As China rises, can the US arrest its own destruction?

The end of the US war in Afghanistan has invoked memories of its defeat in Vietnam, with the optics eerily similar. While the United States in 1975 was still the emergent power, much has changed since then, and mostly for the worst. Playing a primary role in the US decline has been the 50-odd years of neoliberalism. This economic system of free-market capitalism has, over time, corrupted the political, military and social aspects that made the US a superpower. The desperate scenes of Afghan locals at Kabul airport mirrored memories of Washington’s Vietnam disaster. The Vietnam war was America’s most embarrassing defeat with a huge toll in lives, prestige and cost. In the face of such a loss, the US went on to become the sole superpower. Post Afghanistan, however, America’s prospects seem reversed, with the rise of China and domestic problems the two main factors. Between 1975 and today, the most visible difference is the decline in US manufacturing, a generator of middle-class wealth. Over that period, the US’ share of the global economy has fallen from 28 per cent to 15.9 per cent (with forecasts of 14.76 per cent by 2026), while the debt-to-GDP ratio rose from 32 per cent to 125 per cent. The feedback loop of war, debt and now outsourcing have taken their toll on the US economy. An example of the latter is the Pentagon paying between a third and a half of the US$14 trillion spent on the Afghan war to private military contractors. How the US found itself in this position can be attributed to the neoliberal ideology of free-market capitalism. Introduced in the 1970s, this economic ideology is predicated on allocating capital where returns are the greatest, all in the name of resource efficiency, whether domestic or international. This thinking was the genesis of globalisation. The principal stakeholders in this system are the shareholders, whose top priority is to maximise their wealth. The overarching effect of neoliberalism has been to ignite greed in the individual while legitimising itself as the way to deliver goods and services most efficiently. Such greed and shareholder observance has made corporate America disloyal to US interests. In the face of a trade war with Beijing, now Washington’s greatest geopolitical rival, investment into China by US firms has increased year on year over the past decade, to US$123.88 billion alone last year. The mantra seems to be “capital over country”. How a post-pandemic US can revive its prosperity Beginning with president Ronald Reagan’s naive proclamation that “government is the problem”, the prolific free-market doctrine, along with all the money in politics, has done much to undermine the role of government. Via lobbying and the revolving-door practice of public officials moving in and out of the private sector, any obstacles to greater profit maximisation have been reduced over time. The decline of the US can be attributed to the combination of three events that changed the power balance to favour capital over politics. The first is the 1999 repeal of the Glass-Steagall Act, which had forbidden commercial and investment bank mergers (and was a primary catalyst for the 2008 global financial crisis). The second is China’s ascension to the World Trade Organization. The third is the US “war on terror” after September 11. Considerable corporate lobbying lay behind all these decisions. Because of neoliberalism’s successful assault on Washington, what’s left, in the words of Lewis Lapham, is a dysfunctional plutocracy, giving us today a Republican Party of Donald Trump, a Democratic Party with no identity and a larger absence of bipartisanship for the national interest. With the corrosive effects of money in politics, the ruling elites have increasingly suppressed the effect of wealth trickling down to the masses. This inequity is increasingly visible; as Professor Richard Alston’s 2017 US poverty report found, 40 million Americans were already living in poverty, with almost 18.5 million in deep poverty. Such statistics prove that trickle-down economics does not work. As partisan politics mixes with rising inequality, social tensions have manifested in the rise of politics on race, class and now identity. The Capitol riot, Black Lives Matter protests and rise of Antifa are the consequence of this toxic mixture. One of the most extreme examples of neoliberalism’s perversion in the US is the mass addiction to painkillers, referred to as the opioid crisis. Corporate depravity, government obsequiousness and the medical fraternity’s betrayals came together to create this epidemic, which contributed to more than 70,000 overdose deaths last year alone, and has become a primary factor in the decline of US life expectancy. Though US gross domestic product continues to rise, if the intersecting factors above are left unchecked, growth will eventually decline. As Washington opts for greater confrontation with Beijing, addressing its domestic woes with greater vigour should be the priority. Such neglect will further erode America’s geopolitical standing, while hastening China’s geopolitical and geoeconomic rise. While many commentators speak of a Thucydides trap between the US and China, the more pressing issue is America’s self-destruction that’s happening in slow motion. Much has changed for the US since 1975, with the passage of time showing the devastating effects of unfettered neoliberalism. Correcting the structural problems over the next decade is vital, as what is at stake is not only the stability of the US but, just as importantly, that of the global order. S. George Marano holds a PhD from the School of Management at RMIT University, Australia, and has an MBA and Master of Commerce from RMIT University