Let’s dance the Oswald Spengler, whose Decline of the West sold millions after it came out a hundred years ago. Is the doomster back in business? “Example is not proof,” teaches the Talmud. Neither is historical analogy. Still, there are some nasty parallels between then and now. Here is the short-list.
Item 1: The pandemic.
First, the better news: COVID is not the Spanish Flu, which claimed some 50 million lives after invading the planet in 1918. Raging for two years, the Flu did not strangle the world economy. Actually, the Dow Jones increased by 30 percent in 1919—just as it did in 2020. In the Roaring Twenties, the pandemic was quickly forgotten. But beware: the real thing—the Great Depression—hit in the Thirties and lasted a decade.
Now, the worse news: today, the causal link between disease and depression operates almost instantaneously. In Q2 of 2020, a few months into the pandemic, the U.S. economy shrank by 32 percent, the worst single-quarter since systematic data were being collected. The eurozone economy suffered the deepest contraction on record. By comparison, the so-called Great Recession of 2008 was a blip. As one COVID wave segues into the next, no sane observer would wager on a speedy recovery.
You don’t have to engage in Spenglerian metaphysics, nor claim clairvoyance, to predict the convulsions to come, whichever way COVID breaks, vaccine or not. Unless the Deity intervenes by erasing two-hundred years of economic theory and experience, trillions of stimulus cash plus astronomic infusions of liquidity are bound to unleash a deluge of inflation. At this point, Mad Magazine’s Alfred E. Neuman’s “What, me worry?” is like Valium—relief without rescue.
Item 2, A look backward at the dire fate of globalization, the engine of planetary growth since the mid-19thcentury, which has been stalling bit by bit in our days.
World War I marked the end of the First Globalization. The previous decades had been transformed by revolutionary technologies. Steamships raised the speed and lowered the price of transportation. Telegraphy and telephony did the same to communication. A message from London to New York suddenly took minutes, not weeks.
Beginning in the 1860s, liberalization became the watchword. Bismarck’s rising Germany, soon to grow into an industrial behemoth, cut tariffs to zero until the 1890s. The U.S. was a lot less virtuous in the 19th century, maintaining average tariffs of 40 percent. Still, world trade soared four-fold, and wealth grew pari passu.
The First Globalization collapsed on the eve of the “Great War.” It would not rise again until the 1970s, again propelled by technology: jet planes, container shipping and digitalization. The price of communication plunged toward zero. In the second wave, world trade grew five-fold. Multilateralism was the order of the day.
Why did both waves end—though the second one by creep rather than design? For the same reason: politics. Politics, pace Marx, is mightier than economics. World War I killed the First Globalization as autarky and protectionism swooped down to stay. At the tail end of the Second, the world was dividing into trading blocs, with bilateralism as the new norm. In response to domestic pressure, one-world trade is being done in by punitive tariffs and tit-for-tat. “America first”—a zero-sum game, where your losses are my gains—rules Trumpist policy. “Globalism” is victimization, runs the indictment. Once more, as in 1914, domestic interests speak more loudly than economic rationality.
Naturally, global welfare does not increase. Worse, trade battles compound strategic conflicts, especially between the United States and China. We have seen this before. After 1890, German protectionism helped to drive Tsarist Russia into the Franco-British Entente—the beginning of the end of the Wilhelmine Reich.
Item 3: Add to the mix a new feature, which I define as “defensive nationalism.”
This side of China and Russia, which obey the traditional expansionist kind, the West is emulating hedgehogs that roll up in a ball when threatened. It is no longer the lure of glory and booty that animates Western nations. Instead of “manifest destiny,” it is “leave us alone.” Stop the invasion of people and products—recall “Polish plumbers” in London, behold the Mexican Wall. Nativism and mercantilism are raising ramparts everywhere, rending the fabric of globalization and sharpening great-power rivalries.
Self-encapsulation, driven to unprecedented heights by COVID, comes with familiar costs, making nations poorer, not richer. Undone by retaliation, gains are illusionary. Tariff walls raise domestic prices and thus lower real income.
Lastly, “everyone for himself” blunts cooperation, be it economic or diplomatic. Stifling trade, nations at loggerheads sacrifice the benefits of coalition-building as a tool of global order. How could Mr. Trump corral Berlin and Paris when he treats them as economic enemies? Once more, globalization is falling prey to re-nationalization even among friends. The “West,” previously a community, is dwindling into a geographic concept.
Item 4: America is abdicating just as crises are piling up.
The dreary lessons of the post-WWI era are coming back to haunt us. Consider the key point. As after WWI, the Liberal International Order (LIO) needs a housekeeper—a power mightier than the rest and dedicated to the job. When the United States. gave notice in 1919, it triggered not only economic but also political catastrophe: beggar-thy-neighbor, the triumph of totalitarianism, and the slide into World War II. Open trade and strategic stability degenerated in tandem.
The United States heeded that nasty lesson after WW II by executing a 180-degree turn. No need to retrace the path that led from Yalta to NATO, from closed to open markets. Suffice it to stress that America shouldered the burden and built a magnificent LIO based on cold-eyed self-interest as well as on moral commitment to “The West.” Today, this Golden Age of U.S. diplomacy is yielding to MAGA, and damn the rest. If Trump stays, he will finish the demolition job. But it is not foreordained that a Biden-led America will gather the pieces and glue them together.
Item 5: America’s grinding internal tectonics do not strengthen U.S. leadership and legitimacy.
The deficit is compounded by the embarrassing failure to defeat COVID-19. The country is caught in an ideological civil war that saps its purpose and power. It is the Stalinist Woke vs. the embittered Deplorables, as Hillary Clinton labeled them, folks who cling to guns and religion, as Obama had it. It is a pitiless Kulturkampf, and it keeps escalating.
America’s universities, still the best in the world, confuse education with indoctrination. Its media equate journalism with agitprop – left or right. Self-righteousness rules the land, breeding mutual fear and contempt. Pitting the better-off and highly educated against the hoi-polloi, cultural and street warfare weakens America’s standing in the world—and its capacity to rein in disorder. Though hailing from opposite directions, Left and Right share a common conviction: Come home, America! Nor is retrenchment due just to Trumpism and Wokism. It was Barack Obama who kept urging: “It’s time for a little nation-building at home.”
Back in 1863, Lincoln orated: “We are engaged in a great civil war, testing whether that nation, or any nation so conceived can long endure.” It did, overcoming world wars and the Great Depression, while resisting the lure of illiberal ideologies. Nativism came and went. William Jenning Bryan’s populism was safely enveloped in the Democratic Party. Joseph McCarthy was censured by the Senate. As Bismarck quipped: “God protects children, drunkards, and Americans.” Would that he is right again.
Today, America is retracting from global responsibility just as the world needs an anchor power as much as it did in the darkest days of the 20th century. The risk of pile-ups in the planet’s traffic system keeps growing. Yet America is absconding again, caught in self-absorption and a civil war that defies the idea of e pluribus unum. As an aside, it is a testimony to American clout that the culture war was invented here and then spread to the rest of the West, the American vocabulary included.
The housekeeper is off on an extended vacation. Who is going to mind the building, also known as the tottering LIO? As the world’s second-largest economy, the European Union might, but lacking a global vocation, it won’t. China would love to go to the top, replacing the U.S.-built architecture with a tribute system centered on the Middle Kingdom. America-on-furlough (or on the way out?) is no blessing for a convulsing world that evokes memories of the Thirties. It is bad for the world and bad for the country.
Go back to an America not yet born. Ignore the religious vernacular and listen to John Winthrop as he reminds his Pilgrim flock in 1630 to heed their obligations to God, also known as their “best interests”. If not, he warned, “we shall open the mouths of our enemies to speak evil [of us]. We shall be made a by-word throughout the world.”
Sonorous stuff, but good advice.