The US stumbles under the burden of global leadership. The rest of the world may pay a heavier price
- The turn to populism suggests the old system of Keynesian spending, free trade and military commitments no longer works for the US. This could be costly for America’s partners
Is the world in crisis or is it only a crisis of the neo-liberal order?
Last year, American historian Walter Russell Mead identified the following traits of American discomfort: “ineffective politicians, frequent scandals, racial backsliding, polarised and irresponsible news media, populists spouting quack economic remedies, growing suspicion of elites and experts, frightening outbreaks of violence, major job losses, high-profile terrorist attacks, anti-immigrant agitation, declining social mobility, giant corporations dominating the economy, rising inequality, and the appearance of a new class of super-empowered billionaires in finance and technology-heavy industries”.
However, he was actually describing the 35 years (1865-1901) after the American civil war, when the US emerged to become the major challenger to the British Empire. It took another 45 years, at the end of the second world war, to realise Pax Americana, confirming the US as the dominant global military, economic and political power.
But having acquired global power, what was the strategy going forward? The neo-liberal order was the strategy to bring the New Deal of President Franklin D. Roosevelt to the world. Use Keynesian spending to revive the global economy, win friends and convert them to Pax Americana.
The spread of American culture of global consumerism was a promise of five freedoms – freedom of speech, to vote, of trade, of capital and of migration. This was a convincing American dream, that every individual could have all he wants under Pax Americana. Consumption in excess of income must be funded by debt.
