Balance: The Economics Of Great Powers From Ancient Rome to Modern America, by Glenn Hubbard and Tim Kane, Simon & Schuster, RRP$28, 368 pages
It is often observed that each generation rewrites history to suit itself. The same might be said about books on US decline. Balance: The Economics Of Great Powers From Ancient Rome to Modern America offers an ambitious fusion: the book argues that the US will decline unless it changes course; and it draws liberally on world history to explain which pitfalls should be avoided.
The authors, Glenn Hubbard and Tim Kane, are enthusiastic amateur historians. Praetorians, Janissaries and eunuchs stalk their pages, more than half of which are devoted to the decline of other great powers. They are also accomplished economists. Hubbard was chairman of George W Bush’s Council of Economic Advisers and is now dean of Columbia Business School. Kane is chief economist at the Hudson Institute. The result is a readable, data-rich history of the fall of great powers through the eyes of two fiscally troubled US conservatives in 2013. To say that Balance could not have been written in 2003, nor by a Keynesian, is not a criticism. But it is worth keeping in mind.
The nub of their argument is that politics is to blame for all declines – great powers lose the ability, or the will, to take the tough decisions needed to maintain their economic vitality. The US today faces the challenge of a growing “entitlement bubble”, they argue, which remains unchecked because of Washington gridlock. Polarisation is America’s chief enemy. “Runaway budget deficits are not a math problem,” the authors write. “They are a process problem, a political problem.”
Contrary to popular imagination, great powers are not brought down by barbarians at the gate – they rot from within, say the authors. Rome’s descent can be tracked by the debasement of the silver denarius, which was whittled down in parallel to the rise of “bread and circuses” mobocracy. The Roman empire had atrophied long before it was sacked by the Visigoths. Likewise, America’s potential fall can be measured by its failure to bring down the national debt. The authors never seriously entertain the rise of China as a threat to US predominance. The “primary threat to America”, they write, “is America itself”.
This may well be true in the short term. There can be little doubt that a better-functioning Washington would ease many headaches, including US national debt. But for a book that devotes so much attention to non-US history, it is a strangely solipsistic point of view. History’s chief lesson is that nothing lasts for ever. But Balance rests on the belief that if the US administers the right medicine, then history’s services will no longer be required. To be sure, no other major power can yet match America’s innovative strengths, nor its openness to immigration. But even if the US follows Hubbard and Kane’s remedies, its future will be affected by how the rest of the world behaves. Others the American city will not freeze simply because the US reboots. Balance would also have benefited from a much closer look at the nature of China today than a whirlwind 1,000-year tour of its dynasties.
Which brings me to the book’s two chief problems. The first is the history, which, while engagingly rendered, is too obviously retrofitted to the present. The authors’ choices tell a story in themselves. Rome, dynastic China, imperial Spain, the British and the Ottomans make sense. Each was the great power of its day. But the inclusion of Japan, the European Union and California is eccentric. The EU and California have no greater claim to having been great powers than Sacramento or Strasbourg have to being imperial cities. By including two relatively high tax and politically dysfunctional entities, Hubbard and Kane show their hand.
What if they had, instead, chosen Germany, a rising power with a reasonably functional democracy and high tax rates? By the same token, if California, with the highest state income tax in the US, points the way down, then shouldn’t Texas, which has zero state taxes, point the way up? Wisely, the authors do not go there. Too often the past plays facile servant to the present. Here is the conclusion of their chapter on imperial Spain. “The good news is that many Europeans, indeed many Spaniards, recognise what has happened, and they are demanding an end to the ‘easy money’ solutions that Charles V and Philip II championed centuries ago.” Yes, they really wrote that.
The second problem is the book’s diagnosis of what is ailing the US. Hubbard and Kane are right to see gridlock as a big problem. But their view of what is causing it is bizarre. To be fair, they raise the alarm over Washington’s special interest – or “collective action” – problem. But this is secondary to their main culprit, which is campaign finance reform. In their chronology, US political decline began in 1975 – the year the first post-Watergate controls on electoral spending were put in place. “There is a natural tendency for states to atrophy, just as capital equipment depreciates over time,” they write. The Supreme Court briefly arrested the atrophy in 2010 with its controversial 2010 Citizens United ruling, which in the authors’ view restored “some of those freedoms” lost since 1975. But “the forces of Leviathan are already pushing to reassert centralised control”.
So there we have it. Forget the rise of China, the stagnation of US middle class incomes, or the drop down the ranks of international education tables. The biggest threat to US power comes from the mild (and ineffectual) attempts to curb how much money the rich can spend to influence elections. It is hard to know how to react to such reasoning, except to say that it is a pity.
Much of the book is instructive. Their economic account of Rome’s fall is compelling. Their survey of Britain’s decline, which they date to the 1780s, is original. “The British empire could still be a superpower today, we believe, if it had been more expansively British and less imperial.” I don’t agree. But as a Brit, it was entertaining to read. Their chapters on the US, however, are neither fun nor convincing. America does, indeed, face deep challenges, which may, or may not, lead to its decline. Regulation of election spending is not among them. It beats me how anyone could conclude that it was.
Edward Luce is the FT’s chief US commentator and author of ‘Time to Start Thinking: America and the Spectre of Decline’ (Little, Brown)
Read Edward Luce on the American city in FT Weekend magazine
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