Tuesday, October 07, 2008

Is American economic dominance over?

The U. S. mortgage crisis has produced the curious spectacle of angry fer'ners who are at once lamenting the effect the problem is having on their own economies, and then declaring that American economic power is over. But if American economic power is over, then why is it having such an effect on their economies?

Here is John Gray, in Australia's The Age, making absolutely no sense whatsoever:
Our gaze might be on the markets melting down, but the upheaval we are experiencing is more than a financial crisis, however large. Here is a historic geopolitical shift, in which the balance of power in the world is being altered irrevocably. The era of American global leadership, reaching back to the Second World War, is over.
I heard the same thing on PBS yesterday morning from a European, upset about the affect of the mortgage crisis in American on his own country, say that this is evidence that American world economic dominance is over. But if that is the case, then why is the euro falling in value against the dollar in the midst of the now worldwide crisis? The euro fell to $1.3587 in Monday trading from $1.3774 late Friday.

In fact, if American worldwide economic dominance is over, then why are the problems here having so many effects over there? Would the United States be experiencing the kind of effects here if, say, Britain had a similar mortgage crisis?

There is an old saying meant to articulate the long-standing preeminence of America in the world: "When America hiccups, the world shudders." Well, America his hiccuped, and its detractors abroad seem to think it a conclusive point in their case against American preeminence that the world has shuddered.

Maybe all those educational comparisons showing all these other countries ahead of us are bogus after all.

2 comments:

dean said...

Martin,
Maybe it's because those countries are so heavily invested over here? Not an economist by any stretch of the imagination, but that's just my best guess.

But I am curious... since the rest of the world feels like we're washed up as an economic power, will they quit looking to us for aid whenever a crisis erupts in some third world country? I can guarantee you that when some disaster requires billions in aid, they'll be hollering about how we are such a rich country but we never do enough around the world. They cannot have their cake and eat it too.

Lee said...

Sure they can.