Do not write off Trump’s America Premium

There are good reasons why it would be unwise to write off Trump’s America, which, instead, must be taken very seriously

In the aftermath of Donald Trump’s resounding victory in the U.S. presidential elections, with a stunning Electoral College triumph of 312 votes to 226, the Indian commentariat appears to be divided between those lamenting the demise of Liberal America and those celebrating the rise of a right-wing transactional leader who might be “good for India”. Both sides, however, appear to think that the America, over which Mr Trump will preside, has given one more sign of its irresistible decline, as the world becomes increasingly multi-polar and China continues its inexorable rise. For them, Mr. Trump’s victory merely sets the seal on an America more divided against itself, more insular, more xenophobic, more racist and misogynist and less inclined to engage with the world than at any time since the Second World War.

I am not prepared to write America off quite so quickly. For one thing, the fundamental elements of American global power remain unchallenged. It is still the world’s largest, most diverse and most innovative economy. Its military budget dwarfs those of the rest of the planet’s countries combined. It has a remarkable level of energy security, with its own domestic sources of oil, gas, solar and wind power, and seems to be gradually expanding its nuclear capacity as well. Its labour force may have priced itself out of the manufacturing business but American labour productivity and its talent for business and entrepreneurship remain incomparable. Its capital markets are thriving and stable, defying every doomsday prediction since the Great Depression. It has more billionaires than in any country on earth; the U.S. dollar remains the world’s benchmark currency; and the average working American is still better off than the average worker almost anywhere else in the world.

It is still a land that wields an unparalleled influence over global culture — as the home of Coca-Cola, Starbucks, Levi’s, McDonald’s, Disney, Hollywood, CNN, Google, Microsoft, and Nvidia, it sets the global cultural agenda in ways that no one else comes remotely close to approaching. The “unipolar moment” that lasted from roughly 1990 to 2010 may have passed, but these factors mean that whatever degree of multi-polarity may be dawning, it is very much amongst second-order powers jostling for space with each other, rather than truly competing with the United States for global dominance.

It is of course true that the couple of decades of absolute dominance — politically, militarily, economically, and technologically — of the world by the United States of America have passed. This was an era in which Washington faced no near-term rivals for global power and influence, and one in which the defining feature of international politics was that America held sway over world affairs, and usually had its way. But in the last decade or so, it has become clear that the U.S. was no longer going to be uncontested in any of these domains. The first, largest, tallest, biggest everything — from skyscrapers to planes — used to be in America. That is no longer the case.

There are also the undoubted weaknesses with which America is now reckoning. Its industrial base has been weakened by decades of over-reliance on imports from China. Its public debt is out of control and is expected to rise to 122% of GDP by 2034. It is already the case that America spends more on public debt interest than on defence, even though its defence budget is larger than that of the rest of the world combined. Its public, as the recent election showed, is increasingly resentful of the country’s own globalist elites, has rejected cosmopolitanism and multiculturalism, and wants to return to a more insular and arguably xenophobic insularity. Its appetite for global adventure has shrunk dramatically and might increasingly prompt American administrations to withdraw from their current engagements across the world and cease to make the major efforts required to manage and defuse international conflicts.

And then there is China. Roughly around the 2008-09 financial crisis, pundits recognised that there had emerged on the global scene the spectre of Beijing. China’s “peaceful rise” for the last quarter of a century, fuelled by American investment in its industries and burgeoning export trade for its manufactures, has culminated in its supplanting the U.S. as a manufacturing and industrial power, rivalling it in economic size and exceeding its surpluses, as well as challenging it in new cutting-edge technologies such as 5G. Under the assertive autocracy of Xi Jinping, China has emerged, after decades of uncontested U.S. hegemony, as the other aspiring hegemon — and it has the resources to make the Americans sweat. No wonder many American thinkers have called for policymakers to evolve a comprehensive strategy to counter China, much as George Kennan’s famous “Long Telegram” from Moscow in 1946 led to the birth of the “containment strategy” that hemmed in the Soviet Union.

Such a strategy, by definition, will require the U.S. to stay engaged, if only to preserve its dominance in world affairs. Mr. Trump’s first term demonstrated that he was no isolationist. His initiatives in promoting a “grand bargain” involving the U.S., Israel, Saudi Arabia, the United Arab Emirates and other moderate West Asian powers, did indicate a willingness to pursue a new regional compact that would isolate Islamic extremists. (The “I2U2” among Israel, India, the U.S. and the UAE, which was part of this vision, has been rendered dormant by the Gaza conflict, but will certainly be revived once that war is brought to an end.) His withdrawal from the Joint Comprehensive Plan of Action (JCPoA)/nuclear agreement with Iran, his imposition of extremely rigorous sanctions on that country, and the American assassination of Iran’s intelligence chief, Qasem Soleimani, suggest a willingness to be belligerent in pursuing adversaries deemed to be hostile.