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Do We Need to Be a World Power?

The United States is the most powerful country in the world, past or present, but what does that mean? It has meant certain advantages that most people probably do not think of, like paying less for many things because of the dollars position as the world's reserve currency. With oil and other commodities quoted in and sold in dollars, there is a demand created that allows us to print more and more currency without the usual inflationary effects, although the limits of this are being tested at the moment.

Of course, all powerful countries get more leverage when it come to negotiating as well. This is why tariffs are higher on many small and poor countries than on larger and wealthier ones. The United States, European countries, and even developing countries like Mexico often have low-tariff or even duty-free access to markets of the world. Compare that a country like Bangladesh, where tariffs of over 15% for exports to the U.S. mean garment workers have to work for less pay and with less safety in order for factories there to be competitive against countries that do not pay so much. Power, or a lack of it, shows in the trade deals that can be negotiated.

But there are costs to being a world power beyond those paid by the poor countries. There are costs to the countries which wield that power. The histories of the Roman Empire and, more recently, the British Empire show that those costs can be overwhelming eventually. In any case, there is no sure way to maintain an empire, and in the United States our position as the most powerful is probably coming to an end in this century.

China is rising to challenge our status, for example. It still has a lot of areas which need to be updated to the most modern technology, but there will eventually be tractors for all farms, and other technological improvements that will rapidly increase their economic growth. Because of the lower base they are starting from, it is virtually inevitable that within a few decades they'll be at least half as productive as the United States. Consider for a moment that a tractor can quickly double or triple the output of a farm versus human power. There is no technology in the United States that can similarly skyrocket our productiveness. Adopting the best technologies available is easier than creating ever better ones, so expect China and other poorer countries to continue to grow at a faster rate than the developed world.

Some readers might think it isn't so impressive that China could soon be half as productive as the U.S. That doesn't sound like much, but let's look at the numbers for a moment. According to the World Bank, as of 2011 the United States had a GDP (gross domestic product) of about $15.09 trillion, for a per-capita GDP of about $48,428 (divide GDP by the population of 311,591,917).

Now, if China was half as productive, with a per-capita GDP of around $24,200, their total current GDP would be $32.53 trillion, because there are currently 1,344,130,000 people living there. That's more than twice the size of our economy and that day is coming. The math is actually quite simple. If each person in China produces only half as much but there are four times as many people, total production will be twice as high as here.

A larger economy means more potential military power, since a bigger economy means more potential tax revenue to buy more weapons. That is also very simple math. Both India and China are very likely to be more powerful than the United States at some point in this century, and the wait won't be very long for China.

It's assumed by many that it is a bad thing for the people of a country to have their nation lose its dominant position as a world power, but is that true? Not necessarily, and that hypothesis has not been proven by history. The British Empire was lost, and afterwards the British people became richer as individuals than they ever were before. Maintaining an empire costs money, after all, and the wealth created by the labor of the people must be diverted to that purpose through taxation.

Furthermore, the wealth gathered up through taxes in order to have troops overseas and for other empire-related expenditures, even if not left in the hands of the people, could be put to more productive purposes. We can argue about whether a country does better when the government spends more or the people are allowed to spend more of their own money, but if a government is to spend some part of the production of the populace, the different ways in which they do it clearly have differing economic impacts. Creating a freeway system here in the United States, for example, because it made transportation much more efficient, did much more for the economy than fighting wars in Asia.

In other words, what we might call the "empire-collapse-dividend" could either mean more money in the hands of the people or more efficient use of tax revenues in regards to encouraging economic growth. Those of us who live here don't necessarily have to lose anything important from the coming shifts in power. On the other hand, if our fear of those changes causes us to pursue expensive and dangerous policies which try to prevent the inevitable end of an era, we might face a true and lasting impoverishment.

The better plan, in my mind, is to live peacefully and prosper!

Here are some questions to ponder about what it means for the United States to no longer be the primary world power. I add a couple of my own thoughts to each, but these are not meant to be definitive or researched answers.

1. When the U.S. is no longer the most powerful country militarily, will the people be at greater risk of wars or a loss of freedom?

I think that more openness between countries is already lessening the threat of world wars. Furthermore, a strong economy always leaves open the possibility of quickly gearing up for war as the U.S. did for World War Two. An economy weakened by spending excessively on the military and on other measures to maintain an empire leaves us less able to sustain new defense measures.

Are we actually safer for having military bases in 130 countries? I doubt it. In fact, our armed presence and meddling causes enough animosity in many places that it easy to suppose it puts us at greater risk of war. Imagine for a moment how people here would react in their were foreign troops in our country and internal economic policies were often dictated to us by France or Germany.

2. Are there things we could do develop a healthier economy based on the coming changes in power?

As I suggested above, my feeling is that some seriously strategic thinking has to be done when it comes to military spending, so we can stop adding debt that threatens to someday impoverish us. Cutting military spending and means-testing so-called entitlements so only those in need receive Social Security and Medicare payments are the two biggest things we could do. (Yes I know that despite there actually being no accounting basis for calling these programs anything but "promised welfare," many readers will hate that last idea.)

3. What can we do individually to prepare for the changes to come?

The United States is almost certainly in the process of losing its status as the world power, but what you should do about it as an individual depends in part on how you think our culture and government will respond to this inevitability. If you think we are likely to go on expanding our power into the world and add ever greater debt in an attempt to avoid the end of the empire, prepare for some really rough times a couple decades down the road. If you think wiser heads will prevail, you still should be ready for temporary disruptions, like potentially massive inflation for several years when the dollar loses its status as the world's reserve currency and we have to start paying a truer price for the worlds goods.

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World Power