Wednesday, March 26, 2003

COURSE OF EMPIRE

MARK TRAN, GUARDIAN - Does the US colossus have feet of clay? It takes a brave soul to argue that America, the world's largest economy and by far its most potent military power, is about to go into decline, when it is widely perceived as a hyperpower. But Independent Strategy, a financial research company for institutional investors, has made the case in a paper that is making the rounds of big investment banks such as Goldman Sachs. Independent Strategy believes that the US shows many symptoms of an empire that is cresting. First, it sees deepening mistrust of the US and predicts a rise in terrorism in reaction to US unilateralism. . . Second, Independent Strategy sees trouble ahead for US economic policy. It notes that Mr Bush has boosted discretionary government spending more than at any time since the Vietnam war. Inheriting big budgetary surpluses from the Clinton administration, the Bush White House is heading for record deficits. . . Third, what was known as the Washington consensus - free market economics and deregulation - has broken down. As Bob McKee, chief economist with Independent Strategy, notes, a populist reaction has taken hold in Latin America, while in Asia, Malaysia has gone its own way economically. Moreover, South Korea and Taiwan never really bought into supply side reform. "Empires work best when they project power through the successful export of a social model or ideology," argues Independent Strategy. "The rot started when the US failed to project its economic ideology and social model globally. Japan and Europe have long rejected both, at least implicitly, as inimical to their culture and alien to their social contract." Independent Strategy sees the weakening dollar as the fourth strand in the decline of empire. . . The twilight of empires can last a long time, but judging from his reckless unilateralism and his economic vandalism, George Bush seems to be determined to do his level best to hasten that decline.

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