Time to start thinking by Edward Luce

According to the US industrialist and world-class bigot Henry Ford, "History is bunk". Edward Luce, who cites Ford's assertion, tells the reader that Oliver Wendell Holmes was closer to the mark when he said: "An ounce of history is worth a pound of logic." But what emerges from Luce's carefully balanced and often startlingly evocative analysis and reportage is the denial of history by the current crop of American leaders. Every one of the gallery of grotesques that have tried to challenge Obama for the presidency interprets America's slide from pre-eminence as the result of Democrat policies, while Obama himself dismisses all talk of decline. The assumption underlying practically all US discussion is that any slippage in America's global standing is the result of misguided policies that can be reversed by an act of will.It is true that there have been serious errors in policy. Luce, formerly the Financial Times's south Asia bureau chief based in New Delhi and now the paper's chief Washington correspondent, spells out these exercises in self-damage in painful and illuminating detail. He shows how America has choked off the flow of talented scientists and entrepreneurs by making immigration more difficult, while major companies have been encouraged to move offshore so that IBM and General Electric now employ more people overseas than they do in the US. He examines the factors that have de-skilled much of the US workforce, not least failures in public education, and tells some poignant stories of the economic squeeze that is laying waste to the lives of so many. Rightly, he sees the collapse of social mobility as a turning point. What hope have the former middle classes if their children are also trapped in debt and dead-end jobs? Surprisingly, Luce says little about the foreign policy disasters that have speeded America's fall from grace. Though the Iraq war achieved little aside from increasing the influence of Iran, occupying the country has been ruinously expensive. Trillions of dollars have also been spent in Afghanistan, the principal result being to entrench the position of the Taliban. Yet despite these debacles there is fierce resistance to Obama's relatively modest proposals for spending cuts in the military-industrial complex. A similar paralysis exists in many areas of domestic policy. America's debt burden would be less crippling if the US did not have the least cost-effective system of medical care of any advanced country. But as Clinton and Obama have demonstrated, radical reform is politically impossible. Again, it is mainly America's absurdly punitive drug laws that have led to a higher proportion of its citizens being incarcerated than anywhere else in the world. Here too, though, the likelihood of reform must be close to zero. Those who argue that America's decline has been the result of policies that can be changed pass over the chronic dysfunction of the American political system. "Given America's separation of powers," Luce writes, "the Tea Party needs only a majority of the majority of one half of one branch of government to have a pretty good shot at ensuring nothing significant happens in Washington… in light of such a low bar, and given its organisational prowess, it is hard to see a neat end to the Tea Party's 'tyranny of the minority' in the near future." As Luce implies, deadlock in Washington is a by-product of America's sacrosanct constitution. One might wonder how a system of government that was framed in pre-industrial times could possibly be suitable at the start of the 21st century. But while the constitution is often ignored in practice, there is no prospect of the structures of government being reformed. As the Tea Party has shown, a mythic story of American constitutional origins still has powerful resonance. Another obstacle is the political power of money. In an entertaining aside, Luce quotes the dictum of Mark Hanna, a celebrated 19th-century political operator: "There are two things that are important in politics. The first is money, and I can't remember what the second one is." Luce believes that "it is within America's power to reverse its increasingly plutocratic internal character". Yet it is hard to see how policy-making can be freed from the pervasive influence of the financial sector. The same banks whose reckless and predatory activities created the financial crisis have shaped the legislation that is supposed to prevent similar crises in future. Luce quotes Nicholas Brady, treasury secretary under George Bush Sr, complaining about the lack of proper consultation on the legislation. Observing that the chief architect of reform, current treasury secretary Timothy Geithner, "just talks to the investment bank chiefs", Brady concluded that the Dodd-Frank Wall Street Reform Act "is largely their bill". If the capture of US policy-making by financial institutions effectively rules out any serious attempt to tackle the country's economic problems for the foreseeable future, a still greater obstacle is the incapacity of elites to face the realities of America's situation in the world. Luce's book is a call to thinking, but US thinking is stuck in a vice of myth and denial. The country's politicians, economists and journalists have celebrated globalisation as a process in which US capitalism is replicated throughout the world. Contrary to what many assume, China is unlikely to replace the US as the world's leading power. Instead, there may well be no global hegemon for the foreseeable future. But as new varieties of capitalism come on to the scene, America's relative economic position is bound to decline. Even if Washington could somehow be reformed and American policy-making reset, this would not change. Luce finishes by noting that "America's biggest challenges are not unique", and of course he is right. America's difficulties are not fundamentally different from those all developed countries face in responding to the global shift of economic power. But by the same token, what may prove to be America's greatest weakness is the adamant insistence that it can defy the normal course of history. Pundits who insist that American decline is not a fact but a choice are closing their minds to the only real issue, which is how the US will adjust to a descent from primacy that cannot be stopped. At present the auguries are not good.