By Zachary Karabell
This current bout of Washington inanity is approaching its denouement, but however it ends, it has accelerated a trend that has been gathering steam for at least the last five years: the move away from a Washington-centric world and towards a new, undefined, but decidedly less American global system.
The latest broadside was the widely disseminated editorial in China's state-run news agency Xinhua, which called for a "de-Americanized world" that no longer depends on the dollar and is thus no longer at the whim of "intensifying domestic political turmoil in the United States." That follows on the heels of a Vladimir Putin's op-ed in the New York Times in which he called out the American tendency to see itself as an exceptional, indispensable nation. "It is extremely dangerous," Putin concluded, "to encourage people to see themselves as exceptional, whatever the motivation."
The fact that these two powerful critiques of America's place in the world were written by the United States' historical adversaries should not be an excuse to dismiss their substance. Yes, these broadsides were politically motivated, and they play to domestic and international audiences that celebrate anyone who stands up to the big, bad Americans. But even a hypocritical adversary can have keen observations, and in both cases, the message was the same: the United States may be a powerful country that controls the world's reserve currency and has the world's predominant military, but that does not mean it is the global leader, the world's policeman or anything other than a first among equals at best.
For all the fervor of the Tea Party and the anxiety of the middle class, Americans still adhere to a comforting story of the U.S. as the world's sole superpower. If anything good comes out of this current morass, it will be that we're one step closer to unraveling that outdated myth.
The financial crisis of 2008 disabused the rest of the world of the notion that the United States — whatever its limitations — was far and away superior at maneuvering the wheels of finance and capitalism. For a while, the denizens of the European Union enjoyed tut-tutting the Americans about their love affairs with derivatives and mortgages, until the EU itself plunged into chaos in 2010. The U.S. was exposed as the man behind the curtain, dispensing advice born of financial alchemy, but in the end just as susceptible to speculators and systemic failings.
That the "emerging" world came out of the 2008 crisis in much better financial shape was especially damning for Washington-centrism. The countries that learned hard financial lessons in past regional crises, such as Latin America in the 1970s or East Asian nations in the 1990s, held up remarkably well in the aftermath of the financial crisis, especially compared to the United States and Europe. Aware that they were weathering the storms, they became more vocal in their criticism and skepticism of the Americans.
As the United States adopted an easy-money, low-rate policy in an attempt to shore up its ailing economic system, many in the developing world cried foul and accused the U.S. of engaging in a currency war. In 2010, when President Obama appeared in Seoul at the G20 summit, he was met not with the deference normally accorded the leader of the world's largest economy but rather with lectures and even a hint of scorn. China's deputy foreign minister admonished America to "realize its responsibility and obligation as a major currency issuing country, and take responsible macroeconomic policies." Germany's Angela Merkel was more diplomatic but still unequivocally rebuffed America's calls for less austerity.
Then, in 2011, came a similar game of debt ceiling chicken. The world once again watched as the American political class encased itself in a hermetically-sealed bubble of folly and arrogance while it disregarded the deleterious effects on both its own prestige and the global financial system. One bout of inanity that tilts toward insanity can perhaps be written off as a bad moment. Two in the space of two years begins to look like a pattern.
This diminution is widely perceived as negative, but for now it is actually an extraordinary boon for the United States. It provides a much-needed opening to turn full attention to pressing domestic issues, such as the future of job creation and the nature of economic growth in the decades ahead. (Granted, this crisis is not exactly leading to solutions on domestic issues, but perhaps that will emerge in its wake.) The U.S. has too many unresolved issues, and the world has too many emerging centers of dynamism, for America to do otherwise.
The realignment that is taking place is as much attitudinal as structural. By sheer dint of size and scope, if countries no longer look to the United States for leadership there will be global ramifications. In a world with multiple centers of influence, from China to Latin America to India and sub-Saharan Africa, new actors that take on a greater share of regional and, in time, global responsibility will yield a more stable future. We have known that forever, hence the stops and starts of the United Nations and other international bodies. Perhaps now, with the U.S. receding in relative strength, we will begin to create a truly international order. It will have its own challenges of course, but it also will be less dependent on any one country.
So what we have in the debt debacle part XXXII is a gift, oddly, of time. With the world both aghast and bemused, the U.S. is left to sort out its own issues. Yes, many are legitimately worried that the fecklessness of the political class will trigger a global economic crisis if a debt default occurs. More likely, however, a worst-case scenario consists of a brief crisis that diminishes the U.S. as a global actor. A reduced U.S. role is still a lot more powerful/influential than 100 emerging markets, but it would force even greater internal focus for the U.S. Whether that opportunity would be used well or used poorly we will have to see, but it's an opportunity, and a good one at that.
(Zachary Karabell is president of River Twice Research and River Twice Capital. The views expressed here are author's own. )