Rise and Fall of Great Powers 2008

In today's Washington Post, Kevin Phillips resurrects Paul Kennedy's specter of the coming fall of a great power near and dear to our hearts (um, that would be us). Philips wonders if our "unprecedented debt levels, soaring commodity prices and sliding home prices, to say nothing of a weak dollar" mark the beginning of the end for an America destined to join Rome, Spain, the Netherlands, and Great Britain on the list of late great world powers.

I'm nowhere near trading in my savings bonds or my passport. But I do catch one passage in Phillips's essay that I offer as a semi-tangential response to my Madison readers who occasionally suggest that the key to economic development lies in getting some credit card company to plunk call center down in Madison:

The most chilling parallel with the failures of the old powers is the United States' unhealthy reliance on the financial sector as the engine of its growth. In the 18th century, the Dutch thought they could replace their declining industry and physical commerce with grand money-lending schemes to foreign nations and princes. But a series of crashes and bankruptcies in the 1760s and 1770s crippled Holland's economy. In the early 1900s, one apprehensive minister argued that Britain could not thrive as a "hoarder of invested securities" because "banking is not the creator of our prosperity but the creation of it." By the late 1940s, the debt loads of two world wars proved the point, and British global economic leadership became history [Kevin Phillips, "The Old Titans All Collapsed: Is the U.S. Next?" Washington Post, 2008.05.18, page B03].

O.K., maybe that's really tangential. But it's just something to sit on the porch and ponder on this glorious and finally un-windy Sunday.