Are Two Poles Better than One?

Over the period from 1898 to 1945, from the U.S. victory in the Spanish-American War to the final Allied triumph in World War II, Great Britain slowly but steadily ceded its role as world hegemon to the United States. The U.K. now serves as kind of an affable "hegemon emeritus," providing the rest of the English-speaking world with pretty good pop music, great TV comedies and dramas, and absolutely awesome clothes. Of course, that five-decade cession process also featured the slaughter of two World Wars.

Will the U.S. ever cede its world hegemony to China? And if it does, how could it possibly do so peacefully? It is hard to imagine that the U.S. would give up world leadership without a fight. Yet, China continues to grow. Before long, the size of its economy will surpass our own. Once China's domestic market is wealthy enough to purchase all the flat-screen TVs, iPhones, and laptop computers that it currently exports to the United States, what use will they have for us? It seems unlikely that they'll continue to finance our consumption like they have for the last 20 years or so. Then what?

It's part of why I'm starting to muse about some sort of international authority administering a single global economy, with minimal trade barriers between countries, sort of like a European Union for the whole world. There's a lot that would be troubling about such an arrangement, especially given the outsize role that multinational corporations would likely have in such a regime. Despite their professed love of open borders, we probably can't count on them to really go to the mat for reduced barriers to labor mobility, since labor arbitrage is a key source of profit for multinationals.

Another possible path would be a return to a bi-polar world, with China and the U.S. serving as the two big powers. Such a standoff would be scary but might also simplify domestic politics to good effect; a lot of social progress was made in the U.S. during the first part of the Cold War, primarily the period from 1945 to 1965.

During those two decades, the U.S. saw reduced economic inequality and rapidly-advancing incomes for middle- and working-class families, fueled in part by a massive federal subsidy of home mortgages and college and vocational education through the G.I. Bill, along with enormous investment in public education from kindergarten right on through graduate school. These spending programs, all of which added to the nation's physical and human capital stock and paved the way for future productivity gains, were funded by a steeply progressive income tax with top marginal rates above 90%.

In addition, de jure racial equality made serious strides forward with Brown v. Board of Education in 1954, the Civil Rights Act of 1964, and the Voting Rights Acts of 1965, though the promise of racial economic parity has yet to be realized (in fact the economic gap [PDF] between whites and African-Americans and Latinos has barely budged in over 40 years).

Lastly, the arrival of Medicare and Medicaid in 1965 added a key measure of security for Americans in their later years, allowing them to live independently longer, which in turn meant that fewer working- and middle-class families had that extra mouth to feed when Grandma or Grandpa – too old to work and too poor to afford to see the doctor – had to move in with the kids.

I conjecture that one of the reasons that the 20 years following World War II was a period of unprecedented broadening of prosperity is that American elites, who otherwise might have opposed the high taxes and generous social spending of the time, were keen to demonstrate that a mixed economy — state-directed at the macroeconomic level but mostly left to the free market in the microeconomic sphere — could generate both prosperity and equal opportunity at a time when central planning was in the ascendancy in the First as well as the Third Worlds.

Compare this period with the years from 1990 to 2010, when the U.S. straddled the world like the Colossus of Rhodes. Despite what neoconservative (at the time) Francis Fukuyama called "The End of History," America saw widening economic inequality, declining middle- and working-class economic security, and soaring personal indebtedness, all culminating in the economic meltdown of 2008. Meanwhile, the lack of a unifying national purpose in foreign affairs has contributed to the creation of a polity incapable of agreeing even on a common set of facts about the world. Against that backdrop, it's starting to be true that it's not only the paleoconservatives who long for the days of the Cold War.

Of course, the Cold War also imposed serious costs on the American people in the form of an overly conformist politics, not to mention the excesses of McCarthyism and COINTELPRO. And the U.S. and U.S.S.R also sponsored countless proxy wars around the globe, not to mention the first-person wars and invasions in places like Korea, Hungary, Vietnam, Czechoslovakia, Cambodia, Afghanistan, and Grenada, all of which need to go in the minus column when assessing the benefits and costs of a dual-power equilibrium.