In the late 1950s, after the Soviet Union launched the satellite Sputnik, many intellectuals were predicting a future of American decline and Soviet ascendancy. A few decades later, in the 1980s, it was once again fashionable to speak of U.S. decline and the coming emergence of a new global superpower. This time, the new superpower was going to be Japan. Needless to say, the Soviet Union collapsed at roughly same moment that Japan sank into a lengthy period of stagnation. Meanwhile, the U.S. economy was enjoying an unprecedented boom.
Today, a fresh round of declinism has engulfed our political discourse as America suffers its worst economic crisis since the Great Depression. Soon, we are told, the United States will no longer be the preeminent global superpower, and it may not even be a superpower at all.
I firmly reject the idea that American decline is inevitable. Indeed, I strongly believe that, with better public policies, the 21st century can be yet another American century. For that to happen, we must build a 21st-century economy. In other words, we must adapt to certain global and domestic realities.
For starters, we must recognize that the U.S. corporate-tax system has become increasingly harmful to economic growth. America now carries the dubious distinction of having one of the world’s highest corporate-tax rates. That is a much bigger problem today than it would have been a quarter-century ago, because capital is far more internationally mobile in 2011 than it was in 1986.
The globalization of capital markets has raised the stakes for U.S. tax policy, and it has also done the same for U.S. regulatory policy. Companies and investors simply have far more global options today than they did 20 or 30 years ago, which means that excessive or misguided U.S. regulations do relatively greater harm than they did in past decades.
President Obama pays lip service to regulatory reform, yet he refuses to reconsider the job-killing regulations contained in his health-care law and the Dodd-Frank Act. Both of those measures should be repealed.
America should also resist placing its domestic manufacturers at a competitive disadvantage in exchange for dubious environmental benefits. A 21st-century energy policy would allow the United States to tap its abundant domestic resources. Our current policy has placed massive oil and natural-gas reserves off limits, due to exaggerated environmental concerns, and has made a fetish of “green” energy. The ongoing Solyndra scandal highlights the danger of having the federal government try to pick the next big technology. Our energy policy should be driven not by political fads and special-interest lobbying, but rather by free markets and the practical needs of the U.S. economy.
Finally, a 21st-century economy needs a 21st-century safety net. Which is to say, it needs Medicare, Medicaid, and Social Security programs that are flexible, affordable, and sustainable amid unprecedented demographic shifts and surging health-care costs. Those three entitlement programs cannot continue to fulfill their promise without major structural reform.
As the columnist Charles Krauthammer has noted, American decline “is not a condition,” it is a choice. Our rise to superpower status was not preordained, and neither is any fall. If we remain true to our principles, elect strong leaders, and pursue wise policies that protect our security and preserve the liberty of the American people, there is no reason that the 21st century cannot be another “American century.”