The Economy: Then Falls All The World?

The British had the wit to understand what we were doing after World War II. They also had the wit to hitch a ride, knowing that a Britain without its empire would have more clout coming alongside the new world empire—the US—than if it sulked and stood alone.
Future British Prime Minister Harold MacMillan asked to be assigned to Eisenhower’s headquarters in North Africa in 1943. He friends asked why on earth. He replied, “We are the Greeks; we must teach these Romans to rule.”
Latin America had feared us for years, calling us the “Colossus of the North”. By 1945 we were the “Colossus of the Planet”. We had an atomic monopoly. Our troops were on the Russian border in China. We had bases on every ocean and sea. In Europe we kept the ancient “Watch on the Rhine”, once the responsibility of Roman legions.
We had the only undamaged manufacturing plants on earth. If you wanted to buy goods—like coming to Joseph in ancient Egypt, which had the only available food—you had to come to us. We were the cross roads and the center of the world economy.
The rest of the world existed to supply us with raw materials and luxuries. Should we, for the moment, be embarrassingly short of ready cash, nations on every continent were only too willing to extend us credit—huge amounts of it.
After all, they told themselves, where can we find a surer, better, safer investment than in American treasury bonds? Before long the trade of all the world was backed and financed by American debt. We no longer had to earn our luxuries: they were almost forced upon us.
We become stinking rich. If we didn’t own it we brokered it, put an option on it—and collected the interest. Truly it seemed to the rest of the world that American streets WERE paved in gold. (Even though they held the mortgage on much of it.)
Our inscription could have been a paraphrase of ancient Rome’s. “When falls the American consumer, then falls America; when falls the American market, then falls all the world.” The arrogance and myopia were much the same.
“It’s been here for as long as I’ve been alive; I assume that it will go on forever.” It looked that way. Even our enemies envied us. The World Trade Center bombers spent time walking through our malls before blowing themselves up.
Our adversary, the Soviet Union, folded. The Iron Curtain fell. East Europeans and Russians alike rushed to emulate the American life style. China became more capitalist than Wall Street. The entire human race seemed to be buying the great American assumption—that this would all go on forever. Until, for one heart-stopping moment last fall, the music cut out.
For a terrifying moment, Coliseums all over the American financial district seemed to totter, ready to fall. For a horrifying instant, we could see that many of the foundation pillars were rotten. The market crashed over 50%. Fortunes and retirement funds were ravaged.
The great Middle Class was vulnerable. It could be hurt—perhaps even destroyed. Angry, frightened voices began to cry out. American voices, of people who had to put off retirement. Chinese voices who realized that their assets were tied to the ones stumbling in New York.
European voices, Latin American voices, Japanese voices, voices from all over the world. All questioning the great American assumption. Can it really go on forever? Or, like Rome and everything else, is there a time when all things come to an end?
We can go back to our postwar assumptions at our peril. Or we can take a calculating look at our real situation and decide what policies will best protect us in a post imperial world. Rome wasn’t that smart. Britain appears to have been. Which will we be more like?