The Debate Over the Decline of the US Economy
Discuss about the International Political Economy.
This study deals with the International policy economy. In this particular assignment, proper emphasis has been given on understanding the fact about whether comparative decline of the US is making it more complex for development international economic institutions (Uzzi, 2014). The current segment properly explains about the decline stage in the most appropriate way. US primacy is undiminished. In addition, the share of nation of global economic output had been holding steady as well as its military strength (Leamer & Storper, 2014). On the contrary, Declinism may be less the product of actual decline on comparing it with the response to rapid economic as well as social change. The current segment explains about how far relative decline of US affect development of International Economic Institutions like World Bank and International Monetary Fund. These International Economic Institutions plays main role in facilitating as well as organizing the world economy. In addition, these institutions rapidly proliferated for more than 50 years and help in regulating in almost all the aspects of the global economy. The present study properly explains about Modern Liberalism and decline in US by referring to reliable book source written by Bork and the title for the book is “Slouching towards Gomorrah: Modern Liberalism and American decline”.
“Is the relative decline of the US making it more difficult to develop international economic institutions?”
UK once celebrated for its disorderly optimism but now the country is fanatical with the decline. The list of complaints cited by America seems never-ending where real wages are falling as well as expansion of productivity level is down (Odell, 2014). For that, companies are not competitive in recent globalized markets. Even the white-collar jobs are not secured. The infrastructure of the nation is collapsing at a rapid rate. Furthermore, the federal deficit is even soaring. To add on, the health system is deteriorating. In addition, the cities are no more safe as well as schools are failing at rapid rates (Leamer & Storper, 2014). Therefore, the gap between rich people as well as poor people are widening
The President of World Bank is of the opinion that they have made a remarkable progress in reducing the number of people who live under $1.25 a single in the developing world (Beeson, 2014). The real fact lies that there are still 1.2 billion who are living in poverty and stain on the collective conscience. According to the latest forecast of World Bank, it talks about global GDP growth where there is a fragile recovery and inherited from the housing as well as derivatives market. After Inflation, the US economy is projected to grow at a rate of 2.1% in the year 2017.
The Current State of the US Economy
In the year 2014 and 2015, the US economy grew by 2.4% and 2.6%. The World Bank forecasted that by the year 2018 and 2019, US GDP will grow by 2.2% and 1.9% that will make it a slower economy under Trump as compared to under Obama. According to World Bank, the total world GDP will be growing relatively weak by 2.7% for the middle class people in the developing world. The World Bank reports explain that Europe as well as Asia will lead the change by next 2 years. In addition, the euro zone is forecasted to grow at 1.7% present year. By 2018, the growth will decline as US GDP grows (Benería, Berik & Floro, 2015).
Both World Bank and International Monetary Fund had been the most popular economic institutions that reflect the economic primacy of the US during the post-war world. The IMF reports states that books as well as reports collects from here as it shed light on the debate about the decline (Leigh & Blakely, 2016). There are even some of the classic declinist texts that catalogue the theoretical weakness of the UK economy as well as American society as a whole. Addition to that, others argue regarding the US economy decline as well as presenting a far more positive view of the economic and its outlook or forecast. Therefore, none of them grasps the real challenging that faces US culture as it comes to terms that relates new economic as well a social realities (Oatley, 2015).
Declinism is an idea that explains about something being basically wrong and this is about the UK economy (O'brien & Williams, 2016). To that, it is noted that America is not engaging in findings ways where they can compete effectively in a global markets. The country is not even providing an adequate standard of living for the population staying there. Overall, these problem or concern took place as there is decline and the possible answer reflects on accurate economic reality. To explain in detail, British had previously earned a reputation for self depreciation where the relative economic condition of the country decline was properly established (Leamer & Storper, 2014). The entire world is facing it difficult to adjust in reducing the macroeconomic imbalances that is one of the main causes of the current crisis (Booth & Erskine, 2016). It mainly deals with reducing the surpluses of the major surplus countries as it reduces the deficits countries in the given ways. It include process that need substantial domestic economic changes where the economies as well as people are turning inward as governments are tempted for reducing the priority as it give to their external ties (Leamer & Storper, 2014).
The Role of International Economic Institutions
On critical analysis, it is noted that the text explain about the popularity of declinist and others relating to modern America as it is not accurately what most declinist authors argues. Some of the authors fail to grasp the true implication of the debate about the decline (Leamer & Storper, 2014).
The real issue is not about decline but it increased equality among sophisticated industrial nations. During the Postwar era, most of the US companies had been dominated by the world economy (Leigh & Blakely, 2016). The main concern is about the decline that is a indication of the growing equality among the developed nations as it reflecting upon basic problems with the US economy at the same time.
The real issue is not about decline so much as it is for increased social inequality at home. One of the essential features of the postwar US economy had been broadly distributed at home of the fruits of global economic dominance (Nugent, 2017). In addition, the unexpected combination of easy financial expansion as well as extensive social equality had been tailored for fulfilling the promise of the America dream. With the drastic economic changes, it leads or results to increased equality among industrial nations as it served for increasing social inequality within the American society. Therefore, it is much of the concern about US economic decline as it is really deals with socioeconomic inference of increased social disparity (Leamer & Storper, 2014).
The real challenge is faced by American society as it is not reversing economic decline as it mainly addresses the social proposition of the new economy. In addition, the end of US financial supremacy as well as rise of social equality as it poses a unique challenge. It is all about reinventing in a radically new economic environment (Leigh & Blakely, 2016). It mainly increases the risks of a breakdown for maintaining international cooperation with each other. It is a challenging task for the government who are engaged in supporting a well-functioning international economy. The problem or issue need to be recognized so that proper methods or tools can be used in the upcoming financial year. The United States is facing debt crisis that took place because of classic flow cycle where the country had borrowed half a trillion dollar a year. In addition, the current phase of crisis management will have eventually longer implications (Booth & Erskine, 2016).
The Socioeconomic Implications of Increased Social Disparity
The Equality of Nations can be well-understood by using the theory of Modern Liberalism. This theory can be used for solving problems where it relates about the demand for economic regimes. This theory help in giving functionalist explanation to the issues identified in the present study where the competitors become collaborators in the near future. The theory on modern liberalism explains about ways on how to establish rules for a functioning world economy. Theory on Modern Liberalism focuses mainly for the rights as well as freedom of all people. It mainly supports the right to live freely as well as safely and act what people want. This theory recognizes the state needs by providing social services for creating future opportunities. By using this theory, it will be easy to understand the each individual has its rights to behave as they want.
It is important to understand the fact about how modern liberalism had corrupted American culture as well as setting the country on the road to moral chaos. Liberalism is incompatible with true democracy as it helps in looking at the conditions where no individuals actually desire. In the book “Slouching towards Gomorrah”, it was properly mentioned about Modern Liberalism as well as decline of US. In this book, it was clearly stated about American western culture that is in a state of decline as well as cause behind the modern liberalism and the rise of New Left. The author of this book had traced the rapid expansion of modern liberalism that took place in the year 1960 and argues about the legacy of radicalism as it highlights the percepts of modern liberalism and rest of the American political tradition.
Liberalism in action or Neoliberal institutionalism had been suggested by Robert Keohane and Joseph Nye in the year 1977. Here, it was mentioned that cooperation is difficult because of the same argument like statism. The problem is with nationalism and anarchy. It is further noted that institutions can change the game by building trust, providing rules as well as allowing common interests that need to be realized at faster pace. There are several importances of institutions that need to be understood and instances of this can be Bretton words-3. Presence of these institutions is necessary as it help in cooperation to large extent.
One of the interesting facts is known from the American history on how old-style liberalism changes the whole activities completely. Liberalism was first embraced of material progress; however it presumes an environment of peace as well as diplomacy for resolving conflict. With the means of socialization, the Americans embraced state controls in areas that advocate peace.
The Challenge of Reinventing in a New Economic Environment
The liberal approaches focus mainly on a wide range of actors that states and non-states the actors. The actors involved are international economic organizations, multinational corporations and civil society groups. Furthermore, the liberal approaches views world economy as a rules-based sphere where the positive-sum nature of international economic interactions as well as rule providing role of international organizations. It even helps in predicting cooperative relations between states that involves liberalism, investment, knowledge and opening trade.
Statism in action or hegemonic stability theory has been proposed by Charles Kindleberger and Stephen Krasner. In this theory, it is noted that cooperation is difficult and the reason behind the difficult is the obstacles like nationalism and anarchy and even the likely economic conflict. It is further noted that hegemony can change the game as a whole as it can exercise coercive power as well as reward collaborators or punish the defectors. There is huge importance of great powers where presence of hegemony is essential for cooperation. One of the instances that prove the importance is US Post-World War 2.
It is important to understand the fact that version of Declinism need to be understood by the managers as it is present in the literature of competitiveness. Firstly, declinist mainly aims at comparing US economic performance to that with the chief rivals of the nation especially for countries like Japan and Germany as and when required (Gilpin, 2016). Secondly, these declinist need to urge United States to become more like its closest competitors who are actually copying Japanese as well as European mechanisms for maintaining collaboration between trade with government. For instance, by considering two recent reports that comes out of the Washington public policy group of people, it explains about the competitiveness policy for assessment activities (Leamer & Storper, 2014).
On the other hand, it is noted that the chief measures of competitiveness lies in the fact where the analysts are of the opinion that the ability of the nation can be judged by looking at the fair market conditions for producing goods as well as services (Leigh & Blakely, 2016). It is for the services that meet the test of global markets at the time of maintaining or expanding the real income of the citizens. It is properly mentioned in the books of Competing Economics that the United States fails on both counts where the share of world manufacturing exports had declined during current times (Booth & Erskine, 2016). On the contrary, the share of imports had drastically risen within few years. In that case, it actually fails the living standards test due to the real wages of manufacturing workers have fallen from the year 1970. After looking at the Japanese trade barriers, it is noted that the barrier contributes to the US trade deficit with that particular nation where the authors argues that unfair deal cannot be blamed completely for the leaning in what it actually describe or explain in a simple way (Fowler, 2013). It is the government that faces the challenges for overseeing the adjustments for restoring some of the global imbalances as it is one of the major sources of current crisis. It is important to look into the adjustments that are about integrated international economy that need to be handled as far as possible. It is important to build or engage in international cooperation where the domestic publics shows no interest in compromising the national goals especially for international achievements and serves as constructive collaborators. Therefore, it will not evaluate proper tradeoff between national as well as international activities in the most appropriate way (Leamer & Storper, 2014).
The Theory of Modern Liberalism
There was some decline found in countries like US on matters reacting to the share of international markets as it is inevitable by nature provided that the United States had began with the post World war II economic race as it is one of the wealthiest nation in and across the world (Booth & Erskine, 2016). In addition, it will further put little emphasis upon basic fact of history where two countries like Europe as well as Japan need to catch up in the procedure for undermining US financial hegemony. Even, the United States had spent more than 30 years for making the process better. However, US policy objectives states the fact that fights with communism by planting the seeds of success for entrepreneurship as well as to increase in the trading activities that directly provide benefit to the United States. Therefore, the policy needs to be implemented where the declinist wishes to use an completely diverse measuring stick for declaring the failures (De Grauwe, 2016).
At the end of the study, it is concluded that International Economic Institutions emphasis upon common interests as well as hegemonic power and normative consensus. The above study properly explains about how comparative decline of the US makes it difficult to expand international economic institutions such as World Bank and International Monetary Fund. The entire study revolves around how the decline in US affects these international economic institutions. The next segment even explains about modern liberation and the US decline by referring a book written by Bork. From the book, it can be interpreted properly about theory of modern liberation to that of American decline.
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