The Twilight of Pax Americana

It’s not often that I find myself agreeing with op-eds in the Los Angeles Times, but a piece by Christopher Layne and Benjamin Schwarz, “The Twilight of Pax Americana” is must reading. In a nutshell: The United States is on a fiscally unsustainable path that will undermine its ability to continue playing the world’s policeman. We cannot long maintain our military commitment to allies, much less continue fighting endless wars overseas. As our power recedes, regional powers will fill the vacuum. The era of global U.S. dominance is coming to an end.

The decline of American power will have severely negative economic consequences (and not just for us). Write the authors:

Although the weakening of the Pax Americana will not cause international trade and capital flows to come to a grinding halt, in coming years we can expect states to adopt openly competitive economic policies as they are forced to jockey for power and advantage in an increasingly competitive security and economic environment. The world economy will thereby more closely resemble that of the 1930s than the free-trade system of the post-1945 Pax Americana. The coming end of the Pax Americana heralds a crisis for capitalism.

Many – the kinds of people who create posters like the one shown above — will cheer to see the U.S. humbled. But the world will see (this is me speaking now) that the U.S. was the most benign hegemon in world history. We maintained a world order based on relatively free trade to lift hundreds of millions of people out of poverty. The end of American dominance will lead to more military conflict, more anarchy, more disruption of trade, more poverty and a greater slaughter of innocents. We will see more Somalias, more Congos, more Afghanistans and more Dafurs as vast swaths of the globe revert to barbarism.

This is the world that is unfolding — the world in which Virginia is a part. Speaking parochially, the most immediate impact will be the contraction of the military sector, upon which our state’s economy is so dependent. As Layne and Schwarz write: “This will mean radically scaling back defense expenditures, because discretionary nondefense spending accounts for only about 20% of annual federal outlays.” But that’s only the beginning. When federal insolvency comes, the federal civilian sector will contract as well. World trade flows will be disrupted. Refugees will seek asylum. But the new world order won’t be entirely negative. Financial and human capital will seek safe havens.

If we’re not thinking ahead and preparing ourselves for this world, we Virginians are living in la-la land.

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17 responses to “The Twilight of Pax Americana”

  1. Anonymous Avatar

    I have a good friend who is a liberal Democrat. We were talking about defense spending contraction. He candidly told me that part of him is very happy since he has felt we've devoted too many resources to defense spending, but he is also very scared since he lives in Virginia and Fairfax County, which is very dependent on federal defense and national security spending. Will many of the state and local government programs he supports need to be cut back or eliminated because of a cut-back on the military and homeland security areas? Needless to say, neither of us had the answer.

    I thought my friend stated the problem very well. What else does Virginia have besides NoVA and Tidewater, both of which need Uncle Sam's spending? And then, don't forget that we have the real estate development people living off this too.


  2. How did Bill Clinton balance the budget?

    He made lots of cuts INCLUDING the military – and the military-industrial complex right-wingers never forgave him for this terrible injury even though after the cuts – we still were bigger than the next 10 military's in the world.

    so now.. we cannot carry on 3 simultaneous wars in the world and have to pick only 2 and we're presented with this dilemma about which one to drop in we want to go after Iran..

    I actually take the opposite tact though on NoVa and HR/TW and here's why.

    We apparently are starting to understand that not only are boots on the ground – the most expensive part of "Defense" (what an oxymoron) but they cannot really win asymmetric wars.. so we are moving more and more to UAVs (unmanned aerial vehicles) but also unmanned other vehicles as well as a Littoral Strategy that uses surface and submerged fleets to move assets – to monitor and even defend (with missiles).

    So.. we'll still need headquarter command & control with NoVa being the preferred location and we're going to invest more in our Navy which will not hurt HR/TW.. despite the fact that one of their carriers is apparently on it's way to Mayport.

    I think as long as NoVa sits next door to the Capitol and HR/TW sits astride one of the major harbor estuaries in the world that their futures are, at least, brighter than many of the other bases that may well be rendered less needed by a more mobile littoral force.

  3. James A. Bacon Avatar
    James A. Bacon

    Larry, You lay out one plausible scenario of what might happen to the military establishment in Virginia's future — it's as plausible as anything I could come up with on the spur of the moment. But let's face it, you're guessing. I would suggest that Virginia needs some group that monitors the impact of military spending on Virginia's economy and makes *informed* projections about the future. Right now, we're flying blind. We can't rely upon hunches and guesses.

  4. " Wait Until 2017 Before Job Market Recovers, Report Says"

    " The report gives a failing grade to job growth over the past decade, calling it “The Lost Employment Decade.” Noting that there are 1.256 million fewer private-sector jobs than in December 1999, it said the nation was “destined to exit the decade with fewer jobs than when it began.”

    well.. so much for the idea that tax cuts for the rich and less regulation provides jobs.

    Now you know why so many young people are willing to go into the military… don't we?

  5. Anonymous Avatar

    Tax capital gains of investments (speculavestments?)held for less than six months at 80%. Reduce the capital gains tax on investments held five years or longer.

    If we take away Wall Street's toys, they may again start investing in businesses. Businesses create jobs.


  6. E M Risse Avatar

    Jim Bacon:

    Another excelllent post.

    There is an emerging pattern at the Global, Contential and Nation-state scles.

    At the Regional scale check out the Atlanta Constituion / CNN coverage of Zombie Subdivisions.

    In the CNN coverage there is an image in red and black of the Atlanta New Urban Region vis a vis the impact of foreclosures.

    Draw some radial lines and recall what Linenberger said about "The Next Slum" which EMR quoted in "Shaping a Functional and Sustainable Future in Greater Warrenton-Fauquier" 23 June 2008.

    It is not as if there have not been warnings from the Cluster scale to the Global scale.


  7. E M Risse Avatar


    Your ideas are good ones.

    Have you notices what the National Gambling Venue (aka, New York Stock Exchange) has been doing?

    Rising oil prices are a good thing for the gamblers.


  8. anyone who thinks we are back to normal or even close to it better get back down in their foxhole.

    " Banks to Prepay Assessments to Rescue F.D.I.C."

    "Acknowledging that they had greatly underestimated the problems plaguing the nation’s banks, federal officials on Tuesday proposed a $45 billion plan financed by the industry to rescue the ailing insurance fund that protects bank depositors."

    so I had a question for those who still insist the govt is a screwup…

    how about we get the govt out of the market and dump the FDIC since it's clear they screwed up on how many bank failures there would be?

    no more bailouts.. let the market "work" – right?

    just let me get my money before we do this.

  9. Anonymous Avatar

    Privatizing gain, while socializing losses, is not consistent with either liberalism or conservatism.

    If your company receives federal bailout money, its pay schedule becomes GS and SES.


  10. Gooze Views Avatar
    Gooze Views

    A few comments on Pax Americana:

    (1) Predictions of the demise of U.S. military might due to high costs and revenue woes is hardly new. This same thing happenbed after WWI, WWII, in the 1970s (until the Reagan build up) and then in the 1990s after the East Bloc crumpled.

    (2) In each case, some event forced the U.S. to scramble to come back fast with some military power.

    (3) Take Korea. After WWII, every branch of the military took dramatic cuts. So, when North Korea invaded the South int he summer of 1950, U.S. Aremy units were so ill equipped and ill-trained that the Communists pushed them all the way to Pusan. Luckily, a few Army units could fight and then the Marines landed mid peninsula and the tide turned …for a while.

    (4) This lead to the Cold War doctrine of two and a half wars. The U.S. must be prepared to fight wars in Europe and Asia simulatenously, plus half a war somewhere else. This policy which lasted into the 1990s was enormously expensive.

    (5) So many of our weapons systems were designed for threats 20 plus years ago. The F-22 Raptor, designed in the 70s and 80s, was planned to counter advanced Soviet interceptors. The F-117 stealth fighter bomber likewise was designed to penetrate sophisticated Soviet radar systems. The entire U.S. Navy Trident sub force is designed as a last-chance safeguard against nuclear war. In all three cases, the extremely expensive weapons systems no longer face the kinds of threats they were designed to do — that is unless Russia comes back or China emerges as a huge force.

    (6) The kind of threats the U.S. now faces — namely anti terrorism and counter insurgency are really shows for the Army and the Marine Corps. They will continue to get funded while Navy and Air Force progams, typically highly sophisticated technically and expensive — won't get funded.

    (7) What does this mean for Virginia? Big, costly warships won't get built at Neport News. Langely AFB won't get more F-22s. But Army installations at Ft. Lee and the Marine training base at Quantico will be expanded. So, it's kind of a draw for Virginia.

    Personal note: a few years before I was born in 1953, my dad was a Navy doctor serving at an air station in Florida. He had lots of combat experience with the Marines in WWII and had been a Marine officer before he went to med school. When the Korean War exploded, he was rushed to Camp Lejeune to reopen a training facility for Navy doctors and medical corpsmen in combat medicine. The Navy had stripped the school (I think there was also one on the West Coast) in the post WWII Truman years. In the early days of the war, Marine forces in Korea simply did not have enough Navy medical personnel to handle them and many died as a result.

    So, I wouldn't put too much enmphasis on the idea that we're facing a major turning point here. There are too many examples of draw downs becoming emergency expansions. And, the U.S. is the only cpountry that can wield such power.

    Peter Galuszka

  11. Groveton Avatar

    What are you guys going to write about when it becomes obvious that the recovery is real?

    Stock market indexes usually lead the overall econonomy by 6 – 9 months. The markets have been trending strongly up for 6 months now.

    What is it that you guys can't understand about this chart?

    Or, maybe you guys are looking at this chart:

    After the Crash of 1929 the market almost doubled from 41.22 to 79.83 in the aftermath of the crash. Then, the market fell again – back to 50.16.

    Uh oh … Spaghetti – O!

    Is the current run up of the indices a leading indicator of broader economic recovery or is it a sucker's bet?

    I am playing the sucker's bet angle (although I've been wrong before).

    What say you wise men and women?

  12. James A. Bacon Avatar
    James A. Bacon

    Groveton, Here's another chart to look at: A five-year perspective. Tells a different story, doesn't it?

    More to the point, I would agree, a "recovery" is coming. Nothing has repealed the business cycle. But this recovery will be weaker than the previous two or three because consumers are determined to reduce consumption, pay down debt and build personal savings. That will suck 5 or 6 percentage points out of growth over the course of the next business cycle.

    So, what will I write about when the recovery takes hold? I'll lament the fact that instead of running surpluses, or more realistically "small" deficits of "only" $200 billion or $300 billion a year during the boom phase of a new business cycle, government is still running $1 trillion-a-year deficits.

    Peter, I don't disagree with any of the points you make. I think you're just looking at the short-term impact instead of the long-term impact. You're describing changes to U.S. military posture that Obama might make. I'm worried what will happen 15 or 20 years from now when the U.S. government literally can no longer borrow any more money and has no choice to slash expenditures to meet revenues. That's when the American empire will collapse.

  13. E M Risse Avatar
    E M Risse


    Here are two quotes from a report by SYNERGY that is still in draft that speak to your question:

    "Option Two – Under the second option – a long period of recession / depression – humans will only achieve a sustainable trajectory after a period of deflation that brings about a more substantive Balance between consumption and resources.

    "This new Balance will result from a new ‘spatial fix’ in Florida’s Vocabulary or ‘Balanced, functional human settlement patterns’ in SYNERGY’S Vocabulary.

    "That is what happened with the rise of Industrial Centers which became dominate by the end of The Long Depression (1873 to 1896). The difference is that in 1896 the US of A had huge untapped reserves of natural resources, new technology with which to access and use these resources and a FAR smaller population. Perhaps most important, the population was motivated to be productive. Too many in the current population believe they are ENTITLED to consume and to be entertained."


    "There is a prevailing assumption – reinforced by Enterprise owned MainStream Media – that admitting what is happening in the economic sphere will make things worse. That is a tragic reality of an economy based on consumer consumption but the alternative – sweeping reality under the rug – is even worse.

    "The problem is exacerbated by political partisans from the Elephant Clan screaming incessantly that everything would fine if THEY were in power. Over the past 35 years both of the major political Clans have made similar, if not equal contributions to the Global Financial Meltdown.

    "The economy has been pulled out of every recession since World War II by the sale of Autonomobiles and by building houses. Those are the two forces that directly and indirectly set the stage for the current economic meltdown.

    "The only temporary relief for the Auto industry depression seems to be the Cash for Clunkers program. Will there be a need for ‘Cash for Clunker dwellings’ programs? No, to pursue such a program will only make the settlement patterns dysfunction worse and deepen Agencies debt."


    Hope that helps.


  14. Larry G Avatar

    I think that a sub 10K car that perhaps can go 40 miles on an electric charge (fueled from the electric grid) – could be a game-changer.

    there is no shortage of electric energy because it is fungible – can be generated from a wide variety of sources, including non-fossil, renewable sources.

    the only variable is the cost of it or to put this in context – how much does energy cost – as a percentage of your income – as a percentage of GDP?

    Figure 35

  15. E M Risse Avatar
    E M Risse


    You still do not understand THE PROBLEM WITH CARS. It is the space to drive and park Large, Private vehicles that disaggregates human settlement pattern.

    A $10K that gets 40 MPG equlivant would be nice but the Autonomobile industry is building big, heavy electric vehicles that will go 0 to 60 in 3.5 seconds and have a top speed of 120 mph rather than slow, safe vehicles — for which there will be a need.

    They are going to put noise makers on them so people will get out of the way.

    Time to design Autonomobiles with a sensor that does not allow them to go over 7 mph if they are within 100 feet of a human. Why should humans continue to run away from Large, Private vehicles?


  16. Larry G Avatar

    EMR – I'm in favor of smaller, lighter, EV type cars in urban areas with more sidewalks, less vehicle lanes, and high tolls on cars that are not wanted nor needed in urban landscapes.

    but in Europe, China, India, Brazil and many other developing countries – more cars will come IMHO. They will be smaller, lighter, more fuel efficient and less polluting but they'll still come.

  17. Larry G Avatar

    WOW! THIS is a chart that Groveton and others should take a look at.. very disturbing:

    Comparing This Recession to Previous Ones: Job Losses

    it's hard to look at this chart and think that our economy is actually improving…

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