They have his soul, who have his bonds

Mark Steyn on Personal Liberty:…

Decline starts with the money. It always does. As Jonathan Swift put it:

A baited banker thus desponds,
From his own hand foresees his fall,
They have his soul, who have his bonds;
'Tis like the writing on the wall.

Today the people who have America's bonds are not the people one would wish to have one's soul. As Madhav Nalapat has suggested, Beijing believes a half-millennium Western interregnum is about to come to an end, and the world will return to Chinese dominance. I think they're wrong on the latter, but right on the former. Within a decade, the United States will be spending more of the federal budget on its interest payments than on its military.

According to the cbo's 2010 long-term budget outlook, by 2020 the U.S. government will be paying between 15 and 20 percent of its revenues in debt interest-whereas defense spending will be down to between 14 and 16 percent. America will be spending more on debt interest than China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel spend on their militaries combined. The superpower will have advanced from a nation of aircraft carriers to a nation of debt carriers.

What does that mean? In 2009, the United States spent about $665 billion on its military, the Chinese about $99 billion. If Beijing continues to buy American debt at the rate it has in recent years, then within a half-decade or so U.S. interest payments on that debt will be covering the entire cost of the Chinese military. This year, the Pentagon issued an alarming report to Congress on Beijing's massive military build-up, including new missiles, upgraded bombers, and an aircraft-carrier R&D program intended to challenge American dominance in the Pacific. What the report didn't mention is who's paying for it. Answer: Mr. and Mrs. America.

Within the next five years, the People's Liberation Army, which is the largest employer on the planet, bigger even than the U.S. Department of Community-Organizer Grant Applications, will be entirely funded by U.S. taxpayers. When they take Taiwan, suburban families in Connecticut and small businesses in Idaho will have paid for it. The existential questions for America loom now, not decades hence. What we face is not merely the decline and fall of a powerful nation but the collapse of the highly specific cultural tradition that built the modern world. It starts with the money-it always does. But the money is only the symptom. We wouldn't be this broke if we hadn't squandered our inheritance in a more profound sense.

Britain's decline also began with the money. The U.S. "Lend-Lease" program to the United Kingdom ended with the war in September 1946. London paid off the final installment of its debt in December 2006, and the Economic Secretary, Ed Balls, sent with the check a faintly surreal accompanying note thanking Washington for its support during the war. They have our soul who have our bonds: Britain and the world were more fortunate in who had London's bonds than America is seventy years later. For that reason, in terms of global order, the transition from Britannia ruling the waves to the American era, from the old lion to its transatlantic progeny, was one of the smoothest transfers of power in history-so smooth that most of us aren't quite sure when it took place. Andrew Roberts likes to pinpoint it to the middle of 1943: One month, the British had more men under arms than the Americans; the next month, the Americans had more men under arms than the British.

The baton of global leadership had been passed. And, if it didn't seem that way at the time, that's because it was as near a seamless transition as could be devised-although it was hardly "devised" at all, at least not by London. Yet we live with the benefits of that transition to this day. To take a minor but not inconsequential example, one of the critical links in the post-9/11 Afghan campaign was the British Indian Ocean Territory. As its name would suggest, it's a British dependency, but it has a U.S. military base-just one of many pinpricks on the map where the Royal Navy's Pax Britannica evolved into Washington's Pax Americana with nary a thought: From U.S. naval bases in Bermuda to the Anzus alliance down under to Norad in Cheyenne Mountain, London's military ties with its empire were assumed, effortlessly, by the United States, and life and global order went on.

One of my favorite lines from the Declaration of Independence never made it into the final text. They were Thomas Jefferson's parting words to his fellow British subjects across the ocean: "We might have been a free and great people together." But in the end, when it mattered, they were a free and great people together. Britain was eclipsed by its transatlantic offspring, by a nation with the same language, the same legal inheritance, and the same commitment to liberty.

Comments (3)

Best Response
Jan 31, 2011 - 9:32am
UFOinsider, what's your opinion? Comment below:

At one point in history, China hoarded all the gold that the British empire used to purchase silk, spice, and all the good things the orient produced. Gold went into China and did not leave, bearing a resemblance to the trade imbalance we see now between America and China. However, there is a major structural difference: America's currency is fiat money, which being different in nature than a physical commodity gives the US more options than England had when they were in the same situation. China is also realizing that the 'paper' they hold should be circulated back into the economy to promote economic activity because on its the broadest is just paper and has no intrinsic value.

So on the surface it looks bad, but hopefully cooler heads will prevail and realize that both societies have much more to gain than if they were to go to war / trade which case everyone loses.

The other thing is this: even IF, big IF, China's gross GDP surpases America's, it is divided up between well over a billion people with a net oncome of, well, still very poor. So I do not see this as a problem.

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Jan 31, 2011 - 10:33am
rafiki, what's your opinion? Comment below:

An additional thing about China is the aging of its population. The one child policy in conjunction with emigration gives it an aging population that HAS to strike it rich in the next two or the decades in order to be able to support the "Iron Rice Bowl" of social safety nets they have in place. There s going to be some nasty unrest if that doesn't work out. Meanwhile the USA has trouble limiting the number of young workers it receives from Latin America, with a culture that places a great deal of emphasis on large families in addition to immigration from the rest of the world. This lets the US maintain the kinds of programs it currently or the stripped down version that will eventually exist far better than most other countries in the world.

I'm also wary of the PRC's ability to clamp down on inflation without overly stifling growth. 10% annual growth on top of 5% inflation may be impressive, but these are both government numbers, with independent estimates of inflation at nearly twice as high and growth undoubtedly inflated, China will have to know its place for quite some time.

Jan 31, 2011 - 1:24pm
UFOinsider, what's your opinion? Comment below:

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