Michael Mosbacher responds to Keith Windschuttle:
I’d like to take issue with one part of your paper. You criticize the Niall Ferguson idea of decline based on increased government expenditure, but you’re much too optimistic about how easy it is for government expenditure to be cut. There haven’t been any cases of it. You give the example of Margaret Thatcher, but all Margaret Thatcher achieved was a reduction in the rate of increased government expenditure. There have been no cases in Western Europe or in the United States of falling government expenditure. Then you make a point about debts, and how debt burdens are still much lower than defense expenditure. But that’s a factor of historically low interest rates. If interest rates rise to their median historical level, the debt burden, the cost of debt, will shoot up very quickly.
If interest rates rose to 7 or 8 percent, the cost of servicing debt becomes greater than defense expenditures. Even when governments are led by people like Margaret Thatcher and Ronald Reagan, who are ideologically opposed to an increased state, these sorts of reforms aren’t easily achieved. At the moment, most world leaders embrace big government. There’s no real political will to make the major changes we need.
Jeremy Black responds to Keith Windschuttle:
One of the ways that empires and large states often dealt with fiscal crises in the past was to raid the creditors. For example, the Spanish Empire declared bankruptcy in the sixteenth century, which in practice meant a compulsory renegotiation of its debt. Modern governments can do this by letting their currency depreciate. It’s also easy for the United States, as the prime creditor, to force people to take a rate of return on their credit that is lower than they would otherwise get elsewhere.
John O’Sullivan responds to Charles Murray:
This question relates to the end of Charles’s paper, when he describes the greater social stratification in America with two classes that hardly know each other. When I want to annoy Europeans, I always say that the most social-democratic country in the world is the United States, in the sense that ordinary Americans feel a greater confidence in expressing their own judgments on politics and other questions than they do elsewhere. They show, it seems to me, much less deference to elite opinion and experts and the people in the classes above them than in other countries. I wonder whether that’s been, or is likely to be, affected by what you are describing.
James C. Bennett responds to Andrew C. McCarthy:
Looking at the numbers as you’ve laid them out, they seem entirely accurate. If this were a private enterprise with a balance sheet like that, the directors would be having discussions with bankruptcy lawyers in order to absolve themselves of any personal liability. And if you see a private enterprise on the verge of bankruptcy where the directors are not willing to take that step, the most aggressive creditors will put the pressure on to get preferential payments. One of the main points of bankruptcy law, and the whole idea of bankruptcy itself, is not just to give relief to the debtor, but to ensure that the creditors are paid off as equally and fairly as possible. The other thing that happens is that you look at all the resources and you take the things that have been sacred cows—all that the directors have previously said “Well, we can’t touch this and we can’t touch that”—and you say “It’s all on the table.” It strikes me that we are coming to an inflection point in national history of the sort that we’ve only had a few times in the past. We have to look at this as a bankruptcy-type situation and say “What are the sacred cows that we have not been barbecuing up until now?”
In America 3.0, forthcoming from Encounter Books, I talk about something that I call The Big Haircut, which is basically the equivalence of a bankruptcy process for the United States. The right would be foolish just to go in and say “old people and poor people are going to have to tighten their belts because Medicare and Social Security are unsustainable.” They are, but I think that it would be an electoral catastrophe to present entitlement reform as our only way out of this economic morass. We have got to present an agenda that says we’re going to barbecue some of these other sacred cows, we’re going to alleviate some of the pain that will come with entitlement reform. If we can restore a halfway decent growth rate, it’s going to be easier to tackle the entitlement issues. It’s got to be a broad view. We have to reconsider everything.
Charles Murray responds to Andrew C. McCarthy:
When will the federal government hit the wall? There’s been a lot of schadenfreude with respect to the situation in California, because California cannot print money. It can use smoke and mirrors for a while, but it is up against the fact that people can move away from California (which they are doing). California has to be able to write checks with money behind them, but it can’t print money. The federal government doesn’t face either of those problems. Large numbers of people cannot emigrate from the United States in the same way they can go from California to Texas, and the federal government can print money. But where is the point at which we must stop deluding ourselves in the same way that California must stop deluding itself?
James Piereson responds to Andrew C. McCarthy:
Charles, I think it will happen at the point at which our creditors will stop loaning us money at low rates of interest. I think we’re borrowing about $1.5 trillion a year on a federal budget of about $3.8 trillion. So we’re borrowing about 40 percent of what we spend, and that’s how we’re financing the welfare state today. If we reach a point where we can’t borrow that money, the system will collapse fairly quickly. California is, to some extent, held up by the federal government and its ability to borrow. California has a state budget of about $85 billion, but it has been cutting it back. California receives about $80 billion in transfers from the federal government, for Medicaid, workers’ compensation, welfare, education, and all sorts of things. When that budget has to be trimmed, California will be in further difficulty. That effect will cascade down through the federal system because many localities and states are likewise dependant upon federal transfers.
I think we’re at the early stages of a general unwinding of a system that was put in place in the 1930s, 1940s, and 1950s. It’s not unlike other upheavals that we’ve gone through in American history. Every sixty to seventy years, America has gone through a major upheaval, and a new system has been put in place. That system continues until it can no longer work and until its excesses become exposed, and the political process then generates a solution to it. I’m not sure if it will represent a decline in America. We’ll go through an upheaval that may last ten or twenty years, but we’ll come out of it on the other side with a reformed system. It may be a renewal; it may be a decline. It’s too early to tell.
John Fonte responds to S. J. D. Green:
One thing about Tocqueville is that he saw the lawyers as a very positive force, an aristocratic force that could strengthen American democracy in a beneficial way. Yet, today, the American Bar Association is the center of an adversarial intelligentsia which has a problem with the American regime.
Tocqueville thought that the sovereignty of the people was more settled in the United States than anywhere else in the world. Americans do not think in terms of Westphalian sovereignty—the sovereignty of the state—but in terms of Philadelphian sovereignty. The Preamble of the Constitution of the United States begins, “We the People of the United States,” so sovereignty is within the people. The adversarial intelligentsia has a problem with that.
Decline is an ideological weapon used by the adversarial intelligentsia. This can be seen by looking at members of the elite. Take, for instance, two heads of the Office of Policy and Planning at the U.S. State Department: Richard Haass from the Bush Administration and Anne-Marie Slaughter under Obama. Both have written that America should give up some sovereignty. Why? Because America is in decline. And because America is in decline, the argument goes, we should move toward a globally governed system because we will be able to bring in, let’s say, the Chinese elites and the elites from developing countries. We need to have their elites internalize the concept of global governance and global law, so that when America declines and others become more powerful, we won’t be in danger because they’ll be domesticated. Thus, the argument that we’re in decline is actually an argument elites make for global governance.
Daniel Johnson responds to S. J. D. Green:
You didn’t mention Tocqueville’s other great work, The Ancien Régime and the Revolution. He always saw America through the eyes of a French politician, and very much a historian of France, who in a sense was trying to draw lessons from across the Atlantic to understand what was happening in his own country. And what he observed was democracy, and this was the great new phenomenon. What he doesn’t seem to have found in America was socialism. Remember, he was a man who lived through revolutions himself, not the first great French Revolution, but the subsequent ones.
I want to throw into the discussion another visitor to America, the German sociologist Werner Sombart, who around the year 1900 wrote a book called Why Is There No Socialism in America? We now are living through an era in which we not only have a kind of socialism, but we even have a socialist president in America! For a very long time, it was a cardinal principle that America diverged from Europe in not having a large socialist movement. There were fringe movements, but they never took over the Democratic party in the way that they now have. There are no longer even liberal internationalists in the party—they’ve been largely marginalized as well.
William Shawcross responds to S. J. D. Green:
John Fonte mentioned that the elites in America are particularly dismissive of American exceptionalism, which we have certainly seen with President Obama. It is also true of elite universities. This is, perhaps, similar to what we have faced in Britain, where the elites have been very enthusiastic about the diminution of British sovereignty and the pooling of sovereignty in the European Union. A Conservative friend of mine in London recently said to me that she had been told by a former Conservative cabinet minister that her Euroskepticism made her unfit for any office in Britain. That was only a few months before the collapse of the Euro began. We are seeing, in this extraordinary collapse of the European experiment, something that is going to have a vast impact upon European society and upon the world economy.
Going back to Richard Haass and Anne-Marie Slaughter: I think anything that diminishes American exceptionalism is a great danger for the world. America has been rightly seen as the lodestar, and should continue to be so, but how can that in present circumstances be protected? How can the issues that we are discussing be reversed? It’s very difficult today. The center of gravity has moved so much to the left of where it was fifty years ago both in Europe and in the United States.
Jeremy Black responds to S. J. D. Green:
My conservatism looks to a more cautious, prudentialist attitude. If you are looking at your own country, you can envisage whatever you want. Personally, I would like to see a far more conservative, prudential, financially cautious, and morally vigorous Britain and America. But you can’t assume that the rest of the world will necessarily follow suit. Strength or decline are, in part, a matter of what happens in your own countries, but, in part, a question of how others countries respond. I think we would be naïve if we did not note the extent to which all major states have found it much harder to implement their policy agendas in foreign countries over the last fifty years (including countries guided by ideologies different from ours, such as the Soviet Union in Afghanistan).
Now, what am I driving at here? Basically, that it is one thing to urge a series of policy changes in one’s own country, and I’m all in favor of that. But what we have to be very careful of is that we don’t link that to an international agenda in which we try to change the rest of the world to conform to our image of our own power. But by all means be tough, by all means expect other people to heed our interests. That’s sensible, and I agree entirely with all the sentiments expressed by my colleagues here about the weaknesses of international agencies. There is a lot of silly liberal thinking in them. But conservatives can go in for just as much woolly thinking as liberals. Just pressing a button (i.e., endorsing a view, sending troops to a certain area, engaging in military activity) isn’t necessarily going to have the outcome we want—that is equally as naïve as the naïveté of liberal internationalists and universalists in the United Nations. It’s important to try and keep older traditions of conservatism alive at the same time as the kind of internationalism that’s become part of the conservative tradition over the last fifty years.