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Addressing the Declinists

An example of the America-in-terminal-decline point of view is Kevin Phillips's Wealth and Democracy,²³ in which Phillips argues that, like Spain, Holland, and Britain before it, America exhibits all the classic symptoms of cyclical decline: a preoccupation with finance, technology, and services rather than basic manufacturing; capital markets prone to bubbles and speculation; the export of jobs and capital; the import of cheap foreign labor to do jobs Americans don't want; a growing inequality of income and wealth; and frequent and incipient wars.²⁴

But Phillips has it exactly backwards: Whether or not these were symptoms of decline in societies hundreds of years ago, they are, today, symptoms of vigor, of continued dominance. Because Phillips's view of the world is widely held, let's examine each of his symptoms of decline. In brief:

• Contrary to Phillips's view, in the early twenty-first century it is important that simple (basic) manufacturing take place in societies where less expensive labor can produce goods more cheaply and efficiently. This not only contributes to economic progress in those countries, but the resulting less-expensive goods are then more affordable not merely to rich postindustrial populations, but also to people in developing societies.
• Bubbles will always be a part of capital markets and economies because they reflect not markets or economies or anything specifically American, but human nature. Nor is there anything especially ...