Self-doubt tarnishes Brand America- by Edward Luce

In short, the metallic rust of decline has crept into the American soul. “You could argue that the first decade of the 21st century was the last decade of the American century,” says David Rothkopf, a former Clinton administration official and student of US foreign policy. “We are now entering the multipolar century.”

Today the US is cleaning up the mess from the largest financial collapse in history – one that originated in the US and was caused by the actions of American public and private sector players. Perhaps the best way of expressing how much has changed is to recall the reaction of Chinese students in Beijing this year when Tim Geithner, the US Treasury secretary, assured them that China’s dollar assets were in safe hands. His reassurances provoked laughter.

The biggest difference, therefore, is in America’s declining intellectual hegemony. In the 1990s the US was the model to which to aspire. It was Gordon Brown, the UK prime minister, and an erstwhile cheerleader for the American model of capitalism, who pronounced the death of the Washington consensus at the G20 summit in London last April. Over the next decade US publicly held debt is forecast to more than double to 85 per cent of gross domestic product – the highest rate since the second world war. And that is without including the intragovernment debt in Social Security and Medicare, the government health scheme for the elderly, which would push US indebtedness well above 100 per cent of GDP during Mr Obama’s second term. Hegemons cannot for long survive such rising indebtedness.

Given the sclerotic condition of America’s political system, the smart money is on decline. Uncharacteristically for a country built on optimism, most Americans believe their country is on the wrong track. An even higher number believe their children will be worse off than them. Until Americans reacquire their optimism, observers will keep remarking on that rust in their soul.

FT.com / US & Canada - Self-doubt tarnishes Brand America