The next American century

Before I get started, a short postscript to Britannia Unhinged, this week’s Slow Newscast on Kwasi Kwarteng’s attempted takeover of the Treasury. If you’ve had a chance to listen to it, you’ll know it begins with Kwarteng’s first act as chancellor: the sacking of Sir Tom Scholar. The process of replacing him was, if anything, more cack-handed and telling.

Antonia Romeo, a charismatic and can-do civil servant who has her fans and critics for, perhaps, exactly those qualities, was asked to apply for the job as Permanent Secretary at the Treasury. She was said to be reluctant, having never worked there, but she was given to understand that she was the favoured candidate not only of the chancellor, but also of the prime minister. The Treasury’s appointment panel interviewed several candidates, knowing, of course, that Romeo was Liz Truss’ choice, but they advised against appointing her; they recommended James Bowler, a respected and experienced Treasury official. Truss overruled them.

Last Saturday morning, Romeo was lined up to be permanent secretary – the press release announcing her appointment was drafted and, in effect, she started the job, appointing her two deputies. But by Sunday morning the pressure on the prime minister to restore at least the appearance of order in the management of Britain’s finances was such that she reversed: Romeo was stood down, Bowler, the experienced hand, was asked to step up. Romeo had been very publicly messed around; Bowler had been openly undermined as the second choice, the civil service’s people and processes had been, well, toyed with and Truss had marched people up the hill and down the other side again. Call it what you like: a U-turn, a merry-go-round, a mess. This time last week, Kwasi Kwarteng wasn’t the only person who Liz Truss had assured would be running the Treasury and, this weekend, finds they aren’t. 

***

A few years ago, it became fashionable to declare the end of the West. The American century was over: the world’s policeman had been mugged, humbled in Iraq and Afghanistan, embarrassed in Libya and gun-shy in Syria. And the culture wars, Facebook and fake news, the Trump presidency – they all added up to a kind of democratic cannibalism, as freedoms seemed to eat each other alive; and the financial crisis and the Make America Great Again – the “Maga” – backlash against globalisation meant that the world had lost both the champion, but importantly also the hero of the market economy. The pandemic and the climate crisis both seem to shine a light on the empty chair once occupied by by American leadership. And, all the while, China’s kept growing, bound, it seemed, by the laws of economic gravity and historic inevitability to eclipse the USA and dominate the 21st Century. As Mad King George sings in Hamilton the musical, “Oceans rise, Empires fall”, and it all seemed inevitable. And, as we headed into the 2020s, there was – delete as appropriate – a widespread anxiety, resignation, schadenfreude or excitement that, just like Britain before it, America’s time had come and gone.

But perhaps one of the signals of 2022 is that the US is not passing the baton quite so fast. 

I’m James Harding, Editor of Tortoise, and in this week’s Editor’s Voicemail I want to suggest that we’re seeing some evidence of another American century.

It’s hard to be dispassionate about the war in Ukraine. And we shouldn’t be. Outrage, fear and heartbreak drive the West to take sides and, as far as possible, action. But what has become clear in this war is that the US sets the terms of the international response and can dispense the military hardware that matters. It’s not just that Russia has been exposed as a rusty superpower, it’s that China and India are bystanders. The US is the guarantor of Poland’s safety and with it Europe’s freedom; the superiority of American strength and authority has been revealed. Simply put: Himars hit their targets. A simply story, in other words, of high-end chips and precision engineering.

China, meanwhile, looks like it may be coming in second for longer. In his approach to Covid, technology companies and foreign investment, Xi Jinping has prioritised Chinese Communist Party control over growth. The importance of the Party being in power to celebrate in 2049 a century since Mao declared that “the Chinese people have stood up” seems to have trumped the riskier ambition of allowing the economic freedoms that set China on a faster path to being the world’s richest nation. And just as Xi is clamping down, the US is very deliberately pulling back. America is “friendshoring” – i.e. it’s moving is manufacturing bases to friendlier places – precisely so that it can retake control of supply chains. Now you might say that’s a euphemism for de-globalisation that ultimately could hurt America – but it certainly hurts China too. And at the same time, the US is cutting the wires in relations with Chinese tech and artificial intelligence businesses; it’s also weaponising standards to prefer businesses closer to home.

As the IMF pointed out this week, the US economy has hotter prospects than most other places in the world. The US dollar is so strong that the world is one long shopping aisle for American bargain hunters out to buy companies, property and other assets. And the Inflation Reduction Act is not only going to juice the American economy with $2 trillion in subsidies and spending, it’s going to pump prime a torrent of investment in new green industries that look set to enable the US to capitalise on the wave of decarbonisation in much the way that it dominated the wave of technology innovation.

History, of course, doesn’t repeat itself; the next century of American power, if it comes at all, won’t be like the last; and probably what we’re going to see rather than a return to an age of a single superpower, is an era of shared supremacies, some places stronger at some things than others. But for a few years now, the view has set in of a certain inevitability to the cycles of history. At the very least, 2022 is giving us reason, in so many ways, to think again.