Decline and Fall?

Kevin Phillips stuffed the middle of this op-ed with plenty of caveats, but still winds up direly warning that "The loss of global economic leadership that overtook Britain and Holland seems to be looming on our own horizon."

It's worth taking a deep breath and looking back at those caveats. The United States is currently the richest country in the world by a pretty wide margin. Since China and India are both growing from a much smaller base, it should be possible for them to maintain higher average growth rates over an extended period of time eventually overtake us in terms of overall GDP. But it should be noted that there's nothing inevitable about this -- poor policymaking kept Chinese and Indian growth slow for a long time, and poor policymaking could easily return. How confident are you -- is anyone -- that China will go the next twenty years without a major political crisis?

But more to the point, even if that did happen, the typical American would still be substantially better off than the typical Indian. Visit the Netherlands some time and you'll see that it's a very nice country whose residents enjoy a spectacularly high standard of living. It just happens to be a very small country so the overall Dutch GDP is, in PPP adjusted terms, smaller than that of their ex-colony Indonesia. But nobody's sitting around in Amsterdam saying "it sure would be better if we were an economic leader like Indonesia!" They're doing fine, and we'll be doing fine, too, if big, poor countries eventually turn into big middle-income countries.