Thursday, February 27, 2014

The Distressing Effect of Thinking Exceptionalism

If you want to know why it is distressing to think of yourself as exceptional, read the latest Daniel Henninger column. It comes under the title: “The Growth Revolutions Erupt” and the subtitle: “Ukrainians want what we've got: The benefits of real economic growth.” It was published in the Wall Street Journal on February 27, 2014.

What is wrong with the way that the author handles this article is that he does something worse than cherry pick the ideas that suit his views to fit them in one article. What he does, in fact, is grab the cherries that drop into his lap randomly, and arranges them inside a piece in such a way as to make himself believe the resulting article is a coherent work that the public will come to appreciate.

Only one motivation seems to have guided the author while making the choices that he made in piecing together the cherries of ideas. It was the desire to make America look like an indispensable nation; one that the world needs to keep it safe and make its varied economies grow. Thus, Henninger did not care whether or not the pieces fit together, and the result has been a collage of ideas that has no recognizable shape, with gaps between pieces whose edges do not fit together.

One of the pieces that the author has tried to fit with another is the idea that for 5 years under President Obama, America has been leading from behind not only diplomatically and militarily but also economically. And this is why there have been upheavals in the world, from the revolutions in Eastern Europe to the Arab Spring to Ukraine to Venezuela, he says. And he tries to make this piece fit together with another in the collage. It is that despite the fact Obama has less than three more years to go in office, the Congressional Budget Office (CBO) makes a prediction that Henninger totally embraces. And that is that for the next 10 years, the GDP growth in America will be not only the slowest since 1950 but “much slower.” Who will be in office then? Obama's ghost?

Henninger also laments that now “even China is decelerating,” having neglected to explain how that country dared to accelerate while America was only leading from behind. And while America will remain in the doldrums for the next 10 years according to the prediction of the CBO, he mentions that “the European Union predicted weak growth through 2015 [next year]” which means that growth is expected to return to Europe after that; at least 9 years before it returns to America. How can Europe dare doing such a thing?

Thus, having put together a monstrous reproduction of reality, the author now makes a monstrous prediction: “No one should be so naïve as to think that in a low-growth world, the U.S. won't have to get 'involved'. Weakening economies breed anger as in the 1930s … and there will be U.S. boots on the ground somewhere.” That should scare you even if China and Europe seem to be “decoupling” from the US economy.

But having come this far, Henninger returns to points that should have told him he is proceeding on the wrong track but did not. In fact, he misses the glaring lessons, and he continues to line up pieces of ideas that do not fit together. For example, he says this: “Aligned with the EU, a free Poland has grown, even if Italy and France have frittered away what they had.” This should have alerted him to the fact that economies go in cycles that do not always stay in tune with each other. It happened to America, China and Europe; it happened to the BRICS nations and it will happen all the time at some point to everyone.

But Henninger seems to have missed seeing this reality and so, he goes on: “In fact, the vain and decelerating advanced economies are living off the accumulated inheritance of a century and a half of good growth.” Does that mean he predicts the apocalypse after that for these nations?

He finally relies on what Angus Maddison said about the history of economic growth, and its relation with capitalism to advocate that America return to a growth agenda, thus save the world from an apocalypse that will engulf everyone.

I have an advice for this man: If he leaves behind the idea that America is the exceptionally indispensable nation, he may not get so stressed up during his waking hours, and might sleep better at night.