"The War for Wealth"

by Gabor Steingart (McGraw-Hill 2008)

First we have the “War on Terror”, now “The War for Wealth”. The influence of American Right-wing thinking persists in projecting a world where the USA is under imminent threat. The book is pervaded by a “zero sum” mentality, in which progress by others is to the detriment of American interests. Teddy Rooseveldt’s “big stick” is much in evidence – the soft voice is hushed.

The thesis of this book is that the USA is sleepwalking to disaster. By embracing free trade and supporting the development of the emerging economies in China, India and the Middle East, the USA is sponsoring a strategic challenge to its status of sole superpower and destroying the predominant wealth which underpins it. Many of these challenges seek to develop hegemony over their region and eventually worldwide.

In the past American reaction to global challenge has sometimes been isolationism. In a globalising world this option is virtually untenable, so that the USA is driven to find allies and divide its foes. The futility of isolationism is recognised by Steingart, who sketches out three scenarios to discern possible paths into the future.

Steingart’s “shock scenario” which is driven by inertia and culminates in a stand-off between the USA and China, leads to the break down of China’s economy and the imposition of dictatorship. America is weakened by the collapse of US led globalisation and is forced to rebuild its internal economy. Steingart’s second scenario is “Asia-above-all” in which the USA declines relative to Asia. America becomes more indebted to fund its current lifestyle; China moves from a focus on exports to develop its own consumer society. Increasing debt and ageing demographics condemn the USA to further decline relative to growing economies. The third scenario is “American Renaissance”, in which the USA reacts with resolve to its growing challenges. Its aim is to restore the economic infrastructure which globalisation has eroded. Trade is built on American interests, working with the European Union and other open economies, and promoting US hardware and software (industrial products and innovative services). Self-renewal is the key driver and the aim is to return the USA to leadership of the free world – “The United States of the West”.

Too little is said about the process of galvanising the willpower of Americans through democratic means rather than coercion. The book ignores the lessons of Gibbon’s “Decline and Fall” and of the fall of the Spanish Empire; excessive wealth is internally corrosive and attracts the depredations of those who feel their turn has come to enjoy it. “The War for Wealth” will be lost by those who do not have the will to adapt to win.

The theme of this book is protecting US wealth by perpetuating America’s sole superpower status. Globalisation is seen as a process which will shape powerblocks in order to share limited wealth. The actual history of globalisation to date has been of the multiplication of wealth, due to free trade and innovation spurred by competition. It is timely to alert the West to the threat of decadence but the solution does not lie in power blocks but in harnessing the aspirations of citizens of emerging countries to the greatest creator of wealth ever known – open market globalisation – and competing to share its fruits with them.

Adrian Davies
22nd July 2008