"In the United States, the scent of decline is in the air."

Imperial overreach, political polarization,
and a costly financial crisis are weighing on the economy.
 
Doomed to slow growth, the US of today,
like the exhausted Britain that emerged from World War II,
will be forced to curtail its international commitments.
 
This will create space for rising powers like China,
but it will also expose the world to a period of heightened geopolitical uncertainty.
 
...It was not simply that America and Germany grew faster than Britain after 1870.
 
...Over the long course of British modernization,
the industrial classes were absorbed into the establishment.
 
...Britain failed to put in place an effective competition policy.
 
In response to the collapse of demand in 1929,
it erected high tariff walls.
 
Sheltered from foreign competition,
industry grew fat and lazy.
 
After WWII, repeated shifts between Labour and Conservative governments
led to stop-go policies that heightened uncertainty and created chronic financial problems.
 
...The country failed to develop a coherent policy response to the financial crisis of the 1930’s.
 
Its political parties, rather than working together to address pressing economic problems,
remained at each other’s throats.
 
The country turned inward.
 
Its politics grew fractious, its policies erratic, and its finances increasingly unstable.
 
In short, Britain’s was a political, not an economic, failure.
 
And that history, unfortunately, is all too pertinent to America’s fate.
 
Barry Eichengreen
Professor of Economics and Political Science
University of California, Berkeley.