Decline and fall
Will this year mark the final end of Pax Americana?
Towering columns
For Bloomberg, Niall Ferguson reflects on the retreat of American empire and its consequences for Europe and the conflict in Ukraine.
The lesson of history is that when such commitments are made, it is extremely hazardous not to sustain them. If, in the course of 2024, Ukraine’s position becomes so vulnerable that its forces must withdraw from some contested territory, three immediate consequences will follow.
First, more refugees will flow from Ukraine to Europe. There are currently 4.5 million Ukrainian refugees, most of them in EU countries and the UK. Even though many have found jobs, each refugee costs the host countries on average roughly €1,075 per month. If another 4.5 million more Ukrainians flee as Russia advances, it would cost another €58 billion. Second, private investors will be even less likely to risk their money on Ukraine. The country’s bonds are already down significantly since the failure of the summer counter-offensive.
Finally, if they are to arm themselves to deter an emboldened Russia that already shares borders with five EU members (plus Norway, which is in NATO but not the EU), European governments will have to get a lot more serious about their defense spending, with all the obvious political headaches that implies. Between 1949 and 1989 — during the First Cold War — NATO’s European members spent up to 5.8% of GDP on defense. That was the British figure. The French equivalent was 5.1%. The West German was 3.6%. In 2022 those shares were 2.1% (UK), 1.9% (France) and 1.4% (Germany). For these countries to return their defense budgets to their Cold War shares of GDP would require a colossal effort. It would mean around $124 billion more per year for the UK, $97 billion for France, and $96 billion for Germany. For NATO as a whole to hit 3.5% of GDP on defense spending would require $431 billion more per year — nearly twice the amount all countries have pledged to Ukraine since last year ($247 billion).
For the Financial Times, Simon Hinrichsen makes the case for seizing Russian reserves as reparations for violating Ukrainian sovereignty and international law.
The EU and the US should take Russia’s frozen assets and give them to Ukraine. It is the right thing to do and there are historical precedents for both confiscating foreign assets during a time of war and allocating war reparations claims after. A classic problem of sovereign finances is how to enforce any such agreement. Allocating Russia’s already frozen money to Ukraine would sidestep any problem of enforceability.
War reparations are common in peace settlements. When a state violates international law, the injured party can claim reparations as an established norm under customary international law. The historical norm goes back much further, at least as far as the peace settlement after the first Punic war in 241BC. Russia has engaged in an illegal war of aggression, which means that Ukraine is justified in claiming monetary compensation for restitution and compensation, as well as “satisfaction” such as an acknowledgment of its crimes in the form of an apology. The latter seems unrealistic, so let’s focus on the monetary compensation.
The normal historical procedure since the Napoleonic wars has been to set up a reparations commission, which is governed by a peace treaty. Citizens, businesses, and the state can claim restitution and compensation for destroyed property or ask for acknowledgment of its violations. In Ukraine’s case, there is already a register of damages hosted by the KSE Institute, which as of June 2023 has an estimated loss of more than $250bn, stemming from damages to real estate and infrastructure, as well as economic loss from engaging in a full-scale war. Would a reparations transfer of this size be within the historical norm? The answer to that is yes.
On UnHerd, Aris Roussinos warns of rising geopolitical tensions across the world in the wake of American decline in the year ahead.
Unlike the two World Wars, the rival great powers are not challenging the superpower directly — at least, not yet. Instead, American hegemony is being challenged obliquely, as its rivals nibble at the edges of empire, targeting weaker client states in the confidence that the United States now possesses neither the logistical capacity nor the domestic political stability necessary to impose its order on the world. In the Nineties and 2000s, at the height of its unipolar moment, the United States made almost all the world its client state, writing cheques for their security it now struggles to cash: like bankruptcy, decline comes slowly at first, then all at once. The overriding theme of 2024 then, like 2023, will be that of imperial overstretch precipitating retreat from global dominance. From the Red Sea to the Donbas, the jungles of South America to the Far East, America’s security establishment finds itself struggling to contain local blazes that threaten to become a great conflagration…
…Like an ailing mammoth, weakened by a succession of individual spear thrusts, the hegemon staggers bleeding across the global scene. Though stronger than any individual competitor, America is not capable of sustaining three simultaneous major conflicts against powerful regional rivals, without mobilising for a war effort unfeasible within its current political dynamics. At the height of its power, when America’s rivals were cowed and isolated, the United States assumed global security burdens that looked easily achievable at the time, while running down the industrial base necessary to sustain them. Bad choices were made, which are now difficult to undo.
As a result, the United States has already shifted into a defensive mode, attempting to preserve its gains of better times against resurgent challengers, and delaying the grand-political reordering of global affairs for as long as possible. Yet unlike Russia, Iran or China, America’s democratic system incentivises short-term planning, and offers its leaders the escape route of shifting responsibility for failure to the next, rival administration. Heading towards what looks like an inevitable political defeat in 2024, the Biden administration is already drained of political authority, as tired and absent-minded as the gerontocrat at its helm.
Also on UnHerd, Sam Dunning reveals how Britain’s elites have allowed the Chinese Communist Party to extend its influence over the UK.
The conversation about British “de-risking” ought to be fraught. Between 2012 and 2022, China was the UK’s seventh-fastest growing export market — a significant statistic given that the six countries ahead of China were all smaller geographically than England (North Macedonia, Panama, Luxembourg, Lithuania, Switzerland, Gibraltar). Most important, however, is the fact that the UK’s bloated financial sector is massively exposed to China, by some metrics more than any other Western country.
In October, UK banks held secretive meetings about this exposure and drew up an overview that they shared with Western governments. The UK’s largest bank, HSBC, is in a particularly tight spot following attempts by a Chinese shareholder — seen off for now — to split the bank in two, with its profitable Asian business going to a theoretical China-headquartered daughter firm. The coup attempt was dealt with partly by reference from executives to healthy profits. But given that nearly half of the bank’s profits are made in China, is there any way HSBC can perform an elegant “de-risking”? Probably not, which means that if the “Taiwan risk story” comes true, the UK will suffer an exceptional hit.
With Britain facing such towering risks and diplomatic sensitivities, good judgement is required. Lost amid the outpouring of disdain for Cameron’s lobbying for Beijing is the real scandal: our new Foreign Secretary’s “epoch-defining” record of poor judgement on China.
On his Substack, Neil O’Brien explains how government policy has actively encouraged the flow of low wage immigration in ways which harm the economy.
We can’t yet know what the two year post study work visa will mean in terms of the numbers who will stay on in the UK longer term - it is likely to dramatically increase it. After five years living in the UK people can get Indefinite Leave to Remain, and then move on to gain citizenship. The years as a student don’t typically count for 5 year ILR but do count towards 10 year long residence ILR.
If we look at the cohort of students who came between 2007 and 2016 we see that stay rates are (unsurprisingly) higher for students coming from the poorer countries, towards which student migration has now swung. Looking at the largest countries of student origin, we see that even though there were more students from the US than Pakistan over the period, four times more students of Pakistani origin from that cohort were still in the UK in 2022 compared to Americans.
Only about 6% of students from the US were still here in with valid leave in 2022, but it was over a quarter for countries like Pakistan, Nigeria, Bangladesh and Sri Lanka. Of former students from these countries, among those who remaining legally, around half had settlement or citizenship by 2022. Of students who entered from Pakistan, Bangladesh and Sri Lanka during the period, 1%, 2% and 4% respectively had successfully claimed asylum by 2022. These figures obviously do not include those who come as students and illegally overstay, the subject of a recent Sky News report.
For The Telegraph, Jeremy Warner examines why disability benefit has made employment appear to be so low during a time of economic stagnation.
At the last count, there were an estimated 16 million people in the UK with some form of disability, representing nearly a quarter of the total population. In nominal terms, this is around 6 million higher than twenty years ago. Much of this growth can be explained by the demographics of an ageing population. Yet strikingly, there has also been a surge in working age disability claimants.
Again, around a quarter of working age adults now fall into the disabled bracket; many of them still hold down a job, but a lot of them don’t. In recent years, it has been mental illness and long-Covid which account for much of the growth. For many, disability benefit has become just another form of the dole, only a little more generous. As of February 2023, there were 6.3 million people claiming some form of disability benefit in the UK, representing 9.6pc of the total population. The costs are skyrocketing.
According to forecasts by the Office for Budget Responsibility, they’ll reach the giddying heights of £52.3bn annually in five years time, 74pc more than last year. Small wonder that there are labour shortages when so many people who might work are sitting at home, or in a few extreme cases, fraudulently out on the golf course. I hesitate to say we have become a nation of skivers; obviously those with genuine disability, including debilitating mental conditions, need to be supported. But the incentives not to work, especially when it comes to lower paid forms of employment, are all too evident.
Wonky thinking
At Law & Liberty, American Compass director Oren Cass dismantles the case from free traders for ‘comparative advantage’. Modern economists have adopted the mistaken assumptions of nineteenth century dogma and neglected the importance of domestic industry and the trade deficit.
After the Cold War’s end, a bipartisan consensus solidified amongst political leaders who accepted the free-trade consensus and accelerated globalization, in quick succession forming the North American Free Trade Agreement (NAFTA), launching the World Trade Organization (WTO), and granting China permanent normal trading relations (PNTR) as a WTO member. Standing in the White House briefing room in 2000 to present, a letter signed by 149 economists supporting PNTR with China, Nobel laureate Robert Solow explained, “An awful lot of the intellectual power of the economics profession has signed this letter. And it’s such a simple proposition it doesn’t really require that. You could not generate a hard exam question out of the material here.” Writing in the Wall Street Journal, Clinton’s Treasury Secretary, Larry Summers, crowed, “On this issue there has been only one answer.”
Reality, unfortunately, found a second answer. US exports and imports were roughly balanced in 1992; in 2022 the trade deficit exceeded $900 billion for the first time. Even in advanced technology products, the same 30-year period saw the United States swing from a $60 billion surplus to a nearly $250 billion deficit. Economic growth and business investment slowed, with the 2000s and 2010s turning in the worst and second-worst decades of the post-war period. In manufacturing, productivity growth turned negative—American factories needed more labor in 2022 than in 2012 to produce the same output. The crown jewels of American industry, revolutionary innovators like General Electric, Boeing, and Intel, lost their positions of global leadership. The US-China trading relationship became the most imbalanced in world history and cost millions of American jobs. Tesla Motors, an icon of contemporary American innovation, reports that most of its key stakeholders reside in China and CEO Elon Musk pledged in July to enhance “core socialist values.”…
…In the years ahead, America will continue to turn away from the excesses of globalization, as it should. Doing so effectively will require not only the understanding that something has gone wrong, but also an understanding of what went wrong and why. Ideally, economists might come to recognize their own mistakes and participate in this rebalancing. But to paraphrase Krugman, if careful explanation does not prompt a rethinking, then ridicule will be well deserved.
What economists have missed in their blind embrace of free trade is a two-fold problem, part conceptual and part technical. The conceptual problem is quite straightforward: making things matter. This should not be a controversial assertion, but in fact, many economists will take issue with it. Michael Boskin, chair of President George H. W. Bush’s Council of Economic Advisers, famously quipped, “Computer chips, potato chips, what’s the difference?” Michael Strain, director of economic policy studies at the American Enterprise Institute (AEI), says of the United States being a manufacturing center, “we should not want to be.” Adam Posen, president of the Peterson Institute for International Economics, has argued that “what’s really going on here” with concern for American manufacturing is “the general fetish for keeping white males of low education outside the cities in the powerful positions they’re in in the US.”
But a nation’s capital investments, the capabilities it develops in its firms and workers, the supply chains it fosters, and the types of research and development it pursues all have important implications for the trajectory of its growth, the opportunities available to its citizens, and its power on the global stage. What is made in a country determines what else is made in the country; and what will be made tomorrow.
In FT Magazine, environmental and reproductive epidemiologist Dr Shanna Swan discussed how “endocrine disrupting” chemicals (EDCs) have affected human fertility over the past century. Her research looks at why the global sperm count has fallen since the 1930s, speeding up in Western countries and leading to the rise of surrogacies and assisted reproduction.
The plastics era that began in the early 20th century delivered seemingly endless convenience, affordability and hygiene. Amid the bonanza of baby bottles, toys, food containers, medical devices and disposable cutlery, manufacturers propagated a new narrative: that synthetic polymers were not only safe but essential to a good life. “Plastics: an important part of your healthy diet”, read a 1990s ad sponsored by the now-defunct American Plastics Council. “You could think of them as the sixth basic food group.”
Ironically, humans have ended up ingesting plastic, as particles and vapour. Chemicals from plastics leach out of containers into food, particularly when heated. Bottle-fed babies are swallowing millions of microplastic particles a day, a 2020 study showed, the health impacts unknown. An ingredient that was used in Teflon, PFOA, has been linked to cancer, ulcerative colitis and birth deformities. (DuPont, Teflon’s manufacturer, was found to have known about the health risks for decades, but only ceased production of PFOA in 2013.)
As I sat with Swan in her kitchen, she gestured to the non-biological cleaner on her work surface and the cast-iron saucepans on her cooker. She has long since ceased to cook with the chemically coated non-stick variety. We can all take steps to reduce the dangers of phthalates and other chemicals in our lives, she believes. She tries to buy unwrapped, organic fruit and vegetables, and her water is always filtered. She recommends using stainless steel or glass water bottles and microwaving food in glass or ceramic containers — never plastic.
But the situation is too serious to be ameliorated by individual choice alone, she warned. “This is not something we can buy our way out of as consumers,” she said. We need plastic from materials that are not hormonally active, like a fork made from potatoes Swan recently saw. Although its production carried too high a carbon footprint to be sustainable, “I trust brilliant chemists and scientists who were able to give us the [Covid-19] vaccine in a short time, for example, to put their minds to this,” she said.
One difficulty in calculating the impact of chemicals on reproduction is that a host of other factors are affecting worldwide fertility rates. Richard Sharpe, a professor at the University of Edinburgh, believes the ultra-processed, high-fat western diet is the primary source of exposure to BPA and some phthalates. Diet, stress, obesity, social factors and a trend to start families later in life are all important contributing factors, Swan acknowledges, but that doesn’t mean that EDCs are not playing a substantial role.
Nowhere has the resistance to her field of research been stronger or more consistent than from the chemicals industry, which would suffer a huge financial hit from tougher regulation of its products. From the 1990s onwards, an array of articles by scientists have cast doubt on Swan and her colleagues’ findings. While some of the questions raised are credible — abstinence rates in sperm counting, for instance, can influence the results, and were not reliably accounted for in some early studies — others are less so. Swan was one of the scientists ridiculed as “endocrine disrupter cry babies” by JunkScience.com, a website run by a climate change denier and former tobacco industry advocate Steve Milloy. (Swan and her colleagues inscribed the epithet on T-shirts as a badge of pride.)…
…The chemicals she has been able to link most directly to reproductive health are phthalates and pesticides, where she and others have found convincing evidence of a causal link between reproductive disorders and the “triazine” category of herbicides. Other researchers, she says, have found equally incontrovertible evidence of harm to reproductive health from other classes of EDCs such as the bisphenols. “When we began this work, we were in the medical and scientific wilderness because no one believed us,” Myers, who wrote the 1996 best-seller, told me. “And then gradually we built up the science.” But the regulatory climate remains heavily weighted towards industry. Some companies have proudly declared their plastic bottles and baby products “BPA free”, referring to Bisphenol-A, a chemical that can seep into food and beverages and, some researchers believe, harm human health — only for it later to emerge that the substituted product amounted to “slightly tweaked molecules”, Swan said.
Book of the week
We recommend Colossus: The Rise and Fall of the American Empire by historian Niall Ferguson. The author investigated the potential benefits of the American empire for the world and highlighted its limitations following the Global War on Terror.
This book argues not merely that the United States is an empire but that it always has been an empire. Unlike most of the previous authors who have remarked on this, I have no objection in principle to an American empire. Indeed, a part of my argument is that many parts of the world would benefit from a period of American rule. But what the world needs today is not just any kind of empire. What is required is a liberal empire—that is to say, one that not only underwrites the free international exchange of commodities, labor and capital but also creates and upholds the conditions without which markets cannot function—peace and order, the rule of law, noncorrupt administration, stable fiscal and monetary policies—as well as provides public goods, such as transport infrastructure, hospitals and schools, which would not otherwise exist. One important question this book asks is whether or not the United States is capable of being a successful liberal empire. Although the United States seems in many ways ideally endowed economically, militarily and politically—to run such an “empire of liberty” (in Thomas Jefferson’s phrase), in practice it has been a surprisingly inept empire builder. I therefore attempt to explain why the United States finds being an empire so difficult; why, indeed, its imperial undertakings are so often short-lived and their results ephemeral.
Part of my intention is simply to interpret American history as in many ways unexceptional—as the history of just another empire, rather than (as many Americans still like to regard it) as something quite unique. However, I also want to delineate the peculiarities of American imperialism, both its awesome strengths and its debilitating weaknesses. The book sets recent events—in particular, the terrorist attacks of September 11 and the invasions of Afghanistan and Iraq—in their long-run historical context, suggesting that they represent less of a break with the past than is commonly believed. Thus, although this is partly a work of contemporary political economy, inspired by my spending much of the past year in the United States, it is primarily a work of history. It is also, unavoidably, concerned with the future—or rather, with possible futures. The later chapters of the book ask how enduring the American empire is likely to prove.
Is the American empire mightier than any other in history, bestriding the globe as the Colossus was said to tower over the harbor of Rhodes? Or is this giant a Goliath, vast but vulnerable to a single slingshot from a diminutive, elusive foe? Might the United States in fact be more like Samson, eyeless in Gaza, chained by irreconcilable commitments in the Middle East and ultimately capable only of blind destruction? Like all historical questions, these can only be answered by comparisons and counterfactuals, juxtaposing America’s empire with those that have gone before and considering other imaginable pasts, as well as possible futures…
…Unlike the majority of European writers who have written on this subject, I am fundamentally in favor of empire. Indeed, I believe that empire is more necessary in the twenty-first century than ever before. The threats we face are not in themselves new ones. But advances in technology make them more dangerous than ever before. Thanks to the speed and regularity of modern air travel, infectious diseases can be transmitted to us with terrifying swiftness. And thanks to the relative cheapness and destructiveness of modern weaponry, tyrants and terrorists can realistically think of devastating our cities. The old, post-1945 system of sovereign states, bound loosely together by an evolving system of international law, cannot easily deal with these threats because there are too many nation-states where the writ of the “international community” simply does not run. What is required is an agency capable of intervening in the affairs of such states to contain epidemics, depose tyrants, end local wars and eradicate terrorist organizations. This is the self-interested argument for empire. But there is also a complementary altruistic argument. Even if they did not pose a direct threat to the security of the United States, the economic and social conditions in a number of countries in the world would justify some kind of intervention. The poverty of a country like Liberia is explicable not in terms of resource endowment: otherwise (for example) Botswana would be just as poor. The problem in Liberia, as in so many sub–Saharan African states, is simply misgovernment: corrupt and lawless dictators whose conduct makes economic development impossible and encourages political opposition to take the form of civil war. Countries in this condition will not correct themselves. They require the imposition of some kind of external authority…
…Let me emphasize that it is not my intention to suggest that Americans should somehow adopt the Victorians as role models. The British Empire was very far from an ideal liberal empire, and there is almost as much to be learned from its failures as from its successes. But the resemblances between what the British were attempting to do in 1904 and what the United States is trying to do in 2004 are nevertheless instructive. Like the United States today, Great Britain was very ready to use its naval and military superiority to fight numerous small wars against what we might now call failed states and rogue regimes. No one who has studied the history of the British campaign against the Sudanese dervishes, the followers of the charismatic Wahhabist leader known as the Mahdi, can fail to be struck by its intimations of present-day conflicts. Yet like the United States today, the Victorian imperialists did not act purely in the name of national or imperial security. Just as American presidents of recent decades have consistently propounded the benefits of economic globalization—even when they have deviated from free trade in practice—British statesmen a century ago regarded the spread of free trade and the liberalization of commodity, labor and capital markets as desirable for the general good. And just as most Americans today regard global democratization on the American model as self-evidently good, so the British in those days aspired to export their own institutions—not just the common law but ultimately also parliamentary monarchy—to the rest of the world.
Quick links
Harvard President Claudine Gay resigned after a new round of plagiarism revelations, ending the shortest tenure in the university’s history.
The asylum backlog fell by a third over the past year to 98,599.
Housing and immigration as top issues for voters grew last year by 8 points and 7 points to 25% and 39%, respectively.
Central banks will cut rates this year in response to falling inflation, economists predict.
Sir Kier Starmer said he is open to the possibility of “off-shoring” illegal migrants.
Lord Pannick admitted that language in the new draft Bill to secure flights to Rwanda had been constrained.
A watchdog found 22 out of 43 police forces in England and Wales to be “inadequate” or “requiring improvement” in investigating crime.
Knife crime increased at its fastest rate in half a decade.
A report from the Commission for Countering Extremism claimed Islamism in the UK has been under-researched due to legal threats.
The new chair of the British Business Bank warned that the UK should not be an ‘incubator economy’ for the United States.
It will take two parliamentary terms for public services to be restored, according to new research.
Civil servants have been ‘over promoted’ to avoid the Whitehall pay squeeze, costing £1.5 billion a year.
Research revealed that the biggest predictor of a seat not being Conservative in 2019 was whether it had a higher than average number of non-white voters.
Nations such as Canada and the US that supported a fossil fuel phase-down at COP28 have plans to increase fossil-fuel production over the next ten years.
The Centre for Economics and Business Research claimed that Net Zero policies will hold back growth in the West and allow Asian economies to take the lead.
Baby boomers are predicted to give $53 billion in inheritance to the next generation in the US, but will largely benefit already wealthy households.
The Israeli Supreme Court struck down Prime Minister Benjamin Netanyahu’s legislation to limit the court’s powers.
Violent protests broke out on Camberwell Road following rising tensions between Ethiopia and Eritrea.
Pro-Palestine protesters shut down shops in the Westfield shopping centre in Stratford on Boxing Day.
Polls showed hard-Right parties on track to make gains in 2024 European elections, especially in Netherlands, France, Italy, and Hungary.
Plans to attack Catholic masses in Cologne, Vienna, and Madrid were thwarted by police after arresting members of an Islamist terror cell.
Christians continued to be murdered by Fulani and Boko Haram in northern Nigeria.
The International Atomic Energy Agency reported that North Korea might now have a second operational nuclear reactor.