John Quiggin on the End of American Exceptionalism

At Crooked Timber (here), John Quiggin tries finally to put the rest the idea of "American exceptionalism." He makes a very strong argument that US policy makers should not be overly concerned about relative political-economic decline because it's already happened:

As a public service, I’d like to bring an end to this tiresome debate by observing that the decline of the US from its 1945 position of global pre-eminence has already happened. The US is now a fairly typical advanced/developed country, distinguished primarily by its large population[1]. Precisely because the US is comparable to other advanced countries in many crucial respects, there is no reason to expect any further decline.

As I’ve observed before, the US is similar to other leading countries in terms of key economic variables like output per hour worked and employment/population ratio. Like other countries it has some distinctive features, that can make it look good or bad on particular measures. Features on which the US is an outlier, in economic terms, include long average hours of work per employed person (particularly notable for women), high levels of inequality in wages and other incomes, low levels of public expenditure and taxation, an exchange rate that has typically been well below most estimates of purchasing power parity, and an international balance characterized by large deficits on the goods and services account, matched by large surpluses on the capital account.

In geopolitical terms, the US spends a lot more on its military than anyone else (in fact, more than everyone else put together) and (contrary to the beliefs of most Americans) hardly anything on development aid or other efforts at promoting global public goods. The amount of sustainable influence generated as a result appears pretty trivial. The number of places in the world where the US can directly determine, or even substantially influence, political outcomes is approximately zero – nothing like what might be associated with an old style Great Power, let alone a superpower or “hyperpower”.As I’ve observed before, Americans of all classes (except those directly connected to the military-industrial complex) get very little payoff for their military expenditure – trillions of dollars of expenditure has been unable to produce positive outcomes in a couple of relatively insignificant countries, or even to put paid to a bunch of pirates in the Indian Ocean.

I generally agree with Quiggin's assessment. Initially, I had some doubts relating to innovation and growth in total factor productivity (TPF), where I assumed the US still had a sizeable advantage. However, a cursory comparative review of patent filings and TPF growth only support Quiggin's hypothesis.




The figure to the left is a comparative assessment of growth in total factor productivity from 1990-2008. Even adjusting for the fact that countries starting from a low per capita productivity can more easily improve productivity than countries that already are highly productive, it's clear that the US has lost its productivity edge.

The figure to the right shows resident patent filings, by country, per $1 million invested in research and development in 2007.