10.05.08
Fukuyama on the fall of America, Inc.
via Mxmail
The Fall of America, Inc.
Along with some of Wall Street’s most storied firms, a certain vision
of capitalism has collapsed. How we restore faith in our brand.
Francis Fukuyama
NEWSWEEK
From the magazine issue dated Oct 13, 2008
The implosion of America’s most storied investment banks. The
vanishing of more than a trillion dollars in stock-market wealth in a
day. A $700 billion tab for U.S. taxpayers. The scale of the Wall
Street crackup could scarcely be more gargantuan. Yet even as
Americans ask why they’re having to pay such mind-bending sums to
prevent the economy from imploding, few are discussing a more
intangible, yet potentially much greater cost to the United
States?the damage that the financial meltdown is doing to America’s “brand.”
Ideas are one of our most important exports, and two fundamentally
American ideas have dominated global thinking since the early 1980s,
when Ronald Reagan was elected president. The first was a certain
vision of capitalism?one that argued low taxes, light regulation and
a pared-back government would be the engine for economic growth.
Reaganism reversed a century-long trend toward ever-larger
government. Deregulation became the order of the day not just in the
United States but around the world.
The second big idea was America as a promoter of liberal democracy
around the world, which was seen as the best path to a more
prosperous and open international order. America’s power and
influence rested not just on our tanks and dollars, but on the fact
that most people found the American form of self-government
attractive and wanted to reshape their societies along the same
lines?what political scientist Joseph Nye has labeled our “soft power.”
It’s hard to fathom just how badly these signature features of the
American brand have been discredited. Between 2002 and 2007, while
the world was enjoying an unprecedented period of growth, it was easy
to ignore those European socialists and Latin American populists who
denounced the U.S. economic model as “cowboy capitalism.” But now the
engine of that growth, the American economy, has gone off the rails
and threatens to drag the rest of the world down with it. Worse, the
culprit is the American model itself: under the mantra of less
government, Washington failed to adequately regulate the financial
sector and allowed it to do tremendous harm to the rest of the society.
Democracy was tarnished even earlier. Once Saddam was proved not to
have WMD, the Bush administration sought to justify the Iraq War by
linking it to a broader “freedom agenda”; suddenly the promotion of
democracy was a chief weapon in the war against terrorism. To many
people around the world, America’s rhetoric about democracy sounds a
lot like an excuse for furthering U.S. hegemony.
The choice we face now goes well beyond the bailout, or the
presidential campaign. The American brand is being sorely tested at a
time when other models?whether China’s or Russia’s?are looking more
and more attractive. Restoring our good name and reviving the appeal
of our brand is in many ways as great a challenge as stabilizing the
financial sector. Barack Obama and John McCain would each bring
different strengths to the task. But for either it will be an uphill,
years-long struggle. And we cannot even begin until we clearly
understand what went wrong?which aspects of the American model are
sound, which were poorly implemented, and which need to be discarded
altogether.
Many commentators have noted that the Wall Street meltdown marks the
end of the Reagan era. In this they are doubtless right, even if
McCain manages to get elected president in November. Big ideas are
born in the context of a particular historical era. Few survive when
the context changes dramatically, which is why politics tends to
shift from left to right and back again in generation-long cycles.
http://www.newsweek.com/id/162401
(clip)