Edward Luce wrote a compelling review of BALANCE in the Financial Times. He offers a full spectrum of adjectives, describing the book in turns as readable, data-rich, instructive, original, bizarre, eccentric, and entertaining.
Which brings me to the book’s two chief problems. The first is the history, which, while engagingly rendered, is too obviously retrofitted to the present. The authors’ choices tell a story in themselves. Rome, dynastic China, imperial Spain, the British and the Ottomans make sense. Each was the great power of its day. But the inclusion of Japan, the European Union and California is eccentric. The EU and California have no greater claim to having been great powers than Sacramento or Strasbourg have to being imperial cities. By including two relatively high tax and politically dysfunctional entities, Hubbard and Kane show their hand.
In response, I’d counter that selecting the case studies was one of the biggest challenges we faced, and one we took seriously. To the charge of selecting cases that would help sell books, I plead guilty, but I don’t think that makes us eccentrics, nor should you buy the argument that these contemporary cases are irrelevant. Indeed, one could make a stronger argument that Great Powers pre-1900 are eccentric given the new technological world in which we live. Nuclear weapons are a sea change in the strategic landscape, as is industrial organization, computerization, modern democracy, and mass literacy. But I digress. Luce’s three objections can all be met by recognizing that each of the challenged chapters has a deeper message.
I find it hard to accept an argument against the inclusion of the Japan chapter because it may be the single most important contribution BALANCE makes: the idea of its Development Fuseki supermodel which is the standard growth strategy across Asia and arguably the rest of the world. Glenn and I also point out the limits of that supermodel, which is vital to understanding modern China (Luce’s main objected omission) and why America’s power is not threatened externally. America’s internal threat, however, can only be appreciated by examining failing modern welfare states in Europe and, importantly, California. Here we find the “new Praetorians” that are locking governments into fiscal imbalance with unfunded pensions on a vast scale. And when we explore the fiscal crisis in America, it has to include more than just federal budgets. No state embodies that better than California (which we illustrate has a 2010 GDP equal to Italy, and also has more “economic power” than the UK or Germany). Finally, the Europe chapter is, in our defense, about more than the EU. It includes a section about the failure of statism, Nazi and Soviet, which many will understand as rival Powers in the 20th century that must be addressed, as well as the distinction among three supermodels in Europe today. I think that latter distinction is one Luce shares wholeheartedly, as do most Brits.
The second problem is the book’s diagnosis of what is ailing the US. Hubbard and Kane are right to see gridlock as a big problem. But their view of what is causing it is bizarre. …Forget the rise of China, the stagnation of US middle class incomes, or the drop down the ranks of international education tables. The biggest threat to US power comes from the mild (and ineffectual) attempts to curb how much money the rich can spend to influence elections. It is hard to know how to react to such reasoning, except to say that it is a pity.
No, I’m afraid I can only disagree squarely on this matter. Gridlock is a symptom, not the core problem, which I hope we made plain enough in the text. There is a weakness in any democracy to tend away from responsiveness to the people and toward special interests, either rich external groups or incumbent internal groups. We finger both, attacking the power of speech limits (aka campaign finance “reforms”) to protect incumbent legislators and the enhance the ideological narrowness of monopolistic parties. But we also critique the following: budget process rules, gerrymandering, term limits, and the demise of federalism (state diversity). This is all made relevant by the preceeding two hundred pages of historical rhymes: incumbency and rent-seeking that undercut the economic dynamism of every major Great Power before.
In fairness, Luce strikes many other points into our narrative that should give you, as they gave me, pause. More attention to Germany is deserved, and more as well to the attitudes of the voters and protesters in southern Europe. It may well be wishful thinking to imagine that the young realize the folly of welfare states erected by previous generations. I am guilty of hope, but also vigilance as the reason to hope. In other words, I remain confident that better days are ahead for America and Europe — though perhaps not immediately ahead.