The Washington PostDemocracy Dies in Darkness

Opinion The U.S. economy continues to soar while American politics craters

Sen. John Barrasso (R-Wyo.) uses a visual aid as he talks to reporters about the Democrats' $3.5 trillion budget reconciliation package at the U.S. Capitol on Sept. 28. At left is Sen. Roy Blunt (R-Mo.). (Drew Angerer/Getty Images)

The troubles of a company that nobody had ever heard of now have people worried about another global economic crisis. Evergrande is a property developer in China with the dubious distinction of being the world’s most indebted real estate company, with outstanding loans of more than $300 billion. For the moment, at least, it appears unlikely that the firm’s travails will upend the global economy. But its crisis highlights a crucial fragility in China’s economy. China’s private debt (money owed by households and corporations) is more than 260 percent of the country’s gross domestic product, far and away the highest in the world for any developing nation.

China’s fundamental growth trajectory is slowing. Its export-driven model has become much harder to sustain as wages have risen, making it less competitive with other countries. Meanwhile, domestic spending is not growing fast enough to replace the export boom. The government’s assault on the technology sector will probably slow down the previously explosive growth in that area.

And overshadowing all this is demographics. China is growing old, and its citizens are having fewer children. Fertility dropped by a stunning 20 percent last year, despite the government’s efforts to reverse the “one-child” policy and encourage people to have more children.

Looking around, one sees problems in most major economies. German Chancellor Angela Merkel is about to leave office after 16 years of steady, wise leadership. In an age of populist drama, anger, emotion and invective, she has been an oasis of calm. But she let many of Germany’s economic problems fester. The country has been starved of public investment, leading to a decay of its infrastructure in almost every area. Germany’s pension system sits unreformed and in danger of a real crisis. Its energy policies are a strange patchwork of new and old, banning nuclear and thus getting 44 percent of its electricity from fossil fuels — one of the highest in the European Union.

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More broadly, Germany remains a laggard in the digital age. Its much-vaunted manufacturing economy dates from the Second Industrial Revolution: cars, chemicals and machine tools. In the digital realm, Germany boasts only one large company, SAP, that is now almost 50 years old. And, like China, Germany’s demographics are grim. In 2020, for the first time in a decade, its population actually shrunk.

These are not isolated examples. Look at the world’s other major economies — Japan, Britain, India — and you will see similar structural weaknesses and fragilities. Japan continues to grow at a snail’s pace. A few decades ago, Indians often spoke of their overtaking China. Today, China’s economy is more than five times the size of India’s. Britain will spend the next few years paying the price for Brexit, as its current fuel crisis demonstrates.

And then there is the United States. The unmistakable winner of the past decade has been what Ruchir Sharma termed “the comeback nation” in an insightful Foreign Affairs essay. The United States recovered steadily from the 2008 crisis and never looked back — even accounting for the pandemic-induced recession. Today, amid talk of decline, most Americans would be shocked to hear that their country has about the same share of global GDP as it did 40 years ago — 25 percent. Its companies dominate the world like never before. Seven of the top 10 companies in the world by market capitalization are American. The United States continues to lead in most of the industries of the future, from biotechnology to nanotechnology to artificial intelligence. The dollar is dominant as a global reserve currency like no other in history, being used in almost 90 percent of international transactions. And it has the healthiest demographics of any of the world’s five biggest economies, thanks to immigration.

At some gut level, Americans seem to feel this. Gallup asks people about their lives to determine what share of the population is “thriving.” That number hit 59 percent this summer, the highest in the 13 years of the survey. In January 2020, 90 percent of Americans said they were satisfied with their lives, another all-time high since the question was first asked in 1979. (It has subsequently dropped, presumably because of the pandemic.)

But that is not what it looks like in Washington. America’s weakness is its politics. Despite our extraordinary structural advantages, our political leaders cannot pay our national credit card bills without high drama. They are struggling with infrastructure spending that the past three presidents have advocated as urgent and that a hefty majority of the public supports. Congress has not passed a regular budget in 25 years. Hundreds of key posts in the administration lie vacant, with dozens held hostage by senators on unrelated issues. And one of our two major parties — goaded on by its demagogic leader — is busy seeking to disrupt the set of institutions, laws and norms that ensure free and fair elections, setting the country up for a massive political crisis in 2024.

America has been dealt the world’s best hand by far. As any poker player knows, though, if you play badly, you can still lose everything.