In telling these stories I will try to convey them without bias. I believe that to accurately understand both
history and what is happening now, I need to see things through the relevant parties’ eyes, including those of
enemies. While there are of course allies and enemies and it is tempting to demonize the enemies, most people
and countries are simply pursuing their own interests in the ways they believe are best for them, so I find it
productive to try to see things through their eyes and counterproductive to demonize them. If you hear me say
things that sound sympathetic to former or existing enemies—like “Hitler built a strong economy before
going to war”—please know that it is because I am seeking accuracy and need to be truthful rather than
politically correct in conveying my thinking. While I might be wrong and we might not agree, that’s all OK with
me as long as I am describing the picture as accurately as I can.
Before I begin recounting the story of the United States I’d like to remind you of the archetypical Big Cycle that I
described earlier so you can keep it in mind as you read about how events transpired up to the present. Though a
super-oversimplification of the whole thing, in a nutshell it appears to me that the archetypical Big Cycle transpires
as follows.
A new world order typically begins after radical changes in how things work within countries (i.e., via some form
of revolution) and between countries (typically some form of war). They change in big ways who has wealth and
power and the approaches used to get wealth and power. For example in 1945, when the latest world order began,
the US and its capitalist and democratic allies squared off against the communist and autocratic approaches of the
Soviet Union and its allies. As we saw from studying the Dutch and British empires, capitalism was key to these
countries’ successes but also contributed to their failures. It was successful because the pursuit of profit motivated
people, and the competitive process of allocating capital and profit making directed resources relatively efficiently
to what people wanted enough to pay for. In this system those who allocated efficiently profited, which led to them
gaining more resources, while those who couldn’t allocate well died economically.
At the same time, this system of increasing wealth produced widening wealth and opportunity gaps, as well as
decadence in the form of people working less and increasingly living on borrowed money. As the wealth and
opportunity gaps grew, that produced increasingly widespread views that the system wasn’t fair. When the debt
problems and other factors led to bad economic times at the same time as the wealth and values gaps were large,
that produced a lot of internal conflict that led to large, revolutionary changes in who had wealth and power and
the processes for getting them. Sometimes these big changes were made peacefully, and sometimes they were
made violently. When the leading countries suffered from these internal challenges at the same time as rival
countries had become strong enough to challenge them, the risks of external wars increased. When these seismic
shifts in how wealth and power are distributed occur within countries (i.e., via revolutions) or between countries
(typically through wars, though sometimes peacefully), the old world order breaks down and a new world order
begins, and the process starts all over again.
To refresh your memory, the chart below shows the relative powers of the leading countries as measured in indices
that measure eight different types of power—education, competitiveness, innovation/technology, trade, economic
output, military, financial center status, and reserve currency status. In examining each country’s rise and decline I
look at each of the eight measures and convey the highlights of their stories while diving into key moments to
understand how they transpired in a more granular way. We will now do that with the United States and China,
which as you can see in this chart are currently the leading powers.