BALANCE

The enemy is at the wall—but no worry, since the city inside is pretty well destroyed already.

The American century is over, and we’re in a funk—and it’s our own fault, or at least the fault of our rulers. Thus is it ever the case with empires, which rise until they gobble up as much of the world as they can and then collapse like so much soufflé, except that soufflé doesn’t kill people when that happens. “[T]he existential threat to great civilizations is less barbarians at the gates than self-inflicted economic imbalance within,” write Hubbard, dean of the Columbia Graduate School of Business, and Kane, chief economist of the Hudson Institute. Charting the decline of great powers, such as Imperial Spain and the Ming dynasty, the authors identify the chief threat to the U.S. as not external but domestic and, more specifically, the financial, as symbolized but not wholly encapsulated by the recent fiscal cliff episode. The only reason we are getting away with wanton, record deficits, they assert, is that Europe’s deficits are worse; the only reason the economy chugs along, they add, quoting economist Tyler Cowen, is that the U.S. “is still enjoying the benefits of growth based on the low-hanging fruit of the previous century.” At blame in the collapse of empires is the ruinous cost of war, free spending and what economists call “moral hazard,” the penchant for taking risk when there are no apparent negative consequences—that is, when bailouts and social safety nets exist.

The authors’ tone is less alarmist than, say, David Stockman’s, but there’s not much room for good news here, either. “We might be wrong,” they write. “History has yet to be written, after all.” But if they’re right, then there’s plenty of cause for worry.