Authored by Todd Buchholz, originally posted op-ed at MarketWatch.com,
Nations are just as likely to unravel after periods of prosperity as after periods of depression
Have you ever met an Ottoman? Or a Habsburg? Neither have I.
Like a chopped-up Magritte painting, all that is left of the Habsburgs is a homburg hat. Yet in the 1800s, the Ottoman and Habsburg Empires controlled a huge chunk of the modern world. One in 10 Americans can trace his or her heritage to Habsburg lands, which spanned most of middle Europe from Poland down to Dracula’s castle in Transylvania.
Many people have written about poor countries that have fallen apart. But rich nations fall apart, too. In fact, nations are just as likely to unravel after periods of prosperity as after periods of depression. The 2016 presidential campaign appears so bitter precisely because so many Americans worry that the “other” party’s candidate will annihilate the nation.
I have found five forces that undermine nations after they achieve economic success – and they are biting down on the U.S. today. We have little time to spare to renew the nation. Whichever candidate wins in November better come up with tough and effective solutions.
Falling birthrates
As countries grow rich, people have fewer babies. (The average American women now gives birth to just 1.89 children.) To keep up their lofty standard of living, citizens need new workers to serve them, whether as neurosurgeons in hospitals or as manicurists. This requires immigrants. But immigrants can splinter the dominant culture. So countries face either declining relative wealth or a fraying cultural fabric. Great empires of the past, from the Roman to the Venetian to the British, have faced this challenge — and failed to surmount it.
Globalized trade
Nations cannot grow and stay rich without trading. Countries that fold themselves into a self-contained bubble grow fetid, like a badly aerated terrarium. Or a dank prison, which pretty much describes North Korea. South Koreans, who believe in trade, are 17 times richer, live 10 years longer, and stand several inches taller than their neighbors. South Korea produces super-sharp Samsung flat screens, fine Hyundai cars and charismatic K-pop singers.
But there’s a downside to trade. It shakes the customs and character of the nation. Donald Trump has skillfully tapped into this anxiety and is right to ask whether trade deals like the Trans-Pacific Partnership are vigorously negotiated to boost the incomes of typical Americans, or simply to boost the ego of the president.
Rising debt loads
As countries grow richer, they build bigger bureaucracies and inflate their debts. Here’s a puzzle I call “The Paradox of Theft:” As a family grows wealthier, it is less likely to fall into deep debt, default and bankruptcy. But the opposite is true of individual countries — wealthier nations may pile up proportionately more debt than poorer nations.
Amid the Great Recession of 2010, developing countries like Mexico and Russia had smaller debt burdens than Japan, the U.S. and the eurozone. Why do we borrow more? Because we can! And because today’s politicians aren’t held responsible for the debts they leave for our children and grandchildren.
Eroding work ethic
When a rich nation shatters, people don’t go hungry. They just stop waking up early. The proportion of adults who want to work has been sliding over the last 17 years. In West Virginia, only half of working-age adults have a job. Between 2000 and 2013, disability claims across the country surged 43%. Even though jobs have grown less dangerous, the chances of a judge approving a disability claim has jumped 50% since 1980.
We are seeing a structural shift: Millions have decided they just don’t care much for the idea of showing up for work in the morning and staying on the job until the end of the day.
To prod the unemployed back to work, I propose they receive a signing bonus if they accept a new job before their unemployment compensation payments run out.
The challenge of patriotism in a multicultural country
Unless rich nations discover and embrace their national characters, they won’t survive. In many schools, the Pledge of Allegiance and “My Country ’Tis of Thee” have been pushed aside in favor of self-esteem chants. Characters like Columbus, the Pilgrims and George Washington have been disdained as pillagers, rather than as symbols of exploration, religious freedom and courage.
To help ensure that all learn America’s story and values, all immigrants and any U.S. student applying for a federal loan be required to get their passports stamped at no fewer than five historical monuments or museums around the country.
Is it too late?
Should the U.S. and European nations simply hold a “going out of business sale” while the wealthiest individuals sneak off to private islands or to New Zealand? The odds are against us, as the Spartans, Romans, Ottomans, and Habsburgs would attest — if they were still around.
But as Bill Murray said in Stripes: “We’re not Watusi. We’re not Spartans. We’re Americans, with a capital ‘A”…that means that our forefathers were kicked out of every decent country in the world. We are the wretched refuse. We’re the underdog. We’re the mutts.”
And we can win again.
