‘The Myth of America’s Decline’

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.
[U.S. flag in shape of U.S.]

Few ideas challenge conventional wisdom more than one that questions the pervasive notion that America has seen its best days. Whether you voted for Obama or Romney, it’s all but gospel that the U.S. empire is on the skids. And as the high-profile careers of countless doom-and-gloomers confirm, you can have a lucrative career giving the same speech, year after year, about the decline of America.

But as German journalist Josef Joffe points out in his new book, “The Myth of America’s Decline: Politics, Economics, and a Half Century of False Prophecies,” that’s nothing new.

Whether it was launch of the Sputnik satellite in the 1950s; Vietnam in the 1970s; Jimmy Carter’s “malaise” years in the 1970s; Japan as the “Rising Sun” in the 1980s; or terrorism and the Chinese economic juggernaut in the 2000s, the “U.S. in decline” is a never-ending theme for both liberal and conservative thinkers, egged on from the peanut gallery by the largely anti-American foreign media.

China: ‘This Time It’s Different’

Every decade has its new version of the next global superpower. In 1960, Soviet Premier Nikita Krushchev threatened to “bury” the United States — and did so right in the middle of Manhattan. Novelist Michael Crichton, author of the “Rising Sun,” warned that the United States must simply accept the truth that a country the size of Montana (Japan) would become its economic overlord.

If it weren’t China taking on that mantle today, Americans would have to invent another candidate.

Yet, if you look at the statistics, China is very much a typical development story. Whether it was Japan in the 1950s and 1960s, or the “Asian Tigers” in the 1970s and 1980s, economic growth rates tend to peak at about 10% per year before they peter out. With growth rates pulling back from that level, China already has started down that road.

Exclusive  Dow Jones Industrial Average Rebounds to Close above 16,000 for First Time

Growth stories also generate exaggerated predictions. Caught up in the fever of projecting growth rates out decades, Nobel Prize-winning economist Paul Samuelson predicted the Soviet Union would overtake the U.S. economy by 1984. With the entire country wiped off the map in 1991, it didn’t quite work out that way.

I’m betting University of Chicago economist Robert Fogel’s prediction that in 2040, the Chinese economy will reach $123 trillion, or nearly three times the economic output of the entire globe in 2000, will turn out to be even more absurd.

The United States: A Remarkably Self-Critical Culture

The one remarkable aspect of the United States is its penchant for self-criticism and its ability to adapt to change. In 1741, the preacher Jonathan Edwards penned a famous sermon which railed that we are all “sinners in the hands of an angry God.” Other cultures moan and groan, but they ultimately blame everyone but themselves. The United States is unique in that it sees every crisis as its own fault.

After all, we’re lazy, we’re stupid, we’re fat and we’ve lost our edge. Yet, if the citizens of the United States thought like those in Europe, Americans would blame all their woes on the Greeks (too lazy), the Germans (too industrious) or history (too unfair). Even in as blatant a case as China’s currency manipulation, which essentially financed China’s skyscrapers and put U.S. manufacturing on its back, the U.S. Treasury was unwilling to call the Chinese spade a spade.

At the same time, the U.S. has become ashamed of celebrating its own successes.

When Brett Stephens pointed out in a recent issue of the Wall Street Journal that almost all of this year’s Nobel Prizes went to scholars at U.S. universities, he attracted angry criticism from all sides of the political spectrum.

Exclusive  New Year Lands New Faces at the Fed

Critics pointed out that these prizes were doled out for achievements of the past. (You know, the glorious 1970s — Carter’s “malaise” years — and the roaring 1980s when “Japan was #1”). And besides, some of the winners weren’t even originally from the United States.

Ironically, the fact that a German won the Nobel Prize at Stanford and a Frenchman won it at Harvard merely confirms the U.S.’s strength. Stephens cites the example of Hungary, which has produced a dozen winners of the Nobel Prize. Every single one of Hungary’s laureates ultimately left or fled the country. Stephen’s advice: “If you are brilliant, ambitious and Hungarian, better get out while you can.”

And I don’t think he meant flee to the Moscow State.

What about the oft-cited statistic that a big chunk of Silicon Valley companies are started by those born outside of the United States? I’m not sure why that’s an issue in a country of immigrants. U.S. Steel — the iconic American success story — was also started by an immigrant, Andrew Carnegie. And as one hedge fund manager said, “The next Google is not coming out of Brazil.”

For all of the talk of the United States’ decline, the world’s best and brightest vote with their feet, and more foreign students are flocking to study in the land of the “fat and dumb” than ever before. Most revealingly, well over 90% of Chinese PhD students stay on in the United States — Shanghai’s shiny new skyscrapers notwithstanding. And as proud as China Bull Jim Rogers is of his Chinese-speaking daughters in Singapore, I bet they’re a lot more likely to end up at his alma mater, Yale, than at Peking University.

Exclusive  Small-Cap Fund Shows Big Results

Enough about brains. How about some stats on brawn?

U.S. and foreign athletes associated with U.S. colleges and universities won 281 medals at last year’s London Olympics, 135 of them gold. That means U.S. colleges produced more gold, silver and bronze medals than the top three countries — the United States, China and Great Britain — did combined. Put another way, the Olympics were a big NCAA reunion for a bunch of college kids from around the world.

Why U.S. Decline is a Myth

I am well aware of the endless reams of statistics about the United States that tell a different story — out-of-control government debt, poor infrastructure and staggering health-care costs.

My point here is that the “good old” days when the United States was not gripped by some sort of crisis — think of Vietnam, the arms race, the energy crisis, double-digit inflation rates — were few and far between. The United States is a noisy, contentious democracy. Ironically, all of that churning and change is what gives the country its unique resilience. It is static societies that are resistant to change that implode. That’s ultimately what doomed the Soviet Union and kept Japan from being #1.

The United States still dominates, as Josef Joffe puts it, much like a decathlete does. A decathlete may not be the best in each individual sport. But he dominates when you take the 10 sports together.

And as the late, great Jim Rohn observed, “People aren’t building rafts to escape to Cuba.”

In case you missed it, I encourage you to read last week’s article, “My #1 Contrarian Indicator.” You may also want to read my earlier thoughts on Silicon Valley’s Secret Sauce. Feel free to leave your thoughts below.

Like This Article?
Now Get Nick's FREE Special Report:
Alternative Investing: Investing in Timber

Global Guru editor Nicholas Vardy reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE

previous article

In an effort to one-up the competition, maximize profits and ensure customer satisfaction, Wal-Mart will start its Black Friday sales on Thursday, Nov. 28, at 6:00 pm.


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details


Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details


Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details


Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details


Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details


Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details



Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.