Satyajit Das: Of all its weapons, willingness to change is America’s strength

Das Capital: Many of America’s economic competitors find it difficult to embrace change

America’s continued global dominance is based on its ability to project both hard and soft power.

The US remains a formidable military power, accounting for about 40 per cent of total global defence spending, around six times as much as second-placed China. The technical and economic capacity to maintain, integrate and operate up-to-date complex defence systems provides America with a significant advantage.

The strategic shift to stand-off and remote weapons systems, such as drones, as well more technologically sophisticated weapons systems, enhances its capabilities to protect its interests. Whatever the moral and legal implications of drone strikes against its enemies, America’s ability to project power in support its interests remains unsurpassed.

In the post-cold war era, America has served as the “indispensable nation” (a phrase suggested by the former Secretary of State Madeleine Albright) policing the world’s conflicts. But America is increasingly wary of “entangling alliances” (Thomas Jefferson) and overseas adventures “in search of monsters to destroy” (John Quincy Adams).

America’s political and economic interests increasingly dictate withdrawal from military engagements such as Iraq and Afghanistan. American participation in the current military action in the Middle East has been reluctant, with an emphasis on air strikes and remotely driven weaponry rather than direct boots-on-the-ground involvement.

Reduced reliance on foreign energy supplies, thanks to shale oil, may allow the US to reduce its commitment to guarding crucial sea lanes such as the Strait of Hormuz and Malacca Strait.

Many developed countries have spent too little on defence, preferring to piggyback off US capability. The reliance on US military resources was highlighted during the 2011 European military action in Libya led by France and Britain.

As the former US Defence Secretary Robert Gates pointed out in an acerbic speech, European air warfare capabilities were dependent on US target identification systems, US Air Force air-to-air refuelling, drones and smart bombs, and US expertise: “The mightiest military alliance in history is only 11 weeks into an operation against a poorly armed regime in a sparsely populated country… yet many allies are beginning to run short of munitions, requiring the US, once more, to make up the difference.”

American isolationism would have a double effect. Its defence costs would be reduced, improving its budget deficit and reducing its borrowing requirement. It would also require other nations to increase their defence spending, reducing their funds available for other activities.

America remains a leader in science and technology. While the quality overall of its educational systems is far from exceptional, most studies rank elite US universities as among the best in the world.

While other countries are investing heavily to bridge the difference, its innovation remains strong. Its research and development (R&D) expenditures are about four times greater than China’s, whose government has decreed that by 2020 R&D expenditures will constitute 2.5 per cent of GDP. While quality is difficult to accurately measure, scientific output in the US remains superior. A strong venture capital system supports fledgling businesses.

These factors underpin America’s leadership in high-technology products, with competition coming from only a few nations such as Germany and Japan.

The labour market remains flexible, albeit at high human cost.

America’s ability to tolerate failure is crucial. Few countries consider bankruptcy merely as a step in the evolution of an entrepreneur or innovator. There is also America’s ability to admit mistakes, at least tacitly. It lies at the heart of resolving problems. US actions in dealing with its financial problems stand in sharp contrast to Europe’s approach to resolving its debt crisis.

America’s ability to reinvent itself and change is important. Many of its economic competitors, like those in Europe, find it difficult to embrace change, while

in November 2012, then Chinese President Hu Jintao spoke about the need for economic and political reform. But simultaneously he cryptically cautioned against taking the “evil road of changing flags and banners”. His aversion to change drew the following derisory comment online: “So we will walk in place until we die.”

People throughout the world still aspire to an American way of life. In the 2004 documentary Control Room, about Al Jazeera, a journalist is highly critical of American foreign policy as well as American ethics and morals. But he confesses that if he had a chance to work in America, he would accept the opportunity.

Satyajit Das is a former banker and author of ‘Extreme Money’ and ‘Traders, Guns & Money’