LSE IQ Podcast Summary
Episode: "Will the US remain the world’s superpower?"
Date: May 21, 2024
Host: Sue Windebank (LSE IQ)
Co-production: The Ballpark Podcast (LSE Phelan US Centre)
Overview
This episode investigates whether the United States will continue to be the world's preeminent superpower, economically and geopolitically. The discussion draws on expert insights into the drivers of US economic power, the role of innovation and openness, the rise of China and India, and the evolving dynamics of global leadership. Contributors include economists, historians, and policy experts with first-hand experience in international relations.
Key Discussion Points and Insights
1. What Makes the US an Economic Superpower?
- Main drivers: Size, openness, and innovation.
- The US benefits from a large domestic market that enables economies of scale and competition.
- Openness to people, ideas, and new businesses is a distinctive strength.
- “One of the secrets of US success is kind of openness to people, but also openness to new companies.” – John Van Reenen (03:50)
- US entrepreneurial culture and easy market entry encourage "creative destruction", fueling productivity and innovation.
The Role of “Superstar Firms”
- US multinationals (e.g., Apple, Google, Microsoft) dominate not just digital, but also retail and manufacturing.
- Clusters of innovation, especially around universities, create ecosystems that attract talent and investment.
- “So you have top technical people, scientists together with venture capitalists…that gets the buzz going.” – John Van Reenen (05:58)
- Winner-take-all markets and network effects reinforce the dominance of firms like Google.
- “It’s very hard for other search engines to come in, even if they’re well-financed like Bing.” – John Van Reenen (07:33)
2. The US as World Policeman—Shift in Foreign Policy
- Post-WWII, the US assumed the role of "world's policeman", combating communism and later, terrorism.
- There is now a strategic shift away from large-scale nation-building interventions.
- Withdrawal from Afghanistan signaled a refocus from “remaking other countries” to order maintenance and defense of US interests.
- “The United States has exited nation building, but it has not exited order maintaining in the international system.” – Ashley Tellis (10:33)
- US public appetite for foreign interventions is “close to zero”, unless direct interests are threatened.
- “If there is a threat to US interests…the US public will rouse itself and support intervention.” – Ashley Tellis (11:24)
3. The China Factor: Economic Rivalry and Mutual Influence
The US Role in China’s Rise
- The US encouraged and enabled China’s integration into global capitalism via legislative and business decisions.
- Outsourcing and trade acts (notably the Trade Act of 1974) incentivized offshore manufacturing in places like China.
- “Those changes…were not designed to help China. They were designed to help the capitalists within the US.” – Elizabeth Engelson (16:33)
- Early concerns about US deindustrialization and job losses—especially among labor groups—were often ignored by policymakers.
Deindustrialization and the CHIPS Act
- US industrial output has stayed fairly steady; what has declined is industrial employment.
- Recent reshoring initiatives (e.g., CHIPS Act) focus on high-tech job creation but may not lead to mass employment akin to the mid-20th-century era.
- “It’s misleading to speak about manufacturing jobs coming en masse from the CHIPS act.” – Elizabeth Engelson (19:51)
China’s Current Economic Position and Prospects
- China faces paradoxical challenges: stagnation in sectors like real estate, but global strength in EVs, solar, green energy.
- The future is unpredictable; US policy towards China has often been rigid and reactive.
- “There’s a real long history…of having a very straight jacketed approach towards China.” – Elizabeth Engelson (21:26)
Evolving US Policy on China
- The US now explicitly treats China as a competitor rather than a partner.
- Three key US responses:
- Reinforcing military primacy in the Indo-Pacific
- Tightening export controls on strategic technologies
- Strengthening alliances in Asia and Europe
- “The United States cannot simply challenge or confront China alone. It needs partners to do that.” – Ashley Tellis (24:15)
China–Russia Relationship
- Their alliance is seen as a durable, intensifying challenge to the US due to complementary resources and mutual rivalry with the US.
- “Their partnership against the United States is going to remain durable and is likely to intensify.” – Ashley Tellis (25:15)
4. India: The Next Great Power?
- Enormous "potential resources": young population, high savings, thriving service sector.
- India must translate episodic high growth into a sustained trend to rival China or the US.
- “If India is to become a great power…it has to make…8% growth consistently…and do that for at least another 20 years.” – Ashley Tellis (27:16)
5. Will the US Remain the World's Superpower?
The US Outlook
- Experts agree the US will remain the leading superpower “for at least several more decades” (Ashley Tellis, 29:04) due to:
- Continued relative decline of rivals (e.g., China, EU not unified, India’s untapped potential)
- Resilience of US advantages in hard and soft power
- Threats to this dominance include internal “inward-looking” politics, but the US retains fundamental strengths.
- “With all its problems, the US is the only…country which has the hard power and soft power to provide…the rules-based global order.” – John Van Reenen (31:10)
- The US’s ability to compete will hinge on managing technological change, especially regarding privacy, AI, and big data.
Rethinking the "Superpower" Question
- Some argue the focus on superpower rivalry is outdated given urgent transnational challenges like climate change.
- “The biggest question…is not who is going to be the world’s superpower, but how do we respond to the climate crisis?” – Elizabeth Engelson (33:23)
Notable Quotes and Memorable Moments
-
“One of the secrets of US success is kind of openness to people, but also openness to new companies.”
– John Van Reenen (03:50) -
“The United States has exited nation building, but it has not exited order maintaining in the international system.”
– Ashley Tellis (10:33) -
“Those changes…were not designed to help China. They were designed to help the capitalists within the US.”
– Elizabeth Engelson (16:33) -
“The United States cannot simply challenge or confront China alone. It needs partners to do that.”
– Ashley Tellis (24:15) -
“Their partnership against the United States is going to remain durable and is likely to intensify.”
– Ashley Tellis (25:15) -
“It’s misleading to speak about manufacturing jobs coming en masse from the CHIPS act.”
– Elizabeth Engelson (19:51) -
“If India is to become a great power…it has to make…8% growth consistently…and do that for at least another 20 years.”
– Ashley Tellis (27:16) -
“The biggest question…is not who is going to be the world’s superpower, but how do we respond to the climate crisis?”
– Elizabeth Engelson (33:23)
Timestamps for Important Segments
- 02:17–06:50 – What makes the US economy so productive? (John Van Reenen)
- 07:13–08:00 – Impact of “winner-take-all” companies and network effects
- 08:53–11:45 – US foreign policy shift: from nation-building to order maintenance (Ashley Tellis)
- 12:10–13:46 – Threats to US economic supremacy; rise of China
- 14:21–18:26 – US role in China’s rise, outsourcing, and US deindustrialization (Elizabeth Engelson)
- 19:00–20:36 – The CHIPS Act and myths about US manufacturing decline
- 20:42–21:51 – China’s economic paradox and future prospects (Elizabeth Engelson)
- 22:06–25:01 – Evolution of US policy towards China (Ashley Tellis)
- 25:07–26:00 – The China–Russia partnership
- 26:09–28:42 – India’s prospects as a future superpower (Ashley Tellis)
- 28:52–32:57 – Will the US remain a superpower? (Ashley Tellis, John Van Reenen)
- 33:13–34:37 – Climate crisis as the defining global challenge (Elizabeth Engelson)
Tone and Style
The episode blends rigorous academic analysis with clear, accessible explanation. The tone is thoughtful, informed, and at times critical—probing the assumptions behind US supremacy while acknowledging the complexities of global shifts. Experts challenge listeners to think beyond traditional superpower rivalries and address pressing global issues that transcend national competition.