Inflation and American Power

In recent years, American policy at home and abroad has seemed more pressed by events and less sure of its responses than at any time since the late 1940s. Since World War II, the guiding ideals of policy have been neo-Keynesian "full-employment" at home and neo-Wilsonian leadership abroad. It is difficult to count the achievements unimpressive. Along with an unparalleled domestic prosperity, America's leadership and power have coaxed the world into a structure of collective security and liberal economic interdependence-a pax Americana that has been, on balance, the happiest era of this troubled century. The present disarray of American policy arises from two broad trends that have increasingly undermined both its domestic and foreign achievements. The first is the apparently relentless acceleration of domestic inflation-a process that involves increasingly violent swings of the business cycle and a progressive stagnation of real growth and competitiveness. The second is the deterioration of American power abroad and, with it, the disintegration of the pax Americana.

Blaming the ineptitude of incumbent policymakers is always tempting and in recent years perhaps unusually plausible. In longer perspective, however, America's difficulties seem long-standing and cumulative rather than adventitious and random-the result less of inept and inexperienced tactics in one administration than of increasingly inadequate strategies through several. From this perspective, improvement depends not so much upon fresh leadership, per se, as upon a hardheaded reexamination of the mix of strategies long used to maintain American goals at home and abroad.