Rulers unlimited

Today, in sending the less unpopular to the White House, the American voters will also be reminding us, if a reminder was needed, that when America sneezes the rest of the world catches a cold. The world may writhe at the thought but listens when Hillary Clinton says "For anyone, anywhere, who wonders whether the United States still has what it takes to lead...... the answer is a resounding yes......America remains the indispensable nation". Like it or not, the doctrine of American exceptionalism has gained currency.
The US may neither lead nor cede but the world is a victim of its policies. The central banks of the world may have become independent of their governments but not of the Fed, whose decisions impact their own monetary policies. You can do all the R&D you want in 'sunrise' industries like technology and pharmaceuticals but the US sets the rules and often adjudicates as well. If you are the new kid on the block getting listed on the New York Exchange is the seal of approval. Foreign Banks may kick and scream but pay the fines - more than $100 billion already, some little more than shakedowns - and meekly accept growing compliance demands.
The 'sticky superpower', as the Economist called it, presents a curious paradox: it continues to command when life for its own people is not getting any better and its economic weight in the world is declining.
Domestically, 'the indispensable nation' is fraught with all kind of issues. The spectre of affordable health dissuades many from retiring when they still have a few good years left. Quality of school education is deteriorating and college becoming unaffordable. It has instance after instance of people being mowed down in schools and shopping malls but is helpless to control guns - you are considered dangerous enough to be put on 'no-fly list' but not dangerous enough to go and buy a gun. Its atrophying moral timbre was on world display during a presidential campaign full of abuse and threats.
In most countries hate speeches are against the law but this presidential campaign was a law into itself. One candidate is declared unfit for office, the other fit for jail. Both call each other irresponsible - one for making a virtue of not paying taxes and dismissing lewdness as locker room talk; the other for indiscrete handling of matters of state and poor judgement in matters personal and financial.
Economically, the gap between the US and the rest is narrowing. On purchasing-power parity basis China already has a higher share of world GDP, and poised to overtake on market price basis as well. In his illuminating book (Eclipse: Living in the shadow of China's Economic Dominance) Subramanian forecasts China to be way ahead of the US on a composite measure of GDP, trade, and FDI - by 2030 China's share of global economic power is projected at 17% compared to America's 10%. America's discomfiture was evident when it tried but failed to dissuade its allies from joining the China led Infrastructure Investment Bank. Turning its back on mega trade agreements like the trans-Pacific one (TPP), or the one with the EU (TTIP), poses the risk of economic isolation.
It may have stalled the Arab Spring, but the debris of Afghanistan, Iraq, and Libya points to an indigent foreign policy. Far from dispelling it, the regime-change adventurism impelled extremism in the region. It may have no desire to be the world's gendarme but often finds itself in that role, earning hostility rather than gratitude.
Is this the kind of stuff that defines an indispensable nation?
It is the dollar, stupid. That is what makes America the indispensable nation; more than its dominance of next generation technology, cloud computing, computerised financial trading, or the sharing economy.
At Bretton Woods Giscard d'Estaing railed against the dollar, calling it an 'exorbitant privilege'. Neither Keynes's arrogance nor his erudition could get back for Bank of England its former role of being the orchestra conductor of the global financial system. The sterling zone withered away, as did the Yen zone that a surging Japan invited Asia to. The Euro zone, conceived as the counterfoil to the dominating dollar, seems to be in intensive care with little chances of a quick recovery.
Dollar, in a sense, allows the US to live beyond its means. It cushions its fiscal and trade deficits. It earns hefty seigniorage income from issuing bank notes around the world. Global crises, often sparked by the US, strengthen the dollar because it is the world's safety buffer. If a country or a company or a person does not behave it runs the risk of being cut off from the dollar payment system. It does for the US what its formidable military arsenal or its fumbling foreign policy cannot: it is the ultimate weapon.
Indisputably, then, US is the indispensable nation. How do we deal with it?
It is not easy salvaging your pride and obtuse ideas of sovereignty when you, the bantam weight, are thrown into the ring with a heavy weight. Even outside the ring you can become collateral damage. You can protest but you can't stand up to him, like when his goon shoots down two in broad daylight and you have to let him fly out uncharged. Like when he invades miles of your airspace to take out a target - doesn't matter if it is for a good cause - and all that you can do is appoint a Commission, whose report is anointed a state secret.
The indispensable nation renders the aid-dependent countries dispensable, reduces friends to junior partners, and makes adversaries of a host of others. Its people may be rallying against globalisation but it spawns a culture of dependency that nurtures globalisation.
Countries like Pakistan see their policy space shrinking, something that serves to dumb-down democracy. It is one of the reasons why nothing changes when governments change. The policy outline, drawn up elsewhere, has to be adhered to at the risk of ex-communication.
Meanwhile, the people face a multi-tiered system of over-lordship, stretching from the village to across seven seas. They may pluck up the courage to throw stones at the thana, shout before the Chief Minister's office, do a dharna; but Washington, the superior landlord, is beyond reach. Learn to live with unlimited rulers! [email protected]