“My name is Ozymandias, King of Kings:

Look on my works, ye mighty, and despair!”

Nothing beside remains. Round the decay

Of that colossal wreck, boundless and bare,

The lone and level sands stretch far away.

— Percy Bysshe Shelley, from “Ozymandias”

Human life one hundred years ago, on the eve of the First World War, was dramatically and measurably worse than it is now. The average annual income of a person in Western Europe was $3,077, and only a thousand dollars higher in England and America.1 No one had televisions or antibiotics in 1913, let alone computers. A thousand years ago, life was more miserable still. The average annual income in any region of the world in A.D. 1000 is estimated to have been the equivalent of four hundred dollars, except in northeast Asia, where it was fifty dollars higher. Human life was generally “nasty, brutish, and short,” as the philosophers said, perhaps more so in cities than in the state of nature. But two thousand years ago, human life was rich and happy in a civilization that had emerged like an island in the sea of historical misery. The emperor Caesar Augustus presided from his modest house on the Palatine hill over the marbled city of Rome and the interlinked empire of the same name. After four prosperous decades of rule by Augustus, which had followed a century of civil wars, A.D. 13 was the last full year Rome enjoyed before his death. Historians credit Augustus with carving a stable and prosperous empire in the marble of time, a Pax Romana that endured for centuries. Yet Rome did not, perhaps could not, last forever. Three centuries of Roman leaders after Augustus could not cure the relentless stagnation of Roman politics and erosion of its economic vitality. Why?

This book is not about empire, but about economic data and the hard facts of Great Powers in human history. We stand on the shoulders of historians who have perceived this subject matter as a narrative of great leaders, great armies, and great cultures. All were mortal. Thanks to countless scholars, our generation can understand this puzzle better than ever before. What our book aspires to add comes from our peculiar domain of economics, which by nature sees the world in a most unnatural way. We see “supply” and “demand” and “incentives” and “constraints” in markets not just for goods and services, but also markets for prestige, security, and political power.

A quarter century ago, the Yale historian Paul Kennedy penned an authoritative survey of the deeper forces shaping world affairs, in The Rise and Fall of the Great Powers, which introduced readers to the insight that relative economic strength was the main foundation for military and diplomatic forces that dominate most traditional narratives.2 The explosion of unparalleled historical data in recent years gives us an opportunity to reexamine the Great Powers.

Consider imperial Rome, which many do now as a unipolar and intellectual forefather of Pax Americana in our time. The popular imagination sees Germanic tribes massed by the thousands on the far side of the Danube River, clanging their battle axes and shields, readying to invade. In the end, we have been told, Great Powers succumb to barbarian hordes. This image echoes through history, as far back as the three hundred Spartans fighting against the Persian armies at the “hot gates” of Thermopylae, to the noble British resisting the dark continent of fascism, even to our modern struggle against jihadi terrorists. This heroic image must be recognized as an irresistible illusion. Military defeat is, of course, a capstone on the decline of Great Powers, but history errs in confusing symptom with cause. Recoil at the idea that mundane currencies, debt notes, and productivity ratios determine the future. But, at the very least, agree that the truth about the fate of nations is not swords, not plowshares, but a combination of the two.

The Battle of Adrianople on August 9, A.D. 378, is just as good a date as any to mark the turning point in Rome’s decline and fall. The invading Goths were cornered near the city of Adrianople (located near the modern city of Edirne, Turkey) by Roman forces led personally by Emperor Valens. He wanted to repel the foreigners once and for all. On that day, however, the Romans did more than lose the battle; they were routed. Emperor Valens was killed in battle along with most top officers, tribunes, and soldiers. Rome’s vulnerability sparked a century of Germanic invasions that pushed further against the imperial border until the great city itself fell.

That account of the battle is more or less correct, but it misses the point. For one, Roman society had been rotting internally, not just for decades, but for centuries, before Valens died in battle. More importantly, that story mistakes why the Goths were fighting in the first place. They were rebelling against their Roman allies, not invading, and only because pillage was their only recourse to starvation. In the year 376, these Gothic tribes were fleeing the Huns and were allowed to settle south of Danube as new allies of the Roman army. But Valens inadequately supplied them with promised land and provisions, then sent them on a death march to a different city, where they were denied entry. It is no surprise the Goths rebelled, but their success proved how weak the empire had become. This chapter of history affirms that the decline of Rome, contra Kennedy, was caused not by imperial overstretch or any kind of external threat. It shows, as does history from ancient empires to modern Europe, that the existential threat to great civilizations is less barbarians at the gates than self-inflicted economic imbalance within.

Overcentralization of political power, for example, is a common factor in imperial decline, usually a century or more after the centralization is enacted. Many Westerners know the story of the seven epic voyages of Admiral Zheng He (Cheng Ho). A century before Christopher Columbus discovered the New World, the Ming empire could have dominated the world if it had not abruptly turned inward in the middle of the fifteenth century. Few realize how dramatic and economic in nature the story is. The Yongle emperor Zhu Di ruled from 1402 to 1424, and ordered the restrictive trade policies of the Confucian technocrats to be reversed. He opened trade missions with Japan, the Philippines, India, and beyond. He funded a strong navy that stamped out piracy. Then, thanks to centralization of authority, Zhu Di’s successor closed off trade, which was reversed by the next emperor, then reversed again by the next. The great Ming treasure fleet was ultimately destroyed in harbor at the emperor’s own command. To confirm the message that the act symbolized, imperial decrees made the construction of oceangoing ships punishable by death.

Empires and nations often lose their balance without understanding the tectonic economic forces in motion. On the other hand, rulers are often unable to adapt even when they understand those forces, an eerie and fascinating parallel to the Great Powers in our time. Imperial Spanish rulers went bankrupt again and again, even as shiploads of New World silver flooded Spain. They remained oblivious to the productivity revolution that empowered their rivals. Great Britain panicked in 1900, as European rivals caught up to its industrial might. Partially in denial of relative decline, Great Britain could not imagine expanding the level of potential engagement with its subject territories beyond free trade.

Indeed, if America’s global economic power ends, it will almost surely be due to a loss of fiscal balance that forces it down the well-worn path of history’s Great Powers. The cracks we hear—a minor credit warning from Moody’s or acrimonious political fights over the debt ceiling—confirm that the only existential threat facing America is from America itself.

Once we look at history through the lens of economics, we can never look back. History becomes much more than a drama of personalities, revealing a surprising rhythm of policy choices that seem irrational with the benefit of hindsight. One theme in this book is that political institutions are often too slow to adapt to changing economic reality. The institutional focus of our theory of decline is neither original nor timely. Mancur Olson (1932–98) was a pioneer, particularly his Rise and Decline of Nations, published in 1982. The political scientist Francis Fukuyama, who rose to prominence with his prescient “The End of History” essay in 1989, has been leading scholarship in this area ever since.3 And we are happy to find common cause with Daron Acemoglu’s and James Robinson’s Why Nations Fail, the 2012 book that made their decades of academic research on economic institutions publicly accessible. Their book powerfully explains how “inclusive” institutions trump “extractive” ones in generating long-term economic growth, and the political roots of vital institutions like the rule of law and property rights.

What our book adds is a new way to measure economic power, that vague notion so often expressed in daily discourse but never well defined. We also examine how once-vibrant societies become politically and economically stagnant, rather than how they grow in the first place. The bulk of the book studies the Great Power imbalance, invariably economic. Finally, we use those lessons to focus on the pending imbalance of the United States; we do so not just as scholars but as policy advisers.

America today faces a financial imbalance, threatening its world leadership as an economy and a power. The threat comes not from foreign enemies but from a breakdown in long-term fiscal discipline. In recent years, the budget deficit has grown to roughly $1 trillion every year, the mathematical result after $3 trillion in expenditures are matched by only $2 trillion in tax revenues, roughly. Readers are no doubt aware that what we are describing is a much bigger dilemma than the so-called fiscal cliff, the nickname of the political standoff that ended 2012 but was really just a minor chapter in story that has grown more dire over the past four decades.

Recent research by Harvard economists Carmen Reinhart and Kenneth Rogoff suggests that countries with a total debt to gross domestic product (GDP) ratio that exceeds 90 percent face a tipping point of decline.4 And the United States, with annual deficits that now amount to 5–10 percent of annual GDP and a debt-to-GDP ratio of around 70 percent, is rapidly heading toward a critical level of imbalance. That is a consensus—of economists. The consensus of politicians is a rather different kind, a bipartisan unwillingness to take action, arguing that “deficits don’t matter” and/or that deficits should be fixed . . . later (after the current recession/election/drought/insert-crisis-here has passed in a few years). Indeed, the United States has been getting away with runaway national debt at relatively low interest rates in recent years only because of the perverse contrast with European sovereign debts that are even more precarious. America is the debtor of last resort, the safe haven in a global glut of indebted sovereigns.

Where consensus is lacking among economists as well as politicians is how to bridge the fiscal gap. There are countless plans to fix the budget, coming from various blue-ribbon panels, notably the Bowles-Simpson commission, created in 2010 by President Obama. There have been hundreds of similar plans proposed ever since Ronald Reagan spotlighted the issue during the 1980 presidential election. And while we could proffer another solution, it is no longer credible to believe that even the best economic plan will be a solution. It is not just the economy that is imbalanced. Runaway budget deficits are not a math problem. They are a process problem, a political problem.

Many plans to fix the U.S. federal budget would work in a technical sense, but none can be enacted. Our political institutions cannot accommodate them. Dealing with this threat requires a change in Washington. The stagnancy of U.S. politics is the focus of It’s Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism, by political scientists Thomas E. Mann and Norman J. Ornstein. Mann and Ornstein finger political polarization as the core dilemma, although we disagree with their blaming one party more than the other, but they seem unaware that the field of institutional economics has chronicled historical patterns of stagnation since long before the American political parties existed.

Institutions are the “rules of the game” that guide our aggregate behavior. One example of an economic institution is the patent, which a government issues to an inventor to protect her idea from being copied by anyone without her permission. Think of a patent as a property right over something intangible. The more fundamental institutions are political, such as the idea of “checks and balances” between government executives who administer and enforce the law and the legislators who make it. Sometimes a behavior emerges that is not well checked by existing rules, and this rule-bending can usually only be stopped by new rules.

A useful analogy to the dilemma of rule-bending comes from professional sports. Some sports, notably soccer and baseball, tend to be conservative, allowing few rule changes. In contrast, American football and basketball have been much more open to revising their rules. The evolution of play in those games has made them popular—and economically successful.

Football players have long known that injuring an opposing quarterback can ruin the opposing team’s chance of winning. In response, the National Football League (NFL) has tweaked its rules to protect the players. “Roughing the passer” after the ball has left the quarterback’s hands became a penalty in 1938. Helmets became mandatory in the NFL in 1943. Low “chop” blocks have been barred with incessant new rules over the decades. But as the blocking behavior evolved, the rules evolved as well. Recently, a rash of helmet-to-helmet and concussive hits has proved hard to stamp out by existing rules. The NFL is working to update its rulebook and may even require new kinds of helmets.5

The same behavior-rule-behavior dance happens with nations and economies. This interaction of economics and politics can be viewed as a story of trial and error, with governments competing over time to find the right balance of laws and behaviors that will yield maximum prosperity with minimum instability. Unfortunately, the consequences of new behaviors (price inflation, for example, from debasing one’s coinage) are often not well understood until it is too late. Acemoglu and Robinson don’t agree with what they call the “ignorance theory”—that leaders simply don’t understand adverse consequences of policies—but the authors limited that critique to modern development.6 International aid agencies have missions based on the assumption that foreign rulers are ignorant rather than malicious. That assumption is naïve and counterproductive, we agree. But it has little application to Rome in A.D. 301.

Even when ignorance is not a factor, perverse incentives are. Presidents and legislators often know good policy from bad, but their incentives are short-term reelection rather than long-term national growth, a specific problem for representative democracies. Trade policy offers a useful lesson. When nations agree to open their borders with “free” trade agreements by lowering tariffs, many industries lobby for nontariff barriers (for restrictions on imported beef in Japan or genetically modified crops in Europe). Even though economists since Adam Smith have argued that mercantilism is unproductive, the lure of managed trade is a siren song during election season. The policy may be irrational economically while perfectly rational politically.

That economic-political tension in a democracy is normal, and usually not economically life-threatening. Statesmanship can counterbalance selfish politics. Even when politics overwhelms good policy, international competition tends to tip the balance for the better. (Which nation makes it easiest to open a new business in the fewest days and with the lightest paperwork? Which nations welcome innovative and entrepreneurial immigrants?) But something about the modern welfare state, the so-called entitlement state, has corrupted the balance between good economics and bad politics.

A new behavior of modern nations has emerged in the past few decades, unchecked by wise leadership or by international competition. Its symptom is the rising fiscal imbalance in nearly every advanced industrial economy, meaning annual deficits that accumulate into a pool of debt. The lowest recent level of U.S. debt held by the public relative to the size of the economy was 23.9 percent of GDP in 1974, which in real dollars was $344 billion. Today, the level is around 75 percent of GDP, or $11,578 billion (note: this figure does not include debt held in government accounts).7 By contrast, the European Central Bank reports that 2010 debt among member countries ranged from 119 percent of GDP in Italy to 143 percent in Greece and 6.6 percent in Estonia.8 Interest payment on higher debt levels is a major expenditure category that crowds out normal government functions if interest rates rise. That is, higher interest payments reduce governments’ ability to fund defense research or education.

The U.S. debt level is alarming today because the pattern of ballooning budget deficits is occurring during peacetime (although two wars are winding down), an unprecedented departure from historical norms. Figure 1 shows the debt-to-GDP ratio over the course of constitutional history. Until the 1970s, the ratio generally declined during peacetime and spiked only during wartime. Five episodes of spiking debt established the norm—the Revolutionary War debt, Civil War debt, World War I debt, Great Depression debt, and World War II debt. Although the Great Depression debt spike was not caused by war, as the other episodes were, the pattern was similar—a sudden increase in annual fiscal deficits that approached 10 percent of GDP per year, followed by a gradual decline in total debt. Debt reduction occurred not because debt principal was paid down but rather because growth in the economy outpaced the debt. The outlier in America’s debt episodes is the sixth one, in play since the middle of the 1970s. This episode is different in its features, neither sudden nor caused by a military crisis. We are not ignoring the wars in the Middle East during this era, but their total cost is a fraction of previous major wars. Besides, annual U.S. defense spending fell from 10 percent of GDP in the 1950s and 1960s to 6 percent in the 1970s and 1980s to 4 percent or less ever since.

Figure 1. History of U.S. debt as a percentage of GDP.

Source: Congressional Budget Office (2012)

What changed? Entitlement spending. In 1971, annual spending on Medicare and Medicaid was $11 billion, which was 1 percent of GDP. In 2010, those two programs cost $793 billion, or 5.5 percent of GDP. Add in Social Security and today these big three entitlements equal more than 10 percent of the nation’s economic output. According to the Congressional Budget Office’s (CBO) June 2011 Long-Term Budget Outlook,9 entitlement spending will grow to 15 percent of GDP over the next two decades. This spending along with interest payments on the debt and entitlement spending will absorb all expected tax revenue under current tax policy. It wouldn’t be wrong to call this scenario the entitlement bubble.

Entitlement implies a form of government spending to which all common citizens are guaranteed depending on circumstances, unlike discretionary spending, which can be lowered more easily (such as dollars budgeted for defense, highways, or space exploration). Table 1 shows how entitlement expenditures have grown in contrast to declining spending on defense. According to official records, two times more federal funds were spent on physical resources (energy and transportation) in 1943 and 1944 than on human resources (education, health, welfare, and all entitlement programs), a 2:1 ratio. In 1970, the ratio had reversed to 1:5. In 2000, the ratio had shifted further to 1:15, and in 2010 it was 1:27. Projections of how this ratio will crowd out infrastructure investments are easy to imagine.

TABLE 1. FEDERAL EXPENDITURES AS A PERCENTAGE OF GDP

National defense

Social Security

Medicare

Health (Medicaid)

Income security

1940s

17.0

0.1

0.1

1.1

1950s

10.4

1.1

0.1

1.3

1960s

8.7

2.6

0.4

0.3

1.5

1970s

5.9

3.8

0.8

0.8

2.6

1980s

5.8

4.6

1.5

0.9

3.1

1990s

4.0

4.2

1.9

1.3

2.7

2000s

3.8

4.4

2.4

1.9

2.9

2010s (est.)

4.2

4.6

3.0

2.5

3.4

Source: Office of Management and Budget, 2013 budget, Table 3.1.

The larger question then: How did this happen? The introduction of Medicare in 1965 and structural reforms to Social Security in 1972 made binding and growing expenditure commitments into the long-term future, beyond the horizon of political consequences. These entitlement promises, we can see clearly in retrospect, expanded beyond the obligations assumed by the creators of these programs. Promises of escalating future entitlements as the benefits were tweaked and excesses left in place have yielded obvious political payoffs as the years have gone by. Even now, after the results of the 2012 election are in, some of the first interviews of elected officials center on promises not to change the growth rates in entitlement programs. We are not talking about cuts. We are talking about slowing the growth of programs with technical adjustments, but this policy discussion is, to put it mildly, politically charged.

Unfortunately, the economy cannot outpace the entitlement problem through faster growth in the economy. As the CBO makes clear, “Without significant changes in government policy, [entitlement growth and medical cost inflation] will boost federal outlays sharply relative to GDP in coming decades under any plausible assumptions.”10 Higher tax rates could be tried, but many Republicans and most Democrats misunderstand the limits of more taxation, which the CBO hints would likely create disincentives that have not been included in their forecasts. Despite the political dilemma, it is rare for any president or legislator to offer real, here-and-now cuts, let alone structural changes. The political process has neutered the legislative process in reacting to economic forces.

If the fiscal dilemma the United States has worked itself into is easy to trace to its policy origins, a solution should also be easy to pinpoint, no? The symptoms and even proximate causes of the debt crises for nearly every Western nation are well known, yet solutions are elusive. Proposing plans to fix the programs themselves are almost irrelevant, or worse, are excuses for inaction. It is the political structures that enable and defend the entitlement bubble that need attention and reform. The rules of the political game must change.

Many rule changes are controversial when first recommended, but become widely acclaimed and later taken for granted. In the game of American football, the forward pass was illegal until 1906, when none other than Theodore Roosevelt urged reform.11 Eighteen players had died and another 159 were maimed in the previous year. Likewise, the three-point shot in basketball was controversial when first used in a game between Fordham and Columbia in 1945, but it opened the game and leveled the playing field.

In the United States, the Constitution is the ultimate institution—the hierarchy of rules. For centuries its political-fiscal structure worked well. New economic challenges are historically not well understood by the existing politics—inflation in imperial Rome, technological regress in Ming China, mercantilism in eighteenth-century Spain, as we explain later in this book. In each case of Great Power decline, the historical record shows that rulers did what seemed to make sense in the short term but were often hostile to long-term growth. Modern legislators, we believe, are ignorant of the nature of debt risk. It is perhaps a willful ignorance, but the small-percentage risk of a catastrophic bubble collapse makes one by definition impossible to foresee. What we need to blame are the political rules, not the political rulers.

Fortunately for the United States, the Founding Fathers anticipated the unanticipated, and crafted a Constitution that could be amended to defend the nation against future threats. Even during the ratification of the document in 1787, the states decided to amend the document with no fewer than ten additions, which we know as the Bill of Rights. The people have amended the Constitution seventeen times since then, about once every fifteen years. The last amendment was in 1992.

The founders recognized that having rulers for long terms could breed tyranny, but too short a term in office could hinder competence and patience. Their remedy was terms of varying lengths, of two, four, and six years for the House of Representatives, presidency, and Senate, respectively, but crucially with no limit on the number of terms that could be served. A norm developed for individuals to serve no more than two presidential terms—a tradition established by George Washington. The two-term norm held for a century and a half, until Franklin Roosevelt shattered it. Many Americans voted for President Roosevelt during the critical years of the Great Depression. He was elected to his fourth term in 1944, a few months after the Allied invasion at Normandy during World War II. Later, a formal rule was proposed to require a de jure two-term limit on future presidents. It was adopted in 1951 as the Twenty-Second Amendment, less than six years after President Roosevelt died.

The entitlement dilemma mirrors Roosevelt’s breaking of the two-term presidential norm. Budget balance during peacetime was the American norm for almost two centuries. The existing political institutions supported this outcome. But the fiscal consequences of entitlement expenditures were larger and longer than the politicians who created those programs realized. Understandably, early efforts to fix entitlements misdiagnosed the problem, but now we know that the institutions of American democracy have proven inadequate at self-correction.

America could change the rules of the budgetary game, leaving no room for entitlements to balloon because of legislative passivity. One way to do so is through the passage of a fiscal amendment to the U.S. Constitution. Indeed, 70 percent of voters favor the idea of a balanced budget amendment,12 though few economists have supported the specific ideas proposed in the 1980s, in 1995, and as recently as 2011. Although every serious analyst acknowledges the U.S. fiscal situation is unsustainable, a genuine threat to America’s long-term economic vitality and power, this fix seems too draconian. It’s as if we were Greek voters, expressing a strong preference for staying in the euro and also a strong preference against the austerity necessary to stay in the euro. Voters everywhere want to eat their cake and have it, too. This paradox defines a Great Power democracy in decline.

The peculiar stagnation of Western democracies, at first glance, is categorically different than the collapse of history’s empires. Comparisons of A.D. 13 Rome and A.D. 2013 America are interesting but not taken all too seriously. Rome was an empire, after all. Our reading of history suggests this overconfidence of “modern” differentness is just another symptom in common. Great Power decline almost always follows a template: denying the internal nature of stagnation, centralizing power, and shortchanging the future to overspend on the present.

Before turning to the case studies, the next two chapters describe our theory of Great Power decline. Chapter 2 presents our novel approach to measuring power, which we think is an approach superior to the normal, vague language one finds in this literature. Rather than present a truckload of varied statistics, we put forward an algorithm that computes economic power in a hard but understandable way. It builds on a history of economic measurement of national power that stretches from modern theories of growth to pioneers of economic measurement in England a full century before Adam Smith published his Inquiry into the Wealth of Nations. Chapter 3 shifts from the hard data about power to consider the relatively new field of behavioral economics. We apply the theories of individual behaviors of patience and loss aversion to collective national action and the behavioral impact of rules on the largest scale.

The case studies were a challenge. Which Great Powers should we select for a book of economic challenges such as this one? Rome was essential, and it is the subject of Chapter 2. Ming China was also essential, and though some readers may be familiar with the stories of Zheng He’s treasure ships, digging into China’s economic history gives us the opportunity to present some counterintuitive observations that should challenge the preconceptions of even the best-read readers. We wanted to pick case studies that challenged our theory, as well as those cases that were unavoidable. Imperial Spain is fascinating. Its repeated bankruptcies and failed effort to dominate Europe embody the triumph of militaristic thinking over settling for mere prosperity. The history of Ottoman Turkey is unknown to many Americans, but Chapter 7 may have more lessons for America than any other Great Power. In Chapter 8 we retell Japan’s trajectory since the Meiji Restoration of 1868, which is essential in understanding the model of how many developing countries have developed ever since. Chapters 9 and 10 together cover Europe. Chapter 9 is about Great Britain, which we argue never really declined, but did fumble its potential, and not once, but twice. Chapter 10 covers the Eurozone; we also discuss the new science of measuring institutional quality. Our last case study is an odd duck: the state of California. At once richer and more powerful (per capita) than the United States as a whole, it has all of America’s strengths and weakness, only more so—the polarization, the entitlements, the debt. The Golden State is a golden example.

We draw on each of the seven case studies when we turn to America in the final two chapters. We start Chapter 12 by looking at the polarization of politics, and we also dig much deeper into the political roots of the entitlement crisis. We have been surprised at the consensus of opinion that thinks political polarization can only be fixed by curbing free speech rights. Newspaper editorials—presumably the strongest free speech advocates—parrot the message of “campaign finance reform” while seemingly unaware of the control such reform surrenders to the two political parties (that is, monopolies). Polarization is a measurable phenomenon, and even a casual study finds that it started getting worse exactly when the courts restricted political speech rights in the 1970s. This timing coincides with the year we identify as America’s turning point, institutionally, toward Great Power decline. Finally, Chapter 13 offers a plan to reform America’s institutions, built on a careful study of the Constitution as well as democracy itself.

All nations fall, as the great economic historian and Nobel laureate Douglass North reminds us, when political institutions reveal their “inherent instability.” Such thoughts can be needlessly fatalistic, though. Most nations are born and sustained by overcoming crises. Rome might have fallen one, three, or five centuries before it ultimately did. That lesson should not be lost on modern nations. Sweden showed the way large European welfare states can succeed with reforms. By contrast, Greece today seems determined to show how reform can fail. What has been lingering in Japan for two decades, haunting Europe in recent years, and now loose in the United States is the beginning, not the end, of a global fiscal storm.

Discussions of economic power are often loose, as if economic power is something that represents a yardstick against which the players are reshuffled every decade or so. Will China surpass America? Will Europe fall behind? Will Brazil always be the nation of tomorrow? We hope to show that the economic crisis at the beginning of the twenty-first century is a much bigger storm than most people realize. And slower, making it more dangerous. The whole world system is brittle, with demographics and debt compounding the risks. We should all recognize that when Great Powers of the past declined, rarely were they replaced by challengers. Rome fell, and the world went dark for a thousand years. The big question facing America and the Great Powers of our generation is whether we can learn from a newer, richer, more economic history in time to amend our broken ways.