In France, the latest production of the ‘Three Musketeers’ is hitting cinemas and it is feted for being the most expensive French film ever made. My attention however is focused on another of Alexandre Dumas’ works, ‘The Count of Monte Cristo’, where the main character Edmond Dantes, deviously wronged as a young man, eventually escapes prison on Chateau d’If, builds a fortune and then exacts revenge on his rivals.
The book was set around the time of Napoleon’s escape from Elba, but this time I associate it with another well-know political figure, Donald Trump. If he read books, Trump might fancy himself as a modern-day Edmond Dantes – he will prove his tormenters wrong when his case for campaign fraud is held at the end of this year, and then march back into power. Yet, I think that ‘The Donald’ is unlikely to enjoy the same triumph as ‘The Count’ but the great risk for America is that the court case turns out to be a damp squib and he manages to turn this to his advantage in the 2024 presidential race.
I hope that this does not turn out to be the case, and the media, social media and most of the Republican party bear responsibility for giving Trump the political oxygen he craves, and not the shame and censure that someone who has debased American institutions deserves .
The prospect of a second Trump presidency and the fragility of American public life is a key reason why European governments are now publicly worried about the US as a political partner. More seriously, it has caused some countries – Saudi Arabia as we noted last week – to start to bet against American decline. American declinism is a growing cottage industry, matched by the ‘Europe will fall apart’ brigade, and led by the ‘end of the dollar’ crowd.
This group was out in force last week, forecasting the end of the dominance of the dollar. I think this is unlikely. China – allegedly the coming financial empire – makes up barely 3% of world fx reserves. It has yet to be tested by a full recession and it continues to make the wrong sort of geopolitical friends (fragile states like Russia and Iran). The Chinese monetary policy is still opaque, and surprise currency devaluations are a live risk. Further, some Westerners or professionals from countries like Indonesia, Bangladesh and India want to live there and the barriers to doing so are high.
If developed world currencies are likely to lose their place in the world trading system it is likely to be smaller ones like the pound and the Swiss franc. Brexit is making the pound less relevant in a number of ways, and the Credit Suisse debacle will sow fears regarding trust in Swiss laws and the durability of its banks. Traditionally, one reason that the Swiss franc remained strong was that capital flowed into the country and did not flow
So, if the dollar is safe for now, there are still two issues to worry about. The first is that while it is financially the most dominant nation, America’s diplomatic power is much reduced. One illustration is to think of how it was the central, organizing force behind most of the financial and economic rescues of the past fifty years – from the Brady bond solution to Latin America’s crisis to Alan Greenspan’s ‘Committee to save the World’ after the Asian crisis. When the next crisis comes, America will be the most significant player but not the dominant one and the risk for the US, is that the solution to that crisis may tilt financial power away from it.
The second, more profound worry is that at the heart of American society there is a disturbing set of socio-economic trends. America today is debatably the most unequal (in terms of wealth) society ever (I have even compared it to the Roman empire)
Gravely, life expectancy and adult health have dropped sharply – a highly unusual development in a rich country, and one more associated with some kind of emerging market socio-economic shock (Russian life expectancy dropped by nearly five years from 1990 to 2005 for example)
Morbidity and Mortality
An important paper by Anne Case and Angus Deaton (2015 Nobel winner), “Rising Morbidity and Mortality in Midlife Among White Non-Hispanic Americans in the 21st Century,” highlighted the deterioration in health conditions, especially those relating to mental health, for middle -aged white men and women in the United States.
The mortality rate for this cohort has increased sharply owing to drug and alcohol poisoning, suicides (the United States is seeing a sharp rise in suicides, according to the Centers for Disease Control and Prevention) and related diseases such as cirrhosis of the liver. Groups with lower levels of education saw a sharper rise in mortality. Gun violence is of course another problem (witness the debate in Tennessee).
The worsening of inequality, social and health conditions in the US is a sign that politicians should pay much greater attention to health in public policy. If a serious politician is looking for a spell and a program to run in 2024 he/she should try ‘Make Americans Healthy Again’.