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This question will supplement the thread on "American Exceptionalism". Is American "Exceptionalism" over?

World War II got the US out of the Great Depression. We beat our guns into ploughshares with a vast increase in consumerism. This was, in part, an accident of geography; WWII was fought on European and Asian soil, not American soil.

Ike warned of the Military-Industrial Complex, yet our Defense costs as much as the next 10 countries combined; we are the arms merchant of the world. Millions of Americans make a good living from Defense-related manufacturing. Is this healthy?

Ike built the Interstate Highway system, suburbs blossomed and consumerism took off. This created a vast market for autos, housing supplies and consumer goods. Now those same suburbs need vast infrastructure repairs and improvements.

We promise too much and tax too little. Now American faces a vast shortfall in Social Security, Medicare and pension funds.

Enter credit cards. We could avoid delaying gratification by buying on credit. This allowed the financial service sector to beome the parasitic institution it has become. The vampires on Wall Street have shifted wealth from the middle class to the rich. Now the paradox of thrift has kicked in as Americans pay down debt and don't buy consumer goods.

Will we speak of Chinese Exceptionalism in a few years? Our "long-term" planning consists of meeting each crisis as it occurs. China is investing $1 trillion on a smart grid. Are we? The are graduating far more engineers than we do, so is India.

Our free enterprise system didn't work in the last financial crisis because of a failure of Adam Smith to consider one underlying principle: Directional Greed. His belief was that individual greed would cancel out. What he never considered was that collective greed could be directional i.e. the public, the financial services sector and the government all wanted the housing bubble. Now we face the consequencs of this failure of the Adam Smith paradigm.

Are we witnessing the end of an empire?

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    Nov 13 2012: A lot depends on the citizens of the US. Nations do not fail because they have challenges, the empires fail and fall because of the inability to rise up to certain demanding challenges.
    The US should rise to the challenges of the day, instead of the common belief that the empire can not fall. This sort of boasting always reminds me of the Titanic.
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    Nov 12 2012: I think this sort of language- "exceptionalism" - is so unhelpful.

    As I understand the term in its original usage, an understanding which may be incorrect, it was a way of saying America has some unique attributes (but does not suggest that it is somehow better than other countries). The variations among countries means that some people may be much happier living here than elsewhere and others happier living somewhere other than here.

    EVERY country surely has unique attributes, and countries also have a host of overlapping attributes.

    It's kind of like people. Each of us is unique and yet we have lots in common.

    All of us (people, countries...) get things right some of the time and mess up at other times.

    I think this has always been true and always will be true, with none of us exceptions.
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      Nov 12 2012: I take exception to your denying U.S. exceptionalism, which now is done, you are regurgitating the party line of the collective.

      Why is the U.S. exceptional? Real Simple the U.S. has raised the standard of living of the entire world more than any country in history. It has protected the world more than any country in history. No doubt some will argue these points but they are wrong.

      The reason for this is the Constitution which is one of the most exceptional documents in the history of the world.

      But since academia has seen fit to show the Constitution as a unexceptionable piece of paper we are now witnessing the death of the most exceptional country in the history of the world.

      Normally you talk sooth but on this you are 180 degrees wrong and I take exception.
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        Nov 12 2012: I do think both the Declaration of Independence and the Constitution are exceptional in ideas and construction and am not aware that academia would deny this.

        My thoughts are my own rather than a regurgitation of anyone else's, just as I expect you to draw your own conclusions and that a resemblance between your independent opinions and deductions and someone else's are coincidence rather than regurgitation.

        My claim is that other countries also have contributed in exceptional ways to the history of the world, some more significantly and some less significantly. Ancient civilzations have made their mark, for example in producing language and writing, philosophy, great works of art and architecture, and so forth that find their echoes and provided a foundation for developments across the world.
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          Nov 12 2012: My point is that the party line is that exceptionalism does not exist in favor of some sort of egalitarian crap. The simple truth is that the technological advances of the last century and this century came from the U.S. Other cultures have contributed but they are a fraction of the U.S. including the ones throughout history. I'm not being arrogant here I'm simply stating the powers of the free market that have been embraced though the constitution are the catalyst for this.

          I base my opinion on academia on the fact that over 50% of the voting public considered the constitution with the same regard as toilet paper in the election less than a week ago or they would not have voted for someone who is using it as just that, please tell me that you can discern that that is exactly what the POTUS is doing? To increase the debt by 6 trillion thus take away economic freedom which will probably end the country, to issue unconstitutional executive orders to this magnitude, to create healthcare laws that require people purchase (despite what the SCOTUS said) or regulations like Frank Dodd? To continue the policies that have lead to continuation of the great recession soon to titled the end of the U.S.

          But as I said on other posts it is a moot point because the U.S. is Done.
  • Nov 13 2012: Your kidding right?
    America is unique in that it is the only nation that I know of that was explicitly founded as an empire.
    The stated purpose from the founding fathers was to expand out and take over the entire planet.
    "American Exceptionalism" is just the rationalization babble that is necessary to spin that plan into the destructive steps taken by the US around the world since then.
    The financial problems the world is now in stem from a number of causes, one of which is capitalism`s inability to see beyound the next quarter profits, and the US Government`s military expansion along with undoing (deregulation) of hard won lessons from the past.
    I am specifically thinking of the Vietnam War and deGaules call to Nixon on the war debt and the underhanded deregulation of many of the limitations on banks along with the Clinton, everyone shoud own a house nonsense.
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      Nov 13 2012: Compared to Canada it is damn exceptional for that matter every country in the world ever. Canada would be speaking another language if it were not for the U.S. you have to kidding me. But the U.S. won't be around much longer as it has drank too much of the Socialist unexceptional cool aid.
      • Nov 13 2012: Well I really don't know what to say to that.
        The US is not going anywhere any more than France or Brittan did. It will just become the junior partner to the next big thing.
        Whoever that is will undoubtly think that their right to do what ever they want is obvious and what ever anyone else wants to do is illegal.
        Then the world will hate you less and them more so you will probably think that things are getting better.
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          Nov 13 2012: It IS going from capitalism to consummate Socialism, which is from exceptionalism to insipid
      • Nov 13 2012: I would think that 47.1 million people on food stamps would make "going" into "went". Not to mention the fact that the entire banking section of the economy is on welfare.
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          Nov 13 2012: I don't disagree but I'm an optimist.
  • Nov 12 2012: I heard some time ago that exceptionalism was not a compliment when Doqueville coined the expression. We have our weirdness ;like everyone else. Listen to Gallileo and Madame Curie - be humble enough to think and learn. The alternative - epistemological closure is terrible to consider.
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    Nov 11 2012: Yes, but not because of your hogwash regarding Adam Smith. The reason Ike could do what he did was because of the market place. Supply creates demand not the other way around. The exceptionalism was a result of the U.S. embrace of the free market the languishing of is because of abandoning it.
    • Nov 12 2012: The fallacy of the free market system was exposed during the recent financial crisis; if we'd allowed the banks to fail, based on free market principles, it is generally agreed that we would have experienced a depression even worse than the Great Depression. Is this what you mean by free market principles?

      Banks were too big to fail so they were bailed out at the expense of Main Street. Hurricane Sandy is the metereological equivalent of the Great Recession's finances. It was the Black Swan. You only need one "Black Swan" in the financial community every century to expose just how shaky the so-called free market system is. Sure the free market system works if you endorse corporate welfare.

      Do you think the Fed giving banks "free" money is consistent with the free market principle? I wanted to invest in a $10,000 CD for six months and told that I would receive 0.1% on my investment or $5 after six months! Frugal "foolish" Americans, who believe in savings accounts and CD's to live on in their old age can forget that pipe dream.

      The corporate world racks up massive profits but refuses to invest in improving the life of working Americans because of grid lock in Washington so over $1 trillion sits on the side lines in corporate coffers.

      Now Wall Street owns Washington, both parties, and they can take the money the Fed doles out and invest in Australian currency, hedge funds or other exotic instruments of investment enriching those at the very top. Banks too big to fail at the start of the Great Recession are now even bigger and can't possibly fail. Tepid reforms on Wall Street will just force them to be more creative. Bring back the Glass-Steagall Act, or at least the better aspects of it, so that banks can't gamble with your money.

      Demand is created, in part, from advertising.

      You say "hogwash"; show me where I am wrong about the concept of directional greed and I'll believe you have contributed something worthwhile to the discussion of Adam Smith
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        Nov 12 2012: This is futile but lets see if any of this resonates with you.

        Milton Friedman, Ludwig von Mises , Ben Bernanke all agree that the Great Depression was caused by the Fed and was predicted by Mises. Think about this the Fed was started in 1913 with the mandate to create stability in banking yet 16 years later the last thing there was was stability.Does that strike you as odd?

        Do you see that the Fed giving money away is crony capitalism?

        Sandy is irrelevant.

        Do you see that the 250 billion dollars in interest EVERY YEAR that we pay on the debt will turn into 750 billion dollars if the interest rates goes up to just 5%

        Grid lock and a trillion dollars sitting on the side line are irrelevant to each other. The only reason investment capital sits on the side line is that O scares the crap out of investors and me.

        Did it ever occur to you that there is no Glass Steagall in Canada yet they had no housing melt down? Or how that could be? That maybe Glass Steagall did not cause the melt down?

        Supply creates demand. Did people demand computers first or were they supplied first? or smart phones or electricity or cars or indoor toilets and plumbing or televisions or teflon frying pans? No the supply comes first.

        Do you see that the standard of living in the world has come up from entrepreneurs creating products that people want? And that the government has not created any products ? Except of course the internet that was invented by Al Gore.

        There is no point in me trying to convince you of anything at this time the damage is done. I need to tend to firearms and can goods.
        • Nov 12 2012: Canada didn't need Glass Steagall because their banks are well capitalized and their banks don't engage in the kind of risky practices our banks engage in. They didn't experience the housing meltdown because they engaged in prudent lending practices so they didn't experience the housing crisis we experienced.

          We are in agreement that the Fed has done a terrible job. Alan Greenspan and his attitude that the market would be self-correcting was proven to be false. He warned against "irrational exuberance" when the DOW hit 8300 in 1996 and then sat back and watched as it hit 14,000. Then in response to a possible recession in 2001, he opened up the spigots of cheap credit and the housing bubble took off.

          Greenspan presided over bubble after bubble after bubble. First it was the equities bubble, then it was the Dot.com bubble, then it was the housing bubble and then it was the commodities bubble.

          Yes our standard of living has gone up from entrepreneurs manufacturing products. The financial services industry manufactures new and useful ways to churn money---for themselves. They are the pinnacle of success in the free market system and they brought this country to its knees. And still they continue to engage in even riskier schemes now that we have abdicated any hope of avoiding too big to fail. They know that Uncle Sap will be the safety net they can always rely on.

          In 1940 the financial services sector accounted for less than 2% of the GDP, it has now grown to over 8% of GDP. What has Main Street gotten from the additional growth in the GDP of the financial services sector over the past 70 years? Securitized mortgages they couldn't afford and the albatross of credit card debt that drove consumerism for decades and is now an impediment to the economy as Americans pay down debt rather than consume.

          The free market system is great when you can privatize profit and socialize debt.
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        Nov 12 2012: And why is it do you think U.S. banks participated in this, an I want to win the Darwin award mentality? Because all of sudden they were feeling suicidal?

        And what is the agency that bails out the too big to fail, that is right the government.

        There is no problem with any of this conduct as long as they are allowed to fail.

        Talking to your ilk is a waste of time, if you want to learn about this and the impending disaster, put on your big boy pants and use another entrepreneurial advance called Google or don't I don't give a rats ass.
        • Nov 12 2012: "There is no problem with any of this conduct as long as they are allowed to fail." Surely you jest. Do you think when Ben Bernanke went to Congress to give them the bad news he thought that the banks should be permitted to fail?

          Consider this news article appearing in the September 19, 2008 edition of the New York Times, "As Senator Chris Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday on 'Good Morning America', the Congressional Leaders were told, "...that we're literally days away from a complete meltdown of our financial system, with all the implications here at home and globally..."

          The "greatest geniuses" at the time were in agreement that we couldn't allow the banks to fail yet you say we should have allowed them to fail---and perhaps run the risk of a global depression worse than the Great Depression. We had a Great Recession even with a massive bail out. Were you in favor of allowing the banks to fail in 2008?
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        Nov 12 2012: Chris Dodd created the problem are you really that ignorant?

        Yup I was in favor of them failing in 2008 and wrote by congressman to that effect. If Dodd and Frank had not created the mess in the first place it would not have been necessary and it would not have been as bad as what you are about to witness.

        I probably will not answer any more of your posts
    • Nov 12 2012: "Supply creates demand not the other way around."

      That's a ridiculous statement. There is no supply without demand.

      Anyway, Adam Smith knew capitalism has shortcomings and he wrote about it. He wrote about wealth tending to concentrate in the hands of a few under unrestrained capitalism, he also wrote that the state would have to tax the rich to care for the poorest who are not guaranteed to profit from unrestrained capitalism. So even though there were no credit default swaps and leveraged buyouts in Adam Smith's time he already knew capitalism wasn't perfect and he never claimed it was, like most early advocates of capitalism and most serious economists today he merely saw it as the least worst of the known options. Modern (mostly American) worship of free market capitalism as a perfect system is relatively new and the result of cold war era propaganda, and even viewing capitalism as the least worst option is becoming outdated as technological progress has allowed the Northern European social democracy (a form of regulated capitalism) to thrive and will in the near future enable us to dust off old ideas that were ahead of their time, such as the social dividend, guaranteed basic income, energy currency, etc... Meanwhile there is increasing work from the fields of economics, psychology, sociology and neuroscience that cast doubts on many core assumptions behind current corporate practices and policies. This is not to say that the principle of the free market is useless (it is very useful for the consumer non-essentials sector), but it cannot be left to dictate every aspect of the economy.