Andrew Clancy: A comedian once remarked that the invention of caller number identification, better known to everyone as "caller ID," did more to drive up debt in the United States than any other creation. It allowed thousands of American households the freedom to rack up credit card debt without ever having to answer the repeated calls from collection agencies. Over the course of the past three decades, "massive personal debt" has replaced baseball and apple pie as the most apt conclusion to the phrase "As American as ... ." In the ultimate case of stone-throwing by a glass mansion owner, the U.S. government has repeatedly cautioned its citizens about the dangers of accruing personal debts. According to authors Stephen S. Cohen and Brad DeLong, the U.S. Treasury would do well to invest in caller ID because the land of plenty is on the fast track to hearing from its creditors.
Cohen, a professor of regional planning, and DeLong, an economist, combined forces at the University of California, Berkeley to produce the upcoming release The End of Influence: What Happens When Other Countries Have the Money. In a compact, information-rich book, the pair outline America's staggering decline from a country that ended World War II with outrageous wealth and power to its current standing as a cash-poor nation whose global credit card is likely to meet with a giant pair of scissors. The story of how the nation reached this point is one that mirrors the path taken by so many of its citizens. Readers will likely get the impression that America never intended for its economic situation to get this far from its reach. However, life at the top affords certain luxuries and when, as various business authors have noted in books on leadership, a leader is surrounded by "yes" men, the leader gives less and less consideration to alternative points of view.
The End of Influence is not another in the recent chain of doomsday prophecies, envisioning an America that is suffocated by the squeeze of the Chinese Yuan to the west and the Euro to the east. Cohen and DeLong contend that America 's unique position as the world's lone superpower will vanish due to the country's irreversible debt. This does not mean the U.S. will descend the global ladder into the nether reaches of third-world status. It would be impossible for the third most populous nation on the planet to see its dominance in the realm of innovation disappear overnight. America is, after all, still the only nation to have put at least one of its citizens on the surface of a celestial body other than our own, even if that achievement occurred 40 years ago. Cohen and DeLong suggest that America 's debts will lead it to be "relegated" to status as a normal country, a position that, they assert, the U.S. has not held since the days of steamship travel.
The authors also provide key insight into a frequently discussed statistics. Executives are likely to have heard the chestnut that the Chinese government owns more American currency than the U.S. itself. The implications of this rumor have always stated that, if it desired, China could respond to American political posturing by flooding the market with dollars, thereby devaluing the greenback and shattering the American economy. This may lead readers to wonder why this has yet to occur. Cohen and DeLong answer the great China debate with another well known axiom that can be paraphrased in this way, "If you owe the bank $1 million, that's your problem. If you owe the bank $1 billion, that's the bank's problem." The End of Influence points out that the amount owed to China by the U.S. is roughly 50 percent of China 's Gross Domestic Product. The authors occasional humorous jab when revealing statistics such as this will help ease any reader tension at the state of America 's business affairs.
The End of Influence is a book that deserves a CEO's attention. Readers who tend to contain their reading of The Wall Street Journal to the domestic financial news may want to brush up on international markets and policymaking before opening Cohen and DeLong's book. As the reader progresses through the text, he or she will see that it's a title that is less about the financial impact of America 's debt and more about the way in which that debt will lead to the loss of a political foothold. To put it in slightly humorous terms, America can no longer arrive at the global restaurant sans reservation and expect the best seat in the house, but the nation isn't at the point yet where its table will be outside the kitchen door.