The Illusion of Permanence

An uncomfortable thesis runs through American public debate today: the empire, as we knew it, is in decline. There is no need to turn that into catastrophe or apocalyptic prophecy. One need only look at the historical cycles described in detail by authors such as Ray Dalio: a power rises, consolidates, stagnates, and eventually gives ground to another arriving with greater dynamism. Today, that emerging power is China. Washington, meanwhile, faces two problems that feed into each other: a national debt that continues to grow and an economic inequality that has fractured the social contract among its citizens.

The fracture has a brutally simple symptom: most Americans live paycheck to paycheck, without enough room to cover basic expenses comfortably. It is not just a statistic. Behind it lies a paradox that is difficult to ignore: the more government has tried to create services intended to help people move upward—education, healthcare, housing—the more expensive those same services have become. Higher education shows this particularly clearly. The wide availability of government-backed student loans may have helped loosen some market constraints and facilitate an administrative expansion that now absorbs a considerable share of university spending, without any straightforward link between that increase and a commensurate improvement in education. That is the problem: when public intervention greatly expands purchasing power without correcting incentives and cost structures at the same time, it can end up making more expensive precisely what it was meant to make accessible.

How, then, should the success of a nation be measured? GDP growth is not enough. Nor are aggregate measures of wealth. What matters is how many people each year manage to cross a very specific boundary: to stop depending exclusively on the sale of their time and labour and become owners of capital as well, able to derive income from their own assets and savings.

That transition is, at bottom, the real American dream.

Not the accumulation of consumer goods. Freedom from dependence on the monthly paycheck.

Setting an ambitious target—for example, having two percent of the population cross that boundary each year—would reveal far more about social progress than another macroeconomic figure. A society can become enormously richer in aggregate terms while a considerable share of its citizens remains dependent on the next paycheck. The wealth exists. What is missing is a path broad enough to enter it.

Here the argument becomes more uncomfortable. The risk appears when redistribution ceases to be a limited corrective mechanism and allows a majority, without effective limits, to claim a growing share of a minority’s wealth: taken to that extreme, the system weakens the incentive to accumulate capital and narrows precisely the path toward owning it. Everyone remains a permanent worker.

And something more than money is lost with it.

What is lost is an essential form of freedom: individual agency to alter one’s own economic destiny.

Capital flight in response to tax increases or threats, and the mobility and avoidance responses observed around wealth taxes, point in that direction. Confiscatory taxes on wealth do not necessarily solve the problem. They may simply drive away the very capital they were meant to tax.

But none of this amounts to a blind defence of the fiscal status quo. There is an asymmetry worth correcting: earned income should never be taxed at a higher rate than gains from capital. Nor does that mean capital should be exempt from contributing. Taxing the wealthy when they transact, sell, or realise capital gains is legitimate.

Harder still to defend is another practice that is perfectly legal today: wealthy individuals who do not sell their shares, use them as collateral to borrow against, thereby financing their lifestyles without paying tax on gains they are, in practical terms, already enjoying. Closing that loophole and treating borrowing backed by appreciated assets as a taxable event seems a far more reasonable reform than directly confiscating wealth.

And in the middle of all this comes the phenomenon that defines our age: artificial intelligence.

It matters here for a specific reason. AI may become another mechanism for concentrating economic power—or one of the instruments through which access to productive capacity spreads beyond those who already possess capital.

We are living through a golden age of technology and scarcely know it.

One of the most repeated fears is that AI will concentrate all economic value in a handful of already established giants. The record of earlier technological revolutions gives us no reason to share that pessimism. Automation displaces tasks and can reduce demand for labour in particular sectors, but it also creates new tasks, new forms of production, and new economic possibilities.

There is also something distinctive about this revolution. Much of today’s AI development is open; models exist that can be downloaded and run without prohibitive cost. That makes possible something far from trivial: over the next decade, new fortunes may be built precisely with tools that now radically lower barriers to entry for individuals and small teams. This is not yet a demonstrated trend. It is a real possibility within a technology whose access is far more widely distributed than in previous revolutions.

But AI does not end with economics. Its ability to accelerate knowledge in biology and the life sciences may bear directly on two of the great human tragedies of our time: the hundreds of millions who go hungry and those who die from curable diseases. If it delivers even part of that promise, we will have to measure its impact differently.

Not only productivity.

Not only market value.

Lives saved.

Suffering avoided.

There remains, however, a geopolitical question that technological enthusiasm cannot make disappear: what to do about open models developed in China that can compete with their private American counterparts and may also be cheaper to deploy. The possibility that American companies adopt Chinese technology creates a genuine dilemma between economic efficiency, national technological competitiveness, and security.

None of those three can simply be erased from the equation.

Up to this point, however, we have still been looking at the problem mainly from inside the United States.

And the United States is not the world.

That change of scale alters the entire argument.

The United States has a few hundred million inhabitants. Humanity numbers more than eight billion. For much of the past century, a relatively small fraction of the world’s population has concentrated an extraordinary share of the planet’s financial, military, technological, and political power.

That is a historical fact.

What it is not is a law of nature.

Nothing justifies treating an American life as worth twenty times another human life. Nor does a technological, military, or financial advantage acquired at a particular moment in history grant a society a permanent right to set the rules for everyone else.

One thing is to possess power.

Another is to mistake a historical circumstance for a natural hierarchy among human beings.

Here a logic emerges that runs deeper than public debt, the dollar, Trump, or any presidential election. Extraordinary concentrations of power carry within them the forces that will eventually erode them. As long as everyone else needs the centre far more than the centre needs them, the asymmetry can endure. But that same asymmetry creates a permanent incentive to build alternatives.

And that is precisely what, still only partially, is beginning to happen.

China need not conquer the United States to alter the balance gradually. It need only erode, step by step, what made American power exceptional: develop its own technology, expand its markets, build scientific capacity, increase its commercial influence, and offer other countries alternatives that simply did not exist before.

Russia plays another role. India another. The Gulf states another. And many countries that for decades had few alternatives are beginning to discover that there is more than one door to knock on.

The question, then, is not whether China will replace the United States tomorrow as though one flag were simply exchanged for another. Historical shifts are rarely that clean.

The point is that the rest of the world is beginning to acquire, still unevenly and within limits, more alternatives to dependence on a single centre.

That also changes the meaning of American debt.

An enormous debt can be sustained for a long time as long as there is extraordinary demand for the currency and assets in which that debt is denominated. But that position ultimately depends on trust.

Not aircraft carriers.

Japan, Saudi Arabia, China, and the other major holders of capital do not keep their assets in dollars because an army forces them to. They do so for as long as they believe that decision sufficiently protects their own interests.

If that trust begins to erode, the nature of the problem changes.

The whole world would not have to abandon the dollar at once. It would be enough for alternatives gradually to gain ground: for a larger share of trade to find other channels, for some countries to diversify their reserves, for other assets to begin to look safer, and for American debt to require increasingly attractive terms to find buyers.

Then what had been an extraordinary advantage for decades begins to weaken.

And if an enormous debt has to be sustained in an environment of lower confidence, the adjustment does not disappear. Someone will have to absorb it. It may appear as taxes, spending cuts, lost purchasing power, currency depreciation, or inflation.

The bill does not vanish simply because paying it is politically uncomfortable.

Here a principle appears that runs through the entire argument:

whoever does it, pays for it.

It may sound like a moral claim.

It is not necessarily one.

It is causality.

Every action introduces consequences into a system. Some appear immediately. Others take years. Others require an entire generation.

Power can delay them. It can displace them. Sometimes it can load them onto someone else.

But delaying a consequence does not eliminate it.

If a country accumulates debt for decades, consequences follow.

If it uses its dominant position to impose costs on others, responses will come.

If it turns its currency, its market, or its financial system into instruments of power, those who feel threatened will look for alternatives.

If a society allows a growing share of its people to work without gaining a meaningful stake in the accumulation of capital, that population will seek another way out.

They are different phenomena.

The architecture is the same.

At home, the worker who remains excluded from capital tries to recover agency.

Abroad, the country that remains subject to a structure it does not control tries to recover agency.

That is where the two sides of the problem meet.

Inequality inside the United States and the relative loss of American hegemony beyond its borders are not necessarily separate processes. The same tension between concentration and participation appears in both.

A structure can withstand enormous differences as long as those below continue to believe that there is a real path upward within it.

The problem begins when that path ceases to look credible.

It applies to a person.

It applies to a social class.

It applies to a nation.

That is why China’s rise does not contradict the argument about American decline. It completes it.

The United States can correct many of its internal imbalances and remain one of the most powerful societies on the planet for a long time. What it can hardly demand is that the rest of humanity treat as permanent a historical situation in which almost no alternatives to American centrality existed.

The military does not solve that problem either.

Military force can defend territory, protect routes, deter an adversary, and destroy an enemy capability. What it cannot do is force the world indefinitely to trust a currency, buy debt, or accept a particular economic architecture.

An empire can use force to prolong certain conditions.

It cannot use force to abolish causality.

Nor should China misunderstand what its own rise means.

If, during this century or the next, it were to occupy a similar position and once again mistake a historical advantage for a permanent right to dominate, it would produce the same forces that are now beginning to erode American primacy.

Others would build alternatives.

Others would reclaim agency.

Another concentration of power would slowly begin to lose its exceptional status.

This is not, then, a story about the moral decline of the United States and the triumph of China.

It is a story about power.

Empires rise because, for a time, they manage to concentrate extraordinary capabilities. They fall when those capabilities cease to be exclusive and others discover that they no longer need to accept that old asymmetry.

Then another centre will arise.

And after that, probably another.

Technology changes. Currencies change. Armies change. Centres of power change.

Causality remains.

That is why the final question is not simply whether the United States will continue to dominate, or even whether China will take its place. The deeper question is how long an extreme concentration of power can last when billions of human beings gradually acquire the means to build alternatives.

No life is worth twenty times another.

A society may possess twenty times more capital. It may command incomparable military power. It may dominate a decisive technology. It may control, for decades, the institutions around which much of the world is organised.

But none of those advantages makes its inhabitants more valuable human beings.

Power can make it seem otherwise for a time.

History eventually corrects the illusion.