The failure of the U.S. to handle the coronavirus pandemic risks derailing the economic recovery and puts the country at a competitive disadvantage in its long-run battle with China for global hegemony, former Federal Reserve Chairman Alan Greenspan said.
In an article written for Advisors Capital Management and published on Monday, Greenspan said that the U.S. has at times looked like it “has lost its way,” while China has enjoyed continued success in expanding its economy, including being the first to recover from a pandemic-driven swoon in activity.
“The COVID-19 crisis has presented a real threat to the U.S. position of global dominance,” wrote Greenspan, who is a senior economic adviser to the money manager. “As political tensions heat up between the world’s two largest economies, the balance of power that will result is still unclear, but becoming of increasingly greater concern by the day.”
President Donald Trump has made his tough positions on China a key element in the lead-up to the U.S. presidential election, now less than three months away, and he seems intent on keeping the pressure on. Barely a day goes by without Trump slamming what he calls a “plague” unleashed on the world by China in press briefings, Twitter and elsewhere.
“The failure by the U.S. to effectively deal with the onset of the Covid-19 crisis has only worsened its competitive position” versus China, Greenspan said. “The resurgence of the virus in the U.S. threatens to forestall our economic recovery.”
While the former Fed chairman said that U.S. dominance will probably ebb this century as China accounts for a greater share of global economic output, he also saw reasons for America to remain on top overall.
“America leads in all the industries that are inventing the future, such as artificial intelligence, robotics, driverless cars, and, indeed, finance,” he wrote. “And for all its problems with populism, America has something precious that China lacks: a stable political regime.”
He said the U.S. needs to find the political will to tackle the problems he believes are holding back growth: out-of-control government spending on entitlement programs and ill-considered regulations.
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