The following is a transcript of a commencement address by Francis Fukuyama, delivered at the Pardee Rand Graduate School, Santa Monica, CA, June 21, 2008.

Is America Ready for a Post-American World?

by Francis Fukuyama

I’m really deeply honored to be asked to be the commencement speaker for Pardee Rand Graduate School this year, and to able to serve on the boards of both the PRGS and now the RAND Corporation.

I’d like to extend my congratulations to all of those receiving degrees today. I’ve been there before, I know what a struggle it is to make it this far. I’d like to congratulate the families, the mothers, fathers, brothers, sisters, spouses, children, because without their support, it really is not possible to achieve this educational level. And I’d also like to congratulate Frank Carlucci and Alain Enthoven who are getting honorary degrees today. I can’t imagine two people more deserving of this honor for their lifetime of public service to get honorary degrees. And finally, I’d like to acknowledge the hard work of the faculty and staff at PRGS.

I attended my son’s high school graduation last week, and at that event, people say the usual things about how you’re just starting on a long road in life, and you’ve got your futures ahead of you. Those of you, particularly those of you getting PhDs today, aren’t really in that position. I would say that you have already committed yourselves to a certain road. I don’t think there’re many of you who are going to become architects, or accountants, or stand-up comedians; maybe that’s in your future. But I suspect that having invested this amount of time in the serious study of public policy you are committed really to that way of life. And so, you are now in the business of helping your country, whatever country that is, make better choices in the public realm. And so, in a sense, this is less of a commencement than a rededication to a path that you have chosen some time ago. The only difference is that now, perhaps, you’ll be able to earn some money in the process of doing it.

Now, the subject that I want to address today, is how the world has changed. I think that the period from when I started at RAND as a summer intern in 1978 to the present is an amazing period in history, during which we’ve gone through three distinct phases.

In 1978, we were in the midst of the cold war, and at that time I was one of about a dozen full-time people here at RAND who studied the former Soviet Union. People overstate how simple and predictable the world was back then, but, the Cold War did in fact provide a very recognizable framework that all of us operated in. When I left RAND, or at least when I left Santa Monica, we entered a post-war world, one that was characterized by American hegemony. I think in that respect both the Clinton and the Bush presidencies, despite their political differences, shared a common assumption, that the United States was absolutely the predominant power in the world and that American power would be sufficient to shape outcomes all over the world. I think the Clinton administration tended to emphasize this in the area of economic policy, and the Bush administration in the area of security, but, in that respect, they both were the beneficiaries and practitioners of American hegemony.

Today, we are evidently entering a very different kind of world. The Newsweek columnist Fareed Zakaria has labeled this a “post-American world”. I’m not sure he’s right about this, but I do get a very strong sense that as we speak, conditions in the global economy are changing in very dramatic ways, and I don’t think that the assumptions that undergirded either the cold war world, or this extended period of American hegemony, are going to be sufficient to guide us in the world that is emerging.

Let me go over some of the ways in which the world is changing. The first obviously has to do with the emergence of a multi-polar world. This is not a story about American decline. The United States remains the dominant power in the world, but what is happening is the rest of the world is catching up. The power shift in terms of economic earnings is very dramatic. Russia, China, India, the states of the Persian Gulf are all growing while America is sinking into a recession; something that underlines the stark differences in a way the rest of the world has become decoupled from the American economy.

In the Clinton years and in the Bush years, the United States was used to lecturing the rest of the world about how to get it’s economic house in order, but it seems to me that those kinds of lectures tend to ring a bit more hollow now that we have suffered the kind of financial crisis that we’ve experienced in the past year. The most dramatic evidence of this shift in power is the simple facts about the endebtedness of the United States, and the accumulating reserves on the part of a lot of countries in the rest of the world. The People’s Republic of China has something like one and a half trillion dollars in reserves; Russia $550 billion, Korea $260 billion, Thailand $110 billion, Algeria $120 billion. The little states of the Gulf Cooperation Council, collectively have about 300 billion in reserves. Saudi Arabia just by itself is saving money at the rate of approximately 15 billion dollars every single month, as a result of energy exports.

Obviously this kind of accumulation of reserves is a phenomenon that in the short run doesn’t signal a shift in power because money of this sort doesn’t obviously translate into military or other kinds of power. On the other hand, a few hundred billion dollars here, a few trillion dollars there, and pretty soon you’re talking about real money. I suspect that as time goes on, this kind of earning power is going to be translated into important shifts in the way that countries interact. Down the road, I think it is inevitable that we are going to be facing a world in which American options are much more constrained. This may be due to shifts in the military balance of power down the road, but it’s also in terms of soft power. Today, the Chinese and Indians export movies, there are Korean pop stars that are popular all over Asia; the Japanese produce anime and manga; there are, in short, other sources of cultural creativity besides the sort that comes out of this particular city, Los Angeles. One particularly worrying trend is the growing reluctance of foreign students to study in American Universities due to the obstacles we ourselves have put up to their coming here. I’m glad to see that in the PRGS class, non-Americans are extremely well represented, but over the past few years, students from around the world have been finding other alternatives than going to American universities.

The emergence of this economic multi-polar world has been much commented on. But there’s a second important respect in which the world has changed, which has to do with the very character of international relations today. If you look at the part of the world that extends from North Africa through the Middle East into the Persian Gulf, Central Asia and sub-Saharan Africa, all the way to the borders of the Indian sub-continent, you are dealing with a world that I think is quite different from the classical world that is taught in international relations theory courses, or that characterized the world of the 20^th century.

That world was dominated by strong, centralized states, and international politics was the story about the interaction of these strong, centralized states—Imperial Japan, Nazi Germany, the former Soviet Union, and the like. What is different about today’s international world is that it is dominated not by strong states, but by weak and sometimes failing states where the usual instruments of power, in particular, hard military power, don’t work that well.

The characteristics of the weak state world were noted after the Lebanon war in 2006 by Henry Kissinger, who said that Hezbollah “is in fact a metastasization of the Al Qaeda pattern, it acts openly as a state within a state, a non-state entity on the soil of a state with all the attributes of a state and backed by the major regional powers, is something new in international relations.”

Well, unfortunately, it’s not simply new, and it’s not simply characteristic of Lebanon, it is true of many countries throughout that part of the world. Why does this weak state world exist? I think it has to do with a lot of different factors. It has to do with the fact that around the world as development occurs, we have the mobilization of new social actors and groups that were formally excluded from power, like the Shiites in Lebanon, but, it extends to our continent as well. We’ve had tremendous turmoil in the Andean region of Latin America because of the fact you have indigenous peoples in places like Bolivia and Ecuador who were largely cut out of power, and who are now demanding their share of it, and are consequently destabilizing the democratic institutions that are in place there.

There is furthermore a dark side to globalization. We have gotten used to celebrating globalization as a source of international trade, investment, and therefore, economic growth. Countries like China and India have benefited enormously from globalization. But globalization means a reduction in the barriers to things crossing international borders, and sometimes those things are bad things—they can be things like drugs or international gangs. They can be laundered money, they can be blood diamonds, or they can be militias and political parties that act fluidly across international boundaries using the Internet. We have a big trade in international gangs between Los Angeles and Central America.

And there is a strange world that is now appearing in which national development is intimately connected with international affairs. Today in sub-Saharan Africa, a region widely recognized as the poorest part of the world, some 10% of the GDP of that entire region comes from international donors. The international community both helps countries there develop, but also makes if difficult for states to consolidate themselves in ways that European states did in the 400 years after the Reformation. For all of these reasons, this weak state world I think is here to stay for some time.

This weak state world has a lot of implications for American power. We need to consider this very perplexing fact: The United States spends as much on its military as virtually, the entire rest of the world combined, and yet, when you look at Iraq, a country of some 24 million people, it is now five years and counting since the United States invaded and occupied that country, and to this day we have not succeeded in pacifying it fully. And the reasons for that I think really have to do with the nature of power itself, because we are trying to use an instrument—hard military power—that we used in the 20^th century world of great powers and centralized states in a weak state world, and that instrument does not work as well. You cannot use hard power to create legitimate institutions to build nations, to consolidate politics and all of the other things that are necessary for political stability in this part of the world.

There are other things afoot in international politics because of American dominance over the last two decades: other countries are mobilizing against the United States. You have alliances like the Shanghai Cooperation Council that had organized themselves to push the United States out of Asia, after our post September 11 entry into that region. We cannot call on our democratic allies to the extent that we used to be able to. This was obviously true in Iraq, but even in a country like Afghanistan, where our allies in principle agree with the legitimacy of the intervention, we have had tremendous difficulties in getting them to pony up the necessary resources, troops and support. Even a country like Korea that has been a traditional American ally has been convulsed with anti-American demonstrations over the past couple of months because of the controversy over imports of American beef.

And so, we face a world in which we need a very different set of skills. We need to be able to deploy and use hard power, but there are a lot of other aspects of projecting American values and institutions that need to underlie a continuing leadership role for the United States in the world. Let me give you one illustration. Back in the early 1990s, my colleague at Johns Hopkins, Michael Mandelbaum, wrote a piece in Foreign Affairs. It was a critique of American foreign policy as social work, in particular of the Clinton administration’s efforts in the Balkans and Somalia and Haiti to do nation building. His message was that real men and real foreign policy professionals don’t do this kind of nation building or deploy soft power, but rather deal with hard power with military force.

But in fact, American foreign policy has to be preoccupied with a certain kind of social work today. If you look at the opponents of American power around the world, groups like the Muslim Brotherhood, Hammas in Gaza, Hezbollah in Lebanon, Mr. Ahmadinejad in Iran, as well as populist leaders in Latin America like Hugo Chavez, Rafael Correa, or Evo Morales, all of them have succeeded in coming to power because they can offer social services directly to poor people in their countries. The United States, by contrast, has really had relatively little to offer in this regard over the past generation. We can offer free trade, and we can offer democracy, these are very good and important things, the basis for growth and political order. But they tend not to appeal to poor populations that are the real constituents of this struggle for power and influence in the world.

So the requirements of an American leadership role are quite different and the question that arises; “Is America really ready to deal with a world in which it cannot assume its own hegemony?” Now, I want to make one thing very clear at the outset. I do not believe in inevitable American decline, and this is not going to be a talk about how we are declining. The United States has enormous assets in technology, in competitiveness, in entrepreneurship, flexible labor markets, and financial institutions that are in principle strong (laughter), but are having a little bit of difficulty at the present moment.

I think one of America’s greatest advantages is its ability to absorb people from other countries and cultures. Virtually all developed countries are experiencing the severe demographic crisis. They are getting smaller with every passing year, because of falling birthrates of native-born people. Any successful developed country in the future is going to have to accommodate immigrants and people from different cultures, and I believe the United States is unique in its ability to do so.

I think that the problems that the United States faces are really ones that are of our own creating. None of the problems and challenges that the United States faces are insoluble. The problems are really political and institutional ones.

First, we face a number of long term fiscal challenges. I don’t have to explain to anyone at RAND about the long term health care liabilities that we are creating for ourselves. A single program, Medicare, is going to punch this enormous hole in the federal budget if we do not act to do something about it. Social Security is similarly a long term time bomb, and there are long deferred investments in infrastructure that have not been made over the past few years. But, in principal, all of these problems are soluble.

I would identify three particular areas of weakness that we must remedy if we are to get through this particular set of challenges. These three are, first, the diminishing capacity of our public sector; secondly, a certain complacency on the part of Americans about understanding the world from a perspective other than that of the United States; and third, our polarized political system that is incapable of even discussing solutions to these problems.

Let me go over each of these. Let’s begin with the problem of the declining capacity of the public sector. We have seen in the past few years a depressing number of policy failures due to the inability of our public officials to actually carry out, plan and implement policies that we agree on. The most obvious case of this was the failure to adequately plan for the occupation and subsequent counter-insurgency war that broke out in Iraq. Part of that was the result of a political miscalculation as to how the United States would be received, but even after it was clear that the United States was in Iraq for the long haul, it took an extraordinary amount of time to adjust to those conditions and move to move to a counter-insurgency strategy. Indeed, it took President Bush longer to find a good general, General Patraeus, than it took Lincoln to find Grant in the Civil War. There are many other examples where we have actually agreed on policies, and have not been able to follow through.

We’ve engaged in two major reorganizations of the federal government in Washington over the last few years; the creation of the Department of Homeland Security, and reorganization of the intelligence community. I would say that as a result of these reorganizations, we are less capable in both of those areas than we were, had we not done the reorganizations in the first place. The Department of Homeland Security was supposed to enable the United States to respond to major urban disasters, and yet, the response to Hurricane Katrina was a total fiasco.

Let me site one further case that some of you here at RAND may know about, the Freedom, which is a new class of littorall combat ships, was recently launched by the US navy. Now, this program has been repeatedly delayed and is more than twice over budget as a result of some major design flaws. RAND knows a lot about military procurement, and I’m sure that long time observers of the procurement process will say that this is nothing new. We’ve had a lot of similar fiascos like this in the past. What caught my eye though was a comment by our Navy Secretary about this case that was quoted in the New York Times. He “lamented the Pentagon’s eroding expertise in systems engineering—managing complex new projects to ensure that goals are achievable and affordable—and faulted the notion that industry could best manage ambitious development projects.” Now, this one procurement case is not in itself too significant, but I do not think there is a single agency across the entire federal government where you could not tell the similar story, where the capacity of the public sector to adequately manage the contractors and to retain within itself the capacity to carry out complex projects has not eroded over the last thirty years.

The causes of this erosion are complex. Some people blame it on politicization of senior offices. That may be the case, but, I’m afraid there may be a deeper problem in our public sector. It is very hard to attract bright young people to go into public service today. It’s partly because there are a lot of competitive jobs in the private sector that offer better pay. It’s also because in public service, we have managed to tie ourselves into knots where people in public service end up dealing more with process than with substance. Since the late 1990s, the US State Department by statute has been forced to dedicate itself to protecting its own personnel as its primary job, not representing the United States to foreign governments, and as a result, diplomats spend their time holed up in massive concrete bunkers, rather than going out and dealing with people in other countries. Stories like this, I think, are spread across the American public sector.

The second issue has to do with complacency about the outside world. After Sputnik in the late 1950s, the United States responded to the Soviet challenge by making massive investments in basic science and technology. This proved to be a very successful set of investments that reaffirmed American technological leadership. After September 11th, we could have reacted in a similar way, by making large investments in our ability to understand complex parts of the world that we did not understand very well like the Middle East. It is a scandal that in this monstrous new embassy we’ve created in Baghdad, we only have a handful of fluent Arabic speakers. As I was driving to work the other morning, I was listening to an NPR radio program in which they were praising their own coverage of the Beijing Olympics, and of China in general. They said “We have a reporter on staff in Beijing, and he actually can speak Chinese!” I’ve heard that there are some reporters in the Chinese press agency Xinhua in Washington who can in fact speak English.

The final issue I think really has to do with the political deadlock that we face with our political system. Again, this has been commented on a great deal. The polarization has put off the table serious discussion of how to solve some of these long term and very clear challenges that every public policy expert understands. It is not possible to talk about raising taxes to pay for badly needed public goods on the Right. It is not possible to talk about issues like privatizing social security, or raising the retirement age on the Left. Neither the Left nor the Right has had the political courage to suggest raising energy taxes, which has been the obvious way of dealing with foreign energy dependency and encouraging alternative sources of energy. And so the political culture that we have created as a result of this kind of politics is incapable of making the decisions that we need.

I’ve spoken a lot about the United States today. I realize that among our graduates, there are many people who are not Americans, and many of you will return to your countries and will pursue public policy analysis there. Everybody, I believe, will benefit from better policy analysis of the sort that a PRGS education provides. But I don’t think that anyone around the world will benefit from an America that is inward looking, incapable of executing policies, and too divided to make important decisions. That hurts not just Americans, but, I think, the rest of the world as well. Graduates should be very proud of their having spent the time and effort to dedicate themselves to learning how to make better public policy. This is a noble objective, and one that is sorely needed in both in this country, and abroad.

RAND is dedicated to objective non-partisan research, but I suspect that all of you who have pursued degrees at PRGS have done so because you have a certain passion, an individual passion for public issues, and you want to make those policies better. So, as you leave RAND, I think that it is important that you maintain your objectivity and your credibility in your mode of doing research, but that you safeguard that passion because that is what is going to drive you to do good things out in the world.

Thank you very much.

Source: The American Interest, Posted on July 7th, 2008