5 November 2019

Free Exchange: Tim Kane on the decline of Great Powers


Our guest this week is entrepreneur, economist, air force veteran and latterly candidate for the US Congress, Tim Kane.

Tim is also the co-author with Glenn Hubbard of the acclaimed book Balance: The Economics of Great Powers from Ancient Rome to Modern America – I started by asking him about the thesis behind the book and why it is that great powers end up falling on hard times.

Tim Kane on…The end of empires

Empires don’t collapse due to Imperial overstretch, that’s just a bad idea. It’s almost always fiscal or monetary problems that lead to massive inflation, bankruptcy and collapse.

I think it happens when a country shifts from conserving its values to conserving its material gains. So it’s a bad sort of conservatism. They don’t want to have dynamic change…but capital equipment as it expands, liberates labour. And when you become too cautious about that, the country starts to decline.

Britain’s never really declined. It’s been surpassed in some ways. But we would dispute the notion that the that there was ever a collapse of the British Empire. And in fact, Britain is the first country that converted from being a great empire to a good nation, and that it did things against its own self interest for values that it cared about, such as ending slavery in 1807.

On….a lack of serious economics

We’re living in a really bizarre time monetarily. I think everyone knows that in the United States. The federal government alone is spending a trillion dollars more than it brings in in revenues. And in a $20 trillion economy that’s roughly 5% of the economy year after year after year that it’s spending that it doesn’t have the revenues for, and we have the most serious candidates on the left calling for completely unsustainable programmes. So the un-seriousness of the serious candidates on the Left and on the Right is very frustrating.

More trade with repressive countries helps liberate and free those countries. It’s a slow process, but it works.

On….the threat of monopolies

Monopoly power is a real thing. Monopolies don’t give a damn about progress. They don’t want small startup companies disrupting their their highly profitable enterprises…That’s an issue that governments need to constantly be on guard against.

When you get a fusion of special interest capitalism and special interest democracy, you’re really on the path to decline.

On…Hong Kong 

Terrorism is a persistent threat, but it’s not an existential threat. Whereas great power competition with an authoritarian model in China, that’s an existential threat. And how do we win against them through the lens of immigration? We should we should be welcoming every Chinese scientist, every refugee out of Hong Kong…if Trump was smart, he’d say everyone in Hong Kong you’re welcome to come here and be a US citizen.

On…America 2020

I think there’s been a politicisation of the intelligence community and I say that as a former intelligence officer. It’s really dangerous territory. And I think Americans are going to reject that. That said, my chips are on Joe Biden, still. I think Joe Biden wins the Democratic nomination and he wins the presidency.

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John Ashmore is the Editor of CapX