There is no doubt that the US wields enormous influence in the world today, be it in politics — with its superior global military capabilities and dominance in international institutions such as the United Nations and North Atlantic Treaty Organization (NATO) — economics or finance, as the world’s largest economy and by virtue of the US dollar hegemony. Its rise to sole superpower status has been virtually unchallenged since the end of WW2, which devastated countries across Europe and Asia, and especially after the fall of the Soviet Union in 1991.
We have written about how the US has benefited enormously by engineering the US dollar hegemony, through the Bretton Woods system — positioning the greenback at the centre of global networks as the settlement currency for international trade and financial transactions and as the world reserve currency. With this, the US is able to finance ever-growing fiscal spending with cheap borrowings — far outspending every other country on its military machinery, pursuing expansive social programmes, supporting American consumerism and elevating living standards for its population, all the time compounding the positive feedback loop.
There are obvious benefits to this US unipolarity. Its military power preponderance maintained an era of relative peace and order, as well as economic and financial stability in the world. The absence of large-scale conflicts fostered an environment conducive to cooperation among nations, innovations and sustained economic growth. The world reaped gains from globalisation. Countries such as Japan, Germany, South Korea and Taiwan “outsourced” the responsibility for national security to the US. By doing so, they enjoy peace under the protection of a powerful ally — and prosper from being able to divert resources that would have been spent on defence (and wasteful military competition) to economics. The ever-expanding US consumer market provided the export market for developing countries. As with everything in life, however, there are trade-offs. The costs are now increasingly evident.