Is American chaos bad for the economy?

It’s all downhill from here. Or is it? [Bloomberg]( This is Bloomberg Opinion Today, a rhyming diagnosis of Bloomberg Opinion’s opinions. On Sundays, we look at the major themes of the week past and how they will define the week ahead. Sign up for the daily newsletter [here](. [Going Down]( “I look forward to each new fiasco with the utmost relish.” This line fairly accurately sums up the attitude of your humble columnist and probably most of his colleagues in opinionland. Too great a spate of good news, effective government and global harmony would have us all out of a job. The quote comes from Evelyn Waugh’s [first novel](, Decline and Fall, the story of a naïve schoolteacher who finds that life and love aren’t what they’re cracked up to be. If only he could have subscribed to this newsletter. The novel’s title, of course, is taken from Edward Gibbon’s epic The History of the Decline and Fall of the Roman Empire, the first volume of which was published in 1776, just as the British were simultaneously forming their great empire and losing its first jewel, the American colonies. And any discussion thereof today leads, inevitably, to arguments over the decline and fall of the American (sorta) Empire. Niall Ferguson has long been [expecting]( Visigoths at the gate, as per “Ferguson’s Law”: “Any great power that spends more on debt service than on defense will not stay great for very long.” Washington is on target to reach that dubious achievement this year. Andreas Kluth makes Niall look like a ray of sunshine. He finds that [a new series of reports]( from Rand scholars on the declines and falls of the great world powers since Rome, from China’s Song dynasty and Renaissance Italy to the Ottomans and the Soviet Union, hits very close to home. “The causes for their decline were diverse, but a few themes recur,” Andreas [writes](. “One common pattern in aging powers is bureaucratic ossification and [metastasizing internal complexity](. These trends strain institutions, which elites then tend to exploit as they compete against rival factions of the same elite, while ignoring their society’s common good. You could call this pathology a toxic mix of complexity and polarization. That diagnosis certainly rhymes with the state of today’s America … we can’t even agree on what to fix, much less how.” James Stavridis, a retired 4-star admiral, is equally alarmed. Having spent his entire life in the military, he’s frequently asked, “Admiral, what keeps you awake at night?” His answer is simple: “It is the divisions within US society.” He ascribes it, in part, to the decline in high-school civics: “We are far too focused on the benefits derived from citizenship with precious little discussion of the responsibilities of being an American … a national mandate of at least a full semester of focused civics would make a big difference,” he writes. True, we are a long way from seeing if America’s collapse is inevitable. But we had a good week for seeing declines, if not falls, all over the place: inflation, unions’ power, employers’ power, corporate focus, German EVs, Chinese optimism, California’s governor, South Korea’s population and many more. About the only thing headed upward is Gen Z’s self-righteousness, but that doesn’t come as a surprise to most. The most important decline first. “There was white smoke over the Bureau of Labor Statistics, sort of, on Wednesday morning,” [reports]( John Authers. “The key measures of consumer price inflation for April confirmed expectations for a slight decline, and alleviated growing anxiety over a possible reacceleration. Risk assets across the world spent the rest of the day exhaling deeply.” So did Fed watchers. So did retirees. So did you, unless you feel US service workers are becoming as inept as their counterparts in the former British Empire. (Matthew Brooker can [explain](.) So is this fall a rise in our fortunes? The Bloomberg editors, for one, are pretty jazzed by CPI’s decline. “This evidence of continuing disinflation is well-timed,” they [write](. “Having previously signaled rate cuts in the second half of this year, the last thing the Fed wants between now and November’s elections is to court political controversy by reversing itself and raising rates … Fortunately, the data supports the Fed’s position that it can afford to wait and see, and that its choice will be when to start cutting, not whether to raise rates further.” The editors are also encouraged by a “sign of cooling” in the labor market, where unemployment hit 3.9%. Not sure American workers feel the same way, but then again, their power has been declining for half a century: Among both private- and public-sector employees, union membership has [fallen]( from 35% in the mid-1950s to 10% today. What’s intriguing is that Tyler Cowen, staunch friend of [free markets](, isn’t sure that workers’ waning fortunes are entirely a good thing. “Labor’s share of the US gross domestic product has been [falling]( for a long time, by seven percentage points since World War II,” Tyler [writes](. “The labor share for 2022 — depending on exactly which measure is used, it comes in at slightly more than 60% — is the lowest measured since 1929.” Caveat: Workers are likely more concerned about the size of their paychecks than their slice of the economic pie, and in the US those pay packets have been getting thicker lately, especially for [lower earners](. Still, it’s an interesting data point. “To the extent the underlying trends driving the declining share of labor are technological, they are hard to reverse. Nonetheless there are some ideas worth pursuing. What about making it easier for working Americans to invest in capital and [land](? The notion of the ‘[ownership society](’ could be resurrected, and a more favorable tax treatment of capital income — perhaps restricted to lower earners — would create an impetus for workers to invest more.” But if you think bosses have it so easy, Adrian Wooldridge has done some legwork to discover that they, too, are suffering a decline — in concentration. “At an executive breakfast held on May 9 at the Ivy Club in Covent Garden by the Global Peter Drucker Forum and featuring management thinkers as well as former and current executives, the most popular answers to the question of what ails the corporate world were ‘lack of focus’ or excessive complexity,” Adrian [writes](. “Lack of focus not only diverts companies from providing their core products and services. It also contributes to managerial overload and complexity. People who have nothing to do with the company’s core business build empires. CEOs are distracted by an expanding list of demands on their time. What was once transparent becomes opaque and what was once straightforward becomes labyrinthine.” Sounds like a fiasco that underpaid workers could relish. Bonus [Decline and Fall]( Reading: - Could a [$70,000 Baby Bonus]( Solve South Korea’s Fertility Crisis? — Tyler Cowen - Why Mercedes’ $100,000 [Electric Jellybean]( Flopped — Chris Bryant - Gavin Newsom Could [Turn Into a Liability]( for Biden — Erika D. Smith - Why Are Americans [So Angry]( While the Chinese Are Calm? — Shuli Ren  [What’s the World Got in Store](? - UK CPI, May 22: Churchill Would Blanch at [Sunak's Steel Deficit]( — Matthew Brooker - Eurozone manufacturing PMI, May 23: Europe's [New Power Map](, From ASML to the Arctic — Lionel Laurent - Japan CPI, May 24: Toyota Is [Taking the Long Road]( to EV Success — Tim Culpan [If the Kids Are United]( As if fumbling focus wasn’t enough, titans of industry and information have another downer: Gen Z. “Corporate America would very much like its employees to be quiet now,” Beth Kowitt [writes](. “Executives have had enough of the bring-your-whole-self-to-work and speak-up-at-the-office grand experiment of the pandemic era. Across the US, C-Suites are yearning for a return to business as usual — aka, you do what we tell you, we pay you for it, and you keep your opinions to yourself. But if the activity on college and university campuses is any indication, Gen Z is unlikely to cooperate.” And even if the war between Israel and Hamas magically ends, Beth thinks things have changed for real: “Employers better prepare themselves for this kind of energy; soon enough this crop of new graduates will be arriving in the office. For some Gen Zers, it’s not just the war they’re protesting, but also a more general failure by those in power to care for them and the mess of a world they are set to inherit.” Of course, Gen Zers can’t stand up to the boss unless they are out in the working world. That’s a real problem if they plan to have families early on, according to Sarah Green Carmichael. “Among employed mothers, almost two thirds — 63% — have considered leaving the workforce because of the cost of child care,” Sarah [writes](. “That figure rises to 82% among Gen Z, a generation where 1 in 4 mothers regularly accept financial help from their parents.” In other words, the decline that should most worry those of us with Gen Z children is the one coming in our bank accounts. Notes: Please send electric jellybeans and feedback to Tobin Harshaw at tharshaw@bloomberg.net. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Before it’s here, it’s on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can’t find anywhere else. [Learn more](. Want to sponsor this newsletter? [Get in touch here](. 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