Until the late 1960s, the United States was the world’s dominant manufacturing power. Today, it has become essentially a rentier economy, while China is the world’s leading manufacturing nation. A study recently reported in the Financial Times indicates that 58 percent of total income in America now comes from dividends and interest payments.

Since the Cold War’s end, America’s military superiority has functioned as an entry barrier designed to prevent emerging powers from challenging the United States where its interests are paramount. But the country’s ability to maintain this barrier faces resistance at both ends. First, the deepening financial crisis will compel retrenchment, and the United States will be increasingly less able to invest in its military. Second, as ascending powers such as China become wealthier, their military expenditures will expand. The Economist recently projected that China’s defense spending will equal that of the United States by 2025.