As U.S. executive director at the World Bank in the early 1980s, I knew what it meant to represent the dominant world power. I had more votes on any issue that came before the board of directors than anyone else, could veto any change to the bank's constitution and got my phone calls returned promptly from most everyone. The United States didn't win on every contentious issue, but our batting average wasn't bad.
Today there is plenty of soul- searching about the United States fading on the global scene. The most recent example is a New York Times article by Adam Davidson suggesting, based on the policies of the United Kingdom under Prime Minister Harold McMillan in the mid-1950s, that we "adjust to a smaller role in the world."
The last time this point of view rose to prominence was when Japanese steel, cars, TVs and Sony Walkmen overwhelmed sleepy American industrial giants and drove many of them to bankruptcy.
That was a good thing. The country woke up. Rather than complaining about Japanese subsidies, exchange rates and low wages, many U.S. manufacturers started studying Japanese production techniques, quality control and attentiveness to what customers really wanted. The South Koreans were even faster learners.
The Japanese got lazy and rested on their oars. Their banks loaded up on bad debt and eventually paid a steep price. They refused to truly open up their economy to the rest of the world.
Today the 500-pound gorilla in the room is China. "Aren't you worried about China?" I am frequently asked. My answer is, "no -- up to a point." A truly prosperous China is a great asset to the world economy, just as the United States has been.
The Chinese have a long way to go: The per-capita income in China in 2010, according to the World Bank, was $4,240, compared to $42,050 in the United States. But as China prospers, it becomes a better customer for U.S. exports and a more integrated member of the global trading system.
Of course, with 1.3 billion people, a more prosperous China that relies on foreign supplies of raw materials is becoming a more influential factor in regional and global political, financial and economic issues. This is clearly influencing Chinese diplomacy, military priorities, and foreign aid programs.
There is every reason to expect increased encounters with U.S. interests in a multitude of new venues. Thoughtful, forward-looking American diplomacy, supported by credible military power, can help reduce inevitable friction and ensure the protection of our legitimate interests. A sensible resolution to our "fiscal cliff" budget debate could relieve many near-term anxieties.
Today, value-creating ideas and technology can proliferate with the speed of the Internet. When government and special interests stand aside, even a bit, extraordinary things can happen, whether in China, India or Africa. Widely shared economic growth has resulted in a dramatic reduction in global poverty rates, particularly in China, over the past 20 years.
If these conditions predominate throughout the globe, then "there is no reason why the whole world should not be as rich as the leading industrial country" in the words of Stephen Parente and Nobel Prize-winning economist Edward Prescott. Is that an outcome to be feared?
James B. Burnham is Distinguished Service Professor of Finance at Duquesne University's Palumbo Donahue School of Business.