U.S. loses its status as economic world power

The World Economic Forum has proved to be an uncanny barometer of global trends. Over the past decade, the United States has been lionized as world leader, economic giant and home of high-tech wizards such as Bill Gates.

When the high-tech bubble burst, when deficits rose, when the Iraq war went sour, the shine on the American model dimmed. But, despite widespread dismay over U.S. foreign policy, few here used to question America's role as the world's unipolar power.

What a difference a year makes. Davos 2008 has laid bare a world in which no superpower seems to be in charge. The unipolar American moment is deemed over, in part a casualty of the Bush administration's political and economic policies, in larger part the result of global economic changes that are shifting wealth elsewhere.

But we have not entered a multipolar world: China and India, though on the rise, aren't ready to take the global lead, nor can Europe do so. The consensus at Davos seems to be that we now live in a "nonpolar" world, with America too strong to stand on the sidelines, but too weak to implement its agenda alone.

The metaphor for Davos 2008 came when its executive chairman, Klaus Schwab, suggested onstage to Condoleezza Rice that America was a piano and the world the orchestra. Playing metaphorically on the secretary of state's talents as a pianist, Schwab asked whether the piano and orchestra could play together in harmony.

Rice asked whether Schwab wanted to be the conductor. But among the 2,500 top chief executives, politicians and intellectuals at the meeting, many believe there is no conductor at all.

The U.S. financial crisis grew out of years of massive lending for subprime mortgages during a housing bubble. The collapse of the bubble has undercut banks and revealed serious flaws in the entire U.S. financial system. Added to American foreign policy failures like Iraq and debacles like the response to Hurricane Katrina, this creates an image of American incompetence. More