ThereĆ­s more than one way to look at American hegemony.

Geraldo Rivera is a former Vietnam war protester who told millions on TV recently that he has lived to regret his earlier political posture. Though recently forced to broadcast from Kuwait because of indiscretions in revealing troop movements, Rivera has been one of Fox News' most enthusiastic cheerleaders for Operation Iraqi Freedom, and for the idea of deposing dictators so that democracy can bloom in the desert.

Bill Gross, a U.S. Navy veteran of the Vietnam era, seems to regret having remained silent about what he now considers a borderline questionable undertaking. In March of this year, the brilliantly successful bond fund manager took a public stance in opposition to the Iraqi invasion. He worries that our mission is not just a pre-emptive strike in self defense but the first step of a military march "toward a new democratic world order with America at the center." Citing his understandable concern about the corrosiveness of absolute (military) power, he says, "I fear for my country's proud heritage and even more for its future."

In the prior (February) edition of his widely-read Investment Outlook, Bill Gross addressed the military and economic roots of the American hegemony that has helped stabilize global activity during the past half-century. He is concerned that the military dimension is being emphasized unwisely even as our economic dominance is beginning to unravel. The evidence: rampant consumerism, a huge trade deficit and a costly military expansion.

The United States' attack on Iraq without U.N. backing came after Gross' memoranda about the war and the hegemonic decay. He probably was not shocked by the number of Security Council members that felt too threatened by our aggressive approach to the Iraqi problem to throw in their lot with us this time. Is this yet another warning that what Gross calls the American hegemony is actually disassembling? Is a coalition of the unwilling emerging to balance our influence and power? Russia, China, France and Germany come easily to mind. Even Mexico and Canada may be ideologically up for grabs.

Profound Issues

Whatever your personal view of the Iraqi war, you will undoubtedly recognize that the questions it raises are not trivial. The reasonableness of U.S. aggression and the future of our economic influence are pivotal to the outlook for peace and prosperity on planet earth. How nations will align themselves in this post Cold War era, and to what extent new populations will embrace economic freedom and a rule of law, will have a far more powerful influence on the flow of capital and creation of wealth than will our consumer debt or current balance of trade.

As part of our obligation to watch over our clients' nest eggs, it seems to me that we have a serious responsibility to think deeply about these issues. At stake is nothing less than the kind of world our children and grandchildren will live in. A philosophically less compelling issue, but one that certainly looms large for our retired clients, is whether the long bear market in stocks all over the world has a chance of righting itself or we should brace our portfolios for global instability in the wake of America's lost hegemony.

I think we owe our clients an opinion, even one subject to change, because the validity of our professional judgments is inescapably fused with the current crisis and the nature of its ultimate resolution. I cannot imagine, for instance, how we can offer opinions about asset allocation or make long-term assumptions about investments returns and inflation while ignoring the global turmoil and its implications for the future of democratic capitalism.

Hegemony Of An Idea

The usual meaning of hegemony is "preponderant influence or authority, especially of one nation over others." Previous notable hegemonies were largely the product of military dominance. Think Solomon, Cyrus, Alexander, Charlemagne, Napoleon, what have you.

The word itself derives from the Greek hegeisthai meaning to lead. Even the French would agree that the United States has exercised leadership and exerted enormous influence in world affairs since World War I. The facts in this regard are incontrovertible. But there is far less agreement among nations today concerning the source of our influence. Was it mainly military, for example, or economic or moral? Has our leadership been principled or merely self-serving and "arrogant," as some are suggesting.

Daniel Henninger tackled the arrogance issue in what I thought was a seminal piece in the Wall Street Journal (Opinion, Friday March 21, 2003). While military power is a mainstay of our superpower status, he wrote, what is more important to understand is the reason our superior weaponry exists.