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.

He pointed beyond our superior technical universities and high-tech defense companies to the whole American system that has emerged from our "foundational values going back to Ben Franklin and before. It's a social and political system rooted in mavericks, innovation, risk-taking, open intellectual argument, impatience, creative change, failure, the frontier spirit, competition and a compulsion to get ahead." Henninger is suggesting that if we would understand America's willingness to "go it alone" in Iraq, we need to think about it in this cultural context.

America, says Henninger, has been going it alone throughout its entire history, whether measured from 1492 or 1776. To believe that we would act differently now because other nations disagree with us would be to completely misunderstand the American experiment.

If Bill Gross is right, the U.S. may have entered the last stages of her hegemony. By our profligacy and our military adventurism we might naively be ushering in a new era in which this nation will no longer sit at the head of the world's table. But it has occurred to me that there is more than one way to look at this concept of the "American hegemony."

Isn't it possible that what has been perceived as the dominant influence of one nation has been, all along, the dominant influence of an idea? The idea, of course, is that all men are created equal and have inalienable rights; the idea of freedom and of democratic capitalism that has become its societal expression. America merely has been the first and so far most successful embodiment of the idea, so the power that flowed from our embrace of freedom made it appear to be the "American hegemony." Is it possible that the bubbling cauldron of current events that seems so menacing is actually the formless waste from which will emerge a new and greater era of human freedom; that America will be a participant, but the actual hegemony will belong to the idea and not to any nation?

Encouraging History

Some of us have been surprised that a few allies of 50 years' standing, even countries that owe their continued existence to the sacrifice of American soldiers and taxpayers, have had the temerity to propose a world view different than ours. They say they believe their interests are threatened by our posture. Is it so offensive that they should fear absolute power more than they trust us not to abuse that power?

While it is understandable that nations refuse to see the world in the same way the current crop of American leaders see it, it is just as natural and understandable that a country as demonstrably powerful as the United States, perceiving itself at risk, would feel no need to clear its foreign policy with the representatives of its economic satellites.

So there we have it. After tedious efforts to achieve consensus, the reigning superpower makes its decision ... self defense and the liberation of a terrorized nation justify an invasion. The former co-superpower cajoles a few new allies and together they make their stand ... that this is a frightening and unjustified war. The rest of the world begins to line up on one side or the other, and the largest stock market in the world unmasks the conflicted hopes and fears of its citizens; soaring 4% one day and plunging 4% the next.

As advisors, we stand ever at the edge of tomorrow, squinting into the fog of uncertainty for some clue about the future we will shortly inhabit. How do we sort it out? Bill Gross looks at our march into Iraq to depose its admittedly vile dictator and he sees the U.S., I think, as a new tyrant; or at least as a country others perceive as imperialist and against which these others are aligning themselves. In our less-than-peak financial condition, he suggests, our economic dominance is vulnerable. Perhaps.

But in Middle Eastern history there is actually a very encouraging precedent of a military conqueror who transformed that region after his victory institutionalizing forbearance and respect toward religious beliefs and cultural traditions of the nations he defeated. Cyrus the Great (580-529 BCE) united two Iranian tribes, the Medes and Persians, and incorporated leaders from both tribes into his government. It was Cyrus who, in 537 BCE, allowed 40,000 Jews to leave Babylon and return to Palestine. Read his history when you have a chance; you will find it very encouraging as we face the uncertainties ahead.

Just imagine if America could realize a success like Cyrus'. Imagine that after Saddam's defeat, freedom actually does spread and democratic capitalism, perhaps in some improved form, does bloom in the desert as Geraldo hopes. Might this not be even better, for us and for the whole world, than an era of American hegemony?

No Longer Simple

It used to be so simple. The good guys were defenders and the bad guys were aggressors. Good guys liked free markets (innovative, resilient and prosperous) and bad guys ran centrally planned economies (archaic, inflexible and dirt poor). Good guys had moral principles and the bad guys were atheists and liars. Stars & Stripes v. Hammer & Sickle. It was so simple. Or so we thought.

But the Wall came down in 1988, reducing the world to one superpower. It seemed wonderful at first, and we all dreamed of peace and global prosperity. The Germanys united and the European Union emerged and China grew 8% a year and NASDAQ broke 5000. And no nation with a McDonalds ever started a war, Bush and Putin were buddies, Alan was in charge of our money and the IMF would bail out the needy and wasn't it going to be grand.

But the Trade Center came down in 2001. And it wasn't Russia. It wasn't any particular country at all, which in some ways was the scariest part. We didn't know why it happened, and we didn't know how to strike back. We didn't know how to protect ourselves. On one frightening day we realized that it was no longer simple.

Americans as a people are not particularly contemplative; we prefer action. We are pragmatic. We fear neither risk nor failure. We are impatient. So it was consistent with our national character that after brief deliberation we defined our mysterious enemy the best we could and tore apart his nest in Afghanistan, ignoring the naysayers. Understanding that terrorism was not disabled, a modest majority of the citizenry supported our leaders' instinct to take the fight to the next level. And we have.

What is the end game? Will we take on a series of dictators? Should we? Can we afford to? Can Islamic nations embrace individual rights and democracy?

Geraldo believes the American star is still rising. Bill sees the arc of her hegemony well past its peak, a shooting star plunging toward the Arabian Sea. A middle way of seeing this hegemony thing requires a dose of American optimism. It goes something like this: The hegemony or preponderant influence of the 20th Century was not so much America as it was the ascendance of democratic capitalism. As Bill Gross ably describes, America certainly has to work through its cycle of financial excess. But freedom's stock may still be rising. Perhaps Geraldo has read the history of Cyrus the Great. George Bush's rhetoric actually matches that of the Persian warrior-philosopher, and who knows, he may turn out to be his moral twin.

As I try to understand where the current turmoil will lead, I recall that in 1776 only one-third of the colonists supported the American Revolution. But their leaders had vision and the people had guts, and hasn't it been grand!

J. Michael Martin, JD, CFP, is president of Financial Advantage in Columbia, Md.