The Economist gets this one utterly wrong—explaining, perhaps, why that august newspaper tragically endorsed the war in Iraq (and has yet to acknowledge the tragedy of that endorsement).
They don't understand true power.
True power--its sine qua non--is the ability to get people to do what you want them to do (with the least possible effort on your part).
If people in other countries respect, admire, and want to emulate and support the United States, they will elect people who feel likewise. And those elected officials are far more likely to cooperate with us--to do what we want them to do.
Now it's true that if your moral standing with potential partners--your legitimacy--is low, "soft" power isn't going get you much. That's when you have to unclip the holster. Hardly the easy or inexpensive way to wield power.
And that's the point we came to under BushCo, after witnessing the most precipitous decline in American power since...well, it's actually hard to think of any decline in power that even vaguely compares, in all of American history.
Think Hamas: would it have won the Palestinian election absent Bush and Iraq? You can never know, but it's not crazy to suggest it might not have.
Think Chavez: would he have pulled off the election he did in 2006 (with the Venezualan economy plummetting) absent a visceral anti-Bush groundswell in the country and the region?
Think Turkey: would its leaders be in a stronger position to support U.S. initiatives--or even be pressured to do so--if their electorate hated us less?
With 200,000 Germans in the street celebrating a not-even-elected-yet American president, does it seem likely that that electorate will choose leaders who support that president's policies and positions—and give those leaders the political slack to do so?
Will those leaders be willing and able to support us by sending troops Afghanistan? It's not crazy to suggest that they will.