Scifi from the 90s, probably older. Our Earth is a kind of secret testing ground for the future administrators of a Galactic federation. The USA is in an economic downturn, India is the new superpower.

War is coming and the protagonist (politician? diplomat?) is trying to prevent it. Along the way he starts to wonder why earth isn't "getting better" despite good conditions and eventually it is revealed to him why: war and conflict is at least partly engineered as growing up on "bad earth" creates the kind of strong character needed to keep the federation a peaceful prosperous place. people like him are eventually removed from earth to do their "real job", earth is "sacrificed" for the greater good.