Welcome the U.S. relative decline
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Whoever wins the U.S. presidential election will preside over a relative decline in the country’s global economic position. He should, but probably will not, accept the inevitable.
There was a time when almost everything about the American economy set the world standard. In 1960, The United States was the world’s largest market. It had by far the most developed infrastructure, easily the best educational system and undoubtedly the most business-friendly government. It was the source of most innovations, from safe highways and comfortable suburban houses to computers and advanced pharmaceuticals.
Those days are long gone. The creation of the European Union has left the U.S. market in second place. Overall, the infrastructure in Europe and Japan is at least as advanced. The United States is still the global leader in many areas of industry, education and government, but it has fallen behind in some, and the gaps have narrowed in all.
The automobile industry provides a good example of the trend. Researchers Joyce Dargay, Dermot Gately and Martin Sommer point out that in 1960 the United States had 411 vehicles for every 1000 people, while Sweden, then the European leader, had 175, only 43 percent as much. By 2002, the U.S. ratio had almost doubled to 812, but the ratio in the current European leader, Italy, had increased much faster – to 656 or 81 percent of the U.S. level. In Japan the ratio moved from 19 to 599. Almost inevitably, in the interim the United States lost its clear pre-eminence in automotive design and manufacturing.
The principal cause of the end of American economic predominance is the sincerest form of flattery: imitation. Other countries have learned from the American teacher, and copying proved easier than creation. Some of the students learned so much that they are now teachers. The catch-up was only hastened by American economic weaknesses, most notably insufficient investment in infrastructure, a persistent trade deficit in manufactured goods and financial mismanagement.
None of these problems as well as the painfully slow recovery from the 2009 recession is likely to have much effect on the basic pattern in the next presidential term or for many terms thereafter: the U.S. economy will continue to advance, but much of the rest of the world will advance faster. The largest relative losses will no longer be to Western Europe and Japan, which are basically in the same economic position as the United States. They are rich and slowly getting richer despite financial, social and demographic weaknesses. However, about 80 percent of the world’s population live in countries which have a long way to go to catch up to global standards. Some may languish, but others will move fast enough along the path towards prosperity to ensure that America’s lead narrows.
What should the next President do?
He should recognise reality. The truth may be painful, but it is better to know. An American president will be better at promoting American interests if he does not assume he has the right to set the global agenda on trade, finance or technology. Recognition will also make him better at calibrating military and diplomatic ambitions to economic reality. The president might just be more motivated to address domestic economic weaknesses if he has no notions of inevitable national superiority.
After he admits the hard truth, he should relax. Not only is there nothing much to be done, but the relative decline of the United States is basically a good thing. More extensive prosperity is good and lesser global economic inequality is even better. Americans who believe in the nation’s manifest destiny to teach the world the right way to live can be pleased that one part of the American dream, the tremendous economic enterprise, is becoming more of a global reality.
Finally, he should act responsibly. Although the American economic era is slowly ending, the country has a disproportionate residual importance. Its currency is the global reserve and its research universities remain the world’s best. In many parts of the globe, America is considered almost as much the archetypical land of opportunity as it was a few decades ago. A president who wishes to conserve as much of the country’s position as possible would do his best to nurture these legacies. For example, he would try to reverse the current fiscal and monetary policies, which might have been designed to make the dollar untrustworthy.
Unfortunately, neither candidate shows much sign of taking my advice. At least in public, they vie to show more confidence in American greatness. Such boosterism may be an electoral necessity, but it is poor preparation for dealing with the challenge. In the 19th century, France suffered from refusing to recognise that the Napoleonic conquests marked the peak of the nation’s influence. The UK repeated the mistake in the 20th century. The United States looks all too likely to do the same.
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A fundamentally honest series of appraisals.
While the “…relative decline of the United States…may be inevitable, I find it hard to see in this any “…good for the country”. More extensive global prosperity is good and lesser global economic inequality is desirable, but it doesn’t help Americans change expectations that may prove increasingly unrealistic.
Yes, the “…tremendous economic enterprise…” has proven possible to “copy”. It will become ever more globally common in those countries not in active pursuit of a twelfth century way of life and dedicated to denying the female half of their people an economic future.
“A president who wishes to conserve as much of the country’s position as possible…would try to reverse the current fiscal and monetary policies, which might have been designed to make the dollar untrustworthy.” Wiser words than commonly heard these days.
Excellent article. The world is changing at light speed and we have front row seats. Very soon discussion will have to take place regarding a single world currency and some sort of global judicial system. The financial system are already collapsing, so those will be re-invented over the next decade. Necessity is the mother of invention. Then we should help our children figure out how to come up with an economy where only 40-60% of the population is needed to work. That will soon be a reality too.
Of course, these topics are not for the masses. They just want to know that they will still have cable and a “32 pack”. Mr. Hadas, be careful not to narrow your audience to much. Remember, Trayvon Martin gets weeks of news cycles, article like these get you a “tinfoil hat”.
It’s a new world and a new economy than the one most of us are still clinging to. The old goals of increasing foreign markets and driving the products for that is no longer a basis we can work from. America’s biggest resource has been the creativity and resourcefulness of its workers. If we use that to figure out how to best succeed in this new model, we’ll be OK. It may not be like the old days when we called the shots, but we can still be prosperous under the new rules.
Your simplistic analysis assumes the “Great Game” is inevitable, and that we should quietly prepare for our “retirement” to allow the next Great Power to ascend the throne.
The problem is the present trip down the rabbit hole into globalization — i.e. free trade, including the tax laws and banking regulations that support it for the benefit of only the wealthy class — is nothing more than a massive Ponzi scheme which is about to collapse.
Also, we would be going into “retirement” with NO funds to support us in our declining years — only massive and exponentially growing debts — with numerous enemies (both internal and external) who would gleefully dismember this country for spare parts (think Greece as a best case scenario). Not a good idea, since we would quickly end up as a third world country.
You are wrong about our problems. They do not lie outside of the US as you indicate. Our problems lie within the confines of our own political, social and cultural systems which are drifting backwards in time at an ever increasing rate, and which will result in the total collapse of the US economy quite soon, thus cleaving this society into only the super-wealthy and the dirt-poor.
Since they lie within our ability to change our own circumstances, our problems are NOT insoluble!
This country stands at a crossroads again, much as it did just prior to the Civil War in the early 1860s.
Unfortunately, the Civil War did not resolve ANY of our problems, only exacerbated them. While we were growing as a nation in our westward expansion, the tensions were kept under control.
However, we are again at an inevitable crisis point where we must make choices.
Arguably, there are only two choices we can reasonably make to survive, neither of which will be pleasant for anyone.
Going backwards in time to when the wealthy ruled this country like a landed gentry again is NOT an option, even though that is clearly their intent, mainly because the country has changed dramatically from a basically independent agricultural society to a highly developed economy which CANNOT simply return to a simpler time, which in fact NEVER existed. Those times exist only in peoples’ minds, but history does not support what they believe.
That choice will be guaranteed to throw this country to the predators just waiting their chance to tear at our carcass, and we as a people will suffer greatly when that happens.
The two choices are basically these:
(1) The greatest financial disaster in our nation’s history has once again widened the cracks that lie beneath.
For example, the US is suffering from basically the same problems as the EU. It was formed “fatally flawed” as well, with the issues that should have been settled beforehand, but which were suppressed during their expansion years, are now tearing it apart. It will not survive intact, but perhaps as a smaller coalition of nations in some sort of trade union. The EU, due to their fundamental cultural differences CANNOT form anything more than a loose trade confederation. It is an open question as to whether the US is so culturally divided that it can do otherwise. The important thing to realize is that the US has reached EXACTLY the same point where cultural and economic differences are about to tear this nation apart. The only choice remaining is how we should do this, much like the choices the EU is facing.
This country from its beginning has been fatally flawed with far too many urgent problems left unsolved in the urgency of the moment (i.e. to fight the greatest military power on earth at the time for our “freedom”). Far too many compromises were made and these problems remain with us today. Now they have once again reached a point at which they MUST be resolved or we will not survive.
Frankly, I think the US as it is today cannot remain without being forced to balkanize into several separate states.
In truth, the experiment with a so-called multicultural society has totally failed. The American people (however you define that term now) are no longer coherent enough to remain intact as a nation. This country is much more like Spain, which is also about to fail as a nation for the same reasons.
What was begun during the Civil War in the 1860s should be resumed — but peacefully this time, as the EU will soon realize it must do to survive.
(2) The only other option is attempt to retain the US intact, BUT I believe this is impossible because of the entrenched power of the wealthy class who have no incentive to do so.
I throw this out as an “ideal” that I do not believe is feasible given the massive differences that divide this nation at the moment.
First of all, contrary to popular belief, this country is NOT a democracy.
The present government was set up in 1776 as an oligarchy which is defined as:
1. a form of government in which all power is vested in a few persons or in a dominant class or clique; government by the few.
2. a state or organization so ruled.
3. the persons or class so ruling.
4. chiefly ( US ) a small clique of private citizens who exert a strong influence on government.
Notice particularly definition #4 which uses the US as an example of a variation on the concept of an oligarchy.
THAT IS OUR FATAL FLAW!
This country is returning to its “roots”, which means ALL the wealth is being accumulated by fewer and fewer people in the ruling class, thus the rest of the country is literally dying.
There are many reasons for this, but it is a relatively “easy” problem to solve, IF that is what we desire.
We MUST change our system of government into a true democracy, or ALL of us will suffer the complete social and economic collapse of this nation.
Personally, I do not think the “American” people care enough about this nation anymore to do what it take to keep it intact.
Thus, we will soon suffer economic collapse and another Great Depression, from which this nation will not survive intact.
It is your choice — wealthy, middle class and poor alike — to keep our nation intact or to continue to tear it apart for the benefit of your class or racial/ethnic group.
In order to save this country we must be — ALL OF US — willing to work towards that goal.
As it is now, the present system is totally and irretrievably broken.
Mr. Hadas,
If you don’t want to take the trouble to understand American history and economics, you should not write about it, since your “opinions” are not based in fact, thus extremely disingenuous at best.
For example, you state, “The principal cause of the end of American economic predominance is the sincerest form of flattery: imitation. The catch-up was only hastened by American economic weaknesses, most notably insufficient investment in infrastructure, a persistent trade deficit in manufactured goods and financial mismanagement.
ARE YOU SERIOUS?
What you are talking about, but do not have the requisite honesty to state openly is that “free trade” with China beginning in the early 1980s is what destroyed this economy, and continues to do so today.
The Chinese are not driven by flattery, but a desire to use the US knowledge and economy to leapfrog into a leading world power. And their plan has succeeded beyond their wildest dreams, mainly because of the unbelievable greed and stupidity of the wealthy-driven US government.
What is truly appalling is the US wealthy class pretend they don’t know this is going on, and argue for more free trade and less regulation so they can compete on the world markets. That is a working definition of insanity, or they are lying through their teeth to the American people.
Since the 1980s, China has dangled the vision of the Holy Grail in front of the US wealthy class and they have been suckered into the greatest scam ever perpetrated on this country by another nation.
What is ironic is neither country is really practicing free trade as it was envisioned by Adam Smith. The proof is that free trade as outlined by Adam Smith benefits BOTH of those engaged in free trade.
The US is practicing a twisted neo-con version of free trade that benefits only the wealthy class.
The Chinese meanwhile have been practicing Mercantilism. They have in only 30 short years completely drained the US of all its resources, including our lead in education and science, as well as the bulk of our manufacturing jobs to feed their economy.
Our cheap prices for manufactured goods, which we could never really afford because their economy was cutting ours to the bone, are now showing up in a total US debt of over $16 TRILLION — ALL of it either directly or indirectly caused by free trade, favorable tax legislation for them, and non-existent banking regulations.
THE FREE TRADE WITH CHINA is mainly responsible for the massive inflation of the 1990s, the collapse of the US housing market in 2007, and the collapse of the stock markets in 2008.
Furthermore, as you say, “The catch-up was only hastened by American economic weaknesses, most notably insufficient investment in infrastructure, a persistent trade deficit in manufactured goods and financial mismanagement.”
ALL of these things, are the RESULT of free trade with China (and Asia in general), not the CAUSE of American economic decline.
With appropriate tax, trade and banking legislation in place the US wealthy chose to invest in China where they could make truly MASSIVE profits by capital investment in Asia rather than in the US.
The US wealthy class has gutted the American economy for their own personal gain.
The irony is that they were being totally duped by the Chinese who were using them to destroy the only world power that remained in their way to global dominance.
To tell you the truth I am outraged by your twisting of the truth for reasons I can only guess at, which is certainly not to benefit this country.
It’s too bad this is still a reasonably free country, since it gives people like you the opportunity to destroy what freedoms we have.
Mr.Hadas – You are doing what a lot of people do when thinking about the US post war economic prosperity. People tend to forget that the US did not build the modern world all by itself and was in large part the beneficiary of global developments, not their initiator.
The post war years were good for the US because it had massive savings from wartime rationing. It had not suffered the destruction that a large part of the world had seen and was able to convert massive industrial output to civilian use quickly.
The USA did not invent the interstate highway system, NAZI Germany had. The GI bill changed the demographic distribution of College educations from something only the elite could obtain to one that anyone could get.
The US is not the last word in research and never really was. The Europeans get formidable educations too. I have some very good economic and social history books that are from European educated writers. I have a lot of books on architecture from Europe as well. The world is stuffed with good brains. When I saw Europe for the first time in 1969 on a family vacation with my family – I had just graduated from high school – my father was stunned with the quality of life and standard of living he saw all around. He thought then that the Europeans had a better standard of living, actually, than we had. Europe is not a struggling backwater by any means and even on more recent trips (in the late 90′s) it is obvious that Europeans were not suffering from substandard living conditions for the most part. They are layered deep in architectural and historic heritage. I saw Rome and am convinced it is one of the most elegant cites on the earth. A place doesn’t have to be shiny penny bright to be sophisticated. Americans are used to living in environments only a few decades old and seeing shopping malls that shudder at the sight of a worm carpet or a few scuffs and fingerprints. Put the material is very thin and doesn’t last long. The rest of the world builds very substantial houses using reinforced concrete and CMUs while Americans are living in the modern equivalent of the stick built structures that used to surround the Mezzo American cities of the Incas and Aztecs. And we actually pay so much more or them then the rest of the world pays for its far more durable homes and commercial buildings. I’m not at all sure we are getting the better deal.
The entire developed and developing world – including the ME – especially the major oil producers – have been pursuing state of the art urban development. Look at the cities of the world on Google earth. In many ways they are doing things better than the US. For one thing, many of them are avoiding energy intensive suburban sprawl. Take a look at Sao Paulo, Brazil. How does a city as large as that manage to have a very sharp edge? I was looking at Syrian cities and one sees the same distinction between urban areas and agricultural lands. It is very sharp contrast. Everything within that limit can be served with more efficient public transportation.
The US does something older societies didn’t do. We measure our prosperity on the basis of GDP figures (one of your earlier articles) and not so much on what we have built. We had a mobile population where it used to be said Americans moved to a new residence every 7 years. They bought new cars regularly – every 3 to 5 years, and used a lot of consumer credit. Mortgages, car loans and consumer credit make for a lot of money changing hands rapidly. More established countries with older infrastructure and more settled neighborhoods don’t do that as fast but that doesn’t make them poor. It makes them fiscally conservative. It makes them more socially conservative and they live with more entrenched social status distinctions. But that is where the US is now heading because we don’t have the vast undeveloped lands we once had. But we have federal lands that could be put to good use for modern future compact growth and for more than mineral and hydrocarbon extraction.
The pursuit of a 12th century way of life for the ME is a memory of the glory years in their minds. That was when the ME was the most sophisticated society on the planet. They had the great universities, the luxurious living conditions, and the most liberal social systems. And they were the great scientists and philosophers. The Europeans were still struggling under the domination of feudal war lords and newly forming nation states with kings and it’s philosophy was still Scholasticism and totally under the control of Church institutions. The standard of living was very low and the majority of the population was living in very primitive conditions. The Europeans were just beginning to engage in trade between their own countries while the ME and China were trading with each other, India and some parts of Africa.
The thing that terrifies the West about Sharia law is their penal code. They may not have believed in prisons. But neither did the Europeans. They were no better and imposed the death penalty even up to the late 18th century for all kinds of crimes, including petty theft.
Islam believed in dismemberment and the subjugation of women. But all those countries have signed the UN Universal Declaration of Human Rights and are moving to bring their societies into conformity with it. The west was no better in the 12th century and not even much better in the 20th except among the upper classes. It wasn’t until the 60s that women were thoroughly and popularly critiquing their roles in modern society. There were earlier women writers who questioned women’s place in the modern world (and maybe only Gay men like me actually read them). I read a lot of Edith Wharton and think she’s clearer headed and “butch” than Henry James, actually. Henry James so preoccupied with the social codes and intricacies of the late 19th century, I have a hard time following him. Wharton isn’t nearly as impressed with the social brik-a-barc.
The suffragette movement started in England at the turn of the century and didn’t really get as established here until about a decade later I think? And it started with upper income women first who already had some degree of economic freedom.
People forget what the US looked like even 60 years ago. For an eye opener look at the HABS collection online at the Library of Congress and you will see what prewar US cities and historic sites looked like. American cities were very shabby and even derelict, especially the south and some parts of NE cities. LA is a post war city almost entirely.
Those buildings existed in a country that did not believe in nearly universal credit. But it’s our heavy dependence on credit and credit instruments that seem to be heading to the greatest difficulties now. One can never ignore the credit card bill and a country can’t or its currency itself becomes garbage.
The USA has almost been rebuilt in the last 50 years and can get very shabby looking very quickly. Paris and Rome will hold up far better and far longer, as will most of the new structures in the world because they are better built. Substantial parts of those cities are over a few hundred years old already. Most of what has been built in the last 50 years in the US isn’t going to hold up well in even a few decades. Houses and many commercial buildings were designed to last the life of their mortgages. Maybe, when the party’s over, the decorations fall off the wall, the table collapses and the roof caves in?
Very interesting opinion, considering the Euro currency is on an accelerated track to the dumpster, the Euro zone is disintegrating before our very eyes, the Western European model of the welfare state is about to undergo radical modifications that would hopefully bring it down to reality, which is that the European dream is, well actually was – just a dream, built on good will, economic and political miscalculations, and a credit bubble of epic proportions.
The author’s opinion is also interesting in view of the slowdown in China, and the inevitable political crises that will ensue, the slowdown in India and Brazil, and the reelection of Vladimir Putin, who has become the symbol of the demise of Russia as a global power, and a functioning society. The once promising Japan doesn’t seem to recover from its stagnation, so what’s left?
The world is constantly changing, and so is America, but relatively speaking, America is as dominant as ever.
@realityAgian – That position of “dominiance” would be more believable if you are from another country and can prove that you were.
The Chinese think they are or soon will be. And we don’t exactly measure national debt on the up and up. We don’t lump all the municipal debt in the same category as the national debt. And those levels of debt are somewhat dependent on each other. We are a predominantly urban country now and the central government can’t afford to let municipal governments go under either.
And there are many comments starting to appear that actual think it would be a good idea if the USA broke up into smaller autonomous regions according to ethnicity or local favor and attitude? I don’t think that’s a very good idea. That would be asking for civil war. The USSR followed that route and lost territories that they held since the time of Iva the terrible as well as the iron curtain countries.
I think it is a big patriotic puffed up illusion that any country is truly “dominant”. When one hurts they all feel it, to greater or lesser degrees. Fortunes have a way of vaporizing due to global shocks.
5% of the world’s population isn’t “dominant”, it’s privileged.
@ paintcan –
I would like to clarify your obvious misunderstanding of what I said. I am NOT advocating the voluntary breakup of the US. I am saying we need to face reality that the present form of government we are using has a fatal flaw. IF we truly care about this nation we should try to fix it, mainly by “starting from scratch” again and this time try to get it right. THAT is my preference and would cause the least disruption.
Let’s face it, this nation is irretrievably broken.
For the first time since the 1860s and the US Civil War, even ordinary American people have lost faith in their government — most do not understand why, except that something is dreadfully wrong — which is not a good sign at all. But the wealthy-controlled government is totally ignoring this trend as it continues to destroy their own nation.
I fail to understand their rationale. They care more about their own personal wealth than anything else. Even Romney — the “poster child” of the wealthy class — is being seen as a viable alternative to Obama by much of the middle class. I am not a supporter of Obama, nor obviously of Romney, but I was hoping Obama by the massive voter acceptance of him as an agent of change could actually stand up to the entrenched wealthy class who are destroying this country, but he is seemingly unable to do that for reasons I cannot fathom.
Are you kidding me? A man who is documented as having destroyed American jobs to promote his own wealth, who “earns” ALL his income from investments that are sheltered (i.e. hidden) from the American people so he does not have to pay his fair share of taxes? Is this the kind of man we want to represent the American people? What is wrong with you?
The US wealthy class are acting like they are “citizens of the world”, rather than US citizens. This is NOT a global economy! Each nation is responsible for its own debts, and our debts are piling up fast ALL because of the US wealthy class “rigging” the tax laws, “free trade” legislation that is anything but free, and banking regulations that egregiously favor the wealthy class.
They think you are stupid, and they are right.
Senior Government officials semi-secretly pledge their allegiance to those who would destroy this nation. I wonder how many American people know the person they are putting in office as their representative has already violated their oath of office to serve this nation on their behalf?
The potential solution I have in mind would involve the writing of a new US Constitution (i.e another constitutional convention by all the states of the union in order to bring it up to date with the present national priorities after more than 200 years of unrelenting growth). Clearly, the old one is not up to the task of keeping this country together anymore. The proof of that statement is that resembles more of a patchwork quilt than a constitution. A litigator’s dream, but a nightmare for the country since it allows those with money buy justice at the expense of everyone else.
Therefore, the ONLY solution is to rewrite the US Constitution to reflect what we as a nation want this country to be going forward.
I do not believe for an instant we have the ability to do that; therefore, this country WILL collapse into yet another Great Depression, only worse since we have lost the ability to survive without a functioning society.
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I think it interesting that you bring up Russia in this context, since you need to understand that your idea of what happened to Russia is not correct.
You stated, “And there are many comments starting to appear that actual think it would be a good idea if the USA broke up into smaller autonomous regions according to ethnicity or local favor and attitude? I don’t think that’s a very good idea. That would be asking for civil war. The USSR followed that route and lost territories that they held since the time of Iva the terrible as well as the iron curtain countries.”
I need to remind you that Russia has suffered economic and social collapse TWICE in the 20th century. The first time resulted in civil war and the rise of communism at the beginning of the century. However, the second time in the late 1980s Russia again collapsed, but it did NOT result in civil war because those that wanted to leave were permitted to do so by the Russian government.
Which scenario would you prefer?
@Gordon2352 – “Which scenario would you prefer?”
Neither. How would you propose to change the Constitution?
And I wasn’t wrong about Russia. I know how the first Revolution came about and you are wrong that it was caused by social collapse. It came about because the Russians were actually developing faster than the government was able to cope with change. The Russians suffered humiliating defeats in WW1 and a huge loss of men and that helped to discredit the government. It was too polite, too aristocratically dominated and not up to the 20th century. The same was true for the Chinese but they were even more out of date. It took WWII to change them. WWI meant the end of other aristocracies and royal families all over Europe. The revolution caused a more accountable government, of a sort, and the suppression of aristocratic privilege in Russia and the confiscation of great estates. The Stalin era brought the crushing totalitarianism and purges. They went through sweeping government and social change but not collapse.
But you’re right about the second revolution being much less violent and the country broke into separate countries and a Federation. But it still broke up. But they worry about the Stans and Chechnya.
What would the break up of the US accomplish? I think that’s what OBL wanted. To do to us what we helped do to Russia via the their occupation of Afghanistan. It was an expensive drag on their economy and unpopular with their own people and Reagan made matters more aggravating for them by outspending them own defense programs. It made life difficult for the average Russian and that caused great dissatisfaction with the regime. I think the US is getting even in the ME by making sure they face aggravating social conditions that cause their governments to collapse. In other words, the entire developed world and developing world could spend the next decades undermining each others credibility and economic systems. OBL would be delighted.
I think the USA is in a great bind. No matter what it does to try to adapt of placate critics and salve dissatisfaction, it will alienate some interest group or economic class. And the country will spook itself into WWIII and that may not necessarily be nuclear war. It could be a constant state of war that involves many countries for a very long time and makes life at home tighter and more difficult. It will permit the “Homelands” to be repressive and stifle back talk in the name of “security”. Lewis Mumford’s “Tyranopolis” is a good term for it. I may not live to see the end of it.
This country uses the potential breakup of the Euro zone to puff it’s own bonds and currency. They would like to break the dominance of Chinese imports and that means we will loose a lot of inexpensive consumer goods. The cost of living could increase here and put all those big retailers and less profitable footing.. And that will aggravate income inequality even more while it erodes stock value in those big names. The Chinese can still sell less expensive manufactured goods (of all grades) to 170 developing nations and we will be waving the flag for our struggling domestic consumption of “made in the USA” goods. That sort of attitude may have worked for the Boston Tea party but that is the worst thing to happen today. The rest of the of the world will just ignore you: all 95% of the world. They would just as soon see the US and European global corporations bite the dust too because they make it difficult for them to grow their own economies. The US is a “big box store” amid a world full of “Mom and Pop Stores” and they won’t miss you as much as you will miss them. They don’t get paid as much as you need to be paid (or else your economy and real estate prices bite the dust) and they can live on much smaller incomes and it actually looks good to them. We are so ever fed and over priced, nothing but very large incomes looks good to us anymore.
That’s our conundrum. I don’t like any of the candidates and believe any of them are going to be able to do a d___d thing. We have been check mated by all those countries some here so arrogantly think we dominate. The last laugh will be on US.
Gordon2352,
Let there be no dount that the “Great Game” is eternal. It springs from human nature itself.
I agree with you that the problems of the U.S. can be solved, yet likely won’t be. I do NOT think our Constitution “fatally flawed”, but inspired! It’s just ignored far too much today. That could easily change.
I agree that virtually no one wants to go back to an agrarian subsistance society, but today I own farm land because that’s a “future” not entirely avoidable under certain possible “developments”. The U.S. won’t “split up” because the most natural divisions are along “red state” and “blue state” lines. That’s impossible simply because the productivity of the “red states” is what sustains economically dysfunctional “blue state” economies.
America does have it’s “gentry”, as you say; but that has long been a group that any American can join given enough determination, persistence, hard work, intelligence and luck. AS Walt Kelly, creator of the “Pogo” strip so astutely observed: “We has met the enemy and they is us.”
The “rest of the country” is NOT “literally dying”. Our grocery stores, malls and roads are conspicuously full of ordinary Americans living their lives as always. But I do increasingly suspect that time is running out for “we, the people” to change the “present system” in Washington if our country is to prosper again, or survive.
China is a competitor, sometimes unfair, always serious. But only one of many problems every major nation must deal with. You destroy your own credibiility by accusing Mr. Hadas of “twisting the truth” to “destroy [our] freedoms.”
A successful constitutional convention requires a commonality of interests that have not existed in America for a long, long time. Not gonna happen. But a VOTING majority of “we, the people” CAN still hammer out a consensus as to what this country NEEDS to become to survive as a sustainable economy. But they need a leader to such end I do not yet see.
@paintcan
The 5% of the world’s population represented by the USA is absolutely dominant by any logical metric both economically and militarily. It is also “musclebound” in terms of being able to act unilaterally in either sphere. Too many “foreign entanglements”, but this will ever be so from here on. And yes, we’re “privileged” too.
Your political and economic concerns are not unreasonable, but none are certain enough to act on. If “the US is a “big box store” amid a world full of “Mom and Pop Stores” we’re going to decide the “terms of engagement” and those will be favorable to us over time. When necessary, Americans can live on little and plant “Victory Gardens” in our abundant fertile soil.
The “bottom line” remains that most of the present SEVEN BILLION people already on our finite planet can’t eat oil or sand. They can’t get their military here and take it! Our abundant and relatively pure water assures surpluses to sell to the highest bidder in a starving world at prices we set, should we so choose. We won’t, but America will enjoy incredible power to reward “friends” and make life harder for those who would be our enemies.
@ paintcan and OneOfTheSheep –
I doubt you will read this since Reuters seems to have pulled the article, but you both prove my point.
The US will not survive because we have no commonality of vision to make it work.
Only the future will tell which of us is right and I don’t think we will have long to wait.
@OOTS – “absolutely dominant by any logical metric both economically and militarily”.
What are the “logical metrics”? I’d love to see them. Politics doesn’t run on logic. It works on dreams and fantasies as much as advertising does. It reacts to unreasonable fears and manias as well. It works with numerous hidden hands, hidden agendas and even hidden money. Voters and politicians are always in the position of the blind men trying to describe what an elephant looks like.
It has looked to me, for the past ten years, that the US is not logical about it’s foreign policy. It can’t be logical in the ME e.g., when the friends it makes and it’s past policies are so contradictory and even contradict it’s own core values.
In many ways the US is like a vain women (the actress in “Sunset Strip’ will do) who is intent on remembering her days of beauty and will use makeup and surgery to hide the lines and marks of age; will convince herself, even while looking in the mirror, that she is still young and beautiful, and surrounds herself with only those who know well enough to never say what she doesn’t want to hear (she won’t hire them or associate with them if they do) and even when looking at photos of herself from years before, she convinces herself that the image she built of herself is the truth. And she always has the ability to edict her memories and never looks at disagreeable facts.
“but America will enjoy incredible power to reward “friends” and make life harder for those who would be our enemies.” Spoken like a vain (and desperate) man or woman with a touch of the mafioso.
Sometimes one’s “enemies” have the more valid, reasonable and “logical” reason for their attitude than one’s “friends”. The future makes those judgments.
@Paintcan,
I agree with you that politics in America currently is a dysfunctional and Byzantine process that is not working well. But you jump subjects like a mosquito in a nudist colony, and you obviously would delight should America lose it’s dominance. Perhaps a lover that feels betrayed.
I agree with what you say about U.S. foreign policy in the Middle East, but the ME is not a place of logic. In spite of breathtaking incompetence which cost the life of our dedicated Libyan Ambassador, America’s current and future “absolute domination” is as I said; not because we are smarter or more deserving, but because all who might otherwise surpass us are beset by problems greater than our own without end.
Your comparison of the U.S. to a vain woman is that of a dissatisfied and ungrateful sychophant to such a person, Too personally discontent and full of self-loathing to be of meaningful use or comfort. They stay because they have no other choice, only to make others as unhappy as they have made themselves. Self-inflicted “cruel and unusual punishment” without end. Have a nice day!
@ paintcan —
If you are still monitoring this article, I suggest you read my comments in another Reuters article, in which I answer you fully why we are fatally flawed and cannot continue like this, whether we want to or not.
http://blogs.reuters.com/thinking-global /2012/10/11/as-the-u-s-prepares-to-vote -the-world-watches/
@gordon2352- Sure we’re all “fatal flawed”. We are mortals.
All I seem to do most of the time is watch these comments. I’d get a real life but that costs too much money in gas.
And when has the world never been fatally flawed?
@OOTS – I don’t know that I’d feel delighted. It would only be a case of faux misery feeling faux comfort from faux company.
I tend to think I made a big mistake way back in puberty when I started to listen to church and religion too much. I should have gone out into that field and taken my pants down. But then I would have felt guilty about it and gone to confession. My mother was very bossy about confession.
But at least I would have something really important to tell them.
Is fail-safe the next political and economic buzzword? Check it out @ http://theendpoint.blogspot.com/
“Your comparison of the U.S. to a vain woman is that of a dissatisfied and ungrateful sychophant to such a person,”
Oh no OOTs – that describes you! Or you don’t know how to use “sycophant” in a sentence? You don’t seem to understand a word I’m saying about out way of life here as compared to other places in the world, especially Europe. The USA does not have the definitive top-of-the- line way of life or standard of living. That is the product of our own self flattering, “sycophantic” media.
“We the People”, as you like to put it, punish those that tell us what we don’t want to hear or if journalists become “too independent” aka “radical” in their opinions. Such opinions are starved of advertising dollars. The corporate advertisers and large industrial producers world-wide determine how you live and what you will like. They are the Musak of your life. And it should be obvious by now that devotion to them is irrelevant in as much as they are not devoted to you. And the only thing global corporations want out of you comes from your wallet.
WE have an economic system designed to generate debt and debt passes for wealth here. There is something to be said for that approach as a way to grow a large economy but it is also very unstable and exceptionally vulnerable to shock and crisis. Debt is a promise to pay that can only work as long as the promise can be kept. The promise can’t be kept now by as many as used to be able to do that. Obviously! That is where your “metrics and logic” fail.
Sycophant is not a word to describe me in any of my comments since I started making them.
But I could warm to the idea of being a “mosquito in a nudist colony”. A lot of people are getting a bit more “naked”. We may well become streakers before too long.
@paintcan,
When did our economic system become “designed to generate debt”? Who is responsible for that if it be true?
The insurance companies did not create the “need” for insurance (which existed as long as investors have sought to “spread the risk” among ships sent out, some of which would not return (based on prior experience). Debt is nothing new.
In “good economic times”, there are more who can be lenders, and there is more “surplus to immediate needs” money that must be “put out at interest” so long as the rate of return is in excess of the rate of inflation. In every case, the borrower had best not be borrowing to meet ongoing “needs” of a certain life style their income is inadequate to support. I don’t have great patience with the “victim” mind set of “The Devil made me do it”.
But we each have to “step up to the plate” and cut back when money is “short”. No one decides for me to spend money I don’t have, not even hospitals. I once pawned a .22 rifle to get $5 until payday while in the service, due to unexpected and unavoidable expense. On payday I was right there with the $5+ to get it back.
Those unable or unwilling to accept and act in accordance with such realities are gambling that “things will get better”. That’s a bet with 50-50 odds, at best. Not something on which I would EVER wager my immediate future, but many do, again and again. Some of those that so wager get thrown off the economic merry-go-round and wind up here posting bitter comments.
@OOTS – Simply living within your means doesn’t cut it. When someone wants to start a business they must go deep into dept to secure financing. All construction projects in this country are financed with debt. In fact, they require two tiers of debt. First, they require short-term higher interest construction loans and those are then turned into longer term mortgage loan. The IRS code encourages that. All major municipal infrastructure improvements are financed through the issuance of bonds. Financing requirements often require insurance as a backup.
People do not usually buy houses for cash and when they have a mortgage they are required to buy homeowners insurance. Most people do not buy cars with cash. The car loan requires the security of auto insurance.
This country needs debt at all levels and lots of it, or it’s economy slows to a snails pace. To function in the modern economy one must be capable of taking on heavy debt loads. Modern American life ABSOLUTELY requires it it and it is very difficult for the lower income levels in this country to do that. Wake up you smug old fool!
This was where Romney was dead wrong. When the debt spiral collapsed, the upper income levels of this country felt it was the governments responsibility to bail them out or they would have been destroyed. And the amounts of debt and leveraging the big boys can play with are staggering and even reckless. They are the forces that toy with derivatives and ever easing margin requirements the more you invest. Those greedy and very foolish investors in Madoff’s scam are all feeling very “entitled” to relief. All the survivors of 9/11 were stridently bitter and felt “entitled” to massive relief. And they were not Romney’s low income 47%. Modaoff’s victims were all in the very upper percentile income group. None of them thinks they should just eat the losses. And they most certainly consider themselves “victims”. Madoff’s chumps were really greedy for privileged and ill-advised returns that any sane money manager would say were phony and suspicious. Life style choices you say? Is that Fifth Avenue address and Nieman Markus, of Sak’s wardrobe (to fill a closet the size of a bedroom – I’ve seen them) something one simply can’t live without? Is a car costing over $100,000 or 5000 sq foot plus houses necessary to perform a job adequately? For certain income brackets you don’t rise in the ranks until you can show you can live like a lord. The US is a very class riddled society but it is very hypocritical and subtle.
People may indeed feel they are “entitled” to government support and that is in direct proportion to how the government at all levels demands that you don’t actually protect yourself because it isn’t quite possible to do that. And even though I say that, I am not a back to the wilderness survivalist. I have only been a very low-income person most of my life and don’t even dream about big debt. I try to live on cash and minimal credit card debt. But this country couldn’t live on a population of people with my means. The most I have ever been able to afford has been very short-term credit card debt and I like it that way. It keeps life and bookkeeping so simple and not at all overwhelming.
People in this country and any civilized country governed by “The Rule of Law” are constrained in almost every aspect of their daily life by those laws. If those laws were poorly designed or misused by the most privileged income groups, of course they will feel betrayed. And “bitterness” isn’t quite adequate to describe what some feel.
The developed world needs the developing world to convert to indebtedness as a way of life. Perhaps that won’t work as well as the developed world hopes. There is a reason why the US government budget devotes 60% to defense. That 60% is guaranteeing cash flow to enormous strings of corporate and private debt service. Without it the economy collapses. But it must be raised through taxation and the wealthier tier can’t afford to spend too much on taxation or their debt service requirements start to feel the pinch and the great train of mutual indebtedness starts to come to a halt. Almost every aspect of commercial and personal life in this country depends on being able to service large amounts of debt and that is it’s Achilles heal.
BTW – my comments aren’t always “bitter”, if you refer to me. I’d say they were rude, sarcastic, arch, critical, or just plain “calling a spade a spade”. I was never one who could “wager” much of anything and my “bitterness” comes from the fact that so many high flying and high living gamblers made such a through mess of things.
@Gordon2352- How would you fix the Constitution, or the government bureaucracy, or the nation as a single or even a collection of states? The whole country would love to know a sure fix for even the simple problems. Was it you who wanted to “start from scratch”? What would the first scratches look like?
And what’s it matter if OOTS and I snipe at each other? Our disagreement won’t cause the collapse of the country of the currency. He’s an old fart and I’m an old fart in training.
BTW – I tired to find the comment link you posted to another blog but found a long list of other articles and didn’t try to get through them. Mr Hadas doesn’t seem to care how long this thread gets so why not just post it here?
@paintcan,
You say: “Simply living within your means doesn’t cut it.” “our” subject was your earlier statement that “WE have an economic system designed to generate debt”, and most people’s “debt” is of “personal debt” which largely DOES arise from not being able or willing to live within one’s means. In the long run, how much is spent should only come as a surprise to those who believe themselves solvent as long as they still have blank checks in the checkbook.
When you jump over to those who would go into business, you speak of a huge minority. Of that minority a huge majority attempt to do that with “inadequate funds” and the huge failure rate of new business is directly related to that.
There are not many businesses that can get funding to start up with “other people’s money”, and God help those “other people” most of the time that are the exception. Debt, like fire, can be a useful tool to the intelligent and a danger to the community at large in the hands of a fool.
And then there are those who prioritize paying themselves first, because they “deserve” it; thus condemning their efforts to inevitable failure when their taxes are not paid, their employees are not paid, or their suppliers are not paid. It is cold, hard economic fact that you cannot pay out money you have not created via your “business model”.
There are necessary “private” and “public” construction projects. Financing for each is both necessary and different. The decision to buy a house is a personal one and those whose income is reasonably established as reliable or adequate in the long term should not buy one. Yes, we bought a house with VA financing I earned honestly, and yes, we bought homeowners insurance. We felt fortunate, over the years to be able to do so; not victimized.
Every car my wife and I have purchased since 1972 has been for cash. Before that we bought three on multi-year loans. either way we did not make a purchase contrary to our long term financial well being. Life in general is “…very difficult for the lower income levels…” in any country…”. What’s your point?
I actually agree with much of the rest of this latest rant, until you speculate as to the “…reason why the US government budget devotes 60% to defense…guaranteeing cash flow to enormous strings of corporate and private debt service.” America became withdrawn and self-centered after WW I, so much so that our ever-increasing lack of preparedness encouraged petty dictators to attack us simply because our values would eventually have to be confronted if they were to have their way on Earth.
After WW II, we did much the same until the Communist alliances “woke us up” in Korea. National defense is a challenge a major country fails to meet only once, and American defense spending has returned many, many benefits to how people live the world over. Would that the same could be said about the additional money spent over that same period on education, farm subsidies, welfare and affirmative action. Kids back then, by and large, left high school equipped to “make their own way”. Today, most leave only understanding the excuses why they are not.
Debt is but one of many tools we humans use. The sledge hammer can be used to build the railroad or to destroy the locomotive. You seem to be a person who would drive with sole reference to the rear view mirror, seeing nothing ahead and not even aware that your present is the inevitable result of choices made, good and bad, long ago. Choices have consequences; and by such consideration who, here, is the “old fool”?
You are always using truisms that aren’t so true. No doubt people make choices in life but many of those choices are by default. The range of choices is very limited and depends largely on prior means. The rich do tend to get richer and the poor poorer. That situation can be cast in stone so that generations can be made privileged and others never get a chance. You haven’t attempted to disprove my statements. I’m simply saying that so much debt – and it wasn’t personal debt (and there you are being the old fool looking only in your “rear view mirror)- but massive corporate debt service from two decades of leveraging every major business to the max, and a real estate market living on no money down to pay for ridiculously over priced real estate and a stock market that was sometimes ignoring margin requirements (to the point where they were lower then they ever were since the roaring 20′s) that caused the credit collapse. If a person wanted a home of his own, they more or less had to participate in that market. You also don’t allow for the fact that property taxes tended to go up as well as all the related costs of homeownership, whether you lived like scrooge or not. And the IRS encourages home ownership for a variety of good social reasons but also because it generates a lot of cash for banks to increase their lending. Knowing the tricks of the trade is what really pays off and others do the “hard work”.
My statements are intended to show that we are moving into an economy with vast disparities of wealth and that situation could become permanent, and so many know it. You even admit that “luck” has a lot to do with success. But the economy can be made so difficult for newcomers that no amount of talent, hard work, perseverance or even luck will do those people the slightest good. Your Norman Rockwell truisms just won’t matter.
I also want to make it quite clear that the leveraged way of life is very difficult to export to other developing countries, without totally destroying their ways of life. And our way of life depends on massive cash flow and all levels of debt or it seizes up. Bhutan is questioning the wisdom of the modern economic way of life with good reason. They might want to pick and chose what they want from modernism but the western economies could paint them as recalcitrant and unfair. They have “a king” if he “plays ball” but a “dictator for life” if he doesn’t. They are portrayed as environmental Nazi’s by businesses that want to exploit the resources for global markets and the rate of poverty has increased now that they are trying to integrate the country into the modern economy. It doesn’t sound like much of an improvement for them at all. They have buildings that are suited for the climate without the need for extensive fuel consumption, and the landscape is beautiful. The have a way of life not based on consumption. You should like them. But the modern economies will bend or ignore any fact or concern to fill their own stomachs first.
5% of the planets population is using about 80% of the resources and it was all got by debt. That isn’t a figure that seems to be used at all anymore. This country wouldn’t pass your or Romney’s personal responsibility test. It is one enormous appetite that borrowed it’s way to dominance. But if it stops – it will go through worse agonies than a heroin addict and it will not be a power at all.
The Chinese are doing so well because they learned how to hybridize capitalist business practice with socialist planning and they love “cash”. In fact they invested the word. They can’t afford massive unemployment yet but when they get it they are going to have to find ways of keeping a lot of idle hands busy and they will have to learn the treacherous ways of debt. They should be loads of fun. They want to be able to censer business papers. They could even give Madoff a few lessons eventually in how to seduce those ever so earnest and hardworking wealthy investors. You can catch millionaires, or wanna be millionaires by making them think they will be multi millionaires or even billionaires.
What I usually object to about your comments is you seem to like that fact that “losers” deserve their fate but I’m sure you will sing another song if you find you are one. The “winners” seem to see no role for government to even the score, unless their own “deserving” hind ends are the ones at risk. You have insured that you live in a secure enclave of your own devising with your gun for protection where you never see the wreckage of policies. You probably don’t know anyone in the lower income brackets like I do. Those people tend not to have a lot of wiggle room.
Money opens doors. Without it, they don’t tend to budge. That’s the hard truth. The low-income person just might get in but it will only be to the “Sal du pas perdue” with a lot of other applicants. Less above board and never admitted means are required to get out of that room, I’m sure.
The country has an enormous target painted on that very big heel it wants to stride the globe with. They probably won’t buy your homilies. I’m sure very few now believe your rhetoric about America’s service to the globe in the form of a bloated military budget. The US doesn’t play global policeman for the benefit of the world, but for it’s own. Don’t lie.
BTW – if affirmative action ends it will because the black people who once benefited by it don’t want any more competition. The wealthy and privileged can use some of the phoniest excuses imaginable.
What petty dictator even attacked the US after WWII? Castro took over and booted the mafia from Cuba. North Korea attacked South Korea. That wasn’t the USA. You nurse a very large sense of “US”. The Israeli’s seem to know how to lead your “us” around by its very insecure nose.
@paintcan,
If I say I actually agree in principle with most of your first paragraph here, I guess you won’t believe me. I can live with that.
Statements like “…situation can be cast in stone so that generations can be made privileged and others never get a chance” are the exception rather than the rule. The idiot of privilege with a college education may be an educated idiot, but American society does not tolerate fools gladly and their life and that of children will not be the stuff of dreams. Children of the underclass of Chicago and elsewhere that pass up their sole opportunity to get an education, however bad, make the worst of bad choices, and are forever thereafter as were/are their parents. Your perspective is frequently illogical.
Forgive me if I do not accept that the American economy “…can be “…so difficult…that no amount of talent, hard work, perseverance or even luck will do…the slightest good”. That ?s just silly. I’m not in the least concerned with legal “newcomers”. These tend to be well prepared, persistent entrepreneurs delighted with American opportunities that often pass up many native born on their way up the greasy pole, and I cheer them even louder as they climb.
There are capable people in developing countries well able to lead. The question is always how honest are they and where do they lead? Not my problem. When you say: “This country wouldn’t pass your…personal responsibility test, you’re right. Definite ticking time bomb. What little influence I have to improve the situation, I use; and beyond that don’t worry at all. What will be, will be.
However America has risen to dominance, I agree the journey back to fiscal reality will not be easy on all. It will survive simply because the world has no alternate “trustworthy entity” to keep order and the lights and fans running.
It doesn’t MATTER why the U.S. “plays” global policeman. What should properly concern EVERYONE is what happens once there is NO “global policeman. Human nature hasn’t changed (big smile)!
Did you ever hear of NATO? That’s the post-WW II alliance in which an attack on one is considered an attack on all. South Korea belonged, as did the U.S. When North Korea attacked South Korea America had substantially disarmed and was not prepared for timely and effective response. Hung on by our teeth and took serious losses. Never again!
You write like a politician or the Chamber of Commerce.
“However America has risen to dominance”.
It claims that it has risen to dominance. It bases all it’s activity in the world on the preservation of dominance. And it will claim it is dominant long after it has ceased to be dominant. I have hundreds of comments asserting that the US is a fraud of dominance and it’s wars of the last ten wars have been double-talking and self-serving swindles. All you do in reply is serve up self-inflating claptrap.
I’m not talking about the US and the western countries’ definition of fiscal reality. They don’t seem to measure reality all that well actually. It will be too much of a shock to its hyper indebted economy. BTW – How holds Libya’s former leaders expatriated billions now and why aren’t they immediately returned to the country? I think I know why but it would be more interesting to hear your excuses. The word “leash” should figure at least once in it.
I mentioned Bhutan – a small country that really isn’t getting what association with the modern economies promised it. Many developing countries have reason to complain about western global dominance. The dominant power has a bigger appetite than all those it claims it serves. It can be said of them what the Indians said of the British Empire.
I have to admit – I never realized that South Korea was a part of NATO. I always thought the war was caused by a mutual aid agreement left over from the US occupation of Japan and its former empire. That was news to me.
But that wasn’t really an attack on the US but a part of cold war strategy. This country can’t seem to find enough reasons to assert its dominance even as it erodes.
But it’s pretension to dominance will not be seen as agreeable to large parts of the world if it’s dominance causes more problems than it solves. And it certainly won’t be appreciated if it purposely warps problems to its advantage or makes them when none really existed. Vito Corleone may have thought he served a vital function in Little Italy too? The organized crime syndicate in Cuba before Castro may have felt they were serving a vital function in Cuba- or they could always hire politicians and media to claim they were.
I think the Benghazi “terrorist attack” may be one of those situations where a “problem” needs our “solution” and is somewhat like the Iraq WMDs. Somehow these problems will always be found – and like Voltaire’s statement about “God” – if they don’t exist, it will be necessary to invent them.
excuse me – (Who) holds Libya’s … billions. No more state supported educations for them!