Some years are pivotal and serve to mark off eras of history. 2011 saw the end of American hyperpower, and it announced the end of a decade of US-Muslim conflict that began with 2001. It saw the killing of Usama Bin Laden, the virtual rolling up of al-Qaeda, the repudiation of al-Qaeda’s methods by the masses of the Arab world, and the US military withdrawal from Iraq. The upheavals of the Arab Spring and subsequent elections have led to Muslim fundamentalist parties being drawn into parliamentary politics on a Westminster model, rather than remaining sect-like corporate groups outside the body politic.
[...]
The end of the Cold War, which had stretched from 1946 to 1991, had left the political elites of the United States and Western Europe without a bogeyman or security threat on which they could run for office and through which they could funnel resources to the military-industrial complex that largely pays for their political campaigns. With Russia in steep decline in the 1990s and China still run as a small, cautious power, the US emerged as what the French called a Hyperpower, the sole superpower. US hawks were impatient that Bill Clinton seemed not to realize that he had complete freedom of movement for a brief window of time. It was the new US status of hyperpower that allowed the G. W. Bush administration to respond to the September 11 terrorist attacks by launching two major wars and a host of smaller struggles, all against targets in the Muslim world.
As of 2011, the age of the US hyperpower is passing, along with the possibilities for American wars of choice, i.e., wars of aggression.
Was 2011 the year that signals the end of America as the only World Hyperpower. Al Jazeera showed an hour long program called Empire that suggests it was. Here is an excerpt from the transcript of that program (transcript here.)
Marwan Bishara
This is Empire.
Hello and welcome to Empire. I am Marwan Bishara. The United States has the world’s biggest economy, strongest military and the most influential culture. It’s the only power with a global project defended and supported by more aircraft carriers, Fortune 500 companies and most successful media-tainment conglomerates than any other. But America’s post-cold war optimism, following the collapse of the Soviet Union, has given way to pessimism, forecasting a declining power and more crucially, the end of an American era. The rise of new divisional and global powers, coupled with Washington’s recent war fiascos and financial crisis have worsened the outlook for America’s future.
Countless books have gone beyond recent developments to illustrate a persistent decline with titles like Suicide of a Superpower, The Empire Has No Clothes, Taming American Power, Nemesis, The Last Days of the American Republic, Colossus, The Rise and Fall of The American Empire and Selling Out a Superpower. But how serious are the Doomsday scenarios? Is this decline temporary or reversible and what does it mean to America and the rest of the world? Well joining me to answer these questions and more are Tom Engelhardt, editor of the American Empire Project and a popular website Tomdispatch, the author of the United States of Fear. Susan Glasser, editor-in-chief of Foreign Policy magazine, former editor at the Washington Post and co-author of Kremlin Rising Vladimir Putin’s Russia And The End of Revolution. And Cynthia Enloe, professor of woman’s studies and international development at Clark University, the author of The Real State of America Atlas, Mapping the Myths and Truths of the United States and Bananas, Beaches and Bases, Making Feminist Sense of International Politics. Last, but not least, Stephen Walt, professor of International Affairs at Harvard University, the author of Taming American Power and co-author of the Israel Lobby. Our starting point is US strategic overstretch.
The show itself is here:
America's relative economic decline internationally has been quite obvious for several decades. In some ways I suspect that America has been trading the existence of its middle class for the military that has substituted for the economic dominance that existed after the end of WW II. The election of Ronald Reagan as President signaled both the end of increases in real wages for workers and the sharp increase in the absolute size of the American military. That increase in the military has been the largest single reason for the deficit that the Conservatives have decried since Obama was elected President, but the deficit has occurred primarily under Republican Presidents.
Now the Wall Street banks have given the world the Great Recession and America can no longer afford to spend a third of the federal budget on a military force that is more expensive that the total military forces of every other nation in the world.
All of these trends came together in 2011. Something is going to have to change radically in 2012. In fact, it may have already changed and we are only just beginning to see what broke. As this election year plays out a lot of it will be exposed - and the fear of the changes will bring forth a lot of lies to conceal the facts. 2012 is going to be a rough year.
This Fourth of July, let's give America the birthday present she cannot do without. Let's give the people back their Declaration of Independence.
The Declaration of Independence sets forth a worldview that, back in the 18th century, served as the foundation of our new nation. This foundation was composed of the principle of human equality and the rights of self-determination implied by the famous phrase "life, liberty and the pursuit of happiness."
Back then, this foundation was sufficient to support the society we hoped to build, one free of the economic monopolies, religious authoritarianism and military brutality embodied, respectively, in the English nobility, the Church of England and England's Redcoat soldiers. As large as these forces loomed over the colonists in the New World, these were forces still dwarfed by the Atlantic Ocean, the American wilderness and the sheer number of people they aimed to dominate.
In a day of bayonets, wooden hulls and musket balls, mere consciousness of the principle of human equality was enough to give the people confidence in their ability to rewrite the social contract, even if it had to be written in their own blood. "Give me liberty or give me death," Patrick Henry cried. In his day, he could calculate the odds of success as reasonable against an enemy that was still on a human scale. He could look his enemy in the eye and say to King George with confidence, our equality is self-evident.
When we won our independence, we dismantled all the power platforms setting some human beings above others. Against the concentration of wealth and power of the classist aristocracy, we built the one-person, one-vote principle. Against the psychological oppression of religious authoritarianism, we constructed the doctrine of separation of church and state. And against the physical domination of mercenary armies, we instituted civilian control of the military.
But then we lost our way.
Think about that. After the slaves were freed and the power of the wealthy plantation owners who had dominated much of America's politics were displaced, the newly developed large corporations (especially the railroads and the banks) marshaled their forces and came back to again dominate American politics. The big banks and corporations quickly took over the Republican Party and effectively dominated America through successive "Financial Panics" that they caused until the massive failure that we now call the "Great Depression occurred.
The period of the 1930's showed a massive uprising of the American people fighting to defend themselves from the corporate and banking would be masters, and they took over the nation. They held it through WW II and the Korean War, and then in the '50's the banks and corporations came back. Their abortive effort to regain control though control of the House of Representative in 1952 was reversed in 1954 after the House performed fully as badly as the Gingrich-dominated House has. Only it was a time of people power and they were quickly replaced. Wikipedia has a pretty good description of what happened in the Republican Party when they chose a Presidential nominee:
The fight for the Republican nomination was between General Dwight D. Eisenhower, who became the candidate of the party's moderate eastern establishment; Senator Robert A. Taft of Ohio, the longtime leader of the GOP's conservative wing; and Governor Earl Warren of California, who appealed to Western delegates and independent voters.
The moderate Eastern Republicans were led by New York Governor Thomas E. Dewey, the party's presidential nominee in 1944 and 1948. The moderates tended to be interventionists who felt that America needed to fight the Cold War overseas and resist Soviet aggression in Europe and Asia; they were also willing to accept most aspects of the social welfare state created by the New Deal in the 1930s. The moderates were also concerned with ending the GOP's losing streak in presidential elections; they felt that the personally popular Eisenhower had the best chance of beating the Democrats.
So even within the Republican Party the power of the people represented by the northeast moderates dominated the choice of Presidential candidate in 1952. But Ike had to choose Nixon as his Vice President to mollify the Conservatives, much as in 2008 McCain had to choose Sarah Palin. But the expanding Cold War gave force to the militarily expansionist elements that were often represented by the John Birch Society. The closeness of the 1960 Presidential election in part represented the growing power of the Corporate and the Cold War Hawk Republicans. Then the Goldwater takeover of the Republican Party in 1964 represented the victory of the Western libertarian Republicans in a party dispirited and disorganized by the 1960 loss of the Presidency and the general confusion caused by assassination of Kennedy. Goldwater's ideological-based disdain for the Republican moderates doomed his election attempt even before it started.
The Vietnam War, greatly expanded by LBJ to mollify the conservatives so they they would not be able to prevent his passage of Medicare, crippled the American populist movement. The nation coalesced around the hardliners and the military as it always has in time of war, while the Progressives of both parties recognized both the idiocy and the futility of the war in Vietnam. The Banks and corporations went with the Military-Industrial Complex for a variety of reasons. The success of the Civil Rights Movement was cemented institutionally by the Civil Rights act, though, so the weakness of the Progressives was not clear. In the meantime, Medicare removed one of the major problems the Progressives worked to correct. [Before Medicare, when a person reached age 65 the health insurers canceled any existing health insurance. There was none sold to those over age 65, including group policies. All retirees were on their own medically after age 65. LBJ had removed this irritant to the middle class with Medicare.]
Nixon became President in 1968 because of the Vietnam War. Nixon was a brilliant but very conflicted man. He was a foreign policy hardliner, but he tried to stop inflation with a price freeze (which didn't work) but which was anathema to the free market Conservatives. It was his personal insecurities and paranoia that drove him to his criminal actions, and as a Conservative he was not restrained by the Rule of Law at all. The Progressive reaction in both Congress and in the media caused him to have to resign or be impeached. Ford had no time in office and no national power base. Carter was elected as a reaction to Nixon but if he ever had a clue regarding the nature of the Progressive American public he never displayed it. Worse, he disdained politics and the political parties, doing nothing to build the Democrats to deal with the Republican-based Corporatocracy. In the meantime the corporation Republicans were building for their comeback with Reagan as the figurehead. Reagan's victory in 1980 (with the assistance of the Iranian Revolutionaries) was a foregone conclusion.
You can tell that the corporations were fighting to come back because since 1970 labor overall has not shared in the profits resulting from the increases in industrial productivity. Those profits, and they are substantial) have all almost totally gone to the wealthiest families in America, and they love it. Beginning when Reagan was in office the cnservatives started eliminating the power of unions to set wages and they started to reduce taxes on the income of the most wealthy. The inheritance tax is a pet peeve of the wealthy families that dominate the conservative movement.
Since 1970 total US consumption has increased because the size of the working population grew and because consumers were extended new forms of credit to make purchasing goods and services easier. This accounts for the rapid expansion of credit cards and their distribution to more and more uncredit-worthy customers, followed by the expansion of equity loans on home mortgages also expanded the consumer purchases. Then when the Asian Credit Crisis threatened the American Economy, the Ayn Randian Libertarian Alan Greenspan started rapidly expanding the money supply to lower interest rates and keep the economy going. Greenspan's refusal to clamp down on mortgage lending practices was another part of this expansion of money to the consumers, just to keep the economy going and avoid Recession. He really believed without evidence that the Mortgage Banks would not intentionally make bad mortgage loans, but the system paid big immediate payments to such loans. They did it without consideration of what happened later to them. Housing, of course, grew to become fully half of Gross Domestic Product (GDP.)
The other thing that happened during the Reagan Regime was that Ralph Reed and the Christian Coalition of Evangelical Fundamentalists allied with the Conservative corporate and foreign policy hardliner Republican politicians. This gave the Republicans the foot soldiers to win elections in areas that were not dominated by military and government contracts and wealthy bankers. The corporations and bankers provided the funds to the Republican conservatives needed to win the elections. It was a match made in heaven, if all that matters is winning.
Except, that as part of the deal the Republican Party had to buy the Social Republican issues and implement them. This has been done primarily by packing the federal judiciary with social conservative judges. Other than that, failure to enforce federal laws protecting abortion providers and the slow advance of legal restrictions on abortion, the social right wing has got very little out of the deal. The moderate Republicans who objected to the social conservative issues were driven out of office over time.
The dissatisfaction of the social conservatives themselves was getting clear by the late 1990's (Ralph Reed left the Christian Coalition), until Karl Rove pushed the born-again George W. Bush into the nomination for President in 2000. He had the money from his father's connections and the approval of the social conservatives. The social conservatives and the social conservative-packed Supreme Court gave Bush the election in 2000, but the social conservatives have really gotten very little out of the deal. They are currently abandoning politics as had been characteristic for them before the growth of the Christian Coalition.
Now America has stalled in economic growth, found two wars to fight (one unnecessary) and the threat of the Depression has activated the mass of the population again to fight the Corporatocracy that has brought us all these disasters. Those are the forces that elected Barack Obama.
But they are difficult to keep mobilized without an immediate threat to bring them out and unify them. Obama's efforts to slow and stall the economic dive into deep Depression has removed most of the immediate threat. The mass population is beginning to drop away. Unfortunately, the delay on the dive into Depression has not been accompanied by the necessary structural reforms that would prevent the Depression from happening. The corporatocracy is fighting those reforms like trapped weasels, and being successful at it. The renewal of the dive into Depression becomes more likely every day those financial reforms are not enacted.
Without those reforms the march economically downward into Depression will be soon coming back. The current apparent floor under the financial collapse is based entirely on the government stimuli. The best that can be said about the indications of an economic "bottom" is that it is just that it represents where the economy is currently able to operate. There is little indication that any economic-based recovery is occurring so far. So without the government stimuli the economy is headed further down the tubes. But this time, on Barack Obama's watch, so that he gets the blame. The Republicans are actively opposing all actions that might prevent this in hopes that the march to Depression will resume and that Obama can be blamed.
That's the context within which Obama has presented this challenge to the American people in today's Saturday U-Tube address. If the mass support Obama got that elected him President is not followed by support is the actions Obama has to take to restructure the economy we are in a world of crap. Here's Obama's challenge.
Are you ready to take up the challenge? Your decision will make or break America.
This is something I wrote and posted elsewhere, and wanted to keep on my own blog. Where did American slavery and white supremacy come from? Consider this a thumbnail description. Slavery was a solution to labor problem, and it created the social system of the South to accommodate it. But to maintain both slavery and the Southern social system that maintained it, the South had to expand Slavery into western territories which were gained by the Louisiana Purchase, by taking over Texas, by negotiating with the British (Oregon and Washington) and by invading Mexico. That expansion led to the Civil War. the Civil War did not solve the problems created by the social system the South created to maintain slavery, however.
The first slaves were sold into Virginia along with indentured servants in the 17th century. The purchaser bought the individual by effectively paying their ticket to the U.S. It was an investment in labor. at first. The difference between slaves and indentured servants was that a slave had a black skin and indentured servants did not. When such a person skipped out on the owner before completing the contract it was clear which one was the slave, but the indentured servant was a lost investment in labor. Guess what the social system and the legal system did to protect the purchasers? Slavery of Black-skinned people became economically successful for some strange reason while indentured servitude sort of trailed off. But then in 1791 the Dominican slaves revolted and killed off almost every French person on the island of Haiti. Slave owners everywhere lived in fear of their slaves from then on.
The Southern plantation owners needed a labor force they could force to work for subsistence wages and move at will when the cotton growing land wore out. During the first half of the 19th century Cotton was the major single international commodity, much as oil is today. This was a major spur for British industrialism. The only way for Americans to get rich growing cotton was to farm it using slaves because the work was too difficult to hire labor at fair rates. In Texas any hired white laborer simply left to start his own farm on free land. Only slaves remained for plantation farming - and only plantation farming for the international market made a farmer wealthy.
A side effect of that, particularly in the older slave states, was that white labor was always competing with slave labor that worked at subsistence pay rates. The plantation owners played off the slave labor against the white labor, and the exchange was White Supremacy. Every White man was required to belong to the militia, and the primary purpose of the militia was to prevent slave revolts. White Supremacy didn't pay any better, but it proved to be a major social step up for white men.
People know what they are worth in the market because they look at what their next door neighbor earns. The system that holds labor rates down is not obvious. But White Supremacy is obvious. So the fact that a white guy was required to carry a gun to church on Sunday for fear of a slave revolt made the white guy superior to the Black guys. It was not clear to White Yeoman farmers that this was the situation created by the plantation-owner class, but it was. Before the Civil War, most of the wealthy individuals in the U.S. were southerners.
An interesting side note is that every white male attending college was required to study military science in the South because they were all part of the militia to protect their society from slave revolt. This is in part the source of the superior military capability of the South in the Civil War. But this was a form of keeping the wealthy in control of the society.
Public education was started primarily in the North, as were most of the earliest public colleges and universities. That, too, is a way of protecting the wealthy class. Make higher education a requirement of joining the upper class and make it expensive.
After the Civil War, the fact that the Yankees had destroyed the Southern culture was considered the fault of the Blacks, the carpetbaggers and the scalawags. But Congress was still controlled largely by the Southerners, so (with the assistance of President Andrew Johnson) local segregation laws were established.
Sharecropping replaced slave based plantations (not nearly as profitable as slave-based plantations.) The new wealthy elites became those who owned the company stores that sharecroppers were required to buy from. Usually these were people who still owned the land that was farmed. For cases when the segregation law wasn't enough, there were the terrorist night-riders and a sharp increase in lynchings. Voting by Blacks was effectively eliminated by law and terrorism. White Supremacy became more important than economics.
Industrialism and WW II were the big changes that revised the South. But the Southern social system permitted long-term congressional and Senate terms that more competitive parts of the U.S. did not. The South kept national power because of Congressional tenure.
We are still working our way out of this disastrous social system.
I find Digby's description of conservative behavior quite sad. All too true, but extremely sad. Let me excerpt a few items from her recent post:
In my previous post, I discussed the fact that a "cold civil war" between two distinct American tribes has been going on since the founding of the Republic. It waxes and wanes and takes on different character, but it is always simmering, beneath the surface.
The ressentiment that fuels the conservative tribe is taking one of its forays into internecine purges, something that both tribes engage in from time to time, but which the conservatives have turned into one of its purifying rituals. Stubborn insistence on conformity of thought and complete capitulation of the other side is one of its tenets, and always has been. Indeed, its one of their prime motivating impulses. [highlighting mine - Editor WTF-o]
Digby then quotes from a speech by Abraham Lincoln delivered at the Cooper Union in 1860. Lincoln was facing threats by a very similar group of conservatives.
Your purpose, then, plainly stated, is that you will destroy the Government, unless you be allowed to construe and enforce the Constitution as you please, on all points in dispute between you and us. You will rule or ruin in all events...
Under all these circumstances, do you really feel yourselves justified to break up this Government unless such a court decision as yours is, shall be at once submitted to as a conclusive and final rule of political action?
But you will not abide the election of a Republican president! In that supposed event, you say, you will destroy the Union; and then, you say, the great crime of having destroyed it will be upon us! That is cool. A highwayman holds a pistol to my ear, and mutters through his teeth, "Stand and deliver, or I shall kill you, and then you will be a murderer!"
To be sure, what the robber demanded of me — my money — was my own; and I had a clear right to keep it; but it was no more my own than my vote is my own; and the threat of death to me, to extort my money, and the threat of destruction to the Union, to extort my vote, can scarcely be distinguished in principle.
A few words now to Republicans. It is exceedingly desirable that all parts of this great Confederacy shall be at peace, and in harmony, one with another...Judging by all they say and do, and by the subject and nature of their controversy with us, let us determine, if we can, what will satisfy them.
Will they be satisfied if the Territories be unconditionally surrendered to them? We know they will not. In all their present complaints against us, the Territories are scarcely mentioned. Invasions and insurrections are the rage now. Will it satisfy them, if, in the future, we have nothing to do with invasions and insurrections? We know it will not. We so know, because we know we never had anything to do with invasions and insurrections; and yet this total abstaining does not exempt us from the charge and the denunciation.
The question recurs, what will satisfy them? Simply this: We must not only let them alone, but we must somehow, convince them that we do let them alone. This, we know by experience, is no easy task. We have been so trying to convince them from the very beginning of our organization, but with no success. In all our platforms and speeches we have constantly protested our purpose to let them alone; but this has had no tendency to convince them. Alike unavailing to convince them, is the fact that they have never detected a man of us in any attempt to disturb them.
These natural, and apparently adequate means all failing, what will convince them? This, and this only: cease to call slavery wrong, and join them in calling it right. And this must be done thoroughly - done in acts as well as in words. Silence will not be tolerated — we must place ourselves avowedly with them.
Digby then continues to provide the comparison of current conservative behavior with that of the Southern confederates in 1860:
Just as it was when the resentment tribe called itself the confederacy, today's conservatives are not content with anything less than conversion. To that end they will happily obstruct any initiative that gives them less than total victory. They filibuster even when it doesn't make sense, just to keep their record untainted with compromise. They insist, as they recently did with immigration reform, for instance, that nothing less than total capitulation to their position will do. It is not enough that politicians or civic leaders agree to build their wall while providing a path to citizenship. They must agree that undocumented workers will be forced out of the country and join them in making it a national crusade. And this must be done thoroughly — done in acts as well as words.
Silence will not be tolerated — they must place themselves avowedly with them.
I do not object so much to the ideas proposed by conservatives as I do to their "My way of the highway" attitudes and refusal to accept any compromise or accommodation. The fulminations of conservative talk show hosts and the ultra-conservative Club for Growth people against John McCain, a man who is as conservative as any politician in Congress, is one example.
But it's not just their refusal to compromise. It is the Bush administration's process of making decisions in the dark of night or behind security classification barriers so that no one can know what they are, why they were necessary, or who they effect that is equally bad. This is a tool they use so that they will not be questioned and do not have to justify their decisions, let alone be asked to compromise on them.
Then, once they have secrecy to hide behind and their refusal to compromise, on top of that is the practice of flat outright lying, as they did with the entire WMD justification for the invasion of Iraq and as Dick Cheney has been doing to try to gin up support for military action against Iran. It is clear from the recent NIE that the threats that Cheney has claimed we face from Iran and which he repeats as justification for military action against Iran simply don't exist.
Similar conservative behavior has prevented America from adopting universal health care since Harry Truman proposed it in 1948, and the problems that single payer universal health care would deal with have continually gotten worse for the last six decades. The conservatives are masters at using Fear, Uncertainty and Doubt to forestall any action they themselves do not propose. Since their motivations tend to rarely go beyond personal enrichment to occasional military adventures to expand U.S. international trade and political control, they stop all efforts to make America a better place for Americans who do not belong to their tribe.
So to answer the question that started this article "How to compromise with a conservative," the answer is simple. You join them and accept their often irrational and self-serving proposals until one of their think tanks changes them and then you accept the new one as thought the older one never existed. Because that's as far as a conservative will move towards compromise. Not an inch.
The earlier post by Digby needs to be read. In it she explains the history of the two American tribes whose current political strife is just another in the long history of strife.
I still see this as a continuation of the battle that has raged in our country since its inception, a battle between the two warring American tribes. Those two tribes originally broke down on geographical lines, North vs. South, but have since evolved into something much more complex, beyond just class or region or race, although it has elements of all three. Underlying all the "issues" of any given era is the notion of moral righteousness and inferiority, ressentiment, that stemmed from the original sin of slavery and created two American "tribes" which operate reflexively under certain recurring impulses.
In that post, Digby explains why we are still battling the issues and methods that grew out of the great American tragedy of Slavery. The U.S. Civil War is not over. It simply has moved into a Cold War status in which the issues are sources of political conflict.
Earlier, Rick Perlstein wrote an excellent article, published in the Washington Post on February 3rd. In it he explains why Barack Obama will not be able to move America beyond the current level of extremist and irrational conflict, no matter what he promises.
What’s gone wrong with the American economy? The Cold War, excessive military spending, and a refusal to invest in the most important economic resource America has, its work force. This has been concealed by the free market fantasies of the Reagan Revolution, which has destroyed more of the economy than it has built. This has been shown by the failure of real middle class wages to increase since 1970. The economy has been pumped up by first getting housewives out of the home and into the work force, followed by an economy pumped up by making credit easier to get, then during the 90’s the Federal Reserve has manipulated the interest rates to be lower to give the illusion of a healthy economy. This has resulted in the two most recent bubbles in the financial economy, but the manipulations of the financial economy have primarily redistributed income away from the real economy and productive workers to people in positions of control of financial products. Unfortunately, financial products have little or no effect on real economic productivity. All these financial manipulations have had the effect for the last three or more decades of exporting our real economy to the rest of the world.
Charles W. McMillion has written an article, first published in "Manufacturing and Technology News" January 24, 2008, that shows the current state of the American economy.
In just the past seven years, US household debt almost doubled and federal debt soared by near two-thirds, rocketing by a combined $10.5 Trillion. The total combined debt of households ($14.4 Trillion) and the federal government ($9.2 Trillion) is now 168% of GDP, far higher even than in the brief spike during World War II. All other levels and ratios of debt also have soared far beyond any past precedent.
Yet, this record-shattering explosion of debt stimulus created the weakest seven year job growth (4.4%) and one of the weakest periods of real GDP growth (18.1%) since the Depression: less than 6 million new jobs ($1.8 million of debt per job) and a mere $4 Trillion increase in GDP. This period began with the collapse of Wall Street's stock market bubble from the late 1990s and ends now with the collapse of Wall Street's housing and other debt bubbles. That such massive mortgage and consumer borrowing, tax cuts and war spending produced such remarkably weak real economic results suggests the months and years ahead could be quite difficult.
Yet, along with Fed rate cuts for cheaper debt, the only policies seriously considered by this year's crop of Wall Street-funded political candidates is more short-term household and federal debt "stimulus." Locked into a failed, 30-year-old ideology of deregulation and debt, there is no option to compete with the remarkably effective industrial and trade policies pursued by China and others.
2008 will be the ninth consecutive year the US economy grows slower than the world's growth while China grows more than three times faster. In the past seven years of sluggish growth, the US accumulated Manufacturing trade deficits (production shortfalls) of over -$3 Trillion with full Current Account trade losses of -$4.3 Trillion; more than the entire nominal growth of GDP.
At the same time, now in the third year of their remarkable 11th 5-Year Development Plan, China's accumulated Current Account surplus soared by nearly $1 Trillion since 2001, near 13% of GDP in 2007. These surpluses are funding China's now $1.5 Trillion war chest of foreign currency reserves. Record US trade losses have accelerated the hollowing-out of the once dynamic US economy. For the first time on record, in 2002 the US lost its historic global trade surplus in Advanced Technology Products. Worsening sharply, since 2004 the ATP deficit became larger than the US trade surplus for Intellectual Property services, royalties and fees. That is, for the past four years the US has a worsening combined deficit in technology goods and services. Technology no longer pays any part of the US import bills for oil, cars, electronics and clothing, etc. China now accounts for half the US Manufacturing trade deficit and more than the entire deficit in technology. Reflecting the production shortfall from the trade deficits, BLS data show output growth since 2001 is among the weakest since the Depression and the gain in total hours worked (just 0.5%) is, by far, the weakest. This is why productivity growth has appeared misleadingly healthy; productivity is a measure of output per hour of labor.
Another powerful measure of the hollowing out in the economy is the radical shift in the job market. Of the 5.92 million total new jobs in last seven years, only 4.32 million were in the private sector while 1.66 million were in state/local governments, mostly for public education, health and prisons. The federal government cut jobs in the Postal Service.
More than all of the new jobs added by the private sector since 2001 are in private education and health care bureaucracies (3.34 million new jobs) and in bars and restaurants (1.53 million new jobs.) Uniquely, all net new jobs added fall in the non-supervisory/production category -- half a million supervisory jobs were lost. Manufacturing lost -3.28 million jobs (-19.1%) and now provides fewer jobs than in July 1942 -- seven months after the attack on Pearl Harbor.
Despite concerns about illegal immigration, since 2001 the labor force has grown more slowly (7.4%) than during any seven-year period since 1955 and participation rate of those in the labor force, those working or looking for work, also fell sharply -- from 67% to 66%. This is the reason that the un-employment rate, now 5.0%, is not much higher.
The average weekly wage for non-supervisory jobs buys 2.0% more now than seven years ago and the average real salary and benefits for all workers is up by 9.0%. These real increases are down from the bubble period of the late 1990s but they are far better than the declines of the previous 20 years. Unfortunately, these recent increases in "average" wages appear to be a product of the latest financial bubbles, the widening use of stock options and very large bonuses in compensation, particularly on Wall Street.
Median real wages have continued to decline, including by -1.4% over the past year. Median household real incomes fell -2.0% from 2000 to 2006 (latest data available) and even the average income fell -0.5% with inequality now the worst on records back to the 1960s. The total current savings of ALL households over the past three years is virtually nothing; by far the worst since the 1933.
The foolishness of powerful, self-interested claims of a "new paradigm" is again exposed. The fantasy is that soaring debt and the loss of production through trade deficits are good things and the lack of current savings irrelevant. As a long forgotten advertisement once proclaimed: "If you don't have yourself an oil well, get one!" We can all live well from royalties and asset appreciation.
Soaring debt and debt schemes did drive up many asset prices, creating a borrowed illusion of general prosperity along with enormous actual wealth and power for a few. But now, unprecedented debt and soaring inventories of unsold homes are driving down the inflated prices for homes and other assets. For at least the next several years, most households will now be forced to cut spending and earn, not borrow, their living standard.
Another short-term debt stimulus may take the edge off the difficult economic conditions of the next few months. But trading away our once unique economic strengths while borrowing against the future has failed. Making even minimum interest payments on these massive, soaring debts will be increasingly difficult as the success of thoughtful industrial and trade policies in China and elsewhere continues.
That tells us where we are right now.
How did we get here, after America had the most powerful and productive economy in the world following WW II? The short answer is “the Cold War.”
We put our investments into military forces and international military expansionism instead of economic growth, mass education and universal health care. While containment of the USSR was worth it, it drained America’s economy as much as it did that of the USSR. America “won” the Cold War by outlasting the Soviet Union in a test of who could waste more money on military spending, something that always detracts from economic growth.
The Reagan Revolution has been a three-decade effort to avoid admitting that what America was doing economically was not working. Fred Kaplan is right to state that conservatism is based on the myth that America gained strength during the Cold War. The truth is the exact opposite. Both the Soviet Union and America squandered their national strength, and America just outlasted the Soviet Union. But the destruction of the American economy lasted throughout the Cold War. The Conservative movement was a panicky set of actions attempted to forestall the clear decline of the American economy. (The invasion of Iraq was a similar conservative panic in which an attack on a small and relatively defenseless Middle Eastern nation was to have been a demonstration of the folly of threatening the American Superpower. The Iraq War and Occupation has been another failed conservative idea.)
The conservative free market policies and the anti-union policies have been designed to compensate for the poor economic performance by substituting the magic of well-finances and highly rewarded entrepreneurs for a lack of economic investment. But intelligent people resort to magical solutions when they cannot see a realistic solution to the problems they face. That this magical solution (“The Invisible Hand”) has not been working has been concealed behind a combination of Federal Reserve manipulation of the monetary economy and interest rates, together with massive international borrowing by the federal government. The borrowing drove America from a creditor nation to a debtor nation during the Nixon administration and the Vietnam War, and sharply accelerated during the Reagan/Bush41 administrations. The government activities have all been ways of papering over the basic economic failure of massive military spending combined with the refusal to invest in workforce education and healthcare.
So now America is facing economic exhaustion. For half a century we have hollowed out our productive economy, shipping it to the rest of the world, and replaced it with a paper-based financial economy that is internationally dependent on the good will of the rest of the world to continue to operate. Yet the 300 million plus American people are still a powerful economic resource, and with investment, the economic infrastructure still exists. The challenges of the increased cost of energy, global warming, and polluted environments will require a great deal of effort to deal with, an effort that paying the massive American military force and for the war of the occupation of Iraq will detract from.
The challenge is facing us, and Rambo is not going to meet that challenge. American workers are. It’s time to put them back to work in real productive jobs. We'll see an indicator that America has turned back in the correct direction when we start graduating more American-born engineers than MBAs and Lawyers. But that will not happen without coordination. Remember - government is not the enemy. The American government is us. Reagan and the conservatives got that wrong, too.
It's time to stop blaming others for the failure to meet the challenges facing us and get down to work to build and fix things instead of bombing every imagined threat.
Ron Paul has been infected by the typical Southern conservative view that the Civil War was not about slavery. That's a load of defensive Southern crap. Eric at The Edge of the American West explains why slavery was the direct cause of the American Civil War, and I have added a comment that agrees with him. Here are the article and my comment:
Slavery did too cause the Civil War.
December 24, 2007 in history and current events by eric
I know everyone’s having a grand time debating the causes of the Civil War all over again, so I thought I would light my own piece of touch-paper: just because Lincoln did not mean to fight a war to end slavery, doesn’t mean slavery didn’t cause the Civil War.
On a basic theory of causation, we’re talking about that x without which no y, where y is the Civil War. It is profoundly difficult to believe any Civil War would have occurred without slavery, or if you want to be precise, without slavery concentrated in one part of the country. Even if you think some version of the states’-rights debate would have occurred without a geographically concentrated slave interest (which I don’t) it’s hard to believe it would have come to war.
And yes, I’ll concede that that imaginary American republic — the one without slavery, which preserved a compact theory of the Union — might have been a nice place to live. But we don’t live there.
We live here, where the war was about ending slavery. Don’t take my word for it, consider an astute student of the war:
One eighth of the whole population were colored slaves, not distributed generally over the Union, but localized in the Southern part of it. These slaves constituted a peculiar and powerful interest. All knew that this interest was, somehow, the cause of the war.
Does this mean that the war was necessary to end slavery? No; Paul could be right that slavery would, eventually have gone away. Does this mean the war was the best way to end slavery — where “best” means cheapest, most painless, most just? Probably not — in theory, it would have been much better to have an immediate and peaceful emancipation.
But of course we don’t live in theory, we live in America. And it pretty much appears that in this country, forcible emancipation had become by the middle nineteenth century, the only plausible kind of immediate emancipation. And, you know, justice delayed is justice denied. The need of ending slavery was not only the first but the final cause of the Civil War.
So you’re in favor either of force or of indefinitely continued slavery. Note that yes, prior to the outbreak of war, Lincoln and most white people favored indefinitely continued slavery. Would we be morally better than they, were we transported back then? Perhaps not. Should we be better, having as we do the luxury of hindsight, and knowing what penalty our forebears paid for their comfortable positions? Yes. Is Ron Paul acting as if he had this luxury? No, and I don’t know why not.
By the the time you get to the Civil Rights Act, Paul is onto entirely untenable positions. With the conclusion of the Civil War you had the Civil Rights Act of 1866, and the Thirteenth, Fourteenth, and Fifteenth Amendments to the Constitution. That was what you bought with your 600,000 dead — a new Union devoted to — in the frank words of the Civil Rights Act of 1866,
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens.
All persons shall have the same rights as white persons — Congress of the United States, 1866. That was what you bought with your war, with (to repeat) your 600,000 dead, with the wrenching crisis of the Union: a new Constitution and racial justice.
Only, you didn’t: because Andrew Johnson and a bunch of weak-kneed Republicans fumbled it away in the face of racist resistance, because the Supreme Court helped gut those amendments, leaving them all but meaningless, thus necessitating a century-long march toward reclaiming the civil rights recognized in 1866. Was the Civil Rights Act of 1964 wrong, Mr. Paul? No, because the side that thought so lost the Civil War.
Only our collective betrayal of that war, our shared desecration of the memory of the dead, in which we participate every time we deny the purpose of the war and the meaning of the victory the United States Army and Navy won in it, has made the absurd position of Ron Paul possible.
And a Merry Christmas to you!
Followed by my comment
I think you have it exactly right. The existence of slavery was the cause of the Civil War. And I think there are two clear reasons for that.
First, had the slave owners simply remained in control of their own states, the threat of slavery would not have been considered so bad by the North. But the slavers were aggressive, and tried to push the legality of slavery as far West and North as they could make it go. They not only wanted “Their special institution”, they wanted it spread to where it hadn’t been before. Normal political reactions to such aggressiveness will cause or intensify opposition.
The Second reason to consider that slavery caused the Civil War includes your analysis and my first point. The attack on Fort Sumter was purely Southern aggressiveness caused by the distaste of the South for the northern abolitionists and for Lincoln’s election, but it was a local rebellion. There was no real reason for Lincoln to have considered it any more significant than Shay’s Rebellion during George Washington’s administration. Lincoln took the very rational decision to put down the rebellion, just as Washington had done seven decades earlier.
The difference is that putting down Shay’s Rebellion did not spread the rebellion. Putting down the rebellion in South Carolina caused a spread of the rebellion across the entire South and Texas. What was the difference between the two incidents? Slavery as the basis for a society. The rest of the slave states saw the federal government effort to put down the local rebellion in South Carolina as an attack on all of them and on their way of life. The only unique factor of their way of life was slavery.
There is no reasonable way to look at the beginning of the Civil War and try to say that slavery was not its’ cause. None.
Agree or disagree with the two of us, but if you have any interest in American history I strongly suggest that you bookmark this site.
[Of course, I see no possible way that you could disagree with me. :-} ]
