Many people, including myself, believe we are witnessing historic times. Gregory Djerejian at THE BELGRAVIA DISPATCH this morning asked what I think might be a good summarizing question about this past century. He is always a good read, though I frequently disagree with him.
I think the primary driving force of history is economics. 12/7 and 9/11 represent two catalytic dates in US history. By it's shear size, the US economy has a overwhelming effect on the world economy, therefore world history. No one likes bad news, and I'm afraid my this post and the blog's economic catogory is full of it, especially bad economic news. However, more blogs are raising similar alarms. I can only hope I am wrong.
Imperial Admiral Yamamoto was indeed prophetic in his statement, "We have awakened a sleeping giant and have instilled in him a terrible resolve". After successfully propagating a war against the Japanese in the Pacific and assisting the European allies in defeating Hitler's Germany. The industrial might created prior to, during and after WWII, created the conditions where the US became the sole superpower after "winning" the Cold War.
The Marshall Plan and the US occupation of Japan led to rebuilding Western Europe and Japan into more modern industrial nations remaking the world economy for likely the next 60 years.
Globalization combined with the events on and following 9/11, will likely remake the world again. This time, however, the decline of influence of the United States will be the telling factor. There are several reasons for this coming decline, but the writing is already on the wall and it seems unlikely the momentum of history will redirect the outcome.
One of the primary features of this coming change is the deindustrialization of the United States. Jobs have move away from heavy industry into service industries. Rather than rebuilding infrastructure in the US as it depreciated however, economic leaders have rebuilt outside of the US where labor is cheap. Now, most consumable goods in the World are produced overseas, creating an oppresive trade deficit in consumer America driving the world economy.
By shear numbers of people, the dominant labor force now lies in Asia. China and India are the future economic superpowers. Perhaps even more significantly, universities in Asia are turning out more engineers and scientists than the United States. Already, US based corporations have to look to new graduates from Asia to fill positions here and US giants like Microsoft are building satelites in India to ensure availability of highly skills specialists. Already, the US is being displaced in it's dominant position in the modern industries that have produced the highest wages in the world.
Meanwhile, in the US, wages have stagnated, largely because of the competition overseas. Unemployment has remained high despite signs of recovery in the economy again because of competition overseas and vigorous outsourcing to cheaper resources overseas.
Two other factors have combined to apparently lock in this inertia in the US economy. The National Debt has ballooned beyond comprehensible proportions. Future tax resources will be largely consumed by interest and principle payments, largely to China and Japan. Much has been said about the coming correction in the world imbalence where interest rates will rise precipitously. Many have been counting on the falling value of the dollar will bring about a rebuilding of the industrial base in the US and more competition of US goods in the world economy. Or will it?
The second event that seems to have locked in future events is the recapitalizing of the upper class in America. There are now more billionaires in the US than ever. So there should be plenty of eager investors to rebuild the US infrastructure. Or are there?
American consumers drive the world economy. But the current imbalence created by overwhelming debt and trade deficit ensures current conditions have to change. The devaluing of the dollar may well made American goods more competitive, but will it be enough to offset the cheap labor in Asia? I don't think so. So when the correction comes, interest rates will rise, demand for goods from the US will decline, world recession is the result and even deflation is a risk. A new depression is not beyond belief. The chaos that raged through Argentina in the 1990's may threaten the US. Even the perenial optimist Greenspan is warning of a difficult correction for the world.
Recession is not often a time of investment. Labor will remain relatively expensive in the US and there will continue to be a shortage highly trained engineers and scientists in the US. US and other investors are much more likely to invest their fortunes in Asia than in the US. The US infrastructure will probably continue to decline, the middle class buying power will likely have to decline just to keep up employment, and fewer middle class youths will have the means to go to college.
Government will be in no position to intervene. The National Debt has effectly "starved the beast" because no one will support raising taxes sufficiently to offset rising interest payments. The current Congress continues to try to cut taxes without any justification of than to line the pockets of their constituents.
9/11 signals the beginning of the decline of Superpower America. It seems unlikely the US will dig itself out of stagnation in the first part of the 21st Century. Asia by then will dominate the world economy and very likely world politics. We will be the largest debtor nation in the world for along time. After Bush's incompetent foreign policy and treasonous economic manipulation, our prestige is all but lost, our world power rusting away. The shining city on a hill, is dimming, decline, and in danger of falling away from it's central role in history. Worse yet, will the US engage in other futile aggressive moves like the invasion of Iraq to forstall it's fall?
Is there a way to avoid this scenario? I don't know of one. It's possible I over estimate the impact of our current fix and the solution show it self. It seems likely to me that anything even hoping to be effective will also be very painful and cost our national character greatly. Our values as a nation will be tested. Will we retain our optimism as a country? I can only hope.
50 yrs or so from now--when major historians look back at the last 100-120 yrs of American history--what date will be deemed to have had a larger impact on the course of this nation's history, Dec 7, 1941 or Sept 11, 2001? There are a lot of angles to approach this essay at prognostication, but as 9/11 is so much fresher in all our minds, let me just remind readers of the critical import of America's decision to join the allies in WWII, ie. how the future of Europe was changed so materially, how an entire post-war security architecture was created by the likes of Dean Acheson that still exists to this day, how the post-war settlement helped lead to a fifty year Cold War with the Soviets, and so much more. Big stuff, all this, very obviously. There is also, of course, the post-Cold War era that lasted from the fall of the Berlin Wall to, I guess, 9/11 (though some would say the magnitude of 9/11, while huge, doesn't supersede the post-Cold War era so that, often, you hear that we are inhabiting both the post-Cold War and post-9/11 era, not merely the latter). Still, the post-Cold War era (remember Herbert Walker's New World Order?) now seems to have been relegated to something of footnote status, with the demons of unleashed nationalism that wracked the Balkans (and still do parts of the FSU), now so overshadowed by the reining hegemon's robust pursuit of the global war on terrorism (nationalist fervor was often portrayed as one of the major potential perils stemming from the end of the Cold War).
I think the primary driving force of history is economics. 12/7 and 9/11 represent two catalytic dates in US history. By it's shear size, the US economy has a overwhelming effect on the world economy, therefore world history. No one likes bad news, and I'm afraid my this post and the blog's economic catogory is full of it, especially bad economic news. However, more blogs are raising similar alarms. I can only hope I am wrong.
Imperial Admiral Yamamoto was indeed prophetic in his statement, "We have awakened a sleeping giant and have instilled in him a terrible resolve". After successfully propagating a war against the Japanese in the Pacific and assisting the European allies in defeating Hitler's Germany. The industrial might created prior to, during and after WWII, created the conditions where the US became the sole superpower after "winning" the Cold War.
The Marshall Plan and the US occupation of Japan led to rebuilding Western Europe and Japan into more modern industrial nations remaking the world economy for likely the next 60 years.
Globalization combined with the events on and following 9/11, will likely remake the world again. This time, however, the decline of influence of the United States will be the telling factor. There are several reasons for this coming decline, but the writing is already on the wall and it seems unlikely the momentum of history will redirect the outcome.
One of the primary features of this coming change is the deindustrialization of the United States. Jobs have move away from heavy industry into service industries. Rather than rebuilding infrastructure in the US as it depreciated however, economic leaders have rebuilt outside of the US where labor is cheap. Now, most consumable goods in the World are produced overseas, creating an oppresive trade deficit in consumer America driving the world economy.
By shear numbers of people, the dominant labor force now lies in Asia. China and India are the future economic superpowers. Perhaps even more significantly, universities in Asia are turning out more engineers and scientists than the United States. Already, US based corporations have to look to new graduates from Asia to fill positions here and US giants like Microsoft are building satelites in India to ensure availability of highly skills specialists. Already, the US is being displaced in it's dominant position in the modern industries that have produced the highest wages in the world.
Meanwhile, in the US, wages have stagnated, largely because of the competition overseas. Unemployment has remained high despite signs of recovery in the economy again because of competition overseas and vigorous outsourcing to cheaper resources overseas.
Two other factors have combined to apparently lock in this inertia in the US economy. The National Debt has ballooned beyond comprehensible proportions. Future tax resources will be largely consumed by interest and principle payments, largely to China and Japan. Much has been said about the coming correction in the world imbalence where interest rates will rise precipitously. Many have been counting on the falling value of the dollar will bring about a rebuilding of the industrial base in the US and more competition of US goods in the world economy. Or will it?
The second event that seems to have locked in future events is the recapitalizing of the upper class in America. There are now more billionaires in the US than ever. So there should be plenty of eager investors to rebuild the US infrastructure. Or are there?
American consumers drive the world economy. But the current imbalence created by overwhelming debt and trade deficit ensures current conditions have to change. The devaluing of the dollar may well made American goods more competitive, but will it be enough to offset the cheap labor in Asia? I don't think so. So when the correction comes, interest rates will rise, demand for goods from the US will decline, world recession is the result and even deflation is a risk. A new depression is not beyond belief. The chaos that raged through Argentina in the 1990's may threaten the US. Even the perenial optimist Greenspan is warning of a difficult correction for the world.
Recession is not often a time of investment. Labor will remain relatively expensive in the US and there will continue to be a shortage highly trained engineers and scientists in the US. US and other investors are much more likely to invest their fortunes in Asia than in the US. The US infrastructure will probably continue to decline, the middle class buying power will likely have to decline just to keep up employment, and fewer middle class youths will have the means to go to college.
Government will be in no position to intervene. The National Debt has effectly "starved the beast" because no one will support raising taxes sufficiently to offset rising interest payments. The current Congress continues to try to cut taxes without any justification of than to line the pockets of their constituents.
9/11 signals the beginning of the decline of Superpower America. It seems unlikely the US will dig itself out of stagnation in the first part of the 21st Century. Asia by then will dominate the world economy and very likely world politics. We will be the largest debtor nation in the world for along time. After Bush's incompetent foreign policy and treasonous economic manipulation, our prestige is all but lost, our world power rusting away. The shining city on a hill, is dimming, decline, and in danger of falling away from it's central role in history. Worse yet, will the US engage in other futile aggressive moves like the invasion of Iraq to forstall it's fall?
Is there a way to avoid this scenario? I don't know of one. It's possible I over estimate the impact of our current fix and the solution show it self. It seems likely to me that anything even hoping to be effective will also be very painful and cost our national character greatly. Our values as a nation will be tested. Will we retain our optimism as a country? I can only hope.
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