The Process of Imperial Collapse

There’s no way to ease into this. In April 2009, but the day after April Fools’ Day and not on the day itself, in the Washington Post, Simon Johnson and James Kwak offered this:

But is the United States really a normal advanced economy anymore? We seem to have taken on some features of so-called emerging markets, including a bloated (and contracting) financial sector, overly indebted consumers, and firms that are trying hard to save cash by investing less. In emerging markets there is no meaningful idea of “slack” – there can be high inflation even when the economy is contracting or when growth is considerably lower than in the recent past.

The idea is that the United States is behaving more like an emerging market, and not like a super-duper best of the best powerhouse and all that stuff. Johnson and Kwak go on to explain that we certainly don’t want to become like Argentina in 2001-2002 or Russia in 1998, when currencies collapsed and inflation soared. It was a warning. But we’re systematically devaluing the dollar and there’s no hint of inflation now – the current worry is a possible deflationary spiral. There are lots of ways an economy can collapse. Choose your doom.

But the United States may not be a normal advanced economy anymore, and here’s the current thinking from Steven Pearlstein on what our biggest and most enduring economic problem really is:

The fundamental economic challenge facing the United States is to get what we consume more in line with what we produce after years of living beyond our means. Obviously there are two ways to correct this imbalance – increase production or reduce consumption – and given the magnitude of the adjustment, it’s likely we’re going to have to do both. …

From a policy standpoint, this appears to put us in a terrible bind: either reduce unemployment by returning to our free-spending ways, or finish the job of reducing consumption by pushing unemployment up even further. For the moment, we’ve decided to choose neither. There is, of course, a way out of this bind: produce more without consuming more. For all practical purposes, that means grabbing a bigger share of global markets, either by exporting more goods and services, or replacing some of the stuff we import by producing it at home.

That might be what’s behind Obama’s promise to double US exports over the next five years – which no one takes seriously, unless the dollar fall a whole lot. That would make out exports to the rest of the world cheaper and everyone else’s exports to us more expensive. And maybe that is the plan, as Martin Wolf comments:

To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. What needs to be discussed is the terms of the world’s surrender: the needed changes in nominal exchange rates and domestic policies around the world.

But that’s not easy:

China objects to the huge US fiscal deficits and unconventional monetary policies. China is also determined to keep inflation down at home and limit the appreciation of its currency. The implication of this policy is clear: adjustments in real exchange rates should occur via falling US domestic prices. China wants to impose a deflationary adjustment on the US, just as Germany is doing to Greece. This is not going to happen. Nor would it be in China’s interest if it did. As a creditor, it would enjoy an increase in the real value of its claims on the US. But US deflation would threaten a world slump.

That’ll make your head hurt, but Wolf says it comes down to this – we’re going to win this war, one way or the other, as we “will either inflate the rest of the world or force their nominal exchange rates up against the dollar.”

There’s a reason they call economics The Dismal Science. But dismal may be the new normal. We may not be an advanced economy any longer.

See Allen L. Sinai – the chief global economist at the consulting firm Decision Economics – “No wonder Americans are pessimistic and unhappy. The only way we are going to get in gear is to face up to the reality that we are entering a period of austerity.” No one wants to face that, but everyone seems to know that’s true.

The current governor of New Jersey, Chris Christie, single-handedly scuttled the new rail tunnel under the Hudson that his state and New York and the federal government was just starting – we can do without such things, even if halting the work will mean decades of a stagnant or shirking economy in the region – at least taxes will stay low. And that’s part of a growing Tea Party way of thinking – we can do without. Even paved roads are overrated. People would rather do without than pay one penny more in taxes, and they want their current taxes lowered.

You might call this the New Austerity Movement. They call it more freedom for everyone. If someone wants police or fire protection or healthcare or schooling for their children, or paved roads, they’ll pay for it, or they won’t. It’s their choice, so leave the government out of it. So you get scattered calls to abolish the Food and Drug Administration – people can decide for themselves what food is safe and what drugs work and won’t kill you – and to abolish the National Institute of Health and the Center for Disease Control – let private industry run those, for profit, and the major pharmaceutical companies will do the job much better. Steve Benen has a rundown of such thinking here – it’s all the rage, in all senses of that word.

As Paul Krugman once noted – “Both sides, I thought, agreed that the government should provide public goods – goods that are non-rival (they benefit everyone) and non-excludable (there’s no way to restrict the benefits to people who pay.) The classic examples are things like lighthouses and national defense, but there are many others.” Dream on. Less and less seems to fall under the rubric of public goods now.

But there are consequences to this new way of thinking. See Glenn Greenwald:

It’s easy to say and easy to document, but quite difficult to really internalize, that the United States is in the process of imperial collapse. Every now and then, however, one encounters certain facts which compellingly and viscerally highlight how real that is.

Greenwald points to a new study in Health Affairs by Columbia Health Policy Professors Peter A. Muennig and Sherry A. Glied:

In 1950, the United States was fifth among the leading industrialized nations with respect to female life expectancy at birth, surpassed only by Sweden, Norway, Australia, and the Netherlands. The last available measure of female life expectancy had the United States ranked at forty-sixth in the world. As of September 23, 2010, the United States ranked forty-ninth for both male and female life expectancy combined.

And Greenwald hammers it home. In 1999 we were ranked by the World Health Organization as 24th in life expectancy – now we’re 49th – and last year the National Center for Health Statistics ranked the U.S. in 30th place in global infant mortality rates – and right now, out of twenty “rich countries” measured by UNICEF, we rank 19th in “child well-being”  – and out of thirty-three nations measured by the OECD, we rank 27th for student math literacy and 22nd for student science literacy. Something is up.

But at least our economy is wonderful. Nope – last year the World Economic Forum ranked one hundred thirty-three nations in terms of “soundness” of their banks – we came off badly, ranked in 108th place – behind Tanzania and just ahead of Venezuela. Greenwald lives in Brazil.

But he does point out that we are now in fifth place in total number of executions – “behind only China, Iran, Iraq and Saudi Arabia, and comfortably ahead of Yemen and Sudan” – and we’re tops in the percent of population in prison, and sell more arms all over the world than any other nation by far. Cool.

But is this imperial collapse? Most of us when we think of imperial collapse think of something like this. On the other hand, Thomas Freidman in the New York Times thinks this way:

A friend in the U.S. military sent me an e-mail last week with a quote from the historian Lewis Mumford’s book, “The Condition of Man,” about the development of civilization. Mumford was describing Rome’s decline: “Everyone aimed at security: no one accepted responsibility. What was plainly lacking, long before the barbarian invasions had done their work, long before economic dislocations became serious, was an inner go. Rome’s life was now an imitation of life: a mere holding on. Security was the watchword – as if life knew any other stability than through constant change, or any form of security except through a constant willingness to take risks.”

It was one of those history passages that echo so loudly in the present that it sends a shiver down my spine – way, way too close for comfort.

And you know where he goes with that:

The best our current two parties can produce today – in the wake of the worst existential crisis in our economy and environment in a century – is suboptimal, even when one party had a huge majority. Suboptimal is okay for ordinary times, but these are not ordinary times. We need to stop waiting for Superman and start building a superconsensus to do the superhard stuff we must do now. Pretty good is not even close to good enough today.

He calls for a third party:

We have to rip open this two-party duopoly and have it challenged by a serious third party that will talk about education reform, without worrying about offending unions; financial reform, without worrying about losing donations from Wall Street; corporate tax reductions to stimulate jobs, without worrying about offending the far left; energy and climate reform, without worrying about offending the far right and coal-state Democrats; and proper health care reform, without worrying about offending insurers and drug companies.

And it comes down to this:

We need a third party on the stage of the next presidential debate to look Americans in the eye and say: “These two parties are lying to you. They can’t tell you the truth because they are each trapped in decades of special interests. I am not going to tell you what you want to hear. I am going to tell you what you need to hear if we want to be the world’s leaders, not the new Romans.”

He was generally ridiculed for the column – a third party would have to be financed by its own special interests of course. Where else would they find the means to mount any kind of effort?

David Bell, who teaches history at Princeton, was, however, not impressed with the underlying reasoning:

Friedman is sounding a popular theme. A Google search for the phrase “America’s decline” turns up 42,500 hits. Comparisons to Rome and other once-powerful empires abound, as in Cullen Murphy’s popular 2007 book “Are We Rome? The Fall of an Empire and the Fate of America.” From the Tea Party right comes the constant, screeching cry that President Obama and the Democrats are “destroying America.” The National Intelligence Council itself, a few years ago, predicted the “erosion” of American power relative to China and India. Clearly, the most popular classical figure in America today is that high-strung Trojan lady, Cassandra.

If we can be certain of anything, it is that someday the United States will indeed cease to exist. “If Sparta and Rome perished, what state can hope to last forever?” asked Rousseau in The Social Contract. The timing, however, is another matter. Why should we assume that we are just now sliding helplessly towards the edge of the cliff?

He says this is all nonsense and cites a twenty-two-year-old article in Foreign Affairs – Harvard’s Samuel P. Huntington on how “America’s decline” had been in the air since the late fifties – there was the Soviet Union’s launch of Sputnik and Vietnam war and the oil shock of 1973 and Soviet aggression in the late seventies, and a general unease that came with the end of the Cold War. It’s always something. Bell says you can now add our reaction to 9/11 and the current Great Recession.

And you can dive in and read his long list of examples of end-of-it-all thinking. Or you can read Cullen Murphy’s Are We Rome? But Bell detects a pattern to it all:

What did our past Cassandras see as the causes of America’s decline? On the one hand, internal weaknesses – spiraling budget and trade deficits, the poor performance of our primary and secondary educational systems; political paralysis – coupled with an arrogant tendency toward “imperial overstretch.” And on the other hand, the rise of tougher, better-disciplined rivals elsewhere: the Soviet Union through the mid-’80s; Japan until the early ’90s; China today.

The image that comes through irresistibly is that of an aging, impotent America being outpaced by younger, more virile competitors. Such has always been the implicitly sexual language of national rivalry, which Shakespeare made brilliantly explicit in a speech by the French Dauphin in Henry V: “By faith and honor, / Our madams mock at us, and plainly say / Our mettle is bred out and they will give / Their bodies to the lust of English youth / To new-store France with bastard warriors.”

Maybe this is all about sexual potency, or the lack of same – but that may be a stretch. But Bell suggests this nonsense might arise “from something deeply rooted in the collective psyche of our chattering classes as from sober political and economic analyses.” Rome fell to the barbarians. France fell to Henry V at Agincourt. There has to be a reason. At Agincourt it all couldn’t have been because of the English longbow allowing what was essentially an aerial attack from a distance.

But there has to be a reason. But people, like Greenwald perhaps, look in the wrong places:

Of course, this does not mean that their actual analyses are mistaken at every point. But it does mean that they often take for granted things that perhaps they should not: for instance, that overall national economic performance necessarily follows from national performance in primary education, or from the savings rate; or that political paralysis at home necessarily weakens a country’s international influence. Such conclusions stem naturally from notions of what is wrong or right, strong or weak on an individual basis. How can a weak, flabby, undisciplined couch potato possibly compete with a rival who eats right, studies hard and works out every day (like the Russians … I mean the Japanese … I mean the Chinese)?

Bell suggests that people with alarming lists of alarming statistics might not be thinking clearly:

The trouble with the analogy is that nations do not in fact behave like individuals. Government debt is not the same thing as individual debt. The collective pursuit of new pleasures and luxuries can create economic benefits that have no real individual equivalent. Attempts to impose stringent discipline on behavior on a national scale can backfire spectacularly. But the psychological impulse to see the country in decline leads writers again and again to neglect these differences, and to cast the story of a huge, complex nation as a simple individual morality play.

And worse: The stories of national decline that they tell can be positively counterproductive. By comparing America to Rome and warning us about our imminent decline and fall, writers like Friedman think that they are issuing a necessary wake-up call; sounding an alarm in terms that cannot be ignored. But are they? The fall of an empire is a historical cataclysm on a scale so vast that, in hindsight, it is hard to see it as anything other than inevitable. Would Rome not have fallen if a group of clear-sighted, hardheaded Roman commentators had sternly told the country to buck up in the late third century, lest the empire share the fate of Persia? Was Great Britain’s decline in the twentieth century a product of moral flabbiness that a strong dose of character-building medicine could have reversed?

So there’s no need to personalize this, or to go all anthropomorphic or whatever. Things happen. We do our best. The sky is not falling. There are just things to fix.

Theodore Dalrymple has another way to see this, in his view from Europe:

The great English moralist of the Eighteenth Century, Dr Johnson, once said that public affairs vex no man.

So it is not astonishing, either, that so many of us in Europe continue our lives without noticing, let alone thinking about, the seismic shifts in world power that have occurred in the last two or three decades. In part this is because we have already lived with a seismic shift without really noticing it: the transformation of Europe from forefront to backwater. We in Europe are at the front end of nothing, except perhaps taking holidays. Not that I am against holidays: in fact, speaking personally, I rather prefer them to exercising power.

The European empires are long gone, and Europe is now… pleasantly irrelevant. They just pretend that’s not so, even if here we don’t:

Most Americans I meet seem rather complacent about the position of their country in the world. They tend to assume that the economic growth of China is not compatible with its political system, and that sooner or later it will blow apart. Ironically enough, this is a very Marxist view.

When de Tocqueville went to America, he soon realized that that the vocabulary of political philosophy and science that he had inherited was not adequate to describe the reality – the new reality – that he was seeing. He struggled to describe the forms of domination, tyranny and unfreedom that he saw developing in embryo under forms of liberal representative democracy.

Certainly, it does not seem to me that the future necessarily belongs to freedom as we have known it, and such as it was, and that therefore China must break apart under demands for personal liberty. It is a mistake, in my view, to assume that all people want to be free, in the sense of the American pioneers.

Wait. That’s our whole way of dealing with the world. We’re the light of the world. Everyone wants to be like us – free to do and say anything we please and free to make a big success of ourselves or a big failure, where you make it on your own and ask for nothing from others and get to keep all your goodies and you don’t have to share with anyone. That’s the blessing of freedom. God says so, or Bush said God said so – “I believe that God has planted in every human heart the desire to live in freedom.” That was from Bush’s State of the Union address, January 20, 2004 – and no one jumped up and shouted “You lie!”

Now folks in other countries may say they don’t like that sort of freedom we have, that everyman for himself beggar-your-neighbor cut-throat way of life, but one day they’ll wake up and realize they want to be just like us, or we will go over and make them become like us, by force if necessary, and then they’ll be amazed and love us for making them just like us, and thank us. That’s the whole plan.

Dalrymple doesn’t think much of the plan:

I think they much prefer to be comfortable; as the establishment of welfare states almost everywhere as the political summun bonum has shown, the greatest of all freedoms, the one that more people want more than any other, is the freedom from responsibility and consequences. It is true that the Chinese have never had the freedoms of speech, etc., that we have enjoyed, and have taken for granted, but I am not sure how much they are missed there.

Moreover, I fleetingly, and no doubt dangerously, wonder whether freedom is as importantly a matter of the soul as of political arrangements. I cannot ever forget Arthur Koestler’s book, Spanish Testament, in which he said that the time he spent in the condemned cell in the Nationalist zone was the time in his life when he felt most free.

Wait, wait, wait – the rankings and data show that we’re going through imperial collapse, or think we are, and the rest of the world shrugs? They prefer to be comfortable and leave it at that? What’s wrong with them?

Maybe nothing’s wrong with them. And maybe we have to fix a few problems and calm down.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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