Category Archive 'American Decline'
30 Jan 2012
John Gast, American Progress (and other titles), 1872, most frequently seen in chromolithograph form inside cigar boxes.
Walter Russell Mead starts a new insightful essay which argues that the Progressive, Blue State-politics ideas revolving around suburbia, a manufacturing economy, a constantly-expanding regulatory regime and welfare state pertain to rapidly vanishing world, destined to follow the Indians and the buffalo, and the family farm and homestead into America’s past.
The frustration and bitterness that fills American politics these days reflects the failure of our current social, political and economic institutions and practices to deliver the results that Americans want and expect. Itâ€™s comparable to the frustration and fear that swept through the country in the late 19th and early 20th century as the first American dream â€“ that every family could prosper on its own farm â€“ gradually died….
Our political battles today reflect the same kinds of frustrations we saw in the old populist era. Many cannot fathom another and â€œhigherâ€ form of the American Dream beyond the old crabgrass utopia. They want to turn back the clock and restore the old system because they donâ€™t know of anything else that will work. …
It is, of course, a very similar situation today. The forces ripping up our old social model are too powerful to beat. That is not because the rich bankers or global multinationals are engaged in a conscious conspiracy of rip-offs and oppression (though, frankly speaking, big business does sometimes engage in exactly that). It is because the forces ripping up the social model are deeply implanted in the nature of the economic system â€” and that system is a reflection of the propensities in human nature which we cannot and perhaps should not overcome.
There is another important similarity, one often overlooked in the pessimism, anger and anxiety provoked by the inexorable decline of the â€œblue social modelâ€ that shaped America in the 20th century â€” just as it was overlooked 100 years ago.
Read the whole thing.
11 Feb 2011
Giovanni Battista Piranesi, View of Paestum from L’ancienne Ville de Pesto, 1778
The Wall Street Journal reported that the end of the era of New York City and the United States as the world’s leading center of finance is not just imminent, it is here right now.
After 219 years as the citadel of American capitalism, the New York Stock Exchange was near an agreement to be acquired by Deutsche BÃ¶rse AG in a deal that would create the world’s largest financial exchange.
With the parent of the New York Stock Exchange and Germany’s Deutsche Borse in advanced talks to merge, Aaron Lucchetti and Dennis Berman look at the likely impact on Wall Street as the financial capital of the world.
If a deal is reached and regulators approve, the combined company would trade more stocks and futures than any rival in the world and more options than any U.S. exchange. The takeover would culminate a decade of tie-ups by exchanges around the world eager to find new sources of growth and catch up with smaller rivals that have been quicker to embrace new and lucrative kinds of trading.
For New York, the move is symbolic of the city’s fading dominance on the world stage as other countries are drawing investors directly to their markets. The move also is a recognition that securities trading today goes on at all hours and in all time zones, making the actual bricks and mortar of Wall Street far less important than before.
“New York is going to be important, but it’s not the financial center. Capital markets are everywhere now,” said Michael LaBranche, CEO of LaBranche & Co, the family-run firm that traded on the floor of the New York Stock Exchange for 87 years before it sold that part of its business to Britain’s Barclays Capital in 2010. …
The exchanges, which are presenting the deal as a merger of equals, said the combination would leave 60% of the company in the hands of Deutsche BÃ¶rse shareholders, with NYSE Euronext shareholders holding the remaining 40%. The combined company, with a putative market capitalization of some $25 billion as of Wednesday, would be incorporated in the Netherlands and split its headquarters between Frankfurt and New York.
To put all this into perspective, take this little news item into account.
The U.S. budget deficit grew in January, heading for an expected record in 2011 amid warnings about the nation’s burgeoning debt and wrangling over government spending.
The Treasury Department’s regular monthly statement, released Thursday, showed the U.S. spent $49.80 billion more than it collected last month.
That’s right. In one single month, your government spent an amount of money in excess of its actual income totaling twice what it would cost to buy the combination of the New York Stock Exchange and the German Deutsche BÃ¶rse, the largest merged securities trading entity in the world.
Liberal policies are not only tremendously economically destructive. Their impact is far more rapid than is commonly recognized. New York City’s financial industry has been been propping up not only New York’s tremendously misgoverned city and state for decades, but the entire region. Picture the financial district of New York before long coming to resemble the manufacturing districts of the Northeast. Then picture the US in the position of post-WWII Britain, obliged to dismantle its military and retreat from its traditional role of world leadership permanently, because it just cannot afford military power or a major international role.
02 Dec 2010
Mortimer B. Zuckerman identifies the real significance of the enormously expanded Obama-era deficit. It is not only capable of putting a dent in Americans’ consuming lifestyles. It promises to change permanently American capabilities and America’s role in the world. Some of us believe the permanent transformation of the United States into another militarily impotent welfare state would fulfill both the domestic and foreign policy goals of the radical left’s agenda.
The majority of Western governments are running fiscal deficits of 10 percent or more relative to GDP, but it is increasingly clear that there will be no quick fixes, that big government and fiscal deficits will not bring us back to the status quo ante. Indeed, the tidal wave of red ink has meant that the leverage-led or debt-led growth model is dead.
Developed countries will be forced to deal with their debt on every level, from the personal to the corporate to the sovereign. Being able to borrow may have made people feel richer, but having to repay the debt is certainly making them feel poorer, particularly since the unfunded liabilities that many governments face from aging populations will have to be paid for by a shrinking band of workers. (Ecoutez, mes amis!)
Demography is destiny. As a result, there is a burgeoning consensus that we are witnessing an inevitable rise of the East and a decline of the West.
The prognosis for America is especially discouraging. We have relied too heavily on surplus savings from abroad on top of running massive current account deficits. Until recent times, we ran deficits of this order only when we were engaged in a titanic war; otherwise we sought to achieve budget balances over a complete business cycle. But now we are running annual deficits of $1.4 trillion, about 10 percent of the total economy. We have compounded the deficits we accumulated over the last decade, so they now reach 61 percent of GDP. Only once before has the ratio of federal debt to GDP come in above 60 percent. That was after World War II. And our federal debt ratio today doesn’t even take into account Social Security and Medicare. Total liabilities and unfunded promises for Medicare and Social Security were about $62 trillion at the end of the last fiscal year, tripling from the year 2000, according to the calculations of former Comptroller General David Walker. Sixty-two trillion dollars is $200,000 per person and $500,000-plus for the average household. As Walker put it, the problem with these trust funds is “you can’t trust them [and] they’re not funded.” Therefore, he asserts, we ought to count them as a liability, which would bring the debt-to-GDP ratio to 91 percent.
The present model of global growth had served excess Western consumption with inexpensive products from the East. The result is plain to see: The West has excessive debt, while China has excessive capacity and inadequate consumption, as well as high levels of savings and our debt.
The deficits we face are a dagger pointing at the heart of the American economy. They threaten that the United States will evolve into another aging welfare state, where fiscal expenditures shift from defense to social welfare, and America’s power in the world will shrink. It has clearly happened in Western Europe, which can no longer defend itself but relies on the United States.
30 Jul 2010
Rep. Barney F. Bourbon
Richard Fernandez identifies the international aspects of the thesis of Angelo Codevilla’s recent important essay.
Niall Ferguson is touring Australia warning that the end of American dominance may be imminent and sudden. Somehow the ideas in Codevillaâ€™s essay are popping up everywhere, whether people have read it or not. Ferguson describes how rapidly empires can fall.
The Bourbon monarchy in France passed from triumph to terror with astonishing rapidity. The sun set on the British Empire almost as suddenly. The Suez crisis in 1956 proved that Britain could not act in defiance of the US in the Middle East, setting the seal on the end of empire.
But those things happen only to the denizens of history. People who live in the today usually think they are different. So despite evidence of dramatic change, people who have spent their whole lives among the policy certainties of the postwar period find it difficult to accept they may have to build a world of their own from first principles. Ferguson asks his audience: â€œwhat would you do in a world without America? Has the question even crossed your mind?â€
Australiaâ€™s post-war foreign policy has been, in essence, to be a committed ally of the US. But what if the sudden waning of American power that I fear brings to an abrupt end the era of US hegemony in the Asia-Pacific region? Are we ready for such a dramatic change in the global balance of power? Judging by what I have heard here since I arrived last Friday, the answer is no. Australians are simply not thinking about such things.
But if the Australians are not thinking about it, the Chinese are certainly preparing for it. The Wall Street Journal recently noted that Beijing objected to the right of US naval vessels to exercise in the Yellow Sea, despite the fact that they are international waters. At least they used to be. Waters are only international if kept so by a powerful navy committed to the freedom of the seas. People sometimes forget that treaties reflect realities rather than create them, no matter what the European Union may think. …
[Caroline Glick observes that] “[j]ust as US bureaucrats, journalists, politicians and domestic policy wonks tend to combine forces to perpetuate and expand the sclerotic and increasingly bankrupt welfare state, so their foreign policy counterparts tend to collaborate to perpetuate failed foreign policy paradigms that have become writs of faith for American and Western elites.â€ In other words, when it comes down to funding politics or funding defense, fund politics. Ferguson made the same point more starkly: â€œit is quite likely that the US could be spending more on interest payments than on defense within the next decade.â€
If the love of money is the root of all evil, the lack of it is the cause of the fall of empires. Ferguson gave some examples:
Think of Spain in the 17th century: already by 1543 nearly two-thirds of ordinary revenue was going on interest on the juros, the loans by which the Habsburg monarchy financed itself.
Or think of France in the 18th century: between 1751 and 1788, the eve of Revolution, interest and amortisation payments rose from just over a quarter of tax revenue to 62 per cent.
Finally, consider Britain in the 20th century. Its real problems came after 1945, when a substantial proportion of its now immense debt burden was in foreign hands. Of the pound stg. 21 billion national debt at the end of the war, about pound stg. 3.4bn was owed to foreign creditors, equivalent to about a third of gross domestic product.
Alarm bells should therefore be ringing very loudly indeed in Washington, as the US contemplates a deficit for 2010 of more than $US1.47 trillion ($1.64 trillion), about 10 per cent of GDP, for the second year running.
But alarm bells arenâ€™t ringing in Washington. The entire alarm system has been disabled, disconnected, perhaps scrapped. Anyone who wants to turn it back on will have to root through the dumpster to see if any usable parts can still be retrieved. No better symptom of the absence of alarms is the genuine astonishment of Charles Rangel that it is illegal to break the law. Almost as a matter of course he concealed hundreds of thousands of dollars in income, used Congressional letterhead to solicit donations for private causes, took four rent controlled apartments for himself. Innocently. He probably didnâ€™t think he was doing anything wrong. Things had been so sweet, so long that even after he was offered the chance to negotiate his way out of 13 separate violations of House rules and federal statutes he simply refused to believe it was happening.
Like Brechtâ€™s fictional Atlantean who â€œthe night the seas rushed in â€¦ still bellowed for their slaves,â€ the members of what Codevilla called the â€œruling classâ€ canâ€™t believe it is happening. They still want their last dollar, their last perk. Literally, no matter what. â€œMassachusetts Congressman Barney Frank caused a scene when he demanded a $1 senior discount on his ferry fare to Fire Islandâ€™s popular gay haunt, The Pines, last Friday. Frank was turned down by ticket clerks at the dock in Sayville because he didnâ€™t have the required Suffolk County Senior Citizens ID. A witness reports, â€˜Frank made such a drama over the senior rate that I contemplated offering him the dollar to cool down the situation.â€™â€
The worst thing about the ferry incident is the possibility that if the witness had really offered Frank the dollar he might actually have taken it. Automatically; out of conditioning, like a Pavlovian dog. The culture in which the chairman of the House Financial Services Committee rose to power is one in which it is OK to blithely borrow more money than the entire defense budget can service and yet refuse to spend one whole dollar of his own money. The ethos of that world can be captured in one phrase: â€œdonâ€™t you know who I am?â€
06 Jan 2010
Ouch! Business Insider reprints an illustrative graph from Seeking Alpha marking the progress of American decline.
In the just-so story of the evolution of our economy, our old manufacturing based economy has been replaced by an innovative knowledge economy. That’s not quite true.
In fact, the decline of the jobs in goods producing sectors of the economy–construction, manufacturing, mining and agriculture–has largely been met with an increase in jobs on the government payroll. We’ve gone from providing jobs in profit-making private industry to providing jobs in profit-eating government work. Toward the end of 2007, the total number of government jobs exceeded the total number of goods producing jobs. Welcome to the government payroll economy.
12 Oct 2009
Scott Johnson strongly recommends Charles Krauthammer’s crucial new essay in the Weekly Standard, supplying an even better alternative title: The Will to Cower.
The single most important essay on the Obama administration’s first year is Charles Krauthammer’s “Decline is a choice.” It presents a sort of unified field theory of Obamaism, usefully collecting evidence to advance the argument that Obama’s domestic and foreign policy positions work together to support the decline of American power.
As Krauthammer more broadly puts it: “The current liberal ascendancy in the United States–controlling the executive and both houses of Congress, dominating the media and elite culture–has set us on a course for decline. And this is true for both foreign and domestic policies. Indeed, they work synergistically to ensure that outcome.”
24 Sep 2009
Rembrandt van Rijn, Belshazzar’s Feast, c. 1635, London, National Gallery
The phrase they are probably going to need most will be: “And would you like fries with that?”
Electing radicals from the democrat party’s Marxist fringe has consequences, and the Telegraph reports that the Obama Administration’s “Just turn on the printing presses!” economic policies are probably going to have some very nasty ones.
The Telegraph quotes a new report from Hongkong and Shanghai Banking Corporation (HSBC)’s currency chief that says the handwriting is on the wall for the United States.
“The dollar looks awfully like sterling after the First World War,” said David Bloom, the bank’s currency chief.
“The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK â€“ debt is racing up to 100pc of GDP,” he said
Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia’s “mercantilist mindset” of recent decades is about to be broken by the spectre of an inflation spiral.
The policy headache was already becoming clear in the final phase of the global credit boom but the financial crisis temporarily masked the effect. The pressures will return with a vengeance as these countries roar back to life, leaving the US and other laggards of the old world far behind.
A monetary policy of near zero rates â€“ further juiced by quantitative easing â€“ is completely incompatible with circumstances in most of Asia, the Middle East, Latin America, and Africa. Divorce is inevitable. The US is expected to hold rates near zero through 2010 to tackle its own crisis.
What is occurring is an epochal loss in the relative wealth and economic power of the old G10 bloc of rich countries compared to rising regions of the world. The euro, yen, sterling, Swiss franc and other mature currencies will be relegated along with the dollar in this great process of rebalancing, but the Greenback will bear the brunt.
Yes, Virginia, we’re talking about the End here: the end of the US dollar as world reserve currency, the end of the whole post-WWII era of American economic, cultural, and military ascendancy, including economic decline, retreat from no longer sustainable overseas responsibilities, the inability to support a first class military, and a whole new American way of life centered on decline, pessimism, and yearning for the permanently vanished good old days.
They may not have understood it at that time, but that is what they voted for.
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