In his masterpiece, The History of the Decline and Fall of the Roman Empire, Edward Gibbon identified the irreversible tendencies which gave rise to the end of the Roman Empire, these were, 1. Decline in Morals and Values, 2. Decline in Public Health, 3. Political Corruption, 4. Unemployment, 5. Inflation, 6. Urban decay, 7. Inferior Technology, 8. Military Spending.
All of which today sound eerily familiar. This process has been manifest in the 20th and 21st centuries with the rise and fall of empires, and there seems no reason why the latest empire is going to buck the trend. Like the USSR before it the USA now seems in an irreversible trajectory of decline. This may well be a well-worn cliché, nonetheless some clichés happen to be true and there is copious evidence to validate the declinist thesis. There is, however, a school of thought on the left that suggests that America is all powerful, unchallengeable, and will continue to be the dominant world power for the foreseeable future, if not forever. Resistance is apparently futile. According to one of the grandees of the left, Tariq Ali, “…until now, despite many a setback, the signs of impending collapse or irreversible decline are few.” (The Extreme Centre – Tariq Ali). But hey, no one is suggesting an “impending collapse”; but, signs of irreversible decline are not ‘few’, they are many and palpable.
In 1945 the US was at the height of its power accounting for half the world’s output; today that figure has fallen to 23%. This figure is likely to fall further since China’s growth rate is 3 times faster than the US. US manufacturing has been hollowed out to the extent that its auto-vehicle industry which produced 50% of the world’s cars in 1950 produces less than 10% today. Remember the old saying “What’s good for General Motors is good for America.” Now GM needed a Federal bail-out to survive. Of the top 10 banks in the world, 4 are American, 4 (including the largest) are Chinese, one is Japanese and one is British. With purchasing power parity adjustments, China is now the world’s largest economy China and has overtaken the United States in gross domestic product, an outcome which had originally been projected to happen by the end of this decade. Analysts concede this will gradually shift the ability to confer advantages or disadvantages on other countries – in other words, power – in China’s favour.
Then of course there is the approaching financial nemesis of the US’s seemingly intractable debt problems. These debts include, public debt, private debt, corporate debt, state and municipal debt, this in addition to intractable deficits on current account; these aggregated total debts are now twice as large as US GDP, and, for the piece de resistance, one can add in unfunded future liabilities – medicare, pensions and social security, which pushes up total indebtedness somewhere north of US$100 trillion.
While federal unfunded liabilities are important, state-level unfunded pension liabilities also pose serious obstacles. In Texas, the recent 2013 Employees Retirement System (ERS) Valuation Report outlines the funding shortages this pension system faces and there is some indication it may be unable to pay beneficiaries by 2052.
The federal unfunded liabilities are catastrophic for future taxpayers and economic growth. At usdebtclock.org, federal unfunded liabilities are estimated at near $127 trillion, which is roughly $1.1 million per taxpayer and nearly double 2012’s total world output.
Fortune – January 2014
Rest assured those figures haven’t got any better since 2014, quite the opposite. These debts have grown, are growing and will continue to grow well beyond the US’s ability to pay them down – therefore a default (either through the front door, a direct refusal to pay, write-down or restructuring) or the back door (inflation) is a near certainty sometime in the not too distant future. Moreover, social mobility in the US has virtually ground to a halt, and income and wealth inequality is the worst of any developed country; the US has a Gini coefficient (45) sandwiched between Peru and Cameroon.
Then there is the main prop of US economic/financial power – the US dollar (US$) and its global reserve status. This ‘exorbitant privilege’ as the French politician Valery Giscard D’Estaing once termed it, has enabled the US to have a ‘free lunch’ courtesy of the rest of the world since 1945, with this arrangement being confirmed by Kissinger’s deal with the Saudis whereby it was established that oil would in future only be invoiced in US$’s – enter the petrodollar. Failure to abide by this arrangement resulted in the untimely demise of Saddam and Gaddafi who both had the temerity to invoice their oil in euros (Saddam) or a proposed gold dinar (Gaddafi). Effectively the US is able to pay for foreign goods by printing its own currency; this amounts to a global subsidy for the US from the rest of the world. However, it is questionable whether the rest of the world is going to put up with this arrangement in perpetuity. De-dollarisation has begun and leading the charge are Russia and China. Both these states are encouraging abandonment of the US$ by developing international trade facilities that operate without touching the US currency.
In 2010 Putin and Chinese premier Wen Jiabao announced an agreement to settle certain trades in Roubles and Yuan. Wen Jiabao stated ‘China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power.’ This was the first agreement between the two nations that directly challenged the US$’s status as the dominant world currency. Marin Katusa – Colder War
And it wasn’t the last. Other nations including Iran, Chile, Japan, Brazil, Australia and even Turkey have been drawn into bilateral trading practises which have excluded the dollar. From a sober evaluation, the de-dollarization process is only just beginning, but it is increasingly picking up momentum and will be very difficult to reverse, if at all. As another American commentator, has noted.
Future historians may look back at 18 September 2008, as the day the dollar died. The Fed furiously printed money to put out fires at Lehman, AIG and Goldman Sachs. At the same time, China began to orchestrate massive inflows of gold, not under a gold standard, but rather stealth purchases and intelligence tradecraft. The mirage of dollar strength continues. However, the ground under the dollar has shifted. The Road To Ruin – James Rickards
Summarising these tendencies of rising debt-to-GDP ratios, the increasingly problematic future of the US$, industrial hollowing out, a sluggish growth rate (even with the aid of fraudulently low GDP deflator) outright bogus (un)employment figures, wage repression and the ever-increasing gap between the top 10% and the rest of the nation, these trends are not – pace Mr Ali -, just easily reversible setbacks, they are the indicators of unsustainable and irreversible shifts.
Next the US’s supposedly unrivalled military power. The US spends more than the next 10 states put together on ‘defence’ However, several of these projects are simply pork barrels designed to make the shareholders of Lockheed-Martin, Northrop-Grumman, Raytheon and Boeing richer – the F35 fighter– aka the flying, financial black-hole – being a case in point. Spending an enormous amount of money on war materiel, much of which will never be used, doesn’t mean an irresistible war machine has been created. Nor is such a military leviathan fitted for the type of war in which the US has been engaged since 1945 (with a notable lack of success).
As it stands the US military is designed to fight purely technical symmetrical wars; unfortunately for the Americans, however, since 1945 its overseas wars have tended to be asymmetrical (and political), a type conflict for which the American military was never designed. The failure in Indo-China and the never-ending war in Afghanistan have demonstrated the deep design flaws in the US military/strategic model. After Vietnam and latterly, Iraq, the US has been unable, for political, strategic and financial reasons, to fight large land wars involving significant numbers of American troops.
It is argued that “…the imperial highway is unconquered and unconquerable from without; the only serious exit route lies within the country.” (Ali, op.cit) True enough, the US’s strategic strength lies in its geographical position. Lying between two vast oceans with friendly countries north and south it is invulnerable to invasion. This great advantage is also a disadvantage, since it will be extremely difficult to confront and win a war against other powerful states – Russia and China – who are thousands of miles way and would be fighting on their own turf.
Away games, where the invading forces are faced by the entire population, are always more difficult to win than home games. Not that in a nuclear age of MIRVd ICBMs this matters very much. We must also question the will of Americans desire to fight any further wars; apart from anything else these wars would bankrupt even the US, note the trillions spent on the middle east wars.
In geopolitical terms the US occupation of Europe designed to contain and confront Russia through NATO, is now being challenged, although unconsciously, by a rebellion of Europe’s people against the vassal status of the EU states. This tendency is significantly the case with France and Marine Le Pen who wants out of both the EU and NATO. But now this political awakening even includes Germany with the Right Wing AfD party challenging Merkel in the forthcoming elections. These ongoing euro-schisms are also spreading to the Russophobic zone in the East of Europe, particularly among the Visegrad group of Hungary, Poland, Czech Republic and Slovakia.
This vassalisation of Europe to the US has been upheld for many years by the wretched Petainist/Quisling political elites – the likes of Merkel, Hollande, and May – in much of western Europe. The EU which started was at time seen as a third force in world politics and as a possible bridge and mediator between Russian Communism and American imperialism was both internally and externally reconfigured into an anti-Russian alliance under the tutelage of NATO. This was largely brought about by the admission of Eastern European states into both the EU and NATO under the auspices of Clinton.
From that time the original European project embracing both political and military autonomy has long since disappeared – to be replaced by a North Atlantic project under US command. These are early days but the survival of the EU, as both an economic and geopolitical project seem increasingly problematic.
Within the United State political indicators of incipient decline are not difficult to find: internal corruption, and an hysteria reminiscent of the worse days of McCarthyism which form part of a more general constitutional crisis; a paralysing groupthink which cannot come to terms with reality and what can only be described as cultural death; a military, surveillance and security complex which resembles an uncontrollable carcinoma afflicting the body politic; the transmutation of a free press into a neo-con, deep-state mouthpiece – which means that there is no effective opposition to the conventional wisdom of the American ruling elites.
When there is no opposition to a corrupt ruling stratum the most bizarre enunciations and policies are seriously entertained. Day after day the media engages in breath-taking double-standards and non-sequiturs. Examples of these are legion if one picks up any copy of the New York Times or Washington Post. Taken together these morbid conditions represent a coming together of economic, geopolitical, social, political and cultural factors which usually prefigure decline and fall.
Is it possible that this process may be reversed? Probably not. There comes a point where the rot runs so deep that nothing can be done to alter this path-dependency of decline and dissolution. This seems to be the characteristic fate of all empires. Egypt, Babylon, Greece, Rome. Where are they now? Empires collapse because they become too costly to hold down and the will is lacking to hang on any longer. The US will eventually bankrupt itself in defence of its empire. Trump at least recognised this blatant fact, for which he was excoriated by just about the entire American establishment.
However, although he may not have realised it, the storm of abuse from the powers-that-be amply illuminates the nature of the problem: viz., that the PTB are incapable of any change of direction, or even an inquiry into why their plans and policies have been called into question Trump departed from the approved script, however, and this was intolerable to Wall Street, the Washington Beltway, Langley, Silicon Valley and Hollywood.
Additionally, it seems the process is beginning to accelerate particularly given the ongoing constitutional crisis after the election of Trump as President and the subsequent hysteria which greeted this. Trump’s election in a sense signalled the end of status quo, the frenzied reaction signalled its defence. At a deeper level the 2016 imbroglio was a crisis of America’s uni-polar imperial status. The US deep-state, the think-tanks, the media, the two-party cartel, academe, showbiz, and their outer party supporters, will not and cannot accept this. They will push the world to the brink to maintain their grip.
Whether we tip over the brink into nuclear extinction, or whether the US accepts its reduced and realistic position in a multi-world, possibly as first among equals, is still undecided. We will soon know the answer.