Empire Economy Woes

This article is partially based on an email exchange with a friend.

Mainstream Media Distortions

Friend wrote:

Here's some scary info about the economy's path ..."Glenn Beck - The Inconvenient Debt":

Glen Beck is a sensationalistic and highly-criticized host on the unscrupulous Fox "News" TV network. In the clip above, Beck casually claims that the Great Society -- a 1965 U.S. Govt. social plan with two main goals: eliminate poverty and racial injustice -- was a chief contributor to the escalating U.S. debt. There is absolutely no evidence to support this. I would throw in a list of reference links to prove my statement ... but I found no information period on a connection between the Great Society and national debt. The corporate elite (e.g., Rupert Murdoch, etc.) -- for whom Beck is obviously an apologist -- almost invariably divert attention from the real cause of debt: rich robbing the middle and under-class via media-based propaganda and subtext. They want their audience to think: It's the under-class Latinos or Black guys or trailer-park White trash who are at fault for the economic mess -- not, of course, those loyal hard-working executives at AIG, Enron, yada, yada. Unfortunately, Beck's deliberate and calculated deception is quite typical of mainstream media.

Beck's main claim -- huge devaluation of U.S. money because the U.S. is printing a lot of it -- doesn't really tell us much. The U.S. still has the strongest, and for better or worse, the most-trusted economy of any nation. If/when things bottom out, the U.S. may very well come out on top, but in an overall poorer or "corrected" world economy (more info on this point in this Noam Chomsky audio interview).

Middle Class Ripped Off

In terms of sheer numbers, the median-income class (or middle class) in the U.S. by far represents the population majority. And many in this income category -- which includes most white collar jobs, too -- are or soon will be significantly impacted by the deceptive practices of the corporate elite. Indeed, the elites often shift the blame onto low- or middle-income families by statements like "they should've never bought that second car" or "it's their fault for taking out that home equity loan". This is complete nonsense! As Harvard prof. Elizabeth Warren -- author of The Two-Income Trap -- alludes in the following UC Berkeley lecture, the middle class are -- like the under class -- bleeding victims of corporate-elite economic terrorism...


(Above: The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net. Another discussion by Prof. Warren is here)

The Real Economic Gorilla-in-the-Room

For the sake of argument, let's say that Beck's sensationalistic projections are fractionally on-the-mark. The scarier thing is that monetary devaluation is completely separate from (i.e., in addition to) a much larger gorilla in the room: the warning given repeatedly by GAO's former Comptroller General, David M. Walker. Walker's message was openly and honestly reported in even the usually-distorted mainstream U.S. media. For example...

David Walker -- CBS 60 Minutes report -- March 2007:

In March 2008, Walker quit as U.S. Comptroller General, five years before his 15-year term was up -- an unprecedented move. He was disgusted that his warning on gao.gov was pulled and that no politician or govt. official in Washington DC was doing anything about this time bomb. He and some fellow concerned govt. expatriates are now promoting the economic warning on this dedicated web site: pgpf.org . This effort has also led to the production of a public-awareness-promoting documentary film and book, I.O.U.S.A.

Not all agree on the catastrophic outcome of PGPF's projections, notably economist Dean Baker. Some, like Baker, feel Social Security is okay, but healthcare/Medicare is the real issue. Also, Baker, feels that catastrophic projections -- based on Walker's data, huge deficits, war spending or healthcare -- are theoretical worse-case scenarios. In other words, a doomsday collapse will happen if the U.S. allows it to happen.

The U.S. and its Main Creditor China

Friend noted:

…Today’s paper had a note that the Chinese — who hold nearly a trillion $ of US treasury debt — are concerned that the U.S. is going to cheapen its currency through rampant inflation caused by having to print so much more money to pay for everything.  That would effectively devalue the worth of their holdings.  It’s a sad day when the Chinese have to lecture the U.S. about monetary policy.

For me, the Chinese holding debt is noteworthy from a different angle…

The U.S. could always hold a gun to the heads of its other main creditors — Japan, UAE and Saudi Arabia — forcing reduction or cancellation of its debts and/or imposing sanctions. The U.S. has over 750 military bases throughout the world. This is why many scholars and authors of US foreign policy now refer to the U.S. as an empire (2, 3), not a “republic”. The unit of American empire is its military base: 103 in S. Korea, 37 on Japan’s Okinawa, etc. — all over the world — so “invasion” of these lands, if the U.S. were desperate or crazy enough, is not inconceivable. The Bush Admin. certainly invaded Iraq despite 10 million people protesting around the world -- and ignoring UN rulings.

The U.S. has a long history of invading, controlling, plundering and devastating weak, defenseless nations. But it can’t really use force with China -- a nation with hundreds of nuclear weapons and a formidable conventional military. The U.S., of course, has far more hardware, but once you get above a few dozen WMDs, overkill and mutually-assured destruction capabilities render invasion "strategies" essentially pointless. If Beijing wants to cash in its "investments" early, or even refuse to lend more to the credit-hungry cash-strapped U.S., things could get tense. Given the GAO-based warning (and war costs and other internal costs), it's difficult to imagine how the U.S. could ever re-pay its foreign debt (10, 11), much less with any accrued interest.

Comparison with USSR Collapse

When the USSR collapsed, Russia went through very tough economic and social upheavals. (The other CIS republics continue to suffer). In his recent book Reinventing Collapse, Dimitry Orlov -- a U.S. immigrant from Russia -- describes some potential similarities and parallels between the Soviet collapse and a possible U.S. collapse. Here are excerpts from Orlov's seminar talk on this topic:



(The complete Orlov presentation is at Fora.tv. Read the transcript here.)

Orlov uses dark “humor” to address serious key struggles Russia went through after Soviet collapse — mafia, drugs, racketeering, sex slavery, auto thefts, armed robbery, kidnappings, assassinations, etc. — before its economy rebounded in roughly 2004 (1). A parallel may be Mexico's recent upsurge in drug trafficking and related violence -- a phenomena linked to economic downturn, globalization (e.g., NAFTA), and the corporate and ruling Mexican elite ripping off the poor (forcing the under-class to fend for themselves). In fact, boom time for economic-collapse-related crime is a certainty. While I'm not certain about the future of the U.S. economy -- except that, overall, the nation will be significantly poorer -- I generally agree with Orlov that the USSR was better equipped for their collapse than the U.S. is for its evitable or inevitable own. Slides 9 - 19 demonstrate why.

Recently, I saw a report on how the current economic crisis is affecting Russia: It's pretty bad for the middle- and under-class -- and way worse than here in the U.S. Unsurprisingly, the Communist/Socialist party seems to be gaining popularity: "As of 2008 the Communist Party continues to be the second largest party in Russia, as well as the largest opposition party" (Wikipedia). Most former Soviets feel that the loss of Communism/Socialism seriously undermined the welfare of citizens in the break-up republics.

Intellectual Elites, Media Figures, Puppets and Puppetmasters

World leaders, such as Bush, Obama, Putin, Medvedev, et. al., have some things in common: tailored $10K suits and great dentists.They are media figures and, in certain ways, puppets of corporate-elites and the military-industrial complex. In the U.S., there are also intellectual elites, like the ones in the White House, Congress and Supreme Court. Other supporting intellectual elites head so-called “think” tanks (New American Century, Heritage Foundation, etc.), certain organizations, even (unfortunately) academic institutions (e.g., certain departments of Yale Univ., Stanford's Hoover Institution, Univ. Chicago school of economics, etc.) — bought and paid for by corporate-elites, these guys' job is to spew out all sorts of mis-/disinformation.

"Hope"?

Any real change-for-the better for the mass population — as has always been the case — is going to come from the bottom up. I.e. grassroots. Lots of examples of this (e.g. Democracy Now, etc. see Links). The U.S. mainstream media (including CNN, CBS, ABC, and even nonprofits like PBS and NPR) does everything it can -- including playing dirty -- to distort or undermine legitimate grassroots efforts. Further, the mainstream media companies are owned by even larger and more politically-powerful conglomerates (corporations) -- all controlled by a few, very wealthy corporate-elite decision-makers (aka corporate executives) who have huge controlling influence in Washington.

All this stuff — with respect to scope, magnitude and interconnections — seems pretty complicated. The simplest answer would be to have one trustworthy news source, that communicates info succinctly. Fortunately, there is one and it’s all-American: Democracy Now. From their web site, you can watch videocasts (mp4, RM), listen like radio (mp3), or read the reports (transcripts/ highlights). Satellite and some public-access stations carry them, too, (and why AT&T's recent effort to undermine Cable-based public-access stations makes sense!).

The Bottom Line

The IOUSA documentary and other grassroots efforts are certainly laudable. However, Prof. Chalmers Johnson, in a March 2007 UC Berkeley interview provides, in my overall opinion, the most accurate near-term economic forecast of the U.S.:

So, what do I suggest probably will happen? I think we [U.S] will stagger along under a façade of constitutional government, as we are now, until we're overcome by bankruptcy. We are not paying our way. We're financing it off of huge loans coming daily from our two leading creditors, Japan and China.

Basically, the rubicon has been crossed -- it’s too late. The corporatocracy is too corrupt and ideologically rigid. If that's not enough, the U.S. government has, due to imperial ambitions, become way overstretched: they’re never really going to withdraw from Iraq ... not with several, already-built military bases, not with the world's largest U.S. embassy, and not with the world's second largest petroleum reserves. As of this writing [Spring 2009], they’re expanding military efforts in Afghanistan and maybe Pakistan. And then there are the other existing imperial projects -- i.e., military bases -- in Kosovo, Aviano (Italy), etc. etc. All on the taxpayers' tab.

Wars are very expensive, especially by, as Prof. Johnson notes, “stupid militarists … [pushing] pipe dreams come up by amateurs sitting in extremely conservative and right-wing think tanks, paid for by American billionaires in Washington DC.” The military-industrial-complex, petroleum-industrial-complex, and other corporate-government complexes (like banks) wield unprecedented power in Washington. This may be via lobbying groups, or more directly via government leaders' own interests (e.g., Dick Cheney and Haliburton). Much of that “bailout” and “stimulus” money is going back into the pocketbooks of greedy corporations whose CEOs and top officers/stakeholders robbed the country in the first place. I’m sure they have a good idea of the full scope and gravity of the coming collapse — potentially a dog-eat-dog or every-man-for-himself world — and probably have a lot of their loot in non-US investments or real estate: Swiss precious metals, Italian real estate, etc.

I'll close this article with a few noteworthy excerpts from the same Chalmers Johnson 2007 UC Berkeley interview:

... [On] attempting to put pressure on our government [to reform]....I don't think this is going to work. I don't think we have enough time. I think we've waited too long and that we are probably talking about the short, happy life of the American republic. In that case, the well informed citizen would start thinking of his or her escape route, the condo in Vancouver, or whatever else it may be.

Bankruptcy would not mean the literal end of the United States, anymore than it did for Germany in 1923, or China in 1948, or Argentina just a few years ago, in 2001 and 2002. But it would certainly mean a catastrophic recession, the collapse of our stock exchange, the end of our level of living, and a vast series of new attitudes that would now be appropriate to a much poorer country. Marshall Auerbach is a financial analyst whom I admire who refers to the United States as a "Blanche Dubois economy." Blanche Dubois, of course, was the leading character in Tennessee Williams' play, "A Streetcar Named Desire," and she said, "I've always depended upon the kindness of strangers." We're [U.S.] also increasingly dependent on the kindness of strangers, and there are not many of them left that much care, any more than they were for Blanche. I figure if the United States did start to go down, it would not elicit any more tears than the collapse of the Soviet Union did, in the world at large today.

This article by hollow-man.

References:

(1) http://en.wikipedia.org/wiki/Economy_of_Russia

(2) http://www.americanempireproject.com/

(3) http://www.harpers.org/archive/2007/01/0081346

(4) Democracynow.org

(5) Blocking the mere option of single-payer health care in US

(6) AT&T Accused of Discriminating Against Local Public Access Channels

(7) Alternet's comprehensive section, Economy in Crisis

(8) This Crisis Is Way Bigger Than Dead Banks and Wall Street Bailouts

(9) Law, Politics, and the Coming Collapse of the Middle Class with Elizabeth Warren (UC Berkely interview)

Especially note what prof. Warren says about Hillary Clinton (31:10 - 34:40)

(10) United States public debt

(11) Debt and the dollar: The United States damages future living standards by borrowing itself into a deceptively deep hole.

(12) Free Market Fantasies: Capitalism in the Real World (Transcript of Noam Chomsky talk delivered at Harvard University, April 13, 1996)

(13) Dean Baker -- CEPR Economic Seminar Series 1 - Basics of Good Economics (Sept. 15, 2005)

(14) Dean Baker discusses IOUSA

Notes:

Other internal costs:

These are costs associated with: (1) maintenance of aging infrastructure (bridges, etc.); (2) natural disasters (earthquakes, hurricanes, pandemics, etc.); (3) environmental (rise in sea level, pollution impact on health, etc.); (4) re-engineering electric grid and transportation infrastructure to one based less on fossil-fuel supply (partially due to declining petroleum supply); etc.

Ideological rigidity, cultural / mind-set inflexibility, and inability to change popular lifestyles in a single generation:

Above, I noted ideological rigidity of American corporations as a fundamental reason the world economy collapsed. Specifically, it was plain ol' greed of corporate executives.

Although highly unlikely, let's say the U.S. govt. instituted drastic reforms, such as nationalizing banks and major corporations. This will help. However, other cultural changes -- i.e., changing the mind set of the mass population -- will be very difficult. Lifestyle changes, like consuming less calories -- standard American high-calorie diet has huge negative impacts on health; hence, healthcare costs -- or using less electricity, driving smaller cars, etc., etc., are not easy habits to form for most Americans -- not without the proverbial gun to the head. But not impossible: the U.S. government changed the nation -- citizens and all -- to a command economy during WWII. Other smaller examples include the Manhattan Project and the Apollo Project. Not just in the U.S. In order to minimally feed all its citizens, Cuba, as a nation, reduced per-person calorie consumption after the collapse of its main trading partner, USSR. Cuba's severe oil crunch led the Castro government to find ways to use less machinery -- even distributing bicycles to its citizens, and switching to animal labor for agriculture. The long-term survival of the U.S. demands Cuba-like actions now. I doubt that will happen: even if you could somehow get past the corporate/bureaucratic hurdle, it's highly unlikely the mass population -- in a single generation -- would be willing to, say, eat less and bike more. The nation is too large to mobilize -- physically, culturally, psychologically.

Please note I am not placing blame on the mass population: Indeed they are bleeding victims of decades of corporate-led "programming", distractions, and diversions via intensive propaganda, marketing campaigns, social engineering and outright frauds...much to generate/sustain love and demand for certain ideologies or products, like big cars and SUVs. For example, for several decades in the early and mid 20th century, major U.S. cities had vibrant, clean (electric) rail/street-car mass-transportation systems. But the carmakers had their own sinister plans. By the early 1960's, for example, a General Motors / Firestone Tire conspiracy pretty much gutted the Los Angeles street/rail-car system -- the largest in the world at that time -- converting Greater Los Angeles into an automobile-congested, smog-polluted mess. These kind of conspiracies are the norm, not the exception.

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