Is The US In 2009 Like The USSR In 1989?

Inspired in no small part by the political charade over the bail-outs and boondoggles that plague the TV screens and electronic ether, I’ve compiled a top 10 list of ways in which the US increasingly resembles the collapsing Soviet Union for your information / despair / entertainment / Schadenfreude / ridicule / etc.

A list of how Russians screwed up and Americans are repeating their mistakes step by step. A list that may provoke much needed debate and change that we can really believe in.

10

An alcohol epidemic from the 1960′s on that kept Russian life expectancy flat ever since.

Dietary catastrophe resulting in historically unprecedented obesity and diabetes rates.

9

Hated and feared for human rights violations, invasion of Afghanistan and Communist rhetoric, and its socialist model discredited.

Hated and feared for use of torture, invasion of Iraq and post-Cold War triumphalist arrogance, and its neoliberal model discredited.

8

Military overstretch, economic distortion and disaster in Afghanistan.

Imperial overstretch, runaway military budget and return to the “graveyard of empires”.

7

Wasteful investments into infrastructure, bloated bureaucracy and inefficient industry.

Decaying infrastructure, misplaced investments into suburbia, bloated financial system and hallowing out of industry.

6

Collapse in morality, bloated bureaucracy and soaring corruption.

Regulatory capture, bloated special interests and legalistic mafia.

5

Suppression of statistics and silencing of dissent.

Manipulation of statistics and ignores dissent.

4

Dependence on foreign credit from debts and oil sales.

Dependence on foreign credit from debts, “dark matter” and the $’s status as global currency reserve.

3

Young reformer takes power and talks of glasnost and perestroika while avoiding real reform.

Young “outsider” wins the elections and talk of change and hope…

2

Ethnic nationalism and separatist tendencies.

Tax revolts and state rights.

1

More and more people began to predict Soviet collapse in the late 1980′s.

More and more people are beginning to predict an American collapse now…


10) The first disturbing similarity is the rapidly deteriorating health of the population. From the 1960′s, an alcohol epidemic began to sweep Russia as binging graduated from something done on holidays to a monthly and then a weekly affair. The drinking epidemic spread to women and younger people, and intensified amongst middle-aged men. Once subjected to the cheap alcohol and social dislocations of the post-Soviet world, an already stagnating average life expectancy plummeted.

As late as 1990, not a single state in the Union had an obesity rate of greater than 15% of the adult population; today, not a single state (with the marginal exception of Colorado) has an obesity rate of less than 20%. The national obesity rate soared to 34%. The percentage of American adults suffering from diabetes is now 11%, and another 26% have impaired glucose tolerance. Although improvements in US life expectancy haven’t stalled, change has been slower than in most other developed countries and even then was mostly accounted for by improved medical technology, and successes in reducing tobacco smoking and overconsumption of animal fats. An economic collapse now would trim the vastly expensive healthcare system and almost certainly result in a mortality spike – especially considering that the baby boomers are now nearing retirement age.

Both the Russian and American epidemics affect poor, middle-aged people the most; a difference is that the alcohol epidemic affected men more than women, whereas in the US obesity is slightly more prevalent amongst women than men. Vodka sales made good profits for the state (via taxes) during the Soviet period and good profits for private distilleries in the post-Soviet period; the American diet makes good profits for fast food outlets and the parasitic “food processing” companies that degrade good corn into corn syrup. Perhaps the most poignant comparison is in the kinds of TV adverts that dominate the airwaves in both countries. In Russia after 9pm, every third commercial suddenly becomes about some or another kind of beer (that’s an improvement over the 1990′s, when they ran all day); in the US, day or night, every third commercial praises the virtues of some kind of meretricious fat-soaked starchy thing.

9) Throughout the early Cold War, the USSR was a source of inspiration to leftist Western intellectuals and Third World countries looking to throw off the imperialist yoke and modernize quickly. But by the early 1980′s, pressure was being applied to the Soviet Union on account of its violations of the human rights treaties it was a signitary to. Central planning remained an alien ideology to all Western societies, increasingly so as its failures became clearer. It was condemned for its invasion of Afghanistan (in reality, an intervention at the request of its new socialist government to defend them from Islamists).

The United States gained a great moral victory from the collapse of the USSR (despite it being a result of internal dynamics) and enjoyed it during the 1990′s. However, this came to an end after 2001 due to the hypocritical and immoral way it went about waging the Orwellian-sounding “war on terror”. Preemptive war on made-up pretenses,  extraordinary renditions of terrorist suspects and the neocons’ incessant freedom-rhetoric was something the world by and large couldn’t square together. This resulted in its poor showing in international approval ratings and its repeated “victories” in the “world’s greatest threats to peace” category with Iran, Israel and North Korea as regular runner-ups and after party company. Although the fairness of such characterizations can be disputed, they are ultimately immaterial since it is perceptions that matter – not right or wrong, however defined.

The central planning model of the USSR was fully discredited by the 1980′s; neoliberalism is similarly on en route to the ashcan of history.

8) The USSR was spending about 25% of its GDP on the military by the 1980′s. Not only did this squeeze consumption and contribute to stagnant real incomes from around the mid 1970′s, it divested resources from investment into renewing the capital stock, civilian R&D and improvement of human capital via education and healthcare. However, official figures were ridiculously low – around 2.5% or so of GDP – due to statistical fudging and giving purely military enterprises funny names like the Chelyabinsk Tractor and Machine Building Factory (invented example).

The US maintains unrivaled power projection capabilities, a global network of 700 military bases and the world’s most technologically advanced military force – but it comes at a steep price. While the official military budget for FY2008 is around 520bn $, to this must be added the costs of the wars in Iraq and Afghanistan (170bn $), interest on past military expenditures (170bn $), nuclear weapons (30bn $), veterans (70bn $), “homeland defense” (70bn $) and other spending on their lavish healthcare and education entitlements, military foreign aid and “black projects”. (And btw, the figures for interest, nukes and veterans are from 2005). Therefore, it is probably entirely reasonable to double the entire military budget to better appreciate its true magnitude – i.e., quite possibly close to 10% of GDP. Add in the distortions – military production has the smallest multiplier effect on the economy (machine building has the biggest), and its claim on skilled workers (something like half of R&D outlays in the US are for military applications), and you get a superpower severely hobbled by its arms’ burden.

This is not a good situation, but not critical either. Yes, it ties down a big chunk of the economy in unproductive pursuits and contributes to the institutional corruption and runaway spending that is typical of military-industrial complexes. I happen to consider that most of the procurement programs currently being pursued are useless, from unproven missile defense to the overhyped F-35 (just build a few hundred much superior F-22′s instead) to the shiny new surface warships and aircraft carriers that are of dubious value in our era of advanced cruise missiles, UAV’s and supercavitating torpedos. (But this for another post). Most poignantly, Obama is now preparing to withdraw from Iraq (where stability is not yet assured, and which is far more strategically important) to free up troops for Afghanistan, the graveyard of empires…and ignoring Soviet veterans’ warnings of what might await them. And the economy is nowhere near as dominated by the priorities of the Armed Forces as was the case in the USSR. Nonetheless, huge military spending and foreign adventures do not necessarily lead to collapse – by themselves. However, the other economic and confidence problems now facing the US now make that a realistic possibility.

7) The Soviet Union invested vast resources into industrial development. However, they were frequently inefficient, wasteful and of questionable quality; and in any case were being severely undercut by the arms burden by the 1980′s.

Although the US built up a world class public infrastructure prior to the 1980′s, since then investments in this area have dropped off. The roads in California are frequently cracked and potholed – vastly inferior to what one might find in Germany, and not much better than in Russia. One quarter of bridges are structurally deficient, in most cities the water pipeline system is a century old and the electrical grid befits a Third World country.

Even worse is that much of the “infrastructure” that was built up in the past few decades consisted of lavish homes in sururbia requiring massive inputs of cheap energy to function normally. When oil is at 10$, spending an hour driving to work is monetarily (if not spiritually) sustainable; as we pass the oil peak and other resources (almost certainly) fail to make good the gap in time, this will change as petrol soars in price, even assuming it will remain available on the open market. Due to the “psychology of preveious investments” (see James Kunstler’s work) it is unlikely Americans will summon the will to scale down its suburbia before the laws of economics and geology force them into it.

Soviet industry was inefficient and was destroyed when subjected to market forces. American industry has already been hallowed out; high productivity growth masks a huge decline in quantity and complexity of its “industrial ecosystem”. US vehicle production fell from 13.0mn to 10.8mn from 2000 to 2007, held up only by the (doomed in the long-term) SUV market which is the only sector in which the Big Three made any profits. (During the same period, Germany increased production from 5.5mn to 6.2mn and Japan from 10.1mn to 11.6mn). Its machine tool building industry has for all intents and purposes collapsed. The only marginally healthy manufacturing industries left are in aerospace and defense. This is going to have very bad consequences when inflows of cheap credit from abroad can no longer sustain the US consumption boom; the manufacturing sector that could potentially have led to a quick revival simply no longer exists.

6) Whatever the faults of the USSR in its early years, there was genuine enthusiasm for building socialism relatively untainted by corruption. This began to change rapidly for the worse from the 1970′s. The elites became exclusively concerned with their own power and wellbeing, ultimately leading to the “insider buyout” that probably best describes what happened in its dying days. The size of the bureaucracy exploded and its effectiveness plummeted. A small change for the better under Gorbachev in the mid to late 1980′s led to catastrophic collapse, endemic corruption under Yeltsin, and some improvements under Putin from a very low base. Blatant self-enrichment of the elite at society’s expense became an accepted norm.

How does this translate to the US?

Collapse in ethics, quoting Buiter in Fiscal expansions in submerging markets:

… Financial regulation and supervision was weak to non-existent, encouraging credit and asset price booms and bubbles.  Corporate governance, especially but not only in the banking sector, became increasingly subservient to the interests of the CEOs and the other top managers. There was a steady erosion in business ethics and moral standards in commerce and trade.  Regulatory capture and corruption, from petty corruption to grand corruption to state capture, became common place.  Truth-telling and trust became increasingly scarce commodities in politics and in business life.  The choice between telling the truth (the whole truth and nothing but the truth)  and telling a deliberate lie or half-truth became a tactical option.  Combined with increasing myopia, this meant that even reputational considerations no longer acted as a constraint on deliberate deception and the use of lies as a policy instrument. As part of this widespread erosion of social capital, both citizens and markets lost faith in the ability of governments to commit themselves to any future course of action that was not validated, at each future point in time, as the most opportunistic course of action at that future point in time – what macroeconomists call time-consistent policies and game theorists call ’subgame-perfect’ strategies.

Under bloated special interests, I put the bloated financial services industry, the legalistic mafia, the healthcare industry and the prison-industrial complex. Finance as a share of GDP doubled in the last 30 years, transforming it from a service industry to a rent-seeking one. The proliferation of lawyers amidst amidst burgeoning legalism in society is another example of a self-serving mafia feeding on the blood of the citizenry, as are the “justice” systems and prisons that have gone together with them (the US has an incarceration rate that is unprecedented amongst anything but totalitarian societies). Finally there’s the healthcare industry, perversely regulated in such a way as to make it far less efficient than if it were nationalized or completely private and delivering one of the worst results for the buck in the world – and like a metastasizing cancer, it’s share of GDP has also exploded in the past few decades.

5) Since the 1970′s real wages for workers in the Soviet Union ceased growing, pressed down by the demands of the military-industrial complex. When statistics began to show that the average life expectancy was stagnating and infant mortality rising, they ceased publishing them.

Real median income in the US slowly increased from 35,000$ in 1967 to 46,000$ in 2005; however, the rate of increase slowed and for the first time in modern history it didn’t exceed the level reached at the peak prior to the last recession in 2000-2001 during the growth years of the Bush Presidency. In reality however the situation is even worse because since the time of Reagan the definition of inflation used by the government was being continuously reworked to make the figures appear better than they otherwise would have been, using substitutions and hedonics to spruce up the figures (i.e. adjusting for consumers switching to other products when similar products become expensive, and trying to put values on quality improvements). If the BEA (Bureau of Economic Analysis) continued using its old measuring standards, then a) the economy would have been in stagnation during the 1990′s and recession in the 2000′s, b) inflation would have been steadily increasing to a peak of nearly 14% in 2007 and c) median incomes would have been in steep decline. According to this thesis, then, the only reason the US avoided a big fall in living standards was due to the massive expansion in credit…which brings us to the next point.

4) The Soviet Union grew rapidly in the 1950′s and 1960′s because it was easy to move plenty of rural farmhands into relatively low-skilled industrial jobs. However as labor stocks became limited and focus shifted towards improving technology and productivity, GDP growth slowed and eventually stagnated. Collapse was delayed by the onset of high oil prices, which allowed the USSR to more easily import food products, machinery and technologies. When that collapsed in the mid-1980′s, the state was forced to run up huge debts to maintain mounting entitlement obligations, an overgrown military and bail out its East European satellites. Corruption and hidden inflation overtook the state and broke it.

According to Willem Buiter writing in Can the American economy afford a Keynesian stimulus?, America is a nation in fundamental disequilibrium. It can finance its continuous double deficits by giving its foreign investors an atrocious rate of return. In prior times, they accepted this because of America’s status as the largest economy, sole superpower and global financial center. This was presumed to reduce risk, so investors traded profits for security. From 2000-2004, it is estimated that the US exported some 559bn $ of this “dark matter“, or some 5% of its GDP at the time (the UK was second with 234bn $, or a stunning 15% of GDP). It also draws immense strength from the $’s role as the global reserve currency, for instance by allowing it to comfortably buy oil at $-denominated prices even when the currency is weak.

Due to its imperial overstretch, moribund financial system and frozen credit markets prepped up only by the federal government means that American alpha is almost certainly going to disappear in the next few years. The US fiscal deficit is going to be more than 12% of GDP in 2009 and will remain in the red for at least the next few years. Once global flight to quality ceases, the US will experience difficulties borrowing due foreign fear of American reluctance to commit to servicing their external obligations without inflation. The interest rates on them are going to be punitive and so a greater amount of resources will have to go towards servicing the debt, thus triggering a potential debt crisis. Buiter predicts a global dump of US dollar assets including Treasury bonds within the next two to five years as investors lose faith in the ability of the US Federal government to generate the primary surpluses required to service its debt without selling much of it to the Fed on a permanent basis, or that the nation as a whole will be able to generate the primary surpluses to service the negative net foreign investment position without the benefit of “American alpha”.

In conclusion, the only reason the US can afford to have both guns and butter is that the outside world is willing to provide it with cheap credit. This will no longer be the case as soon as global panic subsides, and the US will face the real possibility of a debt-and-currency crisis which it will have to inflate its way out of (on which they seem to be making a good start). The 2010′s will see plummeting global oil extraction and sky-high prices. If the $ were to collapse, the imports of oil that fuel the economy will plummet and may lead to a post-Soviet-scale drop in GDP (unless the US uses its military clout to lock in Iraqi and Saudi production – however, given its fiscal problems, questions about political unity and rhetorical commitment to human rights, that would be hard to achieve).

America can take consolation in one thing, however – the collapse in Britain, which is three times as reliant on “dark matter”; which is a much bigger energy importer relative to production; whose industry is in a far more decayed state; and where real breakup is far more likely because of ethnic tensions, will be much worse.

3) When Mikhail Gorbachev (the youngest member of the Politburo) came to power he talked of increasing transparency (glasnost) and restructuring (perestroika). Yet the most dangerous moment for a bad government is when it starts to reform. In reality the Soviet system was already very probably unsalvageable by then, partly because even the leader himself continued to be a part of the system, beholden to dominant interests (in the Soviet case, to the military-industrial complex, the nomenklatura and workers) and steeped in delusions of grandeur. Even as he attempted to liberalize and solve many interlocking social and economic problems at once, social entitlements were increased, new weapons systems ordered and foreign borrowing increased. Half-measures and reckless credit giveouts to save the system led to massive waste, insider plunder and the start of the disintegration of the economy by the late 1980′s.

The similarities with Obama are striking. Obama is one of the youngest Presidential candidates ever, and talks of hope and change. He comes after the zastoi, deterioration in political and civil liberties and reckless foreign military adventures of Bush II. Like Gorby, he is immensely popular throughout the world. He plans on expanding healthcare and other social entitlements, burdening the economy with farcical green schemes* and is intent on rescuing the troubled financial system by massive infusions of credit, with no regard for the future inflationary consequences. His advisors are the same clique of insiders under previous administrations, especially the Clinton one. He is beholden to the financiers and industrial lobbying groups that fund him and the middle classes that are the bedrock of American political power (as were Soviet workers), which are now being whittled down by the collapse in credit and repossessions. Major cuts in funding for the the Armed Forces and sustainable retreat are simply not envisioned. *As anyone who reads this blog nows, I consider global warming one of the greatest challenges faced by civilization. The problem is that schemes to fund “clean coal” or implement carbon trading are too little, too late, too costly and too unreliable.

Obama is steeped in the Pax Americana mindset (just as Gorbachev was steeped in scientific socialism), which is complacent and rests on its laurels; and as such the possibility of collapse simply cannot seriously enter his mind or considerations. Therefore the truly revolutionary reform that is needed to preserve the current system is unlikely to be contemplated, if its even possible.

2) As economic and political difficulties mounted in the USSR, they were further reinforced by disintegration on ethnic lines, diverting administrative and economic resources away from what should have been more pressing matters.

Recently New Hampshire formally requested a casus foedoris with the other states of the union separately from the federal government in a RESOLUTION affirming States’ rights based on Jeffersonian principles.

That this State does therefore call on its co-States for an expression of their sentiments on acts not authorized by the federal compact. And it doubts not that their sense will be so announced as to prove their attachment unaltered to limited government, whether general or particular. And that the rights and liberties of their co-States will be exposed to no dangers by remaining embarked in a common bottom with their own. That they will concur with this State in considering acts as so palpably against the Constitution as to amount to an undisguised declaration that that compact is not meant to be the measure of the powers of the General Government, but that it will proceed in the exercise over these States, of all powers whatsoever: that they will view this as seizing the rights of the States, and consolidating them in the hands of the General Government, with a power assumed to bind the States, not merely as the cases made federal, (casus foederis,) but in all cases whatsoever, by laws made, not with their consent, but by others against their consent: that this would be to surrender the form of government we have chosen, and live under one deriving its powers from its own will, and not from our authority; and that the co-States, recurring to their natural right in cases not made federal, will concur in declaring these acts void, and of no force, and will each take measures of its own for providing that neither these acts, nor any others of the General Government not plainly and intentionally authorized by the Constitution, shall be exercised within their respective territories; and

That the said committee be authorized to communicate by writing or personal conferences, at any times or places whatever, with any person or person who may be appointed by any one or more co-States to correspond or confer with them; and that they lay their proceedings before the next session of the General Court; and

That any Act by the Congress of the United States, Executive Order of the President of the United States of America or Judicial Order by the Judicatories of the United States of America which assumes a power not delegated to the government of United States of America by the Constitution for the United States of America and which serves to diminish the liberty of the any of the several States or their citizens shall constitute a nullification of the Constitution for the United States of America by the government of the United States of America. Acts which would cause such a nullification include, but are not limited to:

I. Establishing martial law or a state of emergency within one of the States comprising the United States of America without the consent of the legislature of that State.

II. Requiring involuntary servitude, or governmental service other than a draft during a declared war, or pursuant to, or as an alternative to, incarceration after due process of law.

III. Requiring involuntary servitude or governmental service of persons under the age of 18 other than pursuant to, or as an alternative to, incarceration after due process of law.

IV. Surrendering any power delegated or not delegated to any corporation or foreign government.

V. Any act regarding religion; further limitations on freedom of political speech; or further limitations on freedom of the press.

VI. Further infringements on the right to keep and bear arms including prohibitions of type or quantity of arms or ammunition; and

That should any such act of Congress become law or Executive Order or Judicial Order be put into force, all powers previously delegated to the United States of America by the Constitution for the United States shall revert to the several States individually. Any future government of the United States of America shall require ratification of three quarters of the States seeking to form a government of the United States of America and shall not be binding upon any State not seeking to form such a government; and

That copies of this resolution be transmitted by the house clerk to the President of the United States, each member of the United States Congress, and the presiding officers of each State’s legislature.

New Hamphshire isn’t isolated. States rights bills are being pushed in nine states this year and almost half the states’ legislatures have plans to pass similar resolutions. While most are addressed to Congress or the President to back off from further violating state’s rights, New Hampshire is appealing for solidarity from other states to develop a casus feodoris / alliance to develop a counter-weight to the federal government in case it increases interference in state matters or moves towards authoritarianism to manage the consequences of the economic crisis. The incidence of tax revolts are growing.

This is all still very far from the situation in the USSR, where after all half the population wasn’t even Russia whereas the US is a nationally homogeneous nation. Nonetheless, the trends are ominous. There is no visible horizon to the end of the economic crisis, and even as late as 1989 no Soviet republic except the Baltics wanted out.

1) Economist Willem Buiter believes there will be a global dumping of $ assets within two to five years. Financial advisor James West writing in SeekingAlpha believes a US debt default and dollar collapse are “altogether likely”. Russia fund investor Eric Kraus has been lamenting the unsustainability of American disbalances for years and predicted the US will fall into a debt trap last November. The economist Nouriel Roubini, one of the few to have foreseen this crisis, predicts this recession will be far longer and deeper than any other post-war recession. Even the Economist mentioned the possibility of a US debt-and-currency crisis in one of its recent issues.

Dmitri Orlov explicitly compares the US to the USSR, and concludes that the collapse will be worse, at least in social terms, in the former. The Russian economist Mikhail Khazin predicts a 25-40% drop in American GDP. Future and trends analyst Gerard Celente, who succesfully predicted the collapse of the Soviet Union, now foresees an unprecendented fall in US economic output, tax rebellions and food riots. Russian professor Igor Panarin sees disintegration and civil war as soon as this year.

Comments

  1. Can you tell me who did your layout? I’ve been looking for one kind of like yours. Thank you.

    AK replies: WordPress, theme is K2, style is RC5 Fork.

  2. On a related note, the pool I swim at suddenly announced a significantly reduced schedule, which will make it difficult for a good number of members to use.

    The involved management sought cutbacks due to the current economic crisis and its projected length.

    Cutting back recreation time in a society that has become increasingly more out of shape, coupled with an increasing life span. It’s no small wonder why health care costs have sky rocketed.

    Some decades back, American public schools made a positive drive at having gym classes three or more times a week. This is a far cry from the current predicament of considerably limited gym class time.

    I see and hear of many instances about how parks that used to be full of kids actively playing are now considerably empty.

  3. Excellent list. One could also add the obvious similarities between Obama and Gorbachev as well as their “Change” and “Perestroika” respectively, but it’s been widely discussed already.

    Post 2: My apologies for the previous comment, please disregard it, – you’ve discussed the similarities between Obama and Gorbachev in much detail in part 3).

    Post 3:

    AK,

    “Dmitri Orlov explicitly compares the US to the USSR, and concludes that the collapse will be worse, at least in social terms, in the former. The Russian economist Mikhail Khazin predicts a 25-40% drop in American GDP. Future and trends analyst Gerard Celente, who succesfully predicted the collapse of the Soviet Union, now foresees an unprecendented fall in US economic output, tax rebellions and food riots. Russian professor Igor Panarin sees disintegration and civil war as soon as this year.”

    Have you also read “Empire of Debt” by William Bonner and Addison Wiggin (published in 2005) and “Mobs, Messiahs, Markets” by William Bonner and Lila Rajiva? They also conclude the same things (with much humor).

    Great job, you’ve done.

  4. False Dmitri,

    No I haven’t read those books; though the fact that I haven’t thought much on this at all except in the last few months but end up coming to the same conclusions as them should be quite worrying! lol

  5. War in Afghanistan was economically insignificant to both USSR and the US. Any perceived failure there is more of a symptom rather than the cause.

  6. I implied that this is of far far more symbolic than real import (“most poignantly”). Obviously if spending on Iraqistan is just 170bn $ or so per year then this would not be catastrophic for an economy as big as America’s, provided everything else was healthy, so I fully agree with you.

  7. Hi AK,

    I think you and some readers of this blog would enjoy the books. The first one, “Empire of Debt” can be downloaded here:

    http://rs472.rapidshare.com/files/156218370/Empire_Of_Debt_-_The_Rise_Of_An_Epic_Financial_Crisis.pdf

    Here’s what the authors say about the “imperial columnist” Thomas L. Friedman:

    “The force of a correction is equal and opposite to the deception and
    delusion that preceded it. Alan Greenspan, George W. Bush, and
    all the great nabobs of positivism assure us that there is nothing to
    fear. Our favorite imperial columnist, Thomas L. Friedman of the New
    York Times, explained that “the next big thing almost always comes out
    of America . . . [because] . . . America allows you to explore your own
    mind.”1 Friedman believes the world would be a better place if America
    were more aggressive about “empowering women” and “building
    democracies.” He also thinks that technical innovations give America a
    permanent advantage. Americans are always innovating, always f iguring
    things out. Heck, we even invented outsourcing, says Friedman:

    This is America’s real edge. Sure Bangalore has a lot of engineering
    schools, but the local government is rife with corruption; half the city has no sidewalks; there are constant electricity blackouts; the rivers are choked with pollution; the public school system is dysfunctional; beggars dart in and out of the traff ic . . .2 and so forth.

    Among the things Mr. Friedman seems to lack is a feeling for verb
    tenses. He goes to Bangalore and notices that it is backward. His conclusion
    is that it will always be so. “Is” is forever in Friedman’s mind. “Will
    be” has no place. It is as if he looked at the stock market in 1982. “Stocks
    are cheap,” he might have said. “Stocks elsewhere are expensive,” he might
    261
    262 EVENING I N AMERICA
    have added, without it ever occurring to him that they might change
    places. And yet, why else would anyone outsource work from Baltimore to
    Bangalore unless Bangalore was relatively, though not necessarily permanently,
    cheaper? Let us imagine that Bangalore had no electricity blackouts
    or pollution or beggars. Let us imagine that it was like Beverly Hills or
    Boca Raton. We might just as well imagine that stocks were expensive in
    1982. Of course, if they had been, there never would have been the bull
    market of 1982 to 2000. It is only because they were cheap in the past that
    they had the potential to be expensive in the future. And it is only because
    Bangalore is a Third World hellhole that it is cheap enough to take work
    away from overpaid Americans 10,000 miles away. Whether it will, neither
    Friedman nor we can know.
    We always try to get our day off on the right foot by reading Friedman’s
    column before breakfast. There is something so gloriously naïve
    and clumsy in the man’s pensée, it never fails to brighten our mornings. It
    refreshes our faith in our fellow men; they are not evil, just mindless. We
    have never met the man, but we imagine Friedman as a high school
    teacher, warping young minds with drippy thoughts. But to say his ideas
    are sophomoric or juvenile merely libels young people, most of whom
    have far more cleverly nuanced opinions than the columnist. You might
    criticize the man by saying his work is without merit, but, too, that would
    be f lattery. His work has negative merit. Every column subtracts from the
    sum of human knowledge in the way a broken pipe drains the town’s
    water tower.
    Not that Mr. Friedman’s ideas are uniquely bad. Many people have
    similarly puerile, insipid notions in their heads. But Friedman expresses
    his hollow thoughts with such heavy-handed earnestness, it often makes
    us laugh. He seems completely unaware that he is a simpleton. That, of
    course, is a charm; he is so dense you can laugh at him without hurting
    his feelings.
    Friedman writes regularly and voluminously. But thinking must be
    painful to him; he shows no evidence of it. Instead, he just writes down
    whatever humbug appeals to him at the moment, as unquestioningly as a
    mule goes for water.
    One of the things Friedman worries about is that the world will “go
    dark.” As near as we can tell, he means that the many changes wrought
    after 9/11 are changing the character of the nation, so that “our DNA as a
    nation . . . has become badly deformed or mutated.” In classic Friedman
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    style, he proposes something that any 12-year-old would recognize as preposterous:
    another national commission! “America urgently needs a national
    commission to look at all the little changes that were made in
    response to 9/11,”3 he writes. If a nation had DNA and if it could be mutated,
    we still are left with the enormous wonder: What difference would a
    national commission make? Wouldn’t the members have the national DNA?
    Or should we pack the commission with people from other countries to get
    an objective opinion—a U.N. panel and a few illiterate tribesmen for cultural
    diversity?
    Friedman’s oeuvre is a long series of “we should do this” and “they
    should do that.” Never for a moment does he stop to wonder why people
    actually do what they do. Nor has the thought crossed his mind that other
    people might have their own ideas about what they should do and no particular
    reason to think Mr. Friedman’s ideas are any better. There is no
    trace of modesty in his writing—no skepticism, no cynicism, no irony, no
    suspicion lurking in the corner of his brain that he might be a jackass. Of
    course, there is nothing false about him either; he is not capable of either
    false modesty or falsetto principles. With Friedman, it is all alarmingly
    real. Nor is there any hesitation or bewilderment in his opinions; that
    would require circumspection, a quality he completely lacks.
    Friedman fears he may not approve of all the post-9/11 changes. But
    so what? Why would the entire world “go dark” just because America
    stoops to empire? The idea is nothing more than another silly imperial
    conceit. America is not the light of the world. Friedman can stop worrying.
    The sun shone before the United States existed. It will shine long
    after she exists no more. But, without realizing it, imperial conceits are
    what Mr. Friedman offers, one after another. He knows what is best for
    everyone, all the time.
    But even at his specialty, Friedman is second-rate. It is not that his
    proposals are much dumber than anyone else’s, but he offers them in a
    dumber way. He sets them up like a TV newscaster, unaware that they
    mean anything, not knowing whether to smile or weep. He does not seem
    to notice that his own DNA has mutated along with the nation’s institutions
    . . . and that he does nothingmore than amplify the vanities and prejudices
    that pass for the evening’s news. Is there trouble in Palestine? Well,
    the Palestinians should have done what we told them. Have peace and
    democracy come to Iraq? If so, it is thanks to the brave efforts of our own
    troops. Is the price of oil going up? Well, of course it is; the United States
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    has not yet taken up the comprehensive energy policy he proposed for it.
    Friedman’s world is so neat. So simple. There must be nothing but right
    angles. And no problem that doesn’t have a commission waiting to solve it.
    It must be unfathomable to such a man that the world could work in
    ways that surpass his understanding. In our experience, any man who understands
    even his own thoughts must have few of them. And those he has
    must be simpleminded.
    But we enjoy Friedman’s commentaries. The man is too clumsy to hide
    or disguise the awkward imbecility of his own line of thinking. The silliness
    of it is right out in the open, where we can laugh at it. Arabs ought to
    shape up and start acting more like New Yorkers, he believes. If they don’t
    want to do it on their own, we can give them some help. He says we can
    send “caring” and “nurturing” troops to “build democracies” in these
    places and “protect the rights of women.” But he doesn’t understand how
    armies, empires, politics, or markets really work. American troops can give
    help, but it is the kind of help that Scipio gave Carthage or Sherman gave
    Atlanta. Armies are a blunt instrument, not a precision tool.
    Friedman urged the Bush administration to attack Iraq. But the man
    has a solution for every problem he causes. “So how do we get the Sunni
    Arab village to delegitimize [we love these big words—every one of them
    hides a whole dictionary of lies, f ibs, prevarications, malentendus, misapprehensions,
    miscalculations, guesswork, hallucination, conceit, and mendacity]
    suicide bombers?”
    Simple. Propaganda! “The Bush team needs to be forcefully demanding
    that Saudi Arabia and other key Arab allies use their news media, government,
    and religious systems to denounce and delegitimize the
    despicable murder of Muslims by Muslims in Iraq.”4
    That ought to do it. What is wrong with the Bush team? Why didn’t
    they think of that? “Forcefully demand” that the Arab states do more
    propaganda. Yes, problem solved.
    By the way, your authors have no position on foreign policy. We only
    notice that the people who do have them are idiots.
    Still we are not going to criticize Friedman. There is no sport in it.
    The poor fellow is evidently handicapped. He only sees things in two dimensions,
    like a drawing by a f ive-year-old with only one eye. He seems
    to have a one-eyed proposal each week: a “Reform Revolution” (whatever
    oxymoronic thing that is); “nation building”; “a Manhattan project
    to develop a hydrogen-based energy economy”; a “National Commission
    Something Wicked This Way Comes 265
    for Doing Things Right”; a “Patriot Tax” of 50 cents a gallon on gasoline;
    a “Reform India” proposal; and many others too numerous and absurd
    to mention.
    Looking at the issue with two eyes and rounding on it a bit to get a
    better view, we see that things are not nearly as simple as Friedman must
    imagine. Things do not respond to commissions and good intentions.
    People do not always get what they want; sometimes they get what they
    deserve.
    America’s roly-poly empire of consumer capitalism, pax dollarium,
    airborne diplomacy, and debt has established order throughout most of the
    world. That order was immensely helpful to Americans in the first 60
    years of the U.S. imperium. We made things that we could sell throughout
    the world—at a prof it. Today, the world still turns, but maybe not in
    our direction.
    There is a dark side to the human character. After people have enough
    to eat and a roof over their heads, they care more about their relative
    wealth than their absolute wealth; they care more about their status than
    their souls. The present imperial order benef its foreigners more than
    Americans. Real wages are rising in Asia. In the United States, they are
    stagnant. In relative terms, Americans are likely to continue to get poorer,
    even if they eliminate their trade def icit.
    The logic of human jealousy—and imperial finance—has now shifted.
    The United States should not be willing to continue providing a public
    good—order—for no other return than the opportunity to compete on a
    level playing field. Industries in the United States are now losing that
    competition. Americans are beginning to resent it. They are likely to insist
    that either we retire from the empire business; or we take it up in a
    way that impedes globalized economic progress.
    Looked at this way, the Bush administration’s many actions make
    more sense. Why invade Iraq? Because it creates disorder. Military adventures
    are risky and destabilizing. And they are a shift from civilized means
    for getting what you want to using political means, which are not only inherently
    disorderly but also favor America’s military strengths while minimizing
    her commercial weaknesses. Why pressure China to revalue the
    yuan? Because it creates disorder. The yuan had been stable for 10 years—
    pegged to the U.S. imperial dollar at a f ixed rate. The United States insisted
    that the yuan move up and threatened to impose tariffs and trade
    barriers. Why? Because the trade barriers directly interfere with the orderly
    266 EVENING I N AMERICA
    give-and-take of commerce and slow our competitors’ growth. Why run
    up huge federal def icits? Why give away money at the cost of consumer
    price inf lation? All these things are deeply disturbing to the world financial
    system; they breed disorder.
    What Friedman has not seemed to notice is that America’s advantage
    is past tense. If the United States really had been creating new products
    and new jobs, the evidence would be in the f igures. America’s trade f igures
    would not be preceded by a minus sign, but by a plus, as they had
    been prior to Ronald Reagan’s entering the White House. America’s job
    numbers, too, would have been different. The number of new jobs created
    in a single month—say, February 2004—would have been more like
    200,000 (which would have been “normal” for that stage of the recovery)
    rather than the measly 21,000 that showed up.
    Never before, since the beginning of the industrial revolution 300
    years ago, have there been so many people outside the Western world
    ready, willing, and able to compete with us. Never before have they had so
    much available capital. While Americans spend all their money—and then
    some, the average Chinese worker saves more than 20 percent of everything
    he earns.
    There are more engineers in the city of Bangalore, in India, than there
    are in the state of California. They work well and cheaply, taking home an
    average annual pay of about $6,000. And they seem to be just as innovative
    as their American counterparts. The software for DVDs was developed in
    Bangalore, not in Silicon Valley, says the French newspaper, Libération. In
    the seven short years of its existence in Bangalore, the Philips research
    center alone has come up with 1,500 new inventions.
    Foreign workers have been cutting into American salaries for many
    years. Assembly line workers in Taiwan, Mexico, and other places have
    undermined factory wage growth in the United States. Over the past 30
    years, real hourly earnings on the shop f loor have gone nowhere. No one
    particularly cared—because America’s economy was shifting to service
    and consumption anyway. Factory workers were out of fashion and out of
    luck. But now it is the accountants, architects, and paper shuff lers whose
    jobs are threatened. Even lawyers are worried; law firms are outsourcing
    routine legal work to India.
    These trends might not have worried Democrat economists any more
    than they troubled the Republicans, but 2004 was an election year, so they
    couldn’t pass up an opportunity to get their names in the paper.

  8. First I’d like to say your observations are very astute.

    As relating to point one. I’ve come to learn that one can always find naysayers and doom-predictors for almost every event in history. This makes me a little hesitant sometimes to predict what will happen because how can we truly know. However I think under the circumstances, with the available data and number of people who simply think the United States will crash soon are going to be correct.

    The question really is when and just how will it start. My reading of history for the American revolution and US Civil war has taught me that those conflicts were actually a long time coming and that the issues at the cause of them started 10-20 years before the actual events took place.

    With the situation today, I don’t think the US has that much time however. It’s really difficult to tell because the appearances are being kept up quite well despite the pending disaster. It’s as if nobody(or very few people) are ready to admit something is wrong. Of course some people, think nothing is wrong at all.

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