America's sad decline -- they've noticed in Europe (and now China)


Recently there have been a number of articles and opinion pieces in European newspapers and magazines lamenting the political and economic chaos in the U.S.  Perhaps those in the White House, Congress, the Tea Party, Fox News, and the Sunday talk shows think that no one across the Atlantic would notice how deranged and dangerous our country now seems.   But people abroad have begun to notice and are shaking their heads in dismay. 

Jacob Augstein's commentary in Spiegel Online, "Once Upon a Time in the West," is typical of a strand of opinion heard in Germany and elsewhere.

"The US is a country where the system of government has fallen firmly into the hands of the elite. An unruly and aggressive militarism set in motion two costly wars in the past 10 years. Society is not only divided socially and politically -- in its ideological blindness the nation is moving even farther away from the core of democracy. It is losing its ability to compromise" ....

"The country's social disintegration is breathtaking.....The richest 1 percent of Americans claim one-quarter of the country's total income for themselves -- 25 years ago that figure was 12 percent. It also possesses 40 percent of total wealth, up from 33 percent 25 years ago. [Joseph] Stiglitz claims that in many countries in the so-called Third World, the income gap between the poor and rich has been reduced. In the United States, it has grown."  ....

"The name "United States" seems increasingly less appropriate. Something has become routine in American political culture that has been absent in Germany since Willy Brandt's Ostpolitik policies of rapprochement with East Germany and the Soviet Bloc (in the 1960s and '70s): hate. At the same time, reason has been replaced by delusion. The notion of tax cuts has taken on a cult-like status, and the limited role of the state a leading ideology. In this new American civil war, respect for the country's highest office was sacrificed long ago. The fact that Barack Obama is the country's first African-American president may have played a role there, too" ....

Augstein concludes that the U.S.A. no longer upholds the commitment to reason, equality and democracy that has long defined "the West."  "The further the United States distances itself from us, the more we will (have to) think for ourselves, as Europeans. The West? That's us."

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Update:  During my recent travels in China, a similar question came up in conversation.  "Is America really in as much trouble as it seems to be?" Hence, it's no surprise to read the Chinese government's response to Standard & Poors downgrading America's credit rating (story from Reuters with quotes from the official Xinhua news agency):

China tells U.S. "good old days" of borrowing are over

In the Xinhua commentary, China scorned the United States for its "debt addiction" and "short sighted" political wrangling."

China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.

It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

"International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.



 


The End of Growth -- Has Economic Policy Become a Cargo Cult?


To an increasing extent, today's discussions of economics and public policy resemble the cargo cults  on Pacific islands of the 19th and 20th centuries. After their encounters with travelers from Europe and the U.S., some islanders decided that the material wealth displayed by the visitors was destined to come to them, a blessing guaranteed by their ancient ancestors.  Hence, they built rough wooden models  of ships and, later, airplanes, engaging in elaborate rituals as ways to attract the shower of prosperity that they hoped would come their way.

Among today's economic policy experts, our equivalents of voodoo doctors, there are basically two cults with differing sets of ritual incantations and practices.

On one side we have those who believe that the problem is excessive government "spending" and the spiraling levels of debt the nation has piled up over the years.  Members of this cult demand austerity achieved by slashing federal and state budgets and, of course, by lowering taxes, especially on the "job creators," their equivalent of the beloved but now woefully absent ancestors revered by the cargo cults.


On the other side are those who believe that the basic problem is insufficient "demand" caused by both long and short term developments -- outsourcing of jobs, the housing bubble, foreclosure, job loss, etc.  Priests of this cult insist the renewed prosperity will arrive when government takes steps to pump more money in the economy, creating new jobs and boosting demand for goods and services.

What the two cults share is the view that mana from heaven -- economic GROWTH -- is just around the corner.  With just the right collection of chants, ceremonies and talismans and just enough financial inducement thrown to the most worthy (or needy) members of the tribe, the good times will surely return.  All hail to BIG MAGIC!

Faced with these arguments and programs, my normal preference is usually to side with those who seek to boost the economy by enlarging government programs that might help the poor, unemployed, students, small business.  At the same time, I am more and more haunted by the thought that the diagnoses and remedies of both sides are fundamentally flawed.  What if "growth" has finally become a chimera for modern technological society?

The publication of Richard Heinberg's book, The End of Growth, comes at an appropriate moment.  In the U.S.,  European Union and around the world, the anemic "recovery" following the economic crash of 2007-08 has begun to sputter.  A "double dip recession" or worse may be at hand as the nostrums and hand-waving of both major schools of economic seem impotent to turn things around.  Heinberg's book raises many crucial questions and offers a strong set of arguments backed by impressive evidence.  "Economists insist that recovery is at hand, yet unemployment remains high, real estate values continue to sink, and governments stagger under record deficits. The End of Growth proposes a startling diagnosis: humanity has reached a fundamental turning point in its economic history." 
(from the Heinberg's Post Carbon Institute web page)


The book identifies indelible limits to growth in resource depletion (especially petroleum), environmental impacts (especially climate change) and "crushing levels of debt."  Heinberg ponders the consequences of this nightmare and speculates about new economies and ways of living that could emerge from the wreckage. 

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Update:   This page contains a cartoon video with Richard Heinberg's commentary summarizing some of the book's basic themes.  Watch until the very end to see container cargo ships sailing off the edge of a Friedman-esque "flat" world.