January 12, 2011
The warning signs of trouble ahead
If we look at the situation globally, we see two trends, one good and one bad. The good one is that the gap in average incomes between people in the developed world and the developing world is closing. But while inequalities between nations (as measured by statistics on averages) is decreasing, inequalities within nations are worsening, as income and wealth disparities get larger. As a result, we now have two worlds emerging that, unlike the old divisions of rich and poor nations, now consist of rich and poor groupings that transcend nations. As Chrystia Freeland says in an article in the January/February 2011 issue of The Atlantic titled The Rise of the New Global Elite of the new oligarchy:
Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves.
No good can come from this trend of a rapidly widening gap between a tiny rich coterie and the ever-increasing numbers of the poor. It is too uncomfortably reminiscent of the pre-revolutionary France and is destined to self-destruct.
Within the US, the collapse of the US empire will not be because of any external threat. Its military is too powerful to be overcome. It will collapse from within for economic reasons, as it becomes bloated, bankrupt, arrogant, over-extended, and hubristic, thinking that its military might alone is sufficient to ensure its continued dominance over other countries. As with past empires, people will not realize until the very moment of collapse how bad things are, and then look back and marvel as to how they could have missed all the screaming warning signs.
The structural warning signs are already there: rapidly rising inequalities in income and wealth, declining services and quality of life, lower standards of living for the many, endemic large budget deficits, a national debt that is approaching the size of the GDP, and a political class that has become so subservient to the oligarchy that it will not address the problems head on but blusters over trivialities.
A serious warning sign is when other nations become wary of the US dollar serving as the reserve currency. That feature has enabled the US Federal Reserve to print money (euphemistically called 'quantitative easing') to paper over its chronic deficits and try and boost the US economy by putting more money in circulation, even though this has a negative impact on the economies of the rest of the world because it essentially devalues the dollar and thus cheapens the value of their dollar reserves. This practice has allowed the US to live well beyond its means for many years now.
But there are limits to how long this can go on. Other countries are starting to seek alternatives to the dollar. Paul Craig Roberts says that here have been rumblings already on this front and that "Russia and China have concluded an agreement to abandon the use of the US dollar in their bilateral trade and to use their own currencies in its place". Troubles with the euro have kept the threat of that currency becoming the reserve temporarily at bay. Meanwhile, China, India, and France are calling for a new international monetary system in which the dollar is no longer the sole reserve currency.
A symbolic warning sign that things are bad is the increasing frequency of grandiose rhetoric making claims to national greatness. Witness this recent effusion from Rich Lowry in the National Review: "Our greatness is simply a fact. Only the churlish or malevolent can deny it, or even get irked at its assertion." It is a truism that the truly great in any field never have to boast about it because they simply take it for granted. It is only those who are insecure who do so.
Barack Obama campaigned on a platform of hope and promises of change and a new direction that we now know he had no intention of fulfilling. He used hope as a lure to delude people the same way that religions use hope of a wonderful afterlife to get them to accept terrible conditions here and now. We need to kill that sense of hope. This sounds terrible but it is only when we lose our illusions about the current state of affairs in the US that we can begin to create a better society. It is only when we see the reality, that the US does not have two parties with different visions but is a one party oligarchic state that is pursuing policies that benefit a few but are causing the nation as a whole to tumble into disaster, that we can set about creating the kind of movement that will unite the base of both parties, including even the tea partiers, and can see clearly what the real problems are and what needs to be done.
Next: Who makes up the oligarchy and what needs to be done?