Fall of the American Empire and the Rise of a New Economy – Part 2

Garda Ghista
For the last decade, and particularly in the last four years, it has become a given that America is indeed an empire. And today, it is becoming clear that this empire is beginning to teeter on the brink of collapse – although we have to study a little harder to see the signs and connect the dots. The neoconservatives (“neocons”) who today walk the White House corridors are in love with their empire. They will not hear of its collapse. They will not see the signs or connect the dots. But the collapse will affect not just the rest of the world – it is going to affect the American people in ways they cannot begin to imagine.

Environmental Degradation

According to Kirkpatrick Sale, it is in the nature of all empires to one day collapse. He provides four indicators. The first is environmental degradation. Empires invariably die because they have completely destroyed their environment – the land, the waters, the very air they breathe. In their ruthless desire to conquer and control, to make money, they ravage the land and poison the waters. We have all the indicators today of mounting ecological devastation. More than 15,000 species are threatened with extinction. Global warming is occurring far faster than atmospheric scientists ever imagined, due directly to carbon dioxide emissions of factories owned by greedy capitalists who do not care what happens to the environment or whether there is global climate change later on. They care about today, and about today’s profits. So in the name of exploitation for capitalist profit, we have widespread slaughter of forests around the world. We have pollution of freshwater resources – which comprise just two percent of the earth’s total water – it is a very small amount to nourish 6 billion people.

In America’s new wars (Kosovo, Afghanistan and Iraq) we have depleted uranium dust being used in a reckless, devil-may-care manner in such large amounts that it is already killing not just the so-called ‘enemy combatants’ but also American soldiers by the thousands. The dust is being picked up and carried by winds around the world, and will gradually cause thousands more deaths of civilians who will never know what hit them. This is again in the name of capitalist profit – the horrific drive on the part of American corporations to take over Iraq – to get their oil, to patent their indigenous seeds, to steal their gold, silver and other minerals. In other words, due to the insatiable greed of capitalists, of corporate owners, the earth is being destroyed. We are losing our ecological equipoise. Without ecological equipoise, human beings will not be able to sustain themselves. A Department of Defense report in 2004 predicts abrupt climate changes within the next ten years leading to ‘catastrophic’ water shortages, wars over fast dwindling water and energy resources. In addition there is vast erosion of top soils and beaches, overfishing, global deforestation, freshwater and aquifer depletion, soil salinization, depletion of oil and minerals, melting ice caps and glaciers and rising sea levels, which threaten to inundate New York, Boston, New Orleans and many other coastal cities around the globe..

Economic Meltdown

Today the US is devoting more and more of its manufacturing assets to arms and munitions. Simultaneously it is becoming increasingly dependent on foreign imports for the basic necessities required by its citizens. In 2002 the US had a record trade deficit of $435.2 billion, and a near zero savings rate. As William Greider says, the US government, instead of facing its debts in a rational manner, continues to lecture its debtors with full arrogance and pomposity. He says that “… American leadership has … become increasingly delusional … I mean that literally – and blind to the adverse balance of power accumulating against it.” (17) What Mr. Bush and cohorts fail to realize is that if they only want to engage in military unilateralism, they fail to see the collateral damage it is causing to international trade. International trade depends upon mutually beneficial relationships between people in order to function nicely. By adopting a stance of unilateral military imperialism, other countries are not happy, and they are showing this displeasure by deciding not to invest in American goods and services. They are taking their business elsewhere – to China, for example. So while globalization has been devastating for the poor and neglected humanity, the new American militarism and imperialism will conceivably usher in a far worse scenario, affecting first and third world countries alike.

The US economy is built on a very fragile system wherein the world produces and the US consumes. US manufacturing at the end of 2004 was a mere 13 percent of GDP. Presently US has a $630 billion trade deficit with the rest of the world. In order to pay for that deficit, an inflow of cash is required to the tune of $1 billion every day. This is not happening. And this kind of excess is simply not sustainable over the long run. In addition the US has a $500 billion Federal budget deficit as part of a total national debt of $7.4 trillion as of Fall 2004. Then there is the military cost of one war after the other – first Afghanistan, then Iraq and soon Iran. It is costing more than $530 billion annually, without counting billions spent in covert operations never recorded by the Department of Defense. These figures are also not sustainable. The dollar has lost value everywhere. Since 2000 it has lost nearly 40 percent value against the Euro, and countries are beginning to raise their eyebrows. If the dollar value declines much further, it will be more than raised eyebrows, as one by one countries shift their financial operations to the Euro. According to Kirkpatrick Sale, China may well let the yuan float against the dollar, which will render the US bankrupt and powerless to control its own economic life, let alone foreign economies.

China is complicating (US-dominated) globalization. Globalization is supposed to benefit the US and other western, white-skinned people. But China is on the economic rise. As well, China and other countries around the world are tired now of American arrogance, racism, colonialism and imperialism. Countries are welcoming Chinese trade negotiations with open arms. At present China, Japan and US are the three most productive economies on the earth. But China is by far the fastest growing, with an average rate of 9.5 percent annually over the past two decades. In contrast, both US and Japan are riddled with heavy and mounting, unsustainable debts. If measured on the basis of purchasing power, China becomes the second-largest economy on the earth, based on actual production as opposed to prices and exchange rates. US GDP for 2004 was $10.4 trillion while China’s was $5.7 million, which gives China’s 1.3 billion people a per capita GDP of $4,385.00. Between 1992 and 2003 Japan was China’s largest trading partner, but in 2004 Japan fell to third place behind the European Union (EU) and the US. China’s trade volume for 2004 was $1.2 trillion – third after the US and Germany and certainly more than Japan’s $1.07 trillion. China’s trade with the US grew 34 percent in 2004, causing Los Angeles, Long Beach and Oakland to become America’s busiest seaports. (18) Three years after entering the WTO, China’s influence on the global economy has become crucial.

China’s growth rate is welcomed. However, the US and Japan fear the now obvious shifting of power from west to east, and specifically from the US to China. Because of this fear, the US as well as Japan take every opportunity to insult and upset China, particularly with regard to the status of Taiwan. As William Greider noted: “Any profligate debtor who insults his banker is unwise, to put it mildly…” (19) For example, if China gets tired of Bush-bullying and decides to shift some or all of its foreign exchange from the dollar to the euro, this would produce “the mother of all financial crises,” and the US would crash overnight, practically. Meanwhile, it is exciting to note the new bonds of trade taking place between China and Latin American countries, as well as Iran. China is beginning to replace the US as the major trading partner for these countries, leading to a situation of multipolarity – the preference for different, competing power centers rather than the ‘unipolarity’ of the US as a single superpower. Multipolarity is no longer a goal for the Third World. It is the reality! China is now close to the European Union, Latin American countries, Iran, and the Association of Southeast Asian Nations (ASEAN), which comprise the ten countries of Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam. The US was not invited to their recent joint meeting in Vientiane to discuss the forthcoming East Asian Summit in November, 2005. China has signed important trade agreements with Argentina, Bolivia, Chile and Cuba, while Hugo Chavez of Venezuela paid a recent visit to China and offered China wide-ranging access to his country’s oil reserves. China will be investing $350 million to extract oil and another $60 million in natural gas reserves, in Venezuela. (20)

In his recent article, “Is America Going Broke?” Steve Maich talks to David Walker. Walker is the comptroller general of the United States. He is an accountant, and he is the head auditor for the most powerful government in the world. According to Maich, Walker is trying hard to get a message out to anyone who will listen. He says that the US public finances are in a shambles, and getting worse. If something is not done soon, the world is going to face an “economic shakeup unlike anything ever seen before.” (21) Walker mentions the $43-trillion hole in America’s public finances that’s increasing daily. He says that Americans have no idea what they’re in for economically because they were born into relative affluence and have never known hard times. This is why the people are not believing him and not listening to him. Walker says that the present American lifestyles have been bought on credit, and very soon people will have to pay up, and there will be drastic consequences if they do not. Those consequences will spill beyond American borders over to Canada, which is so tightly interwoven with the US in terms of trade. No region or industry would be untouched by the financial shock Walker expects to occur in America.

Laurence Kotlikoff, professor of economics at Boston University, wrote a paper recently decrying the “fiscal fantasy” of the Congressional Budget Office (CBO). But, his voice was one alone in the wilderness. Nobody listened, nobody paid heed. Tax breaks and tax returns (to mostly the wealthy in America) proceeded on schedule. Then came 9/11 and ensuing wars with Afghanistan and Iraq, with their huge bills along with new costs for homeland security to the tune of US $87.1 billion. The budget surplus of $128 billion in 2001 vanished with stunning swiftness into a $412 billion deficit by the end of 2004 – the biggest annual shortfall in American history. Who noticed? Who objected?

As of February, 2005, the US national debt was $7.7 trillion. By the end of this year another record deficit of $427 billion is expected. These numbers still do not capture the real financial hole that the country is in. The Middle East wars will require another $80 billion. Social Security revamping will cost $2 trillion if implemented.

Our government has reneged and defaulted on nearly 40 percent of its trillion-dollar foreign debt, and nobody in America seems to mind! The value of the dollar is down now nearly 40 percent – from 80 cents to the euro to 133 cents today. It is quite likely that the dollar will hit rock bottom – zip in value. The same scenario happened in the 1930s. Because China and other East Asian countries have their money pegged to the dollar, so as the dollar slides in value, those countries are also losing a lot of money. The question is, when will they get fed up and pull out of the dollar – begin dumping the dollars they have? China is giving away hundreds of billions of dollars worth of real goods produced in China and consumed by the US, and receives paper dollar bills, then turns around and buys American Treasury bills – more worthless money! The US government has a domestic debt that is nearly 100% of GDP and consumption. (22) The federal debt is right now $7.5 trillion. The US has also arranged to earn 9 percent interest on all economic and financial holdings in other countries, while foreigners earn only 3 percent on their holdings. This arrangement brings in a lot of extra money for Uncle Sam. According to Andre Frank, the problem is that the US government saves no more than 2 percent of its income. The wealthiest 20 percent of Americans save no more than 2 percent. This is counterbalanced by deficit spending of 6 percent. Hence, the government maintains a $600 billion dollar plus deficit while itself living off the fat of the rest of the world – of countries generally called poor countries! US is getting annually more than $100 billion from European central banks, more than $100 billion from China, $140 billion from super-saver Japan, and tens of billions from many other countries around the world. For how many years now has the IMF been lending money to third world countries – more than they could possibly afford to repay – and then simply taken over their economies? As John Perkins writes in his latest book Confessions of an Economic Hit Man:

“our job is to build up the American empire… to create situations where as many resources as possible flow into this country, to our corporations, and our government and in fact we’ve been very successful. We’ve built the largest empire in the history of the world… primarily through economic manipulation, through cheating, through fraud, through seducing people into our way of life… my real job was deal-making. It was giving loans to other countries, huge loans, much bigger than they cold possibly repay…. Let’s say [to] Indonesia or Ecuador – and this country would then have to give 90% of that loan back to a US company, or US companies… a Halliburton or a Bechtel … a country today like Ecuador owes over 50% of tis national budget just to pay down its debt. And it really can’t do it. So we literally have them over a barrel. So when we want more oil, we go to Ecuador and say, ‘Look, you’re not able to repay your debts, therefore give your oil companies your Amazon rain [forests], which are filled with oil.’ And today we’re going in and destroying Amazonian rain forests, forcing Ecuador to give them to us because they’ve accumulated all this debt … [We work] very closely with the World Bank. The World Bank provides most of the money that’s used by economic hit men, it and the IMF.”

Whenever any country does not fall in line with the World Bank, and IMF and their representatives – the economic hit men – then it is time for what Perkins calls “the jackals.”

“Jackals are CIA-sanctioned people that come in and try to foment a coup or revolution. If that doesn’t work, they perform assassinations. Or try to. In the case of Iraq, they weren’t able to get through to Saddam Hussein. He had – his bodyguards were too good. He had doubles…. So the third line of defense is our young men and women, who are sent in to die and kill, which is what we’ve obviously done in Iraq.” (23)

Military Overstretch

Earlier we talked about how the American empire is represented by bases all over the globe. However, they are only bases. They are not occupying armies that can conquer the country in question. The reality is that the US army is not able to conquer even one nation – Iraq – despite all its high-tech military equipment and long-distance weapons systems. The US government, in its arrogance, had no idea of the mindset of the Arab people. The Arabs will never lie down and say, please stomp on us, please occupy our country, and please help yourselves to our oil. No, even if they have to fight with their sandals and their bare fists, the Arabs will never allow themselves to be occupied by a foreign invader. The history of British occupation of Iraq is proof of the mindset of Iraqis as regards occupation. If not today, then tomorrow the people of Iraq will drive out the US invaders and send them packing. It is a question of time. The US military has bases in more than 150 countries, but it cannot control or contain those countries if there is rebellion by the local citizens.

It was not US military power but US arrogance that caused people in Washington to create so many bases. The US is not going to win any war now or in future because it does not have the military capacity to do so. Countries like Iran, China, Venezuela and other South American countries are purchasing state-of-the-art weapons and planes from Russia and other countries, and are making themselves strong. They are prepared to fight and conquer the sagging American empire! As more and more countries refuse to coalesce to the “structural adjustment” policies meted out by the IMF on behalf of its blood-sucking, capitalist controllers, they will resist not only US economic hegemony but US military hegemony. With China growing exponentially in power both economically and militarily, and engaging in trade negotiations around the world – including South America and the Middle East – it is reaching the point where the world simply does not need America any longer. Soon we may see an East Asian currency – perhaps a mix of ASEAN countries plus China, Japan, South Korea and even India. The US is becoming more and more dispensable in the eyes of the world. On December 11-17, 2004 The Economist reported on the previous week’s summit of ASEAN plus three in Malaysia, where the Malaysian prime minister declared that this ASEAN summit will now lay the groundwork for an East Asian Community (EAC), which will “build a free-trade area, cooperate on finance, and sign a security pact… that would transform East Asia into a cohesive economic block … In fact, some of these schemes are already in motion… China, as the region’s pre-eminent economic and military power, will doubtless dominate … and host the second East Asia Summit.” The article mentions how in 1990 the US sabotaged a similar initiative so they would not lose their influence in the region. But today, the word is, “Yankee stay home!” Empire is now dispensable, and hence it is no longer an Empire!

Another very likely scenario is that Asian countries will simply decide to stop buying oil in dollars and will switch over to the mix of Asian currencies or the euro. In one stroke this would wipe out demand for the US dollar and send US economy crashing into netherland. It would start a chain reaction, with domestic holders of dollars selling them off lickety split, along with the central banks of countries around the world doing the same. As Frank writes, “Since selling oil for falling dollars instead of rising euros is evidently bad business, the world’s largest exporters in Russia and OPEC have been considering doing just that.” (24) The bottom line is, the US is a dispensable item in our world today.

Domestic Dissent

According to Sale, empires make their final collapse when dissent from within goes out of control, when public outrage at home becomes unmanageable. Presently the level of dissent in the US has not reached that stage. Life is still too easy, with too many Americans having homes, food, cars, and jobs. However, these statistics are changing rapidly – despite all mainstream media claims to the contrary. In addition, even with relatively small dissent, the Bush administration is becoming more and more repressive, and publicly linking any kind of dissent to ‘terrorism’ and ‘terrorists.’ Along with repression of those who dare to speak out is the calculated program to dumb down the American masses via crude, low-grade entertainment, glamorized sports, television programs aimed at 13-year-olds with careful avoidance of all the real issues plaguing Americans such as no health care, no jobs, no pensions. In place of talking about real issues which are worrying Americans every day – such as their credit card debt and inability to make ends meet without incurring that debt – the Bush administration pays hundreds of thousands of dollars to TV commentators to push its agenda – be it social security elimination as we know it or Medicare and Medicaid elimination. Presently Bush propaganda is cloaked in a veil of religious fundamentalism. And while it is fooling the people today, there is only so long that the people can be fooled by religious rhetoric if they cannot pay their heating bill that month! Perhaps things need to get worse before Americans begin to organize and demand their fundamental, constitutional rights.

This author says, things are going to get much worse fast – maybe in just two or three years. In his new book, Collapse, Jared Diamond says that the traditional values which sustained America for the past 200 years are simply not going to work anymore, and Americans will have to change their mindset and adopt new, more selfless values. Americans celebrated capitalism, but capitalism is not working anymore, and it is time to develop a new economic model. Americans celebrated individualism, but there is too much individual suffering. Individualism needs to be replaced by thinking for the collective welfare. We need to feel the pain of our brothers and sisters without health care, without pension, without job, and without a home due to bankruptcy. The value of nationalism is outdated and completely racist and isolationist. It is time to replace nationalism with the concept of universalism – the idea that all people are brothers and sisters, free to move and settle anywhere on this earth without restrictions. Universalism means, we are one human family and one human culture. We are not to make racist distinctions based on external appearances and differences in language or dress. If Americans begin to make fundamental changes in their thinking and thereafter in their lifestyles, the economic collapse can conceivably be avoided. But Sale says that they won’t make these changes in time. It means that collapse of Empire is inevitable.

Copyright The author 2011

Part 3

Leave a Reply

Your email address will not be published.