USA – It’s the economy, stupid!
Author: Pål Steigan, steigan.no
These days, most Norwegian news media should print job ads for themselves, headlined: USA expert needed. Not only were they wrong, it’s human to err sometimes. But they were all wrong in the same way. And as usual, almost all comments were facile and mainly discussing ideology. But the really interesting aspects of the political crisis that US is experiencing now, is what’s going on beneath the surface – and not least in the economy. USA is a superpower in its sunset, and it’s really beginning to hurt now.
A large analysis from Harvard Business School, entiteled Problems Unsolved and a Nation Devided, shows that the US economy is stagnating and declining, while neither the economic or political system is able to get a grip on the problems.
USA’s competitiveness began to crumble well before the big recession. US economic challenges are structural, not cyclical. USA doesn’t show the ability to take the necessary measures to deal with the increasing deterioration of the country’s economy. This inability to take the necessary measures due to an unrealistic and ineffective national, domestic conversation and discussion of reality, and of the challenges the US is facing in particular. The recent campaign shows how crippled and corrupted this conversation, or lack of conversation is. Hillary Clinton proceeded to describe the US as «A Shining City Upon a Hill», while parts of her country is now more reminiscent of slums in the developing world.
Harvard’s analysis says that US economic performance peaked in late 1990s, and then began crumbling in terms of key indicators such as growth, growth in jobs and investment. Growth is significantly declining. While traditionally at between 4% – 3%, it has since 2000 been at 2%. The temporary recovery in 2015 has been superseded by new stagnation in 2016, with growth rates barely exceeding 1%.
The employment rate peaked in 1997. With a reduced number of people in the workforce, income per capita is also reduced. Median income per household has been falling since 1999, and incomes stagnate in almost all income groups. This particularly affects those in the lower and middle income groups.
A similar split has occurred between large and smaller companies, says the Harvard study. The big companies are becoming even bigger and richer, while the small companies are struggling and unable to act as engines for job creation.
The typical year-round, full time employed male worker earned an average of $50.383 in 2014. The same dollar value adjusted for inflation earned an equivalent male worker $53.294 in 1973. It’s the mighty Brookings Institution that writes this, and it has happened despite the fact that productivity has increased almost 2.5 times over the same period. But the wealthiest of the wealthy have never been wealthier than now, writes Brookings – «they’re in a league of its own.» The richest 0.01% (hundredths of a percent, or 1% of 1%) now owns 11.1% of all wealth in the United States. The richest 16.000 families disposes over 6.000 billion dollars, which corresponds to the bottom two thirds of the statistics.
And yet some wonder why there are lots of angry people on the betrayed grassroot level in the United States?
Also, the country is tearing apart while finance banks can use treasury as bank overdrafts.
Most of America’s infrastructure was built just after World War II. This contributed to tremendous growth, and to making the US the world’s leading superpower. Today, the United States spends only 0.6% of their public budgets on investment in infrastructure. The decay takes place in all areas: roads, bridges, tunnels, power grids, telephone networks, public transport …
In his 2013 State of the Union address, Obama strongly advocated immediate repair of nearly 70.000 dilapidated bridges across the country, a plan he called Fix it First. This would make a cost of $50 billion for the entire transport sector. Instead, the Congress passed a cut of $1.9 billion.
The American Society of Civil Engineers, ASCE found that if the country continues on the current investment path between now and 2020, the US will lose:
- $3.1 trillion in GDP, almost the equivalent of Germany’s entire GDP
- $1.1 trillion in U.S. trade value, equivalent to Mexico’s GDP
- 5 million jobs, more than the jobs created by the America Recovery and Reinvestment Act
- $2.4 trillion in consumer spending, comparable to Brazil’s GDP
- $3.100 in annual personal disposable income
And if the US is due on the home front, then defeats are even more prominent internationally. The United States once was the world’s factory and the world’s innovator. China has famously taken over as the world’s factory, and is rapidly emerging also to take over as the world leading innovator.
In August 2009, the Pentagon carried out its first financial war game. War games is a common method for simulating military conflicts. What was different, was that those who conducted this particular war game weren’t generals and military strategists. They were economists, fund managers and bankers. After two intense days, they made an unambiguous summary: China won, without even pulling guns!
The automobile used to be the very symbol of the American economy, and the US was once the world’s number one automotive plant. That era is over. China is currently manufacturing 26.7% of the world’s vehicles, to US 13.3%. China is the world’s largest trading nation and the world’s largest exporting nation. Eight of the world’s twelve largest ports are located in China. The largest port in the US is number thirteen on the list.
The United States was also once the world’s leading aerospace nation. Now they rely on Russian rockets to send people to the International Space Station, and while China has a moon landing program, the US does not.
While the US currently leads seven wars and has hundreds of military bases abroad, China is leading no wars, and is first and foremost offering economic cooperation and investment. Typically, the US plan to create an economic counterbalance to China, the so-called TPP (Trans-Pacific Partnership) agreement has stalled, while China develops the Asian investment bank and continue with their giant investment program, named The New Silk Road and Economic Belt.
Although the US economy is still nominally larger than China’s, it is already smaller in terms of purchasing power. Evidence indicates that even the dollar hegemony is facing a collapse.
What does all this mean? It means that the empire is unraveling. Any attempts to cling to the position of power the US formerly has had, will lead to even more – and more dangerous wars. The only viable path for a capitalist United States is to accept the fall and renounce its role of indispensable nation. But too much has been invested in this role. The billionaires depend on it to keep the cash flow up, and around the world there are vassals, also in Europe, who are terrified of what will happen if the US would remove the protection they‘ve been living under. They litterally fear it will be “pitchforks time”.
The United States of today much resembles the Roman Empire in its last days. A filthy rich and decadent upper class, a disempowered and impotent proletariat, an infrastructure and an energy system on the verge of collapse. The currency is worthless and the country is completely saddled with debt, and the only thing preventing bankruptcy is issuing ever more worthless securities and arming for war. And along the imperial borders, the barbarians are serving themselves as they please.
The real power elite of the United States – I have the oligarchs in mind, not the speech machines called politicians, are aware of this. The majority of this economic upper class believes that the United States must address these issues by going to war, ever new wars, ultimately also against Russia and China. A minority in this elite class have in fact come to terms with reality, and believe that the only way to save US imperialism is scaling down and giving up the role of global world police, and put up with being a nation among nations.
But this is one discussion the nation don’t seem to be able to lead, and the lack of self-awareness and sober analysis, as the study from Harvard also says, is one of the major shortcomings of USA today.
English translation by Achsel Ford
Translated article, steigan.no: USA – It’s the economy, stupid! (EN)
Original article on steigan.no: USA – It’s the economy, stupid! (NO)