One can write of the decline of the USA, and that has already been noted many times. One can write of the collapse of the USA, and that arguably is in process. But neither characterisation would capture what is now happening to the USA.
The USA is being destroyed before our eyes. The nation with the greatest military defences in history, by far, is being taken over and sacked. Like Singapore in World War II, it’s guns are pointing in the wrong direction. This time the destructive horde is not Japanese soldiers rattling overland on bicycle rims, it is people who claim to be patriotic Americans.
Richard Eskow quotes Sarah Palin, the former vice-presidential candidate, saying that someone who argues the government should spend money on infrastructure is a Marxist. The extreme right-wing Republicans of the Tea Party say President Obama is a communist for pointing out that rich people did not have to build their own roads or run their own fire brigades and court systems. The government has done that for them.
Such an attitude is not just a conservative preference for small government. It is not even a neoliberal preference for a minimal government that attends to law, order and defence. Apparently now anything the government does is bad. There is a word for this kind of political system. It is called anarchy.
Infrastructure in the United States is, literally, falling apart. Perhaps the most famous case is the bridge in Minneapolis that fell down in 2007. However there are many other examples, another icon being roads that have been returned to gravel because local governments, starved of tax revenue, cannot afford to repair their pavement.
It was not always thus. Eskow points out that Republican President Eisenhower imposed a fuel tax to fund the construction of the interstate freeway system, at that time the most expensive US Government project ever. It was Republican President Lincoln who introduced the income tax. Even Republican President Bush II signed a $286 billion infrastructure bill.
In the 1970s generalised grumbling about taxes increased to the point that tax revolts started to break out. Republican President Reagan, elected in 1980, adopted and exploited the low-tax, low-spending rhetoric of conservatives and the newly-ascendant neoliberals, even though he raised more taxes on more people than any other peacetime president.
More importantly, Reagan began the imposition of neoliberal policies that have seen the deregulation of financial markets and trade and an increase in the already highly privatised US economy. Two resulting trends have had disastrous consequences for the US economy.
US corporations began to invest in manufacturing plants in cheap-labour countries. Where capital went, jobs and production followed. As a result, US manufacturing has shrunk dramatically. Industrial cities of the north east have been in chronic depression. There are fewer manufacturing jobs, and they pay much less than they used to. In one infamous case, a company fired workers who were paid $18 an hour and offered to re-hire them at $8 an hour. At the time it was paying workers in Mexico around $1 an hour.
Meanwhile the financial sector became more adventurous and grew dramatically as a proportion of the total economy. Rates of trading increased by a factor of fifty or so, as speculation became the dominant activity. A dollar siphoned from the productive economy by financial speculation is regarded by economists as equal to a dollar earned in a manufacturing job. Both contribute equally to the Gross Domestic Product, which is the pathological but standard way we measure the health of “the economy”.
So money began to drain from the productive economy into the pockets of financial speculators, who dreamed up ever more complex ways of extracting wealth. Over $21 trillion of that wealth, it has recently been documented, has been sequestered in offshore tax havens. Debt created by these clever schemes built up until it could be sustained no longer, and the whole house of cards collapsed in 2008 in the Global Financial Crisis, triggering the Great Recession. For many it could be called a depression, and it is certainly the biggest disruption since the Great Depression of the 1930s.
So the US economy has been hollowed out, and the hollowing occurred in two great waves. In the first, US manufacturing was moved to other countries. The delusional theories of neoclassical economists predicted the US would be better off, but the common sense result – the collapse of jobs and wages – has eventuated. In the second wave, speculators siphoned vast wealth from the productive economy while loan sharks mired much of the population in excessive debt.
The debts of the financial sharks were paid off by tax payers. Tax payers, left struggling to pay off their own debt, cannot afford to buy the things they would like or that they need, and the economy languishes in depression.
Even in 2003 Paul Krugman, economist and New York Times columnist, wrote of a light-bulb moment in which he realised that President Bush II and his allies were not just conservatives, they were radicals with a revolutionary mission. Bush’s tax cuts for the wealthy were regarded by many as highly irresponsible, because there was already a large deficit and there was a war on as well.
Like many others, Krugman was at first bewildered by such behaviour, because it seemed as though the Bushies were blind to the consequences of their actions. Then it dawned on him they had another agenda entirely. Using the big deficits as an excuse, they would set about destroying the welfare state, leaving a bare-bones government whose role was to maintain law and order and defend the nation. The Bushies also poured scorn on the old institutions of international order. Starting with the wars in Afghanistan and Iraq, they set about establishing a new era of global dominance by the US, enforced by US military strength.
Krugman discovered a historical parallel in nineteenth century Europe, when the France of Robespierre and Napoleon transformed much of Europe. The diplomatic system of the time could not come to grips with the revolutionaries, because the revolutionaries were contemptuous of the old rules. When a group achieves power but does not accept the legitimacy of the system it inherits, many in the old system are unable to recognise the nature of the threat.
A third wave of destruction is now washing through the US, even though Bush II fell well short of his overall goals. The third wave may not have been intentional, although it is predictable. As the fortunes of the US have declined at home and abroad, a large section of the population has responded by becoming more bellicose. Unable to admit that the US form of capitalism is failing, they resort to blaming. Hence President Obama must be a socialist, or even a communist. They seem to retreat to a frontier fantasy, when heroic men tamed the wilderness and the weak fell by the wayside.
Hence the spectacle of the fearful and angry “little people” of the Tea Party movement taking over the Republican party, supported by and supporting the very people that have brought them low – Wall Street Bankers and real estate speculators. It is hard to discern any coherent Tea Party program. They seem simply to deny all forms of welfare and even all forms of government as socialist and weak, so as to proclaim their own independence and superiority, and to preserve their fantasy of returning the US to dominance.
Hence the bizarre statements noted at the beginning of this article. Hence the rise of Fox News, courtesy of our own little digger Rupert Murdoch, on which anyone can be blamed for anything and on which anger rules. Hence the total adaptability of presidential candidate Mitt Romney to what the new masters of the Republican Party require. Hence an election campaign described by commentator Dave Johnson as “a strategy of swamping the public with flat-out, blatant lies, one after another, again and again, endlessly and lavishly repeated.” Johnson concludes “the Romney campaign believes that they can win this election using lies and propaganda as ‘truths’ to drive their campaign story”.
Neoliberalism does not acknowledge that social structure is important, and Margaret Thatcher even said there is no such thing as society. We are just competing individuals, seven billion consumers. As the radical reactionaries add their chemistry to the cauldron of the modern United States, it seems not only government but society itself is under threat.
Like the diplomats of early nineteenth century Europe, and like the US establishment in the early Bush II years, President Obama can’t grasp what is going on. He keeps trying to be inclusive, reaching out and offering compromises. Republicans respond the way bullies always respond, by taking what they can and then demanding more.
Self-styled capitalists like to talk about “waves of creative destruction”, an idea attributed to Joseph Schumpeter. The waves are supposedly generated by the allegedly relentless innovation of capitalism. The destruction now engulfing the US is not creative. Modern US “capitalism” is generating waves of destructive destruction.