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empire in decline
So last night I was out to dinner with the spellbinding Martha K. We got to talking about politics and soon found the opportunity to return to a rant I occasionally indulge in, in which I posit that the concept of a "Middle Class" is reasonably new, historically speaking, and may one day (in the grim meathook future) be regarded as a historical blip. This is a rant in which I overstate a bit basically to be sensationalist (you could argue that the Middle Class has existed for a good five centuries), but I do count myself among the folks who believe that a certain "golden age" for the US middle class has, ultimately, passed. This argument is elaborated upon in Andrew J. Bacevich's The Limits of Power: The End of American Exceptionalism, a book my dad loaned me when I was visiting him for Christmas. (Scavengings here.) Bacevich includes the following passage, to illustrate what America looked like at its peak: "By the end of World War II, the country possessed more than two-thirds of the world's gold reserves and more than half its entire manufacturing capacity. In 1947, the United States by itself accounted for one-third of world exports. ... As measured by value, its exports more than doubled its imports. The dollar had displaced the British pound sterling as the global reserve currency, with the Bretton Woods system, the international money regime created in 1944, making the United States the world's money manager. ... Among the world's producers of steel, airplanes, automobiles, and electronics, it ranked first in each category." (pp. 24-5) So... what happened? Bacevich spends a good chunk of the first third of the book walking us through passages like this: "We can fix the tipping point with precision. It occurred between 1965, when President Lyndon Baines Johnson ordered US combat troops to South Vietnam, and 1973, when President Richard M. Nixon finally ended direct US involvement in that war. ... The costs of the Vietnam War ... destablized the economy, as evidenced by deficits, inflation, and a weakening dollar. In August 1971, Nixon tacitly acknowledged the disarray into which the economy had fallen by devaluing the dollar and suspending its controvertibility into gold ... In 1972, domestic oil production peaked and then began its inexorable, irreversible decline. ... Simultaneously, a shift in the overall terms of trade occurred. In 1971, after decades in the black, the United States had a negative trade balance. In 1973, and again in 1975, exports exceeded imports in value. From then on, it was all red ink; never again would American exports equal imports." (29) Sigh. I'm OK with the end of US exceptionalism; I just hope that it means we become a country like, say, Belgium, and not a country like, say, Somalia. Related: "Rusty superpower in need of careful driver," a Times UK article in which Matthew Parris argues that Obama "will be the first US President to manage an empire in decline" Related: "Obama Warns of Prospect for Trillion-Dollar Deficits," from today's New York Times Labels: america, economics, empire, government
Wednesday, January 07, 2009
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