Docudharma: Where to from Here?
Dharmaniac edger posted a diary on Docudharma, Where To From Here?, in which he quotes David Leonhardt in the International Herald Tribune, A power that may not stay so super. He quotes at length, I will focus on the following portion (emphasis added):
Whereas Britain lumbered under the weight of imperial overreach, as the historian Niall Ferguson has written, the United States will be shackled primarily by its financial overreach.
"Given the burden of debt that has accumulated, it's hard to see the U.S. economy growing as fast as it did over the past few decades," Ferguson said. "There is a profound mood shift occurring."
But he added two caveats. The political language of both presidential campaigns makes clear that many voters, for all the current pessimism, still believe in the idea of American pre-eminence. So, apparently, do many of the world's investors.
In recent weeks, the dollar has held its own. Stocks in every other major country are down about as much over the last year as they are in the United States, if not much more. America may not be a safe haven anymore, but it does seem to be safer haven.
Robert Zoellick, the president of the World Bank, said that he was recently speaking to a senior Chinese economist, who said that people in his home country - today's rising economic power - don't see the sky falling on the American economy. "They know its ability to turn around problems is really unmatched, historically," Zoellick said, quoting the economist about the United States. "At the same time, they ask themselves, Will the United States get at some of the root causes that could determine its real strength over the next 10 or 20 or 30 years?"
Financial Overstretch is easier to fix than Imperial Overstretch
As I commented at Docudharma, the Panic of 2008 is the Financial Capitalist version of a Jubilee. Firms go bankrupt, taking their obligations with them, monoline "insurers" go out of business, taking their obligations with them ... lots of companies die, taking their debt with them.
And for enterprises in the productive sector, leaving their real assets behind.
Being a Financial Capitalist event, it of course causes far more pain and suffering to ordinary people than a real Jubilee, but then feudalism has rarely ridden easily on ordinary people, and there's never been any reason to expect corporate feudalism to be any different.
So, I disagree with David Leonhardt on the highlighted section above.
Indeed, suppose that the original British Imperial extension into South Asia was driven by the historic swing of Atlantic Europe from net trade deficit to net trade surplus with the balance of the Axial trading system from Europe and Africa in the West through South Asia, to its center in China, and then Japan on its Eastern edge. Even so, it was not an exercise in reversing that trade surplus ... it became a deficit-creating exercise as a bug, not as a feature.
However, the American Base-Network Empire has been a deficit-spending enterprise from the outset. The trade-deficit impact of the Base Network Empire has always been a Feature of the system. The economic rationale of the post WWII Military Industrial Complex was to avoid the global recessionary impact of a sustained US trade surplus at the same time as providing for a strong employment economy in the US without recourse to the New Deal mechanisms of the government fulfilling its obligations as Employer of Last Resort.
This was not economic insanity in 1946 or 1956 or even 1966 ... but given US Peak Oil in 1968, the first Oil Price Shock and the entrenching of a trade deficit position it was increasingly out of touch with economic reality by 1976 (as shown by the collapse of the Bretton Woods system and the floating of the US$) ... and after the Second Oil Price Shock, the explosive growth of imported value added in the Auto industry, the collapses in the US Steel Industry, the beginning of the hollowing out of the Middle Income Classes, it was clearly economic insanity by 1986.
Observers in the US and abroad can refrain from noticing the actual overstretch in the US Base Network if we wish, but the US cannot indefinitely evade the economic impact of the Imperial Overstretch.
Indeed, government and the private sector in the US certainly has the capacity to fix what needs to be fixed with the finance sector ... it will be a painful year and a half as we do so, as half measures are shown by brutal experience to be inadequate, but it certainly can be done. However, if we do not get the twin structural trade deficits under control ... the overseas expenses of "our" Base Network and our structural dependence on imported Energy ... sooner or later it will just break again.
And What does the Eastern Empire do as the Western Empire Falls?
I only know the most entertaining snippets of the history of the Roman Empire, so I'll suppress the urge to spin an analogy here between the original Military Dominance and Economic Eclipse of the Latin West by the Greek East leading to the eventual collapse of the Latin West of the Roman Empire.
When the US starts closing our bases overseas, I have not idea whether the European bases will be among the first to close, or among the last to close, but in any event, close they will. The US has wasted the opportunity to build such a dominant position in New Energy Industries to be able to maintain the deficit-spending exercise of the Base-Network Empire, and sometime, whether in the next five, ten, or twenty years, and whether to prevent a collapse of the US$ or as a result of that collapse, the Base-Network Empire will be abandoned.
How will the EU and, in that weak-centre Federalism reminiscent of the US before the Civil War, the core EU nation-states, react to the closure of the US bases in Europe? And how should y'all react?
The threat of a land invasion is, of course, somewhere between nil and negligable, given that the Russian Military-Industrial-Complex kills off the flow of income that funds its growth if Russian attacks Europe, and combined EU forces could easily fend off any attack from any other bordering area at less than current levels of military spending.
So development of EU military forces, whether to cope with real threats or as a security blanket to reassure whatever segments of the populace are nervous about collapse of US "force projection", would seem to have a natural focus on seapower.
And then there is force projection. Before the US War for Independence, force projection by US forces tended to be state exercises of power over Native American peoples, except for the activity in support of the British fight against the French known in the US as the French and Indian War. Projection of force from the EU seems to be roughly analogous ... other than interventions such as the French in former French colonies in Africa, projection of force has been organized within the NATO framework.
What will be the focus of EU projection of force, once the US Base-Network Empire collapses? Anti-piracy? Support of UN peace-keeping missions ... where the frictions caused by millions of climate crisis refugees are likely to increase the need for peace-keeping, but may undermine the ability to put them together. Fending off the actions of aggressively hostile states in the immediate neighborhood while playing balance of power politics further abroad?
Like I said, I've got a collection of answers for what we Yanks should do in the aftermath of the collapse of the US Base-Network Empire/ But for you Europeans, all I gots is questions.