Tuesday, January 03, 2012

Decline of American Empire (decline of production)

I posted this over on a metafilter thread about Chris Hedges interview on CSPAN/BookTV(?):

OK, so some people in this thread is like "we dealt with shit before" and I'm not saying that we are truly fucked. But there are factors this time that we didn't have before (and yes, there were factors before that we don't have this time).

I'm hesitant to say that the decline is necessarily a bad thing. I mean, we're an empire who loved to extract wealth from natural resources in distant lands (kind of the sine qua non of an imperial commerce system, no?) Then it was the process of taking domestic labor applied to those resources to build something new and sell to other people (both domestically and internationally).

Then we got the opening with all these lovely free trade agreements that tore down barriers to trade (no judgement on that on my end - I feel uneasy about NAFTA and FTAA and GATT and all that kind of thing, but I don't know if I believe that full on old-school protectionism is really the answer)... Then we had technology like giant massive container ships that made shipping internationally much more efficient, cheap and easy like never before. Add in the low wages in countries with weaker economies and you pit the workers in one nation against each other, driving out the production from the US economy into other countries.

That is not to say that there is absolutely no manufacturing base, but it seems there's been a steady decline since at least the 80s (if not the 70s). How much of our economy for the past half-century was based on a "Cold War Economy"? That "bubble" burst with the collapse of the Soviet Union and the Eastern Bloc.

Anyways, the main point is that things are different in the sense that we've lost a good chunk of producer type jobs and have become, as Hedges noted quite rightly, IMO, a consumer oriented economy. But where does the money come from?

Debt is not necessarily a bad thing (strictly economically speaking - not morally speaking here) if it is used to invest in productive capacity that gives more output. In this sense, of course, I'm not talking of an overall totality of wealth generation, but productive capacity at the national level.

Here's the deal. Finance and Capital are global. Labor is local. Finance and Capital are free with open borders to go where and when they want. Labor, not so much, except in so far as it serves the need of capital.

So while total wealth rises, the share of those on the low end get fucked over because the extraction of value comes from other sources of productive capacity. The consumers, in order to consume, require debt, if they have no job or to continue purchasing beyond the rate of production, yes? (I'm not an economist, so feel free to burst my bubble there).

Hence we have the bubbles that are based upon overvalued houses, overpriced stocks, financial innovations and other such things. The market gets altered due to distortionary effects of herd psychology, and the sheep give up their gold to the butchers who sold them the dream in the hope that they'll get more gold (because lord know they ain't got no jobs).

So we have the modern economic system built upon a rentier foundation, where the only way to make money is rent extraction. Which is why we have such a strong corporate push (for the most part) for things like SOPA. Hollywood and the Music Industry has no way to extract more wealth out of things and instead of finding ways to create new things does what it deems necessary to protect its turf. But this is just one more form of extracting rent from a captive population.

Add in the fact that SOPA goes beyond mere rent extraction into questions of access to information and the right to fair trial and free speech, and you have a dangerous mix. The police state itself is a bubble, the drug war is a bubble. The whole *-industrial complex is one giant massive fucking bubble, and the only way they know how to sustain it without it all collapsing is to keep pushing for more and more things to imprison and make a crime.

It can only end badly. Whether it happens, as some have said, during our lifetime or much later is a question to be seen.

I don't see a solution. I think we're in a "race to the bottom" (again, I hate to think that this is necessarily a bad thing, if it means that other people around the world have a better way of life in the process -- but it IS a bad thing if it's just one more way to make everybody fight for the same scraps, and in that sense, I feel that we are going that route).