America is an amazing place. The country is huge, blessed with spectacular scenery, bountiful resources and a diverse population sharing a can-do attitude. So, to speculate on its imminent demise may appear counter-intuitive, if not downright perverse. The 20th century was clearly the American century. They powered into prominence just as European prestige eroded through internecine wars, social upheaval and fragmenting empires. Exploiting abundant space and resources, they brought the world new wealth, bigger toys and new ways to enjoy both.
But there is a lesson for them from exactly a century ago. In 1918, the British Empire was at its greatest extent; Germany lay defeated; the Royal Navy bestrode the oceans; British ships and factories dominated world trade. But, within a decade, a General strike, a stock market crash and a persistent Depression laid its economic weakness bare. A half -century of relative decline followed, leading to the inflation, unrest and stuttering econony of the 1970s.
A hundred years on, senior politicians in America do not see their globe-straddling behemoth standing in similar danger of decline. Why should they? That century brought relentless innovation: mass production; industrial farming; movies and television; computers and chips; fast food and microwaves, satellites and smart phones. America is still setting the pace with Amazon, Google, Facebook, Uber, etc. With Trump now playing trade hardball with their main competitor China over steel and intellectual property, everything in the American garden it Is lovely. Isn’t it?
If you buy into President Trump’s bluster, it might seem so: illegal immigrants stemmed; Assad’s chemicals blitzed; ‘Little Rocket Man’ brought to the peace table. But look deeper. Stocks are down 15% from their peak at Christmas. The leading stocks are not the Exxon,/GM/Intel/Boeing-type production titans of yesteryear. Today’s success stories don’t actually make anything tangible. Small economies like Singapore or Switzerland might prosper on service alone.. But consumption-hungry giants like the US can’t afford to import all their cars, clothes, electronics, appliances, and other pricey consumable. Even their $678bn arms exports don’t balance imports worth $2,400bn . Add this to a decade of budget overspend and America’s yawning $12,000bn debt charm (= $35,000 per head) should have fiscal alarm bells ringing off the wall. This dwarfs Britain’s $10.4bn owed in 1918—even allowing for inflation that was “only” $3,600 per head. Let’s be clear about this: the self-proclaimed “fiscally conservative” Republican party, who blocked every attempt by Obama to spend more, passed a budget that will add $1,500bn to the debt each year and Trump hailed it as a victory.
Such an insane Financial posture might be sustainable, were the Chinese appetite for US Treasury Bonds to continue forever. But it won’t. They buy them for the same reason oil sheiks snapped them up in the 1970s oil crisis. But once the Gulf States developed their own investment options (hotels, tourism, infrastructure, airlines), they switched to these more profitable returns. The Chinese will soon do the same. Now that Republicans control Senate, House, Presidency and heartland states, they are now rolling out undiluted neocon policy with the fire-and-brimstone fervour of Evangelicals dispensing salvation at a revival meeting.
This policy is not subtle. It consists of cutting taxes—basically the Reaganomics of 30 years ago. The argument is that tax cuts stimulate business investment, creating more jobs and wealth for all. Sounds plausible. Reagan blew a budget surplus proving this did not work. Bush tried it 15 years later and was forced to raise taxes, despite his “read my lips” campaign promise. Early this year Trump signed into law the latest round of tax cuts, slashing corporation tax from 37% to 222%, plus some sweet giveaways to the rich. Regular punters do benefit to the tune of £1,132 per household—but these soon expire.
All this ignores not just last-century history but recent experience. Republican-run Oklahoma cut state taxes four years ago— and is now all but bankrupt, Civic services are understaffed. Schools close one day a week to save money. Kentucky is in a similar mess for similar reasons. Arizona bought off a popular strike by teachers with a 20% raise, Governor Ducey plans to fund this through a 1% hike in sales tax—a regressive move that hits the poorest hardest. Eroding the quality of general education is the economic equivalent of eating your seed corn, especially when you hope to complete in (if not lead) this 21st-century information economy.
America does have top notch universities. But few can afford the their fees. At any time there are just 564,000 students at “Ivy League” universities. Meantime, there are 2,220,300 citizens in jail—and 1,140,000 police busy putting them there. In this increasingly dysfunctional society 142,000 people die from opioid overdose, 33,636 are killed by firearms; 32,479 die in traffic accidents and 44,965 people take their own lives. For all its riches and opportunities, is there not something disturbing about any society where one in every 20 deaths is not from natural causes?
Statistics that shocking are not those of a stable society. One that embraces risk can tolerate a level of guns or drugs or ghettos behind them, provided opportunity for betterment is available to all. But things are coming adrift. Not only are the world’s “huddled masses yearning to be free” no longer welcome, but universal belief in the American dream of success by hard work and merit, no matter how humble their beginning, is wearing thin.
The original Founding Fathers’ vision of a classless, egalitarian society is fading. Class defined by wealth is replacing it.. The ‘Upper Middle’ class (Europeans would call them ‘rich’) are monopolising prosperity. They live in gated communities, leafy suburbs or lake/golf-course-studded tracts. They drive shiny new SUVs. They pull down six-figure salaries. They retire into affluence, move to the sun belt, take cruises—and book their children’s ticket to the same comfortable life by funding the $100,000+ it takes to get an Ivy League degree. The other 75% live in another part of town, in older bungalows behind chain-link fences, where guard dogs bark and there are more liquor stores than trees. Once, such barriers mattered little: but now they have become hard to climb. Ambition and hard work don’t cut it any more and that poorer 75% are losing faith in having access to the American Dream.
“In the USA, the top 10% of families (those with over $942,000 in assets) control 76% of its $79 trillion in personal wealth. Families in the next 40% account for another 23%, averaging $316,000 per family. That means the remaining half of the US population controls just 1% of the nation’s wealth.”
—Congressional Budget Office
As the party of the rich (and of those who aspire to be), Republicans are crowing over their long-promised tax rollback. These seem either oblivious or insensitive to the average American—especially the young—struggling to pay the rent (or, if lucky, the mortgage), who average, $137,063 in personal debt, much on over 20% credit card rates. They may be too busy to wonder why anti-abortion action has precedence over social programs, or why aircraft carriers are funded while medical insurance is not, or why Trump should woo the NRA Convention while school shootings remain commonplace. But they do wonder what’s in it for them.
In Washington and in state capitols across America, Democrats and Republicans are eyeballing each other with partisan political venom. This is unfortunate. If ever America needed visionary, non-tribal leadership while its principles and cohesion were both under threat, it is now. But their institutionalised two-party system does not have the flexibility and their politicised presidency does not have the objectivity to produce such of figure. The present circling of the wagons by the rich not only betrays all that America once stood for but risks alienating the majority. Then the unrest that produced Selma and anti-Vietnam protests may seem trivial by comparison. Progressive major states like California and New York are mad at this reactionary neo-con agenda gripping the country. Nobody (besides Israel) likes the damage all this is doing to American prestige and trade among friends and allies.
Mid-term elections due in November may provide a wake-up call. But Senators and Congressman are deeply entrenched in this ossified system where money again plays a pivotal role. So they will go back to more ritualised battles and constipated legislation. The real story how American overthrew institutionalised dictatorship of the rich while a once-great democracy languished may have to wait another century to be fully appreciated. Unless another Loncoln comes along to lance the boil.