US: In the Twilight of Empire

Source: In These Times

Historians who look back to our time will surely conclude that our problem was not that we didn’t know where we were headed, it was that we didn’t act on what we knew.

Before the financial crash of 2008-2009 and the Great Recession that followed, there was ample warning. Whether you were a journalist who reported the news, a politician who made the news, or a citizen who read or watched the news, it was hard not to be aware that for the past 30 years, the following had been happening:

Most Americans experienced stagnant real incomes, shrinking financial security and fraying social safety nets.

The nation bought more from the rest of the world than it had been selling and was borrowing to finance the difference.

Despite the erosion of U.S. economic power, the governing class—Democrats and Republicans alike—insisted on maintaining its global hegemony, whatever the cost.

Sweeping historical analogies between the present-day United States and the decline and fall of earlier empires had been seeping into public consciousness for three decades. Yale historian Paul Kennedy’s best-selling book, The Rise and Fall of Great Powers, revived grand theories of the natural life cycles of empires that had been proposed earlier in the 20th century. Kennedy suggested that the United States might be headed for the same fate as past superpowers that had collapsed because their political ambitions had expanded beyond their economic bases. His book spawned an academic cottage industry that fondled the historical analogies: Were we Rome in the fourth century? England at the beginning of the 20th century?

Kennedy’s book also spawned an even larger industry of politicians, pundits and academics who flatly rejected the notion that anyone could hear the bells of history tolling the end of America’s time in the sun.

After all, the end-of-empire story has limited appeal for the U.S. governing class: the politicians, the media pundits, and the policy managers who move through revolving doors to and from investment banks, global corporations, universities, think tanks and high-level government jobs. Of course they admitted that the country had problems; indeed, it was their job to solve them. But the suggestion that the United States might no longer be able to have it all is not very useful for ambitious leaders whose careers depended on their ability to project self-confidence. Nor was it useful for their wealthy patrons who valued the prices of the futures in their global portfolios more than the future of their country.

Acknowledging these limits is dangerous territory. If the free market is no longer delivering the prosperity promised to the citizen in the American dream, then the political system bears more responsibility than our leaders want to admit for the relentless redistribution of income and wealth from the bottom and the middle of the pyramid to the top. Most dangerous of all, such an acknowledgment encourages discussion about who our political representatives actually represent. The Democrats are no more eager to have this conversation than the Republicans are.

Hardwired denial

The future is, of course, unknowable, and prediction is always a matter of probabilities. History, like life, is marked by unexpected turns. Black swans, to use author Nassim Nicholas Taleb’s metaphor for the unforeseen, fly in undetected by our best radar. But major dislocating events that could not have been foretold are rarer than we commonly acknowledge. Paddling into a strong current and accelerating toward the sound of a waterfall does not guarantee that you and your canoe will crack up, but if you ignore the evidence, that is certainly the most likely outcome.

Denying the evidence in front of your nose seems to be hardwired in individuals. Throughout history, kings, popes, presidents and corporate CEOs have been surrounded by circles of advisers who have made persuasive arguments in favor of ignoring the evidence. The short-term cost of changing course was just too great. Typically the costs would have to be paid by those at the top, and advocating a level of change to match the level of the danger ahead was too risky for one’s career. It was better then, these advisers thought, to trust that the future cost of not changing course would be mitigated by the exceptional virtue, strength and destiny of those in charge. History and common sense did not apply to them; they were “exceptional.”

The widespread belief among Americans that our country is “exceptional” is not unique. All countries, like all human beings, are exceptional in the sense of being different from one another. But the assumption of 200-plus years of success intoxicates, and it will take a while to sober up.

In 2011, the third year of the global recession, the Pew Research Center polled public attitudes in the United States, Germany, Britain, France and Spain. Only in the United States did a majority agree with the statement, “Our people are not perfect, but our culture is superior to others.” Even the notoriously proud French were only half as convinced of their exceptional culture as Americans were of theirs.

It is therefore not surprising that members of the U.S. governing class assume that their rise to the top of the global hierarchy is the result of their nation’s—and therefore its leaders’—inherent superiority. The assumption of exceptionalism relieves our governing class from having to learn the lessons of history. Every episode of our country’s expansion—from the ethnic cleansing of Native Americans to the invasion of Iraq—has been accompanied by the confidence that success was certain because of our moral virtue.

On Feb. 19, 1998, on the Today show, speaking of the alleged threat posed by Iraq, Secretary of State Madeleine Albright put it this way: “If we have to use force, it is because we are America. We are the indispensable nation. We stand tall, and we see further than other countries into the future.”

A disconnected elite

History, as the adage says, is written by the victors. George Orwell famously stated, “He who controls the present controls the past. He who controls the past controls the future.” This is a point we normally think of as referring to the ability of conquerors to justify and immortalize their victories. But it also applies to the way the “winning” generations think about past losers. From the perspective of the former, the price, however steep, paid by the latter was clearly worth it. We in the succeeding generations take for granted that the pain and suffering of those who went before us justifies our happiness.

Scolding those who worry about the country’s prospects, John Podhoretz, editor of Commentary Magazine, told a conservative business audience in the fall of 2011 that the country’s past is ample proof of its future success: “The amazing durability of the American system over 235 years is the primary reason for optimism about the American future.”

The United States as a country will obviously survive almost any conceivable economic hard times. Given its level of development and size, even as its relative rankings decline, the United States will continue to have one of the world’s largest economies. The disconnect between the interests of the nation’s citizens and its economic elite will accelerate the decline, but the decline will occur over decades. It took more than three centuries for Rome to fall, and a century for the British to drop to the second tier of world powers. In any practical sense, the United States is immortal.

Although not quite as secure, the concentrations of wealth held by Americans also have a sort of immortality that is the special privilege bestowed on the corporation by the state. Individual corporations can die from bad luck and incompetence or a reorganization of investors’ portfolios. But adequately managed, the wealth moves from one protected corporate nest to another—deathless as long as its special status is indulged by society.

“In the long run,” John Maynard Keynes famously said, “we are all dead.” But living off large privileged stores of capital, most members of the governing classes are protected on the downside from the natural capitalist cycles of boom and bust. Recessions, even depressions and other economic calamities, are not typically life-threatening. As the crash of 2008 taught us once more, money may be lost, CEOs may be forced to retire early, and some assets might have to be sold, but those who drove the economy off the cliff did not end up sleeping on park benches. Three years later, Wall Street profits and bonuses were at or exceeding pre-crash levels.

The interpretation of the past, upon which much of the optimism for the future is based, also blurs the difference between the life of America and the lives of Americans. Ordinary citizens live in shorter, more fragile time frames. The damage from being out of work for six months, losing your house and/or your marriage, not being able to afford an operation, or having to drop out of college is never made up over a lifetime. The call for patience and shared sacrifice for the future has costs for the governed that those who govern typically never face.

Thus, in 2007, Forbes writer Quentin Hardy took naysaying Americans to task for their creeping pessimism: “We are longer-lived and with access to more knowledge and experiences than any king or pope who has come before, never mind the lives of countless billions whose ordinary tragedies are collectively called ‘history.’ This much luck should make us hug ourselves with delight.” Furthermore, he argued, “Having slipped catastrophes like the 1914-1945 worldwide conflicts (with 100 million dead), or the nuclear threat of the 44 cold war years that followed, there are also reasonable grounds to believe we can work out our problems. The daily advances in science and technology lend hope that on balance things can be even better.”

Unfortunately for them, the 19-year-olds whose futures were blown to pieces at Verdun, Iwo Jima or Khe Sanh; the young immigrant women incinerated in the Triangle Shirtwaist Factory fire; and the kidnapped slaves from Africa worked to death on cotton plantations did not “slip the catastrophes” of history. We cannot ask them if their sacrifices were worth it.

Amid plenty, a poverty of will

The U.S. governing class does not lack access to ideas and proposals that can stop the decline in average incomes. Rather, it lacks the will to pursue them. The current economic model is obviously not working perfectly, but for the privileged and powerful it is working well enough. If anything, the extraordinary display of Wall Street’s political muscle in the wake of the financial crash and the Supreme Court’s Citizens United decision will further weaken our political leaders’ capacity to change our economic trajectory.

Yet even within the confines of this plutocracy, it does matter who becomes president and who runs Congress. More economic stress is on the way. Under Democrats, it will come at a slower pace and hurt the working class less than under Republicans. Under Democrats, there will be less shredding of social safety nets than under Republicans. Under Democrats, labor unions will be tolerated; under Republicans they will be assaulted. Under Democrats, Supreme Court appointees will tend to be economic centrists; under Republicans they will tend to be economic reactionaries.

These distinctions are not unimportant. For people who struggle every day to pay the rent or mortgage, to buy food and clothes for their kids, to squeeze out a health insurance premium, there is a world of difference between having a smaller Social Security or unemployment compensation check and not having one, between having access to a threadbare Medicare program and having no program at all, between having to piece together a living with several low-paying part-time jobs and being completely without work.

The difference between the parties is significant, but just electing Democrats will not stop the fall in the standard of living.

Scarlett O’Haras of the ruling class

Aside from promoting the political soap opera that is delivered around the clock by the news media, the business and political establishment has little to say to Americans about their economic prospects other than that they should not give up hope. This is the United States of America, after all.

“Somehow” something will come up. Some unpredictable black swan will appear to lead us back to the old-time prosperity. Some deus ex machina will descend from above the stage to rescue the middle class without discomforting the rich and powerful. Perhaps we will invent another Internet, the Chinese will self-destruct, or the magical tax cut will bring back full employment.

“I’ll go home,” says Scarlett O’Hara at the end of Gone with the Wind. “And I’ll think of some way to get him back. After all, tomorrow is another day.”

But we know that Scarlett will never get Rhett back. We also know that we Americans will never get back to the good times of rising wages from 1947 to 1973 or to the string of credit bubbles that compensated for wage stagnation from 1979 to 2008. The world in which both of those eras played out has disappeared.

Moreover, the ecological limits to growth are starting to impinge upon us. No serious observer believes that the world’s natural resources can sustain the growth of consumption necessary to bring the standard of living of the rest of the world up to the level of the major advanced nations. By 2050, we can expect the global population to have grown by another 2.5 billion, to more than 9 billion people, most of them in the poor and developing regions. That U.S. consumers, representing less than 5 percent of the world’s current population, can continue to use 25 percent of the world’s fossil-fuel resources is not credible. Moreover, although we don’t know how long it will take for the full force of climate change to arrive, we can see it coming.

In the wake of our recent financial disasters, to imagine that these resource and environmental pressures can in any way be resolved by the price mechanisms of unregulated markets is preposterous. Yet, no serious observer believes that our current political institutions are capable of dealing with that reality. A governing class that will not bring itself to rescue the sinking incomes of the majority of its voters in the next election is hardly going to lead the world to stop a projected rise in the sea level decades in the future. And neither is it likely that a public, suddenly finding itself under more financial stress, will force its governing class to pay more attention to the fate of the planet. Somehow, we’ll think of something—tomorrow. We hope.

It is already too late to stop the decline in the middle-class standard of living for the next few years. It may even be too late to stop it from declining for the next 20 years. But if it is not, reversing the slide will require more than modest changes in economic policy.

To bring a different future within our grasp, we must first also abandon hope that our current political system will deliver it. We must face the reality—not just the easy “plague on both their houses” attitude that is so often an excuse for refusing the obligations of citizenship—that no established party (not the Democrats, not the Republicans) so dependent on money from the reactionary rich and the globalizing corporations will act to alter our economic trajectory. From the point of view of the governing class, if the American people are willing to suffer an official unemployment rate above 9 percent for three years, they will probably—if maintaining elite privileges so requires—accept it for three more years, or six, or more.

Chris Hedges, a former New York Times reporter who shared a Pulitzer Prize, believes that a fascist future is in the cards, and when it arrives, he predicts: “The goal will no longer be the possibility of reforming the system but of protecting truth, civility and culture from mass contamination. … The goal will become the ability to endure.”

The evidence does not yet clearly suggest Hedges’s nightmare scenario. Still, history has repeatedly shown that democracy becomes more vulnerable during hard times. One recent study of how people in various countries respond to the statement that it is good to have “a strong leader who does not have to bother with Parliament or elections,” showed that in the United States being unemployed increases the favorable response from 27 to 38 percent.

Is the Right smarter than the Left?

The last few years have demonstrated that the American Right has proved itself tougher, more strategic, and bolder than the Left. If that continues, no one can be sure where it will lead.

The Left has not come up with a unifying and appealing challenge to the Right’s simple answer for the economic crisis: “lower taxes and small government.” The major institutions of the Left are stuck seeking protection from the Democratic Party, despite the fact that the party has been so compromised by its enemies.

Again, it is not that the Left doesn’t see it. Labor union leaders, for example, fully understand that the Democratic Party takes them for granted. Richard Trumka, the most dynamic leader the AFL-CIO has had since its inception in 1955, has complained bitterly about the Obama administration’s broken promises to labor. Contempt for labor was routinely expressed by the Wall Street wannabes who worked for Presidents Clinton and Obama. When Rahm Emanuel, who was an advisor to both, said to negotiators on the auto bailout, “Fuck the UAW,” it was nothing the people in the White House had not heard before. Nor was he publicly (or apparently privately) rebuked by President Obama, who could not have been elected, nor could he be reelected, without union support.

But having been systematically weakened by Reagan era policies, union leaders are more dependent than ever on Democrats to shield them from the Republican Right that is out to destroy them. So, on the one hand, the blogs and newsletters of unions and other liberal groups criticize the Democrats, but at election time support them with money and votes in the quixotic belief that this will somehow “put pressure” on them. Election Day for Democratic constituencies are now mostly efforts to shore up their crumbling defenses. Hope implicitly rests on the dangerous premise that some outside catalyst—perhaps the next, even greater economic catastrophe—might force the needed political change.

This represents a fundamental failure of our democracy. Within the two-party system the way out of this trap would be for the progressive party—the Democrats—to explain the economic reality to the electorate: for the middle class to prosper, the government must intervene to reignite growth, to guide that growth into a sustainable future, and to subordinate the dreams of Wall Street and the military industrial complex to the well-being of the middle class.

But the dependence of the majority of Democratic Party leaders on corporate largesse for their careers and for their personal wealth blocks that escape. Like Clinton, Obama turns populist at election time. And, as with Clinton, once elected Barack Obama refused to exploit the educable moment. It was no accident. As journalist Thomas Edsall observes, the pollsters and consultants who guide the party and who themselves are connected to the money that supports the governing class, continue to promote the Democrats’ long-term trend away from economic class issues that have the potential to unite their constituencies and toward the fracturing politics of social identity. This obsession with social niche marketing feeds into the Right’s portrait of the Democrats as affluent liberals, single career women, and racial minorities.

This vision is an aggregation of special interests. The suburban liberal elite want environmental protection, good schools, freedom for individual lifestyles and a lid on taxes. Their fellow Democrats on the other end of the wealth continuum want food stamps, health and childcare subsidies, and a generally stronger and more expensive safety net.

In times of rising prosperity, reconciling these different agendas is hard enough. But in a prolonged period of pressure on living standards at the middle and the bottom of the income and wealth pyramid, it is a formula for division. It is, after all, the minority poor and single mothers who bear the brunt of a politics of austerity.

One outcome of the emphasis on social liberalism, notes Edsall, “could be exacerbated intra-party conflict between whites, blacks and Hispanics—populations frequently marked by diverging material interests. Black versus brown struggles are already emerging in contests over the distribution of political power, especially during a current redistricting of city council, state legislative and congressional seats in cities like Los Angeles and Chicago.”

Looking ahead to 2016, there is little reason to think that the potential candidates in the Democratic pipeline represent anything close to the transformational leadership the country needs. Hillary Clinton and Rahm Emanuel are loyal products of the current system. As is Andrew Cuomo, who in his first year as governor of New York slashed public spending for the poor and lowered taxes for the rich. None of the others in the early betting, such as ex-Virginia Gov. Mark Warner, Illinois Sen. Richard Durbin and several small state governors, have shown a willingness to bite Wall Street or the military-industrial complex from whose financial hands they will have to feed.

The Democratic political consultants argue that given a polarized electorate, the politics of group identity is the only realistic way for the party to keep competitive in close races. In some cases they are surely right. But it is not a strategy for fashioning a large coalition unified by common economic interests. Occupy Wall Street’s “99 %” slogan may exaggerate the potential majority on economic issues, but the Democratic Party’s “50 percent plus one” strategy abandons it.

So, is it hopeless?

To expect the American governing class at the top to change the direction of the economy that has brought its members prosperity—yes. To expect a confused and divided citizenry to agree on a common economic agenda and impose it on the governing class—yes.

What then is the citizen to do? Wait until the next economic catastrophe? Perhaps if, next time, instead of just $12 trillion, the markets lose $25 trillion, and instead of reaching 10 percent, the unemployment rate goes to 20 percent, perhaps then our governing class will act for the good of the country. Or perhaps then the people will rise up.

Perhaps, but we could wait a long time for such a revolution in America. After eight years of depression, the unemployment rate rose back to 20 percent in mid-1938 and still there was no political insurrection. And, if there had been, it could as easily have come from the Right as the Left.

Acknowledging that it is hopeless to expect the governing class as presently constituted to change our economic trajectory does not signal the end to politics. Rather it could allow the citizen to concentrate on attacking the central obstacle to the reshaping of our collective future.

In just about 10 minutes of serious political discussion with other Americans about what is wrong with our country, you will most likely get to the bottom-line answer: the pervasive corruption of our politics by money. The vast majority of Americans believe that money corrupts and prevents the government from serving the public’s needs. After the Supreme Court handed down its Citizens United decision, a Washington Post-ABC poll reported that at least 80 percent of Americans disagreed with it, including 76 percent of Republicans. No matter; neither party’s leadership is about to change this system.

The root problem is the way the court has interpreted the Constitution, and this is not just the case with the Roberts Court. Since 1886 with its Santa Clara County v. Southern Pacific Railroad ruling, the Supreme Court has been providing corporations with the rights of individual human beings that were neither contemplated by the Founding Fathers nor supported by the majority of Americans.

The solution, therefore, is a constitutional amendment establishing once and for all that corporations do not have the political rights of, in the language of the court, “persons” and mandating hard limits on campaign spending. Unlike the efforts of the radical Right to amend the Constitution over issues that are irrelevant to the process of governance such as abortion, flag burning, gay marriage, or prayer in the schools, regulating the money in politics is truly an important constitutional question.

A massive mobilization of citizens for a constitutional amendment has the potential for loosening the death grip of the nihilist, antitax, antigovernment ideology on U.S. politics in the following ways:

It gets to the easily understood heart of the matter: money.

The overwhelming majority of the country agrees with it, crossing party and ideological lines.

It breaks out of the stalemated and confused “government versus business” argument and focuses the anger on the fundamental problem of the corruption of the government by big money.

It has the potential for exposing the gap between the interests of the globalized governing class and the interests of the American middle class.

Yet conventional wisdom holds that trying to amend the Constitution is hopeless: the governing class will never allow it. But given the power over America’s future of financial networks divorced from and uninterested in the well-being of people, even more hopeless is the illusion that Americans can deal with the long economic twilight of empire that lies in front of them without radically reducing the dominance of money over our democracy.

If the conventional wisdom is right, it is not because the governing class and its corporate and military-industrial supporters are too powerful to challenge under any circumstance. It is because the opposition—Wall Street Occupiers, trade unionists and progressive middle-class Americans—cannot unite around a simple message that gets to the root cause of our national inability to talk about, much less plan, an alternative to the future toward which we are hurtling. 

This essay was adapted from Jeff Faux’s most recent book, The Servant Economy: Where America’s Elite is Sending the Middle Class (Wiley).

Jeff Faux is the founder of the Economic Policy Institute, where he is currently a Distinguished Fellow. His latest book, excerpted in this issue, is The Servant Economy: Where America’s Elite is Sending the Middle Class.