We’ve been saying for a while here at Amerika that the USA is going to go third world from a series of factors:
Now we’re starting to see those 500 lb bombs of concepts make craters here in realityland, and while it’s not happy to see, it’s fun to watch reality send a giant YOU WERE WRONG to the doubters.
I still recall the shock I felt at a meeting in Russia’s dingy Ministry of Finance, where I finally realized how a handful of young oligarchs were bringing Russia’s economy to ruin in the pursuit of their own selfish interests, despite the supposed brilliance of Anatoly Chubais, Russia’s economic czar at the time.
At the time, I could not imagine that anything remotely similar could happen in the United States. Indeed, I shared the American conceit that most emerging-market nations had poorly developed institutions and would do well to emulate Washington and Wall Street. These days, though, I’m hardly so confident. Many economists and analysts are worrying that the United States might go the way of Japan, which suffered a “lost decade” after its own real estate market fell apart in the early 1990s. But I’m more concerned that the United States is coming to resemble Argentina, Russia and other so-called emerging markets, both in what led us to the crisis, and in how we’re trying to fix it.
But instead of facing our problems we extol the resilience of the U.S. economy, praise the most productive workers in the world, and go on and on about America’s inherent ability to extricate itself from any crisis. And we ignore our proclivity as a nation to spend, year in year out, more than we produce, to put off dealing with long-term problems, and to engage in grandiose long-term programs that as a nation we can ill afford.
He makes a good case. We are ruled by oligarchs, as Plato predicted in The Republic, because we have allowed a Revolution to empower our know-nothings and these, newly liberal to support the revolution, have done everything they can to wreck our cultural infrastructure, prompting cultural and class war. This started in 1789, and peaked in 1968; 2008’s election was symbolic but actually not all that radical given what happened in the four decades before.
We are told that history is not cyclic; that America has discovered a new form of Progress and we’re heading from Neanderthal ignorance to an enlightened liberal Utopia. Yet history repeats itself because reality is consistent; the same action gets the same response, every time, and so when we make unrealistic plans, they fail the same way every time.
Here’s another example:
The Khmer Rouge leaders were off to a head start when the amnesty came, having amassed mini-fortunes during their days as guerrillas through smuggling of timber, gems and antiques to Thailand. Now, the upper echelons own some of the poshest houses and cars in the provinces of Pailin, Preah Vihear, Battambang, Banteay Meanchey and Oddar Meancheay — Cambodia’s Khmer Rouge country.
Some have sunk into gross corruption and engage in activities, like gambling, which would have earned them summary execution in the old days. And they have certainly ditched their ideal of a classless society.
In Anlong Veng, a two-class system appears to have emerged: the rich businessmen and government officials living in town and former low-ranking soldiers who barely survive on arid land they don’t own in the surrounding countryside. Thus the town witnessed both the final military defeat of the Khmer Rouge and the death of its ideals.
When leadership goes away, and it gets handed to the people, idiocy reigns because few people are ready to make political decisions with long-range consequences — and even fewer care to do the basic research required to do it well. The result is that people vote for whatever is popular, and cynical bastards quickly figure that out and promise the sky, delivering instead repression.
Plato predicted that, too.
But inevitably, emerging-market oligarchs get carried away; they waste money and build massive business empires on a mountain of debt. Local banks, sometimes pressured by the government, become too willing to extend credit to the elite and to those who depend on them. Overborrowing always ends badly, whether for an individual, a company, or a country. Sooner or later, credit conditions become tighter and no one will lend you money on anything close to affordable terms.
The downward spiral that follows is remarkably steep. Enormous companies teeter on the brink of default, and the local banks that have lent to them collapse. Yesterday’s “public-private partnerships” are relabeled “crony capitalism.” With credit unavailable, economic paralysis ensues, and conditions just get worse and worse. The government is forced to draw down its foreign-currency reserves to pay for imports, service debt, and cover private losses. But these reserves will eventually run out. If the country cannot right itself before that happens, it will default on its sovereign debt and become an economic pariah. The government, in its race to stop the bleeding, will typically need to wipe out some of the national champions — now hemorrhaging cash — and usually restructure a banking system thatâ€™s gone badly out of balance. It will, in other words, need to squeeze at least some of its oligarchs.
In its depth and suddenness, the U.S. economic and financial crisis is shockingly reminiscent of moments we have recently seen in emerging markets (and only in emerging markets): South Korea (1997), Malaysia (1998), Russia and Argentina (time and again). In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. This is precisely what drove Lehman Brothers into bankruptcy on September 15, causing all sources of funding to the U.S. financial sector to dry up overnight. Just as in emerging-market crises, the weakness in the banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.
But there’s a deeper and more disturbing similarity: elite business interests — financiers, in the case of the U.S. — played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.
As years pass since their founding date, every society degenerates through a process of entropy. Things fall apart. People forget the original reasons for things, and uphold the appearance of the past. They do their best to carry on the dogma but as they garble it, it loses relevance. In come new people, from abroad and born domestically, who do not share the older culture; it is replaced by the lowest common denominator between them all, which is commerce, entertainment, sex/intoxication and denial.
The denial ramps up, and the further it goes, the worse things get, usually in the form of socialized costs passed on to others. The society goes into arrogant, passive aggressive denial, claiming it has ended history and moved forward to be a new, enlightened, Progressive nation. But problems remain and proliferate.
Finally, the drones turn on the bourgeois, and new leaders intervene. They’re like Jesus or Marx, all about peace and equality. But first they need a military unit loyal to their command. From there, it’s easy to make the nation into a dictatorship, and it’s probably more functional that way.
And what will happen, while this is going on? Do The People take to the streets and overthrow the government? Do they educate themselves and make more sensible choices.
No way. People will remain checked out of reality in their virtual worlds:
Adult Americans spend an average of more than eight hours a day in front of screens — televisions, computer monitors, cellphones or other devices, according to a new study.
The study also found that live television in the home continues to attract the greatest amount of viewing time with the average American spending slightly more than five hours a day in front of the tube.
The figure drops to 210 minutes a day of average TV viewing time among 18-24 year olds but rises to 420 minutes a day among those aged 65 and older.
History repeats itself. This is how all nations fall.
Tags: class war, entropy, late stage democracy, oligarchy, plato, refinancialization, third worlding