Question time on the FM website

Ask any question about geopolitics, broadly defined. We’ll attempt to answer it. Free answers, so you cannot overpay.  Links to other episodes appear below.

Questions received so far:

  1. What industries will be the future drivers of the US economy?
  2. Few people would object to buying products made in Europe or Canada or even Japan. Are there reasons why one shouldn’t buy Chinese?
  3. Shouldn’t there be a clear minimal lending rate, well above the present zero,   to ensure investment funds are available?
  4. Who would you vote for among the announced Presidential candidates?
  5. About US policy towards the Palestinians and the “Arab Spring”.
  6. How will US-based multinational corporations cope in the 21st Century?
  7. About the geopolitical effects of the War on Drugs.
  8. What happens if the US continues to follow Japan’s path of stagnation? How might this affect the emerging nations?
  9. Is it wrong or anti-american to put out water in the desert to save illegal immigrants from thirst?
  10. Is China’s foreign policy a better model than the U.S.’s?
  11. What comes next for America? A new equilibrium? Revolution? Another Great Society solution? Something else?

Previous episodes

Earlier episodes were big successes. My thanks to all who participated!

79 thoughts on “Question time on the FM website

  1. I spent much of the past three days listening to Dreamforce online, Saleforce.com’s annual user group meeting attended by about 45,000 people. The energy exhibited at that show welling up from the revolution in social media, cloud computing, mobile computing, etc. left me breathless. We’re back in the midst of one of the most exciting times in our history in terms of innovation and creativity.

    Eric Schmidt spoke on the future of computing. My favorite takeaway was “if you want to succeed, you’ve got to introduce a new version of your product every day.” It’s clear that lots of entrepreneurs in social media and digital marketing are doing just that, On the world writ large he described Congress as fighting over how to distribute non-existent federal revenue and “there’s an unlimited supply of non-existent revenue.”

    So here’s the question. What are the industries where America has a world class comparative advantage that can drive growth over the next twenty years? I suspect you’d nominate robotics and i agree on that one. The others on my list are:

    1. Biotech/medical devices if the bureaucrats don’t block all initiative.
    2. Nanotech/new materials
    3 Social media/cloud computing
    4. Energy: Oil, gas and wind for now. Algae and synthetic photosynthesis down the road
    5. Manufacturing (see robotics)
    6. Transformation of government services through application of information technology and new systems to drive service efficiency
    7. Education/dispersal of human knowledge

    How do you see it?

    1. That is an awesome question, and one I have been working on. Whatever industry that grows substantially then should already be visible. I don’t see anything that will drive growth of gdp or employment in the US on a large scale.

      The bad news:

      1. Some of those probably will be on net small, replacing current industies (e.g., biotech, robotics, cloud computing).
      2. Some of these probably will have large impacts, but little effect on GDP and employment (e.g., social media).
      3. Some probably will have negative effects on GDP and employment (e.g., transformation of government services).
      4. Some of these probably will be large, but not necessarily in the US. Look at solar, with China exterminating US solar companies (e.g., Evergreen and Solyndra this month alone).

      The really bad news is that some of large industries might shrink. A lot.
      * Education: It’s grown too expensive. Local school districts are groaning. The university system survives only like housing during the bubble, with its customers relying on loans that they cannot pay back — counting on unrealistic profits. Technology provides the hammer, as it has for newspapers and other industries. Unversities rely on a model developed during the Middle Ages, when labor was cheap and books expensive. It’s insane that we still use it, and it will change with blinding speed.

      1. Health care: Technologically advanced treatment combined with antiquated operational methods, operating a system we can not longer afford. Even with relatively primative tech, systems in Europe produce similar outcomes with 2/3 to 1/2 the cost. State of the art systems will do far better in the future.
      2. Retail: An aging population will buy less. Technology will require less people and floor space to process the business: e-commerce, self-checkouts, increasingly integrated supply chains.

      On a larger scale there is robotics, which might be the great job-killer of the 21st Century. See these articles:

      1. 4GW: A solution of the first kind – Robots!, 8 April 2008
      2. The coming big increase in structural unemployment, 7 August 2010
      3. The coming Robotic Nation, 28 August 2010
      4. The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
      5. Economists grapple with the first stage of the robot revolution, 23 September 2011
    2. The world is in a period of transformation like few seen in the history of man. Thanks to Google in particular, but many other factors as well, we are in the process of making the vast bulk of human knowledge available to every sentient being on the planet. At the same time the Inter-web and globalization of trade have made the sale of both services and goods across borders increasingly easy. In such a world we must head the advice of the Queen in Alice in Wonderland:

      “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

      America One is composed of those people who have headed the Queen’s advice, have educated themselves to compete in this increasingly competitive environment and who continue to drive forward faster and faster into this exciting/frightening world of the future. America One remains the most economically competitive economy in many many industries. In those industries where we are not competitive, it’s often because we chose not to be because the work is too hard, pays too little or is too dangerous for Americans to stomach. In many cases we have chosen to abandon whole industries because we prefer to export the related environmental impacts so that we can improve the quality of our home country environment. Unfortunately a large portion of Americans do not have the personal skills, knowledge, training, opportunities or drive to participate in America One.

      America Two used to be pretty small, composed of the lazy, the uneducated, the mentally challenged and, yes, many Americans who have been excluded from full participation due to ethnicity, geographical locale or other reasons unrelated to their innate personal abilities. I think a great deal of the blame for the unfairness of America Two is an unintended consequence of welfare programs that have consigned whole generations to a life without adequate education, connections, opportunity, mentorship or the other factors required to transform personal capacity into full participation in our society. Unfortunately the legacy of this human carnage has fallen disproportionally on the African American community in America and that has led to a taboo against open discussion of the real issues facing our country. A day or two in West Virginia, where third and fourth generation welfare families are common, will quickly disabuse you of the belief that race is at the root of the problem. And don’t believe them when they tell you we eliminated welfare in America; we just call it Supplemental Nutritional Assistance (Food Stamps), disability, housing assistance, etc.

      Since the depression started, something very new and potentially very dangerous has happened in America. Vast numbers of Americans formerly part of America One are now, at least temporarily, part of America Two. Because of some of the changes you outlined, roboticization (particularly in white collar industries and health care), reduction of inefficiencies (read jobs) in education, health care and government, and the dramatic reduction of physical travel that will be enabled by the new social media and video technologies that are exploding throughout every industry, millions of jobs will be eliminated. Many of the workers who formerly filled those roles will continue to grow and find new ways to be productive in America One. Millions more won’t. Additionally millions of American under the age of twenty five may be denied the opportunity to participate in the workforce at all, including some who have college education. Thus we will find America Two populated with millions of people formerly part of America One. These new additions will necessarily include many from social, geographical and ethnic backgrounds that were never part of America Two. Anyone who pays attention to the “Arab Spring” will quickly understand the political dynamite that builds up in countries with large numbers of unemployed, well educated.

      As a country we are not even discussing, much less planning for how we as a nation address a world in which 70% of Americans live in the most productive economy in the history of mankind, while 30% (pick your number – I think the at risk range is from 15 – 40%, but I have no data to back that up) have no value-add role in our economy. Do we add these people to the welfare rolls as the Romans did (Bread and Circuses) during the peak of their empire? If not can the Republic survive massive homelessness (tent cities) or starvation in teh streets? If not who’s going to pay for the subsidies? Or do we redefine work? There are plenty of jobs left done in America today — just take stroll through a community park in the poorest part of your town. I certainly don’t have the answer and this only touches the surface of the issues we face, but its time there was a dialog about the real issues facing our country rather than speeches on the deck of the Titanic (sorry I meant to say the floor of Congress) about how we rearrange the deck chairs (tax cuts and outdated and ineffective bureaucratic “solutions”).

  2. I hope I can live up to the first question!

    Few people would object to buying products made in Europe or Canada or even Japan. Are there reasons why one shouldn’t buy Chinese?

    1. No reason that I know of. Nationalism in buying patterns on sufficient scale would collapse the global trade system, making us all poorer. Our trade problems result to a large extent from an over-valued currency. We have an imperial fetish about the strong dollar, as the Brits did about the pound. It’s an expensive stupidity, leading to ruinious trade deficits and de-industrialization. It’s not the fault of China that we have excessive pride and inadequate knowledge of basic economics.

      But — these days all answers have a “but” — it is possible that the globalization and free trade regime might have passed their “sell by” dates. See Globalization and free trade – wonders of a past era, now enemies of America (16 March 2009).

    2. YES! Lack of federal laws/politics in China on food and product safety. Most shrimp sold in the USA is Chinese (70%?), and raised in poop ponds. Someone probably has a long list of american illnesses/deaths caused by polluted/poisoned Chinese medicine, food, toys, and other products. Here is an example what american “Creatives” do that is “better”:

  3. After a year or so of reading your posts, I can’t recall you dealing with demographics in any way. You write a lot about the decline of America yet don’t seem to address anything related to demographics (illegal/legal immigrants, culture issues – especially in the southwest, the welfare state in regards to these).

    I understand that our defense policy and spending is probably more urgent and cogent but certainly such a massive change in cultural and ethnic makeup of our country deserves at least a modicum of attention. The transformation of California in the past 10-20 years is breathtaking – almost unbelievable yet barely a word from you. I doubt just fixing defense spending and entitlements will solve what ails CA.

    Thanks.

    1. The FM website discusses a wide range of topics. To find material about a specific subject first look at the Reference Pages in the right side menu. There you will find Demography – studies & reports, listing the 7 posts about demographics plus links to a wide range of studies and reports.

      Demographic factors are mentioned in other posts, such as those about China and Iran. These have the tag “demographics”, and can be found here.

      Immigration, esp from Latin America (the reconquista), is a large factor forcing change in America, but discussed only briefly in this series (so much to say, so little time to write):

      1. Migration from the south into America: new people, new foods, new political systems, 4 November 2008
      2. America’s elites reluctantly impose a client-patron system, 5 November 2008
      3. Immigration as a reverse election: our leaders get a new people, 6 November 2008
    2. re:”The transformation of California in the past 10-20 years is breathtaking…”

      You could also say: The transformation of California in the past 50 years is breathtaking. Or: The transformation of California in the past 100-200 years is breathtaking.
      .
      .
      FM reply: The subject is demographics, specifically changing ethnic groups. Not industrialization, a global trend. The change of California’s ethnic composition in the past generation is unusually rapid.

    3. Correct. The 1849 Gold Rush and subsequent transition from Spanish/Mexican rule to territorial anglo-american rule in California (and much of the rest of what is now the southwestern USA) was “breathtaking”. The corruption of california politics by Railroad Tycoons and Agri-business Plutocrats 100+ years ago was “breaktaking” (see Wallace Stegner on John Wesley Powell’s battles with the “Gilpin mentality”). The short-term political reforms that corrected some of the excesses of the plutocrats is “interesting”, but arguable, not “breathtaking”. The promotion of southern California as a haven for white suprermacists, and subsequent demographic transformation, was “breathtaking”.

      Separating ethnic/demographic trends in California from global trends is silly and make you sound slightly cantankerous. fwiw ~ my children are technically “hispanic” (whites), all have “hispanic” names, are growing up tri-lingual, and are dual citizens.
      .
      .
      FM reply: You miss the point. Focused discussions accomplish more than those that attempt to discuss the world as a whole, which tend to quickly become like sophmoric bull sessions. Focus means separating out a specific subject for closer examination.

    1. Question: would the original Fabius Maximus agree?

      If there was no such thing as anonymity in ancient Rome (in relation to public discussion), then the question is probably irrelevant.

    2. “If there was no such thing as anonymity in ancient Rome”

      Much writing in the ancient world was done under pseudonyms or false names. Often adopting the name of famous figures from the past. The more things change…

  4. The National Banks, the FED, etc. are driving the lending rates down all over the world, purportedly at no cost to anyone. Don’t they kill investment on the middle and long run, by not supporting fund generation for replacement-investment in production-means? Shouldn’t there be a clear minimal lending rate, well above the present zero, to ensure investment funds are available?

    1. The answer is no. Unfortunately the explanation requires, as so often in sciences, quite a bit of background knowledge to understand (another example is looking at a swing on a playgound: how does pumping move the swing higher?). For a technical answer see “Debt, deleveraging, and the liquidity trap“, Paul Krugman, VOX, 18 November 2010 (summarizing this paper).

      A great place to start learning about monetary policy — with all its counterintuitive dynamics — is Paul Krugman’s classic article “Baby-Sitting the Economy
      The baby-sitting co-op that went bust teaches us something that could save the world
      “, Slate, 13 August 1998. Also read his presceient book The Return of Depression Economics (1999); see a brief summary here. Krugman (like the late Carl Sagan) has the ability to explain complex science in familar terms).

      More broadly, we are experiencing with economics something like that in the 19th and early 20th centuries: belief that commonplace experience reliably explains complex science. The rapid speed of trains would kill the passengers. Powered flight was impossible. And my favorite, this New York Times editorial: “A Severe Strain on Credulity“, 13 January 1920, showing that space flight is impossible — Excerpt:

      “That Professor Goddard, with his “chair” in Clark College and the countenancing of the Smithsonian Institution, does not know the relation of action to reaction, and of the need to have something better than a vacuum against which to react — to say that would be absurd. Of course he only seems to lack the knowledge ladled out daily in high schools.”

      After a century of so, people now accept that things that violate our daily experience can in fact be so — with respect to the physical sciences (e.g., medicine and physics). But not yet economics. People believe that their own experience applies to large scale systems: gold as currency, high savings are good always, more debt cannot mititgate too much debt. That both theory and history show these things to be false has not been accepted by the public consciousness.

  5. Rational people being irrational: John Slater: “I spent much of the past three days listening to Dreamforce online … With a few Very Small exceptions (briefly listed below), the IT industry is in great shape and has a bright future.”

    The IT (computer) industry has always been full of snake oil salesmen, posers and false visionaries. It is an industry driven by lies and greed as facilitated by gleeful mass media hysteria. (Wallace Stegner’s criticism of the “Gilpin mentality” provides historical backdrop to this tendency in western USA “business” culture.)

    The IT industry needs lots of dupes to “buy” the hype. The IT industry needs educated idiots to repeat the “paradigm shifting” marketing mantra de jour. Even the “responsible adults” in the industry indirectly benefit from the insanity (they sell the very expensive “enterprise” infrastructure/ consulting services that support things like “cloud computing”). The IT industry survives its own vast failures and idiocy only because it is being pushed along at the leading edge of social evolution by emergent/evolutionary forces in postmodern culture (as information exchange is commoditized via networks). Almost without exception, the death of any given large IT company would result, overall, in the significant and immediate improvement in the world.

    Many IT companies are little more than collection of warring internal tribes that are incapable of following rules or discipline. Exploitation and corporate psychopathy runs rampant: Steve Ballmer is a raving lunatic. HP was run into the ground by corporate criminals, one of which was rehired by Oracle “quick as a chicken on a june bug” when he was fired from HP for his role in illegal phone taps/cover ups of company Board members opposed to corporate criminalization! Larry Ellison envisions himself as the “last Samurai” of Silicon Valley. urgh. Oracle’s vastly bloated, and impossibly complicated product line is full of over-priced tech-turds (that are horribly documented). Oracle “executives” attack IT worker critics in user groups and demand that workers be disciplined by their employers (such as public agencies) for doing the very thing that user groups were originally intended to do: “call” the vendor on their marketing lies and bad products. An Oracle “executive” attempted to bribe the State Attorney General in California with a $50,000 campaign contribution during a controversial audit of wasteful state agency contracts with Oracle some years ago! {LINK to areticle at LongNow blog}

    For at least 25 years (that I know of), the IT industry has an overall project failure rate of 80%. In a recent study, IT projects were cited to have a failure rate * 10 TIMES HIGHER * than “business” projects. (see the debate over “The Innovator’s Dilemma”.) Internally, most IT organizations are deeply dysfunctional in their culture, and have not been successful in bridging the “IT-Business alignment” divide. {Link to article at CIO Insight website}

    IT people are usually Very Crappy in their outlooks on life (for a variety of reasons, but they are basically too introverted, and anyone wishing to “manage” them {especially in in a large bureaucratic setting} is usually a raving psychopath – Steve Jobs and Larry Ellison being examples of such). Many reasonable reforms of IT have been proposed over the decades. ITIL is a recent example. Such reforms are usually ignored.

    The Corporate Executive Board published a survey of 500 (?) major organizations last year about the next evolutionary stage of IT. TCB predicted that 75% the traditional jobs in IT organizations would be gone in 5 years. Good riddance, unenlightened “bastard operators from hell”. Links to Executive Board and Techcast websites.

    1. Sounds like I’m glad that I live, not in Menlo Park, but in flyover country on the banks of the Mississippi. I’m not an engineer; my interest in IT is in the extent to which the new technologies will enable the diffusion of knowledge and an increase in communications efficiency in society as a whole. I am 100% convinced that we are still in the third inning in terms of IT’s impact on society and the economy and that most of the game is yet to be played. Henry Ford was credited with transforming America with the introduction of the Model T, but the model A was far more important and most of the transformation didn’t occur until the completion of the Interstate Highway System: i.e it took well over fifty years from the commercial introduction of the automobile until the time it completely transformed American life. I am certain the real impact of the networked world is still a ways off and that many opportunities and perils await us as that transformation plays out.

    2. I suspect we all agree that technology — both electronic and bio — will reshape the world. The narrower question here is its effect on US gdp and employment. It might make the world a better place, but have ill effects on the US economy. To mention just one factor: the economic benefits might go to the holders of capital not the providers of labor. That is, it might increase profits but reduce the total number of jobs AND median wages.

      Tech evolution might even hurt the technology industry, if it produces concentration of profits. Imagine a Microsoft-like near-monopoly selling software writing AI’s. Big profits to the owners and senior execs, amidst hordes of unemployed programers.

  6. FAM said: “China exterminating US solar companies (e.g., Evergreen and Solyndra this month alone).”

    So, we can conclude that China, unlike the USA, does not have a government that is corrupted by the Big Oil industry?

    Isn’t it ironic that communists are the actors (in this case) that are facilitating competitive “global market forces” that are cleaning up corruption (state capitalism) in the USA? lol.

  7. Who would you elect for president in 2012 and why, amongst:

    1. the announced candidates
    2. someone you would draft and who is actually electable
    1. Another great question. I am not aware of any Democratic Party challengers to Obama. The Republican candidates are mostly loons (e.g., Bachman, Ron Paul), or good people corrupted by the insanity of modern American conservatives (Mitt Romney, for whom I votes in the 2008 primary).

      So that leaves Obama as the best of a very poor selection. Note my comment about Obama made in February 2008, with Obama-mania in full roar: “someone with astonishingly little capacity to govern.”

      For more about see the FM Reference page Obama, his administration and policies. Most of these forecasts have proven accurate, unfortunately.

      About drafting candidates: no grassroots draft creates viable candidates in our system. Successful candidates result from a long process of gathering support among our ruling elites, and their using America’s powerful machinery to manipulate public opinion. Candidates are manufactured. Carter, Bob Dole, McCain-Palin — these are best seen as the political equivalent of Hostess Twinkees. With better tech, soon we will have vitural candidates — improved versions of Max Headroom, eliminating the tiresome chore of finding and manipulating a figurehead.

    2. I thought my answer seemed clear: “So that leaves Obama as the best of a very poor selection.”

      That’s all we can say this early, since more candidates may enter. Serious candidates have entered after the New Hampshire primary in March: Eisenhower in 1952, Robert Kennedy in 1968. (Since then NH has moved the date up several times; during 2008 it was in January). Both are relevent today:
      * Eisenhower entered a Republican race in the absence of other viable candidates.
      * Kennedy challenged his party’s incumbent President, after Johnson had aliented much of the Democratic Party’s core base.

      Either or both of those things might happen during the next five months.

  8. Follow up on immigration, “demographics” and the welfare state: I can’t vouch for its veracity, but I found the political incorrectness of the following hilarious (in a sick way) and insightful.Confusion warning: the comment is about the UK, not the USA. Claire Khaw at Libertarian Alliance, 19 November 2010

    Widespread illegitimacy, working mothers and family breakdown is the reason why cultural traditions are now no longer transmitted. In other words, feminism. What the essay did not mention is that unmarried mothers are a burden on the state and tend to have offspring who also become a burden on the state. Worse, their unsocialised offspring who go into state schools spoil it for those who want to learn, and the female-dominated teaching establishment refuse, for ideological reasons, to discipline them.

    So it has been that for quite a few generations now educational and moral standards have deteriorated and this deterioration has accelerated as inexorably as a snowball rolling down a mountain. Our descent to hell in a handcart is analogous to this unstoppable snowball that started with universal child benefit and the Sex Discrimination Act. This also rather explains why the working classes are unfit for purpose. It is all down to bad parenting by single mothers, bad teaching by the female-dominated teaching profession, who now spend most of their time trying to disguise the failure of state education.

    These factors necessitate the import of cheap and better foreign labour. The foreigners who settle here clearly don’t want to end up being white trash, and that is why they prefer not to assimilate and stick to their own culture. It is a vicious and ever decreasing circle which no political party – not even the Libertarian Party – dares address because it would entail the dismantlement of the welfare state to which all Britons are now fatally addicted together with the cheap sex and easy women that feminism uses to bribe men into supporting feminism, an ideology that supports the right of women to be as promiscuous as men.

    The Muslims – which Libertarians and Nationalists fear – are just waiting in the wings to take over when the muck that passes for brains in this country’s political establishment finally explodes and oozes out of the putrefying orifices of the degenerate and stinking corpse of PC liberalism.

  9. (1) To what extent will the UN vote this month as regards Palestine produce a negative reaction towards the US and thereby undermine whatever good will we may have produced by supporting the Egyptian and Libyan revolutions? The assumption of course being that we will support Israel in the vote and in future actions (which I think is a fairly safe assumption).

    (2) On two related notes has the increasing Islamophobia that has become so popular in American politics become an issue for us geo-politically and strategically?

    (3) To what extent has our support of some of the revolutions in the Middle East undermined Saudi – American relations (something that should be very important when considering Peak Oil)? Perhaps for this one it is too early to tell.

    1. Great questions, about which I can only make wild guesses.

      (1) Not to a significant degree. Pouring more water on a rock does not make it wetter. US policy towards Palestine has been consitent for decades. We support Israel blindly, no matter what they do.

      (2) Islamophobia has been a minor factor in the US since 9-11, damaging the internal balance of US society and darkening our image abroad. I anticipate no change.

      (3) “Our support of some of the revolutions in the ME”

      We have not supported many revolutions, as most fight against tyrants who are US allies. Everybody except Americans understand America’s exceptional hypocrasy. We suuport our tyrant-allies until we believe they’ll doomed. Then we switch sides. We loved Diem until he was no longer of use; they we support those who overthrew them. The US since WWII has played this game many times. Only we remain blind to it.

  10. My world is tightly focused: how should independent business people in the U. S. adapt to and profit from this rapidly changing environment. Hopefully that will have positive outcomes for domestic employment, but it’s not the business owner’s job to generate that employment. The business owner’s job is to innovate, delight the customer, make a profit, etc. I do care a lot about the question of domestic employment, because it affects both the environment for businesses operating here and my personal environment as a citizen of the U. S.

    The U.S. has a unique position as global hegemon. As both a cause and a consequence of this position we have far more multinational corporations headquartered here than in any other country. American business and American workers benefit from this in a number of ways. Multinationals headquartered in the U. S. often find it more convenient, or safer or even cheaper to hire or subcontract domestically. But they have no obligation, moral or economic to do so. Quite to the contrary they are obligated to their shareholders to base their purchasing and hiring decisions on more rational factors like quality of output, cost, adjacency to growing markets, etc. Nor do the dynamics of empire dictate “hire American” strategies.

    I am beginning to think that American businesses need to adopt a new worldview to be successful in the present era. While they benefit to some extent from favored geography, they increasingly have more in common with similar sized companies around the world than they do with the global behemoths. Either

    1. they focus entirely on a single domestic market, in which case their survival depends on the prosperity of that market as well as their ability to survive the onslaught if multinationals decide to go after their niche, or
    2. they produce a globally competitive product or service and must make all their decisions based on the assumption that they are competing against the best, the brightest and the hungriest worldwide.

    Group (1) will have some continued protection due to its location near the center of empire, but it will be increasingly be burdened by the costs of maintaining the empire as well. Group (2), whatever their industry or the technologies, products or services they produce, is where the opportunity exists for the U.S. to continue to be competitive and to add jobs and create wealth. That’s both exhausting and exhilarating.

    1. There is always a third path! Which US-based multinationals have already taken, creating their current record high profits.

      (a) They use their political power to supress smaller domestic rivals (e.g., regulations burden smaller companies more than large ones), to dominate the domestic market. America business has been concentrating into cartels since the late 19th century, accellerated by the New Deal and in past decades by the weakening of anti-trust enforcement.

      (b) They use their political power to get US government aid open foreign markets.

      (c) They use their political power to avoid paying for the cost of Empire. Multinational corporations have de facto low or very low tax rates. Shift the costs to low tax states, overseas to low cost nations, have Congress give them tax breaks, and either defeat or coop IRS agents (a lucrative carrer awaits them after learning the game at low pay in the IRS).

    2. Hard to disagree that major corporations have found ways to use the power of Empire to their benefit. For the moment, however, we are witnessing something seen only rarely, if ever, in human history: the creation of a stateless global economy. Using the Inter-webs it is possible for even very small entities and individuals to do business directly outside the control of local market governments. Much thought has been given to the concept of stateless corporations. What if social media enables direct economic interchange, cutting around the current monopoly that such corporations hold on distribution channels? It’s happening in the music industry and to a lesser extent in publishing (though so far Amazon has found a way to take a pretty good toll).

    3. “stateless global economy”

      Many things that happen in the 21st century will be new to human experience.

      A global economy first appeared in the 19th century, during the period in which the state has been the dominate social actor. However, not so if one considers regions in the past (i.e., the larger Mediterrean basin in Roman times, East Asia for thousands of years) to be the equivalent of today’s world. States — cohesive areas in which the political machinery dominated other centers of authority — are a recent invention. As describe in Martin van Creveld’s magnum opus, The Rise and Decline of the State These regional economies operated above and below the control of states.

  11. Given the geo-political impact of the rampant ‘recreational’ drug trade enabled by the failed “War on Drugs” on our southern neighbor and our own economy, I’m curious why you have blown off my question on the appropriate balance, between “Prohibiition” and “defund the FDA” for sanctions on sellers and users of pharmaceuticals. Is the answer too obvious, or is it an intractable problem?

    1. I see no earlier comment by you about drugs; perhaps WordPress’ spam filter ate it. But it’s an imporant issue. You mention two distinct subjects.

      (1) “Defund the FDA”
      This is beyond my expertise, and does not seem like a geopolitical question even by the broad standards used on the FM website.

      (2) “geo-political impact of the rampant ‘recreational’ drug trade”

      The mad war on drugs, a subject frequently discussed here! Click here to see these articles. This is my favorite one: Nixon declared war on drugs, a major investment of America in itself – but one that’s gone bad.

    2. They were not presented as two distinct topics, rather I mentioned two extreme points on possible levels of control (or attempted control) on manufacture and marketing of pharmaceuticals in general and “recreational” pharmaceuticals in particular, and asked where, between these extremes, the ‘wise men’ of our policy making community should gravitate in their recommendations.

      The question was stimulated by having read, several years ago, an illuminating discussion on the topic: “AGAINST EXCESS: DRUG POLICY FOR RESULTS” by Mark Kleiman . If you’re not familiar with it, I recommend giving it a look.

    3. That’s certainly one way to see it. Another perspective: in the US the prohibition of certain recreatonal drugs results from legislation, unlike the authority to regulate medical drugs given to the FDA. They’re somewhat different.

      I can say with confidence that part that is the War on Drugs is mad. I know little about drugs — either biologically or legally — so I’ll leave that kind of deep analysis to others.

  12. Forgive me for asking another question and I think you may have touched upon previously in your posts:

    Will the U.S. continue to Japanize a la Richard Koo’s description over the coming 5-10 years? To me this means economic stagnation, loss of global political and economic power, useless politicians, high jobless rate, aging population, decreasing living standards, etc. — and yet the USD still remains a haven currency.

    Corollary question: How will the Japanization of the U.S. affect the growth of the BRIC countries?

    1. Ask away! These are all good questions.

      (1) In 1989 Japan began a deleveraging cycle, an economic event. But anything of that size becomes a political problem. As Karel van Wolferen predicted in his 1989 book Enigma of Japanese Power, Japan was unable to forge a political solution. The result: continued stagnation supported by massive government borrowing. What happens when that reaches its inevitable end? They pass through the Twilight Zone; none can say what lies beyond.

      In 2001 the US began a similar process. George Magnus saw this in early 2010, that an economic event became a problem for the political economy. See his recent article “Crisis Convergence“, Foreign Policy — Why the global economic crash, the rise of the Tea Party, the Arab Spring, and China’s coming fall are all connected. (see his other articles here)

      in Japan, we have been unable to forge a political solution. Worse, our elites have used this crisis to futher concentrate political and economic power. As those of Latin America did in the early 20th century, resulting in a collapse of social cohesion after WWII from which they’ve never recovered. No longer do people say “Rich as an Argentinian.” What does this mean for America? Stay tuned to this website for more analysis of this vital question.

      About the emerging nations

      They are too disparate a group for easy analysis, but here is the overall story. In the 1990s they broke away from the failed “Washington Consensus”, nostrums advocated by the US and its pets the IMF and World Bank. The adopted the Bretton Woods II system, a combination of free markets, export-led growth, high savings, and cheap currencies that generated rapid GDP growth. In 1997 they began a fast painful deleveraging. The combination sets them up to be the stars of the 21st century, no matter what the developed nations do.

      They have decoupled from us, although this is not yet visible in markets or GDP statistics. For more see Two regions diverging, tearing the world apart. Birth pangs for a new geopolitical order.

      To see the many articles on the FM website about these things, go to the FM Reference Page End of the post-WWII geopolitical regime.

  13. is it wrong or anti american to put out potable water stations in the desert with the overt purpose of saving illegal mexican immigrants from thirst?
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    FM note: for more about such efforts see the website of Humane Borders:

    Humane Borders, motivated by faith, offers humanitarian assistance to those in need through the deployment of emergency water stations on routes known to be used by migrants coming north through our desert. Our sole mission is to take death out of the immigration equation. Our water tanks are on a combination of private and public lands. In all cases we have permission to locate our water stations on these lands in writing from the landowners.

    1. What a fascinating question! I see no obligation to help people break the law, or to reduce the risks of breaking the law. On the other hand, IMO helping other people in this way is neither immoral or anti-American. For example, a Christian (there are some in America, actually attempting to live according to Christ’s teaching) might disagree. I respect such people and their views.

    2. re: “I see no obligation to help people break the law…”

      There many societal incentives, including abscence of effective government policing of employers, for businesses to break laws and hire illegal immigrants. Consumers benefit in the short run, overall. Stunning hypocrisy by most “opponents” of illegal immigration.

    3. I agree. Consumers benefit. Of course, in the US the top 20% of households (by wealth and income) dominate consumption. Illegals provide them with cheap services and servants (what’s not to like). The bottom 40% suffer from competition (jobs and wages) from illegals, but they don’t count in our system.

      This fallacy of composition wrecks the sweet conclusions of the countless “immigration is wonder for the US” studies. The gains and loses are not shared.

  14. Thanks for your answers, Fabius!

    Now for my most controversial question: Is China’s foreign policy a better model than the U.S.’s?

    — It’s primarily non-interventional, i.e. no pretensions of changing someone else’s political systems.

    — It’s in their national interest; the U.S. seems to forget this in its own policy.

    — If they unabashedly want natural resources (from Africa or Brazil), they develop infrastructure for it. This is different from our policies which seem to only piss off other countries. Let’s face it: But we also want their natural resources.

    — Their foreign policy is centered around economic gain, i.e. mercantilist. Ours is schizophrenic: Is it nation building or not? Is it really about neutralizing terrorist or military threats or in Scheuer’s eyes, placating a pro-Israeli lobby? Is it about developing business or not? Is it about being a global policeman? In short, is ours more about projecting power than achieving economic gain?

    1. Absolutely! For details see Another big step for China on its road to becoming a great power, 27 July 2009 — Summary:

      One oddity of major events — world-changing events — is that they are often unrecognized until long after the fact. So it is with China’s steps to becoming a great power. It’s happening slowly and quietly. Our response will likely be even more massive military spending, using funds borrowed from China (more broadly, Asia and OPEC). Few Pentagon reports note the insanity of this, or question why China funds this financially suicidal policy. .. Unfortunately for us, China is no longer ruled by commies. They recognize the many paths to political power. Nor are they stupid, building a costly Empire with no tangible benefits (as we’ve done).

      … So, despite our generals’ and admirals’ wet dreams, China has chosen another strategy — deploying their vast capital to influence events and build alliances. Without telling their allies how to live, without meddling – as we do. They just do business, leaving the moralizing at home. That’s how they reunited with Hong Kong. That’s probably how they will reunite with Taiwan. And that’s how they have developed a strong alliance with Sri Lanka.

      Click here to see all posts about China. Here are some of special interest:

      1. Power shifts from West to East: the end of the post-WWII regime in the news, 20 December 2007
      2. China becomes a super-power (geopolitical analysis need not be war-mongering), 9 July 2008
      3. China – the mysterious other pole of the world economy, 22 July 2009
      4. Another big step for China on its road to becoming a great power, 27 July 2009
      5. Will China collapse?, 5 August 2009
      6. A revolution is not a dinner party. Thoughts about the future of China, 19 August 2009
      7. Update about China: a new center of the world, 13 December 2009
      8. How China builds its commercial empire, 12 July 2010
      9. A look at the future (it’s already here, but it’s not in the USA), 29 September 2010
      10. Why China will again rise to the top, and their most important advantage over America, 11 November 2010
      11. Two pictures show an important difference between China and America, 2 February 2011
  15. The one theme that keeps showing up in your analysis is one of rising inequality in American society. Money, power and opportunity are becoming more concentrated at the top. Globalization, declining power of unions and robotics are trends that will further accelerate this trend and make a permanent underclass in the US. I realize that there are no crystal balls but I would like to hear your thoughts on the end game here? Is this a stable equilibrium or is there a French Revolution like outcome or do the tea leaves point to another Great Society solution or some other final state?

    1. My guesses as to the next chapters in the saga of America (there is no end game):

      (1) The first American Republic, under the Articles of Confederation, ran from 1776 – 1789. The Second Republic is dying. Perhaps dead. For details see the most important article on the FM website: Forecast: Death of the American Constitution, 4 July 2006.

      (2) What comes next? Consider the situation:
      (a) A passive citizenry, too apathetic to govern themselves (see these posts)
      (b) Highly concentrated wealth and income (see these posts)
      (c) Low social mobility (see these posts)
      (b) An American people that trust only two institutions of government: military and police.

      These conditions suggest to whom we might turn during a future crisis, and the nature of our next political regime. Not a pretty picture.

      What can we do to reform America? See 8.Some solutions, ways to reform America, section 8 on the FM Reference Page America – how can we reform it?

      For more on this topic see the FM Reference Page Guessing about possible futures for America.

  16. Empires tend to be very expensive to maintain, though Rome did quite well for a long time.

    It would be hard to say that the U. S. has failed to profit from its foreign policy to date, which has basically kept all potential enemies off balance while maintaining naval superiority. The question is whether this works going forward.

    1. I don’t believe that accurately describes our situation.

      (1) “Empires tend to be very expensive to maintain, though Rome did quite well for a long time.”
      The Roman Empire lasted five centuries because it was profitable. Ditto the British Empire, which ruthlessly exploited its colonies — including exporting grain while the locals starved (e.g., famines in Ireland and India). America get little commercial advantage from our Empire, despite its great cost.

      (2) “basically kept all potential enemies off balance while maintaining naval superiority.”
      Just as France’s military has kept German from invading since WWII. The wonderful thing about fighting imaginary enemies is that one always wins! Since the fall of the Soviet Union the US has had no substantial enemies that justify the massive military built during the cold war. So we’ve kept busy invading nations, justified by lies: Saddam’s WMDs and ties to al Qaeda; Al Qaeda staged 9-11 from Afghanistan.

      (3) “while maintaining naval superiority.”
      And who did we maintain it against since the cold war? Even the only other superpower (USSR) never seriously challenged us, and Russia abandoned even the attempt to do so. China seeks, like most great powers, regional power — and is years or decades from gaining control over East Asian waters. Everybody else with a fleet is friendly: UK, Japan, etc.

  17. Do most Americans care about the acquisition of knowledge and/or education?

    Yes we have the most Nobel Prize winners and we have a very successful Silicon Valley, but most Americans don’t seem to value knowledge and it shows through drop out rates and poor basic reading, writing and math skills. It also shows in higher education through the lack of Americans in advanced science and engineering programs at elite American universities. Yes we spend billions in education, but it’s a grand, particularly American fallacy to measure effort, interest or accomplishment in terms of dollars.

    I don’t think American parents care as much their Asian counterparts about education and/or acquisition of knowledge. That’s the real reason why I think our schools fail — because our parents fail their children.

    1. “Do most Americans care about the acquisition of knowledge and/or education? ”

      Yes, in the sense that they respect education — and want their children to gradulate from college. No, as anti-intellectual values have deep roots in American history and culture. No, in the sense of many Americans being as ignorant as rocks. As seen by the numbers of people believing in astrology and creationism.

  18. This one is very complex. I will stand by my statement that the U. S. has benefited tremendously from its global empire to this point. Just at the Brits, we consume a very large share of world resources and since the industrialization of China we have also benefited from a grossly outsized share of the global labor pool as well. The valid question is to what extent the U. S. global military presence helps or hinders this. I very much agree with your basic premise that we have been conned into expending a far too great share of our national weal on military adventurism, particularly since 9/11. That said, control of the world’s seas and effectively much of its airspace as well, has had very powerful impact on our continued economic hegemony. There is clearly some correlation there. I remember having spirited arguments in college over whether political power derives from economic power or vice versa. I always came down on economic power precedes political power, but these factors are not mutually exclusive.

    1. “control of the world’s seas and effectively much of its airspace as well, has had very powerful impact on our continued economic hegemony”

      Absurd, in my opinion. Just another example of America’s infatuation with military power. Shared by losers like the USSR and German Empire. Winners, like China today, go for commercial success balanced with the minimum necessary military power. The Brits did this well until the WWI screw-up, finished off by the maturity of 4GW after WWII.

      “whether political power derives from economic power or vice ”

      But military power gives little or nothing towards either of those in the modern world economy. Which is why nobody bothers with it beyond the amount necessary to defend itself. The US is the crazy aunt in the attic ignoring this reality. We are exceptional.

    2. hey john,

      re: “I will stand by my statement that the U. S. has benefited tremendously from its global empire to this point.”

      This is probably more historically true. When the USA was a colonial power, it overran places like Cuba, Central America, Phillipines, etc., then ruthlessly exploited them after setting up puppet governments. By luck, the USA’s main industrial competitors, Japan and Germany, were destroyed during WWII, leaving the USA to expand into markets almost everywhere after WWII except in areas under Soviet or communist Chinese control. As FM says, the USA no longer has the stomach to ruthlessly exploit colonies, and is not as adept as the Chinese at building business relationships. So, internal exploitation/colonization has set in at deeper and deeper levels. First the poor were exploited, then working people (farmers, factory workers), now “middle-middle class” people (office workers/consumers).

      Report card on America’s Infrastructure by the Am Society of Civil engineers
      The Uber-rich no longer want to pay taxes to support USA infrastructure (that their wealth was built upon). To “sell” this idiocy, they got stupid politicians to also give “tax breaks” to middle class people. Collapse has resulted. Most middle class jopbs are infrastructure. Many small-medium businesses are infrastructure companies. Collapse of infrastructure causes failures in the consumer economy. Downward spiral. Since Ronald Reagan, people have been fooled into thinking that the forces causing the downward spiral were “patriotic”.

      You should probably be focusing on investing outside the USA if all you want to do is make lots of money, but that takes a strong stomach for risk (?).

      Look at Cuba as a model for where much of the USA is going? People will become adept at finding crumbs from a collapsing system of state-capitalism, fixing old machinery, growing their on food, etc.
      .
      .
      FM reply: A great comment. Thanks for posting!

    3. WTF. Good comments here and below. I’ll respond to both together.

      I believe that the American Empire is primary a trading empire combined with an empire of the mind. Military hegemony has certainly helped the trading empire, but not necessarily the empire of the mind.

      This week Starbucks announced that they will increase the number of stores in China from 470 to 1500 in the next four years and in Korea from 370 to 700 stores. Everyone in the world wants what America has and U. S. multinationals are successfully milking this for everything its worth. Is this bad for America? Almost certainly not, even it these developments create more jobs elsewhere than in the U. S.

      As to optimism v. pessimism, I have a bent to look at the world through a pessimistic lens. I have worked to train myself to see the optimistic side. And in my experience successful entrepreneurs tend to be pretty conservative about hiring and spending decisions. If they don’t they won’t be successful for long. That said innovators must have an abiding optimism that they will succeed; if they don’t they will quit long before success. Just think about Edison and his 3000 “failed” attempts to build a light bulb.

      If we assume that America must innovate to get out of the current trap, then as a society we must have a deep underlying belief that we will succeed in doing so. That sort of faith in long term success has always defined Americans. If we lose that faith, then we lose our edge: i.e. we can’t think “That Used to be Us”. We must continue to believe that we are the country that continues to succeed against all odds. Not the Lake Woebegone “all are children are above average” version of optimism, but a belief grounded in effort and commitment to meet the challenges.

      In the middle 1980s America had “lost” the ability to build microprocessors or so everyone thought. Certainly not so. America ceded the manufacture of low margin processors to Japan and Korea so that all its best and brightest could focus on smart processors. Five years later Silicon Valley was at the beginnings of one of the most extraordinary periods of innovation and business success the world has seen. I am quite certain that somewhere in the mix similar opportunities exist today.

      Finally you have made a very interesting point about infrastructure. Fabius rightly points out that many of the innovations on the horizon are likely to reduce the need for labor or will only produce a limited number of high value added jobs. Yet if America is reaping the rewards of business success through innovation and through the returns on the current explosion of activity among the multinationals, its not hard to envision multiple good uses for the capital created in making this a better and more efficient place to live and do work. The issue becomes will those in political power understand that this is an appropriate role of government and steer the investment of funds accordingly. The risks are two fold. First, there is a rising thought that government has no role in such investment, which is not now, nor never has been true. On the other side of the equation, the percentage of federal dollars spent on redistribution (as opposed to investment) is now so high that it threatens the ability of government to invest in ANY productive activities. Lots more to talk about there, but this is where the line is drawn and the outcome of the debate over investment v. redistribution is likely to define whether America chooses optimism or pessimism as its predominate mood.

  19. I posted “I find myself agreeing far more with Mr. Slater than with Fubar.” FM replied directly to me: “Please explain why you agree with one more than the other. The statement alone provides no value to any of us.” It took me a little while to figure it out for myself but here is my answer:

    John Slater posts comments and questions that agree with my observations of what I laughingly call “the real world.” There are tremendous problems in the world today but also tremendous solutions, most of which are far less obvious than the problems.

    Fubar is obviously well read and intelligent but his posts indicate that his worldview is so persistently negative that it limits his ability to find or accept solutions to the problems he sees all too clearly. I have done the same thing a lot over the last decade of blogging so he has my sympathies. The hardest thing in the world is to change your viewpoint enough to see the solution that has been staring you in the eye the whole time you were complaining about the problem.

    Here’s an historical example of the difference between Fubar and John Slater. The Japanese were a major force for innovation in the 1980’s and correctly identified digital television as a huge potential revenue stream. The Japanese government-industrial complex kicked into high gear and tried to solve the problem through brute force. By 1987 they had spent billions to develop a clunky cable-only system that was extremely expensive for the consumer but looked like a possible future for the television industry. American companies begged the US government to be given similar cash to develop a competitive system. I’m sure Fubar would have been among the first to point out the weakness of the US government in failing to maintain a competitive edge.

    But in one of those quirks that history is so fond of tossing out, an American mathematician discovered a new data compression algorithm just as Congress was considering funding a “Manhattan-style” project to catch up with the Japanese that made the Japanese system obsolete overnight. The Japanese have yet to catch up with the rest of the developed world in digital TV because they were so emotionally and financially wedded to their old system. John Slater’s posts indicate a healthy respect for the fact that bad things are not the only things that happen.

    Here’s a link to a decent history of digital TV development: Article about HDTV at Digital America, Consumer Electronics Assn, undated.
    .
    .
    FM reply: Thanks for posting this! It’s a valuable note from the past and lesson for the future.

    1. Thanks for the info on digital TV. Some of your commentary about technology is unclear, so I’m not sure what to say, sorry!

      Delusions can arise from either an overly negative or overly positive frame of reference. To be precise, psychological and organizational theory at the leading edge has found evidence that negative thinking can be “better”. This contrasts with the frequently empty promises made by advocates of “positive” thinking (which produces the despair, cynicism, hoplessness necessary for the preservation of the power of the overlords). Holism can resolve seemingly “opposed” viewpoints but placing them in a larger context than can contain various perspectives, each of which contains partial truths.

      A hilarious example is the Buddhist idea of “the worst horse”. It is a positive perspective on negative perspectives. http://theworsthorse.com/about/

      I see my viewpoint and John Slater’s as being “complementary”, not “opposed”. You have introduced the idea that our ideas are “opposed”, not me. I greatly admire ethical american business people, and hope they survive, as increasingly unlikely a prospect as that is. I saw many family businesses and working class/ rural communities vaporized in the 80s in the western USA. Again, please see Wallace Stegner’s criticism of the “Gilpin mentality”. American business has always been full of shameless hucksters that rip off the unwary and destroy the tendency toward responsible populist democracy. The only meaningful alternative starts with awareness and vigilance.

    2. See below for commentary about concrete, proven reform strategies. Please find people that are as brave as Christopher Alexander in opposing common delusions and the corrupt institutional/establishment interests that exploit/promote such delusions if you want meaningful reform. And, consider the psychology needed to look at the world in a sufficiently unvarnished manner to actually implement reform, not just theorize about it. Tough stuff. Beliefs and paradigms can matter. (You can’t have sustainability without authenticity.)

      (Please note that the material includes a reference, not excerpted here, to a SCOTUS “academic freedom” case that Alexander won against UC Berkeley.

      Excerpts from Nature of Order: A Commentary for Readers of The Nature Of Order, Book 2, By Christopher Alexander … (Paul Ray, Cultural Creatives) [Website of Integral World]

      …as many as sixty million Americans … are convinced that society must change, that radically new ways of seeing the world are necessary in order to for us to get out of our present “mess.”

      … We may, yes indeed, be conscious of the fact that we are screwed up, and we may wish for better things for ourselves and for our children – but we remain enmeshed in a system which makes us secure (relatively), happy (relatively), morally OK (perhaps), and protected from starvation and disease (if we belong to the privileged 10% of the world’s population who are economically OK in the world today).

      But, we ourselves are enmeshed, deeply enmeshed, in the production of ugliness, zoning, banking, transportation, corporate America, making warplanes, destroying beautiful land by permitting and encouraging construction of freeways for our cars, and by permitting and encouraging the ravages of commercial development and strip malls. No matter how much we look down on it, and criticize it as bad, evil, and harmful – still we ourselves live off the product of this kind of America we hate. It is therefore easier to keep walking as a cripple with a pair of crutches, than it is to throw the crutches away, and take the huge effort of actually learning to walk again.

      We are part of that which we criticize and part of that which we hate. Yet we are sustained by that of which we are a part.

      So talking about a paradigm shift is nice stuff for armchair reading, but very much harder to DO.

    3. Take this with a grain of salt, a view based on this tiny excerpt: it sounds like a relion for yuppies. There are a lot of these around today, perhaps reflecting the high degree of alientation from society that seems endemic today. My guess is that this will amount to nothing. And very likely have no political effect.

      But then I probably would have said the same thing about Christianity in 100 AD. Or 200 AD.

      On the other hand, its chances of spreading like wildfire are no worse than that of Gnosticism (the only sensible western religion).

  20. Fantastic opportunity here, I’ll do my best to challenge!

    The oilsands; What is your assessment of the chances that activists will be able to stop Keystone XL? The Northern Gateway is in a similar stage (planning/government approval/protesters) and would allow product to be loaded into tankers and sold to somebody other than the US. Do you believe this prospect is troubling enough to those that assume the oilsands will automatically be sold to the US that there will be any real chance it’ll be shut down?

    My second,bonus, question (since I think the first one is a softball): What, do you believe, will it take to for the average American to understand their empire is crumbling and would it make any difference at all if they did, knowing that power/wealth has become so concentrated in a ruling elite that the villeins are more or less marginalized? Could they be brought to accept this change, since the danger seems it would be that demagogues promising a return to the Golden Age will find easy prey and implement counterproductive strategies that only accelerate decline rather than cushion it. Thanks!

    1. (1) My guess: near-zero odds that they can stop Keystone XL. The “activists” arguements have no rational basis in law, IMO. They’re hoping to repeat one of their greatest triumphs from the birth of the modern green movement, when they killed the useful and environmentally benign pumpted-storage facility at Storm King Mountain in NY (see the classic article “Environmentalism and the Leisure Class,” Harper’s Magazine, November 1977.

      (2) Great question, to which we can make only wild guesses. This website contains many strongly written expressions of confidence in the slow wisdom of the American people. Unfortunately that view today appears delusional. Perhaps only crushing blows to our status — military, geopolitical, or economic — will awaken us.

    2. Re: question #2: I would say, based on personal discussions and anecdotes that a large percentage, perhaps 30-40%, have already come to this conclusion about the American Empire. But feel either helpless to deal with the situation (sit at the bottom of the economic ladder) or feel that they benefit from it (reside at the top of the economic ladder).

      The bigger question is what happens when one of the big political parties feels the time has come to outlaw the other party. The average citizen has come to accept his fate but the political parties have kept their blinders on and pretend that everything is running normally.

    3. re: “The bigger question is what happens when one of the big political parties feels the time has come to outlaw the other party. ”

      Suggested reprhrase:

      The bigger question is what happens when [the shadow govt.] feels the time has come to [formally] outlaw [democracy].

  21. I have three, mostly rhetorical questions:

    1. What will it take to rouse Americans from their slumber about the dysfunction political process and economic system which exist today?

    2. What will break the rampant, knee-jerk anti-intellectualism which scoffs at serious attempts to deal with the various political, economic, and social challenges we face?

    3. Most importantly, how do we regenerate the shared sense of citizenship as being part of the American democratic experiment?

    I ask all this as I live in the Silicon Valley region, and I encounter a LOT of the libertarian/Ayn Randian narcissism of “I’ve got mine, the government needs to get out of my way” mentality. Referencing JFK’s inaugural call (“Ask not what your country can do for you, ….), I see almost zero shared purpose, responsibility, appreciation, and contribution to living in this country as a full-fledged citizen. In discussions with concerned colleagues, we sometimes joke and other times sadly state that many people treat our nation as if they are in a giant fantasy high school – so long as I’m doing ok and having a good life, don’t bother me….and screw everybody else. You correctly note the immaturity of much of the American public. I’m very afraid that neither the Second nor Third Republic can survive, let alone function, in this environment.

    1. (1) Same answer as I gave above:
      This website contains many strongly written expressions of confidence in the slow wisdom of the American people. Unfortunately that view today appears delusional. Perhaps only crushing blows to our status — military, geopolitical, or economic — will awaken

      2) An even tougher question. Perhaps after all other paths have proven to be dead ends.

      (3) The toughest yet. Nobody knows how social cohesion develops, or the origins of a shared sense of citizenship. However we do have many examples of how quicky a society falls apart once it loses this intangible glue. See Latin America’s devolution during the 20th century.

    2. #3) see leading edge work of anthropologists on the evolution of culture, DNA, etc. on social cohesion, compassion, equality, transcendence of self-interest, they are wired into human consiousness, no need for “god” or “religion” as explanations.

      re: “shared sense of citizenship” – this varies in origin and nature, but is explained in developmental theory: premodern societies are organized on the basis of “dependence” (mythic conformism), modern on “independence” (entreprenurial achievement, individualism), postmodern on “inter-dependence” (pluralism/relativism).

      specifically, the modernist paradigm that gave rise to the idea of democracy (and industrial revolution) suffers a “crisis of legitimization” in postmodern culture.

      in other words, the paradigmatic foundation of industrial democracies is not longer sufficient to address the “coherence needs” of postmodern culture, and is thus seen as “inauthentic”.

    3. Here we get down to brass tacks: the sense of citizenship, belonging to a vital common entity. This has mysterious roots, comes and goes from a people for reasons poorly understood, and is the foundation for the national power of a Republic. Two books I strongly recommend to understand this, from radically different perspective:

      1. Martin van Creveld’s magnum opus Rise and and Decline of the State
      2. Allen Bloom’s Closing of the American Mind
  22. Thomas Friedman has just published a new book on this subject (That Used to Be Us). Very much on point. i heard him on Meet the Press and look forward to getting the book tomorrow.

    1. In my opinion life is too short to spend ten minutes reading anything written by Thomas Friedman. For a good introduction to his unique form of bs read “Flathead – The peculiar genius of Thomas L. Friedman” by Matt Taibbi, New York Press, 26 April 2005 — a review of The World is Flat. One of Taibbi’s best, both informative and entertaining.

      The transcript from the September 4 “Meet the Press” shows that his still venting the same sort of superficial bs. It’s not that what he says is wrong, just that he gives a collection of unrelated fun stories most of which have almost zero analytical foundation.

      Esp note the section where he describes how US employers (at least the four he talked to) want these dynamic, adaptive, inventive employees. What the data shows employers want (in aggregate) is cheap labor — with minimal safeguards against injury on the job, totally disposable (fire at will to maintain profits).

      Demonstrating what a obtuse dipstick he is, one of the employers Friendman interviews head of the Joint Chiefs of Staff (Army General Dempsey). For a realistic view, read Friedman’s description of what the Army wants to an Army (or Marine) private or corporal.

  23. My economics is simple. Man is supporting himself by producing wares to sustain his own life, to support the reproduction of his offspring to replace him when he becomes too old to produce, to replace the worn out means of production , and finally to create new means of production. Do you see this cycle as intact at present?

    1. I doubt that anyone will or can disagree with such a high level statement. On the other hand, such a statement does not seem to be of any utility. It’s like starting with the third law of thermodynamics and attempting to figure how a swing set works (i.e., why pumping your legs moves you higher, which was a fiecely debated topic during the 1970s in the Amateur Scientist column of Scientific American).

  24. Taibbi’s article is cute; pretty acerbic even for Taibbi. However, you and I will just have to disagree on this one.

    No question, Friedman can be a pompous windbag and much of what he writes isn’t work reading. That’s a risk any frequent writer takes; you’re pretty brave to continually link to archived materials (most of which is quite good by the way). I’m not always enthralled when I do that on my own site.

    My point in mentioning Friedman is that I expect the new book to pick up on many of the themes on which you have been focused for quite a while.

    Friedman’s talent is an ability to pick up on big themes, synthesize them in a way that (when he hits his target) focuses thought and then to relentlessly promote the thoughts with a rigid adherence to his talking points. That this eventually becomes tiresome is not a great surprise. I still remember The Third Wave after thirty plus years. I suspect some of the same criticisms could be applied to the Tofflers that Tiabbi throws at Friedman, but that doesn’t mean that they didn’t provide useful insight.

  25. I know I’m late to the party, but I figured I’d ask the question that came to me when I was driving home from work. You’ve made the comment the Republican Party is employing Lenin’s strategy ‘the worse the better.’ I’m wondering what the response to this would be, since currently it doesn’t appear that they Democrats are responding well at all. I have thoughts, but it was your point so I am curious to hear your viewpoint.

    1. You’re never too late to a discussion on the FM website, as they never close.

      That’s a good question. So far as I can tell, our best political engineers say that Obama’s hope of forging grand bargains is daft, and that he should clearly take his case to the America people. The key Republican policies are highly unpopular, if only Obama would challenge them. As it is, he seems to hope that the GOP will run someone with some combination of too far right and too inexperienced. Meanwhile he has adopted most of Bush Jr’s key economic and defense policies, severely demotivating his party’s followers. It’s quite a gamble.

  26. 1. Biotech/medical devices if the bureaucrats don’t block all initiative.
    Worthless as a driver of the economy because medical treatments don’t work like electrical engineering. An engineer can reliably double the speed and effectiveness of a silicon chip by doubling its clock speed. But new vaccines create bacteria which quickly adapt, rendering them useless. Biotech is much more like the field of software than the field of computer hardware, and, as we see from debacles like Windows Vista, the field of software is subject to Wirth’s Law: software gets slower faster than hardware gets faster. The same proves true of biotech “breakthroughs.” They tend to work superbly in a test tube and fail dismally in real patients. As witness the endless money sink of the 40-year-old “war on cancer.” Cancer mortality hasn’t decreased by one whit in the last 10 years, while the amount of money we sink into end-of-life cancer treaments has skyrocketed to hallucinogenic levels.

    2. Nanotech/new materials
    Some new materials have been developed, but nanotech in the Drexlerian sense is a pipe dream and a dead-end non-starter. There is no sign that robots the size of cells are possible to build, or would work if we could build them. 25 years after Drexler’s “Engines of Creation,” we’re no closer to actual nanotech than we are to working nuclear fusion. This is the classic sign of a degenerating research program — other examples include alchemy, nuclear fusion, hard AI, etc.

    3. Social media/cloud computing
    Vacuous buzzword which create no meaningful economic value. The “killer app” of social media/cloud computing the flashmobbed heist, like this one in which 1200 ATMs wordwide got hit with phony credit card withdrawals:

    This is parasitic economic activity, not the creation of real value.

    4. Energy: Oil, gas and wind for now. Algae and synthetic photosynthesis down the road
    We don’t know enough about the biotech to say anything about blue-sky pipe dreams like ‘synthetic photosynthesis.” These kind of Freeman Dyson bio-engineered-plants-that-create-gasoline fantasies belong to the category of science fiction now. As for oil and natural gas, we’re either at or near peak resources on these. Wind power is impractical because of problems with storing energy off-peak; ditto solar voltaic which would require the entire world supply of indium just to supply enough solar electric power for the U.S. The notion that any of these declining or
    unknown fantasy resources will represent major drivers in the U.S. economy over the next several generations is simply contrary to observed reality. As peak oil hits, energy usage will decline…whether we like it not. If we plan for it, our living standards will decline gracefully with minimal social and economic disruptions. If we do nothing and hope for the magic of the markets to fix everything, we’ll get a series of Great Depressions, social upheavals, mass homeless, mass starvation, and mass violence. But in no case will these industries provide any basis for a growing economic engine for America. These are dying industries, like National Lead and National Rubber in 1900 (two of the biggest corporations in America in 1900, now long gone and forgotten and the industries they presided over vanished from the American economic landscape).

    5. Manufacturing (see robotics)
    Since manufacturing has largely been offshored to the third world, it’s hard to see how manufacturing can serve as any kind of economic driver in the first world. The hot new jobs of the next decade are all hands-on low-efficiency low-pay caretaker jobs: elder care, health care RN, and so on. These kinds of jobs are all subject to Baumols’ Cost Disease and will create low-pay jobs with no future.

    6. Transformation of government services through application of information technology and new systems to drive service efficiency
    This is pure word salad, utterly meaningless. It appears to have been lifted whole from a confidence game-style management seminar run by one of the management consultant scammers who infest American business. I can’t even tell what this sentence means.

    7. Education/dispersal of human knowledge
    As the internet and digital storage devices drive book publishers and instructional video publishers and teachers out of business, this offers yet another example of the net and digital technology destroying jobs. As Warren Buffett noted with typical understatement, the internet is a net negative for capitalism. In fact, the net and digital technology works efficiently to poison the basis catalyzers in capitalism. Every friction source and choke point in the economy represents somebody’s job. Online resources like Kahn Academy and make.com are destroying jobs by the millions, without replacing them. We are as a result rapidly headed (as Bruce Sterling put it) for a world in “everything is mostly free and no one has a job.”
    ————
    The real economic drivers of the next 40 years:

    1. Prison guard
    2. Private security goon
    3. Elder care worker, typically with a criminal record, usually a high school dropout
    4. Porn worker. As America’s economy collapses, the USA will become the world’s premier sex tourism destination
    5. Drug dealer. As America’s economy collapses, the USA will also become of the world’s premier drug tourism destinations
    6. Corporate lobbyist
    7. Medical/industrial parasite.

      About the Military: Someone who adds no value to America’s dying medical-industrial complex, like a salesperson who sells $40 disposable surgical plastic appliances for $1200, which then get marked up and billed to patients for $3000.
      Military/industrial parasite. Another person who adds no value to America’s economy but merely feeds at the bottomless trough of America’s river of gold pissed away on endless unwinnable foreign wars and gold-plated Buck Rogers superweapons that don’t work. A typical example would be the pentagon colonel who shepards a supersophisticated multibillion weapons system through procurement, receiving promotions and lavish praise, only to see the weapons system canceled because it doesn’t work — at which point he retires from the military and goes to the work for the thieving military contractor who built the superweapon.

  27. “6. Transformation of government services through application of information technology and new systems to drive service efficiency”

    Due to changes in culture, public agencies are trending toward dysfunctional management, lack of effective vision, etc. (Habermas “lifeworld colonized by systems”) While there are examples of IT being used in conjunction with improvements in management to create more efficient delivery of government services, they are bucking the trend toward bad management overall and in IT management. The underlying problem is a loss of confidence in government, and loss of coherence in politics.

    Any organization (including a public agency) that has a schizo-psychopathic, predatory boss (the political classes) will eventually become dysfunctional. Instead of “good deeds” (innovation, efficiency, rational practices) being rewarded, “bad deeds” are rewarded (bad middle managers exploiting workers, practices based on “style over substance”, protecting the interests of their sick boss and prospects for promotion). And, instead of bad deeds being punished, good deeds are punished.

    Technology (as seen in the conventional view) not only does not improve dysfunctional organizational culture by itself, it makes it worse. Technology charlatans promote “magic” solutions in the absence of “rational” solutions based on proper “IT-Business alignment”. Prediction based on survey of 500+ corporations: 75% of conventional IT jobs will be gone in 5 years:

    The “transformation” will not result in total net loss, some current IT workers will move to “business centers” that more fully integrate IT into their business processes. Most future workers on the “functional/business” side of an organization will be expected to have high levels of IT ability. Almost all high-end professional workers (in categories traditionally seen as “non IT jobs”) will be expected to be sophisticated in their use of IT. Educational systems are not producing well trained public servants that can “align IT and business”, they are still producing “specialists” with narrow perspectives, “discipline-centric”.

    Routine, basic tasks will be automated/outsourced (Daniel Pink). One of the remaining “creative” middle class jobs will be to “architect” the new structural relationship (“alignment”) between IT and non-IT parts of a business.

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