The Decline and Fall of the America Empire: Part One 1945-2011

1981 the start of supply side trickledown economics.

 

I think the decline started in the 70's when consumer credit started to surpass commercial credit extended by banks. The decline accelerated in the late 90's when bank borrowing surpassed both consumer and commercial credit.

 

There are a number of differing views as to when the US’s decline became obvious and they are all right I mean if that is when it became obvious to them. But there have been economic ups and downs before along with expensive wars and bad Presidents in the White House and the US seem to survive and go on.

It is just that to me there seemed to be in the past a belief or hope held by most Americans that the US would or could recover its prestige and position. Is it me, or are those attitudes becoming rarer?

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I’d say that the omens of decline could be seen even in the entrails of 1945.

- The US had risen on a wave of previously untapped resources but by the 1940's resources had either been tapped, were becoming harder to extract or had been exhausted that coupled with increased demand had hidden dangers for the future.

- The beginnings of the rabid anti-communism and Cold War that was to cause so much damage.

- The rejection of Keynes’ ideas at Bretton Wood in favour of a unsustainable system that was storing up problems for further down the line

- Also war torn and damaged countries would recover (e.g. Germany and Japan with the rise of China coming later)

- And last but not least the rise (with a lot of wealth based backing) of the neo-liberal ideas that were to become dominate later in the century with devastating results.

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To me there seems to be three periods

A slow decline from 1945 to 75 - that could have been arrested but was ignored.

Then a steeper decline from 75 to 2005 - that would have been much harder to arrest but was in fact exacerbated by the policies that were undertaken that were claimed to be making the US stronger.

The period when decline became increasingly obvious 2005 to the present – military overstretch, financial meltdown, acute political dysfunctionality.

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Fall in top rate tax
1945 - 94%
1970 – 70%
1982 - 50%
1990 - 28%
2010 – 33%
The neo-liberal ‘trickle down’ ideas that counselled low taxation of the rich took hold in the Reagan era and have remained throughout the steeper period of decline.

Rise in top levels of pay
In the 1950’s CEO pay was 25-50 times that of an average worker that has risen to 300-500 times by 2007.
A bigger gap than any other developed nation.

Trade deficit
1960 – Trade surplus of 3.5 billion
2008 – Trade deficit of 690 billion
(The last time the US posted a trade surplus was in 1975)

Decline in manufacturing
1965 - Manufacturing accounted for 53% of the US’s economy.
2004 – It accounted for 9%
The Economist (10/1/2005) stated: “For the first time since the industrial revolution, fewer than 10% of American workers are now employed in manufacturing.”

 

Yeah-that's good. You know,I think somehow the importance of the conservative knockout of the Kennedys has played a big part in the direction of the country since then. In a way,you had to have been there to have gotten the feel of how the future at that time was going to be. You just felt good about him being in there.Their murders , especially JFK's changed the expectations that something good was to come. Johnson took over and tried to accomplish some decent programs but the war ate him up and then came Nixon(dirty tricks)Ford (benign do-nothing)Carter(weak)Reagen(right wing pretty boy-suck-ass to the rich-union buster)1st Bush(??) Clinton(brilliant dumb-ass) and then the countrys and the worlds downfall---Georgie-boy. I still believe had the Kennedys had a 16 year run---this country would be much better than it is or will be.

 

Very interesting, scratcho. I think I might agree. I was there, too. The beginnings of the decline were the assassinations of the best leaders America had, 1963 to 1968.

 

Scratcho and Sunfighter

I think individual Presidents do have an influence but they are often as not victims of circumstance and social, economic as well as political undercurrents.

For example a lot of the Kennedy’s foreign policies were based on the near paranoid anti-communism of the time and were often counter productive because of that. Also I don’t think they gave much thought to the Bretton Wood system although economists such as Robert Triffin(1) were already pointing out the dangers of it for the US, in fact Kennedy exacerbated things with the Trade Expansion Act of 1962 (the Kennedy Rounds)(2).

But what I think you are saying is that the ‘expectation’ in a better future were diminished by the Kennedy assassinations (along I would think with that of Martin Luther King as well).

However I think few people around the world would have come out in 1969 at the time of the moon landing and said that it was obvious that the US was in decline.

What I’d ask is were those ‘expectations’ ever real or had the seeds of US decline already been sown, germinated and growing out of sight and so unobserved?

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(1) In 1960 Triffin testified before the United States Congress warning of serious flaws in the Bretton Woods system… It was largely ignored until 1971, when his hypothesis became reality, forcing US President Richard Nixon to halt convertibility of the United States dollar into gold, an event with consequences known as the Nixon Shock. http://en.wikipedia.org/wiki/Robert_Triffin

(2) Kennedys Blunder
“The famous liberal economist John Kenneth Galbraith bluntly told President Johnson in 1964, -“If we are screwed on tariffs, this will have an enduringly adverse effect on the balance of payments”
http://economyincrisis.org/content/kennedy%E2%80%99s-blunder-or-how-free-trade-turned-sour-america

 

I didn't experience the JFK era.

When someone dies young, I think it is easy to project our hopes and dreams onto them. Dead people never disappoint you, and their possible accomplishments seem unlimited.

Wouldn't people be doing the same thing to Obama if he had died after 6 months in office? But he lived, and his flaws became obvious.

All my life, I have been hearing older white men talk about America being in decline. They list as reasons all the old and familiar things from their past that have fundamentally changed, become smaller, or less important. They don't bring up areas of incredible success, like medical technology, that have become more important than things like making steel in large quantities.

I never hear this talk from women or minorities. The America that we experience has improved drastically in the last few decades.

I think you are right in saying this issue is all about a feeling, not anything that can be measured. If you look at business data, the numbers are not bad. Even the national debt, when expressed as a percentage of GDP, is not as high as it has been during some previous economic downturns. About the only truly bad stat is the inflation-adjusted purchasing power for the average worker, which has been flat since the mid-70s. But even that is misleading because we all own useful and cool stuff that didn't exist in the 70s. The President of General Electric couldn't buy a pocket-sized cell phone back then, but people who empty trash cans for a living own them now.

Our economy is shifting away from things that middle-aged white men tend to be good at, and this group has also lost significant political power to nearly every other definable group under the sun, so it's understandable that they are going to feel a sense of loss. But that doesn't mean the whole country is in trouble.

If manufacturing was everything, China would already be running the world.

The only thing that worries me right now is Tea Party politics. If majority power ever shifts for a long period of time to a group that values belief above knowledge, our future will be in doubt.

 

Karen

Your post made me wonder what I mean by ‘decline’.

I mean would the decline of the American Empire actually a bad thing?

The decline and fall of the British Empire actually saw the quality of life of the average British citizen improve greatly (especially women and minorities).

Height – Queen Victoria’s Diamond Jubilee celebration in 1897
Obviously in decline (but ignored) - 1918
Last hurrah – WWII -1939-44
Delusions of Grandeur - Suez 1956
Last major colony given up – Hong Kong in 1997

Here is an amusing pocket history of the British Empire from the wonderful Horrible Histories https://www.youtube.com/watch?v=bWedTbuAtR4"]History of the British Empire - YouTube

And here is wiki
http://en.wikipedia.org/wiki/British_Empire

Remember that in a lot of ways the British Pounds Sterling once held the position of ‘world currency’ that the US Dollar took over formally in 1944.

So British hegemony ended a long time before the ‘Empire’ was over, and decline was obvious before that.

We have all the new “cool stuff” that you talk about but Britain is not the world power it used to be and that has had consequences.

 

Just an opinion but I think we prospered after WW2 simply because europe had been flattened by the war. We had the capability to manufacture goods and there was a large demand during the rebuild..Repbulicans site this as a great prosperous period in our histroy but its really just a castle made of sand. It was made possible because of the war and could not last.

 

Your post makes me wonder what you mean by 'empire'. The British flag used to fly over a lot of countries, many of them quite large. We never have taken things quite that far. We tend to use military power mostly for keeping free trade open with oil-producing countries, which benefits all Western economies. I think the EU is smart to keep pushing that responsibility off on us. Very smart.

As far as currency trading goes, I don't see a better place for that to go. Among large countries, China would be a likely contender, and they are notorious for currency manipulations. Japan might handle things better, but I don't see them expressing any interest in stepping up. London is popular with the financial world, but the UK isn't a big enough economy for its banking system to seamlessly replace that of the US on the world stage. Canada is even smaller. International banks in Paris are having a terrible year, thanks to Greece and Ireland. India is just a mess; far too much internal fragmentation. So I think this action stays in New York City. The IMF is located outside the US, but its physical location does not seem to matter.

Culturally, I don't see any serious threats to Hollywood as the entertainment capital. Bollywood seems to be content to produce material for domestic consumption. Who even knows who is in third place?

 

Karen

I recommend you read the book Colossus by Niall Ferguson who is a great supporter of the US but points out that they did/do have an empire although most Americans are in denial about that.

Here is a part of a review –

http://www.guardian.co.uk/books/2004/jun/05/highereducation.history

 

I think it's zenith was 1776 , and then the clock began ticking on its demise . The average span of a " democracy" is around 200 years . Not that this is , or ever was a true democracy .

I think its demise began as early as 1789 , and the congressional fight over centralized banking system .

For sure its demise began in 1913 , when old Woodrow Wilson , brought the FEDERAL RESERVE into being . One of the biggest crimes ever perpetrated on the American people .

As well as n.a.f.t.a , more like ( shafta ) and the United Nations . In any event I think it's demise started as far back as 1791 and plans for centralized banking . And for sure by 1913 the clock was ticking .

 

Karen

As to currency trading and culture impact goes I’m unsure what your argument is?

As pointed out the importance a currencies change. And a countries cultural impact can go on a long time after it has declined in importance (or completely disappeared). And I believe the American porn film industry now makes more money than mainstream Hollywood films, so is that the more important culturally? It also should be noted that once Hollywood films were about US sales that is now shifting to overseas sales as this articule from the Wall Street jounal points out -

Also you have talked of the changing environment, well around the world old visual media (television and film) is under pressure from new media (video games the internet).

 

I just don't see signs of decline here, on any front. I see signs of radical change, along with an economic downturn, which is to be expected now and then.

 

It seems to be obvious to me that the U.S. of Fucking A. is dying and has been for some time now, but then you have to realise that every so called "great empire" has it's hayday and then it slowly falls into disarray. The current government needs to hurry up and take it's last breath in my opinion. We need a new one man

 

Well, what about the fact that the U. S. Congress has lost its ability to solve any long-term problems? That's bound to lead us downwards.

 

papa wolf, well stated and thanx 4 the knowledge re: early problems within currency and banking of the country. i previously drew on ww1 as the probable beginnings of the ongoing downward spiral of the country. new, old news for thought !

 

We've been through that before too. Many times.

Jesus Christ, we've been through a civil war that killed off several percent of the entire US population! And we've been through financial depressions that make this one look like a sunny afternoon stroll in the park! I've been reading recently about the one in the late 1800s. It was devastating.

Maybe there's something special about this crisis, but I haven't seen convincing evidence of it yet. I think a lot of people are spoiled because we haven't lived through anything similar. This is our turn to suffer a little.

We do need to get our asses in gear and fix some things.

 

Hmmm, well I've certainly never seen anything this bad during my lifetime, and I've been following things pretty closely since the early 60's. Maybe you're right about the distant past, but how is anything going to be fixed in this toxic atmosphere? Already, we've completely failed to do anything about global warming and now it's too late. The climate is fucked.

 

Karen--I hope you'll come back and lay out the reasons for the late 1800 depression. I pretty much know the reasons will be close to what caused the big one and this one.--------