"It is a common theme" that the United States,
which "only a few years ago was
hailed to stride the world as a colossus with unparalleled power and unmatched
appeal is in decline, ominously facing the prospect of its
final decay," Giacomo Chiozza writes in the current Political ScienceQuarterly.
The theme is indeed widely believed. And with some reason, though a number of
qualifications are in order. To start with, the decline has proceeded since the
high point of U.S. power after World War II, and the remarkable triumphalism of
the post-Gulf War `90s was mostly self-delusion.
Another common theme, at least among those who are not willfully blind, is that
American decline is in no small measure self-inflicted. The comic opera in
Washington this summer, which disgusts the country and bewilders the world, may
have no analogue in the annals of parliamentary democracy.
The spectacle is even coming to frighten the sponsors of the charade. Corporate
power is now concerned that the extremists they helped put in office may in
fact bring down the edifice on which their own wealth and privilege relies, the
powerful nanny state that caters to their interests.
Corporate power`s ascendancy over politics and society -- by now mostly financial
-- has reached the point that both political organizations,which at this stage barely resemble traditional
parties, are far to the right of the population on the major issues under
debate.
For the public, the primary domestic concern is unemployment. Under current
circumstances, that crisis can be overcome only by a significant government
stimulus, well beyond the recent one, which barely matched
decline in state and local spending -- though even that limited initiative
probably saved millions of jobs.
For financial institutions the primary concern is the deficit. Therefore, only
the deficit is under discussion. A large majority of the population favor
addressing the deficit by taxing the very rich (72 percent, 27 percent
opposed), reports a Washington Post-ABC News poll. Cutting health programs is
opposed by overwhelming majorities (69
percent Medicaid, 78 percent Medicare). The likely outcome is therefore the
opposite.
The Program on International Policy Attitudes surveyed how the public would
eliminate the deficit. PIPA director Steven Kull writes, "Clearly both the
administration and the Republican-led House (of Representatives) are out of
step with the public`s values and priorities in regard to the budget."
The survey illustrates the deep divide: "The biggest difference in spending
is that the public favored deep cuts in defense spending, while the
administration and the House propose modest increases. The public also favored
more spending on job training, education and pollution control than did either
the administration or the House."
The final "compromise" -- more accurately, capitulation to the far
right -- is the opposite throughout, and is almost certain to lead to slower growth
and long-term harm to all but the rich and the corporations, which are enjoying
record profits.
*Not even discussed is that the deficit would be eliminated if, as economist
Dean Baker has shown, the dysfunctional privatized health care system in the
U.S. were replaced by one similar to other industrial
societies`, which have half the per capita costs and health outcomes that are
comparable or better.
The financial institutions and Big Pharma are far too powerful for such options
even to be considered, though the thought seems hardly Utopian. Off the agenda
for similar reasons are other economically sensible options, such as a small
financial transactions tax.*
Meanwhile new gifts are regularly lavished on Wall Street. The House Appropriations
Committee cut the budget request for the Securities and Exchange Commission,
the prime barrier against financial fraud. The
Consumer Protection Agency is unlikely to survive intact.
Congress wields other weapons in its battle against future generations. Faced
with Republican opposition to environmental protection, American Electric
Power, a major utility, shelved "the nation`s most prominent
effort to capture carbon dioxide from an existing coal-burning power plant,
dealing a severe blow to efforts to rein in emissions responsible for global
warming," The New York Times reported.
The self-inflicted blows, while increasingly powerful, are not a recent innovation.
They trace back to the 1970s, when the national political economy underwent
major transformations, ending what is commonly called "the Golden
Age" of (state) capitalism.
Two major elements were financialization (the shift of investor preference from
industrial production to so-called FIRE: finance, insurance, real estate) and the
offshoring of production. The ideological triumph of "free market doctrines,"
highly selective as always, administered further blows, as they were translated
into deregulation, rules of corporate governance linking huge CEO rewards to short-term
profit, and other such policy decisions.
The resulting concentration of wealth yielded greater political power, accelerating
a vicious cycle that has led to extraordinary wealth for a fraction of 1
percent of the population, mainly CEOs of major corporations, hedge fund
managers and the like, while for the large majority real incomes have virtually
stagnated.
In parallel, the cost of elections skyrocketed, driving both parties even
deeper into corporate pockets. What remains of political democracy has been
undermined further as both parties have turned to auctioning
congressional leadership positions, as political economist Thomas Ferguson
outlines in the Financial Times.
"The major political parties borrowed a practice from big box retailers like
Walmart, Best Buy or Target," Ferguson writes. "Uniquely among legislatures
in the developed world, U.S. congressional parties now post prices for key
slots in the lawmaking process." The legislators who contribute the most
funds to the party get the posts.
The result, according to Ferguson, is that debates "rely heavily on the endless
repetition of a handful of slogans that have been battle-tested for their
appeal to national investor blocs and interest groups that the
leadership relies on for resources." The country be damned.
Before the 2007 crash for which they were largely responsible, the new post-Golden
Age financial institutions had gained startling economic power, more than
tripling their share of corporate profits. After the crash, a number of
economists began to inquire into their function in purely economic terms. Nobel
laureate Robert Solow concludes that their general impact may be negative:
"The successes probably add little or nothing to the efficiency of the
real economy, while the disasters transfer wealth from taxpayers to
financiers."
By shredding the remnants of political democracy, the financial institutions
lay the basis for carrying the lethal process forward -- as long as their
victims are willing to suffer in silence.