A Little Humility Is Long Overdue
Two years ago Kevin Phillips, a political and economic commentator and former Republican White House strategist for President Richard Nixon, warned about the dangers of easy cash, growing debt, and dependence on foreign oil. Mr. Phillips was on National Public Radio explaining why he believed America is now in a full fledged economic crisis, what led the United States to its current predicament, and what can be done to address what he referred to as the global crisis of American capitalism. It is Mr. Phillips’ theory that the economic health of this country started to tank in the late sixties, early seventies. Instead of policies that placed financial risk solely on institutions that benefited from financial gains, risk has been transferred to the public without the public enjoying any of the benefits.
Mr. Phillips gave the example of the bailout of Bears and Stearns where the Federal Reserve took the position to insure the financial risk of Citicorp’s investment. This financial bailout was compared to the bailout of Chrysler back in the day where Chrysler borrowed a cool billion dollars from the government in order to remain solvent and the company had to pay it back. Chrysler took the risk on itself. However, Citicorp managed to transfer its risk to the American public. With benefit concentrated into the hands of a few but risk spread throughout the social spectrum a relative handful of people will reap financial rewards while the majority will pay for financial mistakes made through no fault of their own.
Through a series of short sighted policies by the government over the past thirty five years or so, we have gotten to the point where the final straws of the last eight years have pushed the American public over the edge of financial ruin. When President George Bush took office, oil was trading at about twenty dollars a barrel. Last year oil was trading at one hundred fifty dollars a barrel. People will say that the government has no control over the oil’s marketplace. But with so much uncertainty in the Middle East because of policies implemented by our Republican executive branch and our Republican led legislative branch that rubberstamped everything Mr. Bush wanted to do, it is hard to support the argument that government is innocent of any responsibility in this financial tempest.
In order to understand what is happening in America now Mr. Phillips cites the example of Britain in the decade of the 1910s. England saw its position as the leader of the financial world erode. Through a series of happenings that saw a couple of global conflicts and the emergence of new manufacturing efficiencies based on revolutions of mass production, the young upstart United States emerged some thirty years later as the new leader. Unfortunately, while England was able to enjoy its position as number one for centuries, America’s position as number one is in a state of perpetual decline after little more than a handful of decades.
It is Mr. Phillips estimate that we are in the very early stages of a global financial adjustment that will see America lose its position as the financial leader of the world. American corporations have pretty much handed the baton of economic leadership to other countries by the exportation of manufacturing and service jobs to other places throughout the world. The only commodity America has to export anymore is debt. With so many jobs given away America is trying to crawl out of its financial hole with a bit of a handicap. Having a war draining the national treasure is no help. Having a war that is a huge help at propping up the price of oil and devaluing the dollar making everything more expensive than it has to be, our economy is burning itself from both ends. And while America resembles an alligator eating its own tail, the fortunes of the richest one percent of the population will grow even richer.
According to Mr. Phillips, when England’s position of leadership hit the skids it took thirty five years before America emerged as the next financial leader of the world. But that was only because of the chaos of having countries around the world participating in a global war. The table is now turned and America now finds itself pretty much in a unilateral war on terror by its lonesome. Other countries are participating. But no other country is committed to the level of the United States. As America’s economic position gets weaker and weaker, as the liquidity of the American middle class evaporates in a fog of war in which we appear incapable of extricating or unwilling to extricate our self from, it appears pretty certain that our days of being so far ahead of the pack may be numbered.
That may not be a bad thing. The importance and the sense of self of the typical American knows no bounds. Our hubris is legendary. We took on the war on terror virtually by ourselves and now expect the world to help bail us out. It is the American way that as long as we have more than the next guy we are happy to focus only on our needs wants and desires. The other guy can lift him or her self by their own bootstrap. The time for Americans to learn a little humility and reexamine our relationship to each other as well as our relationship to the rest of the world is long overdue.
It maybe just a coincidence, but when Britain emerged from World War II as a country that paid so dearly a price for the global conflict, when its national treasure was exhausted and facing a huge war debt, the country instituted a universal healthcare program. In effect it was an acknowledgement to the people that they would rebuild their country together. Unfortunately there is evidence that we may not have reached that level of understanding just yet.