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Editorial See other Editorial Articles Title: America's self-inflicted decline The United States is facing major economic problems, and its politicians are unable - or unwilling - to solve them. America's self-inflicted decline The United States is facing major economic problems, and its politicians are unable - or unwilling - to solve them. Malcolm Fraser Last Modified: 04 Sep 2011 12:11 E Listen to this page using ReadSpeaker As China's domestic market continues to grow, China will lose its incentive to support the dollar [EPA] If the broad post-World War II prosperity that has endured for six decades comes to an end, both the United States and Europe will be responsible. With rare exceptions, politics has become a discredited profession throughout the West. Tomorrow is always treated as more important than next week, and next week prevails over next year, with no one seeking to secure the long-term future. Now the West is paying the price. President Barack Obama’s instincts may be an exception here, but he is fighting powerful hidebound forces in the United States, as well as a demagogic populism, in the form of the Tea Party, that is far worse - and that might defeat him in 2012, seriously damaging the United States in the process. The United States’ friends around the world watched with dismay the recent brawl over raising the federal government’s debt ceiling, and the US congress’ inability to come to anything like a balanced and forward-looking compromise. On the contrary, the outcome represents a significant victory for the Tea Party’s minions, whose purpose seems to be to reduce government obligations and expenditures to a bare minimum (some object even to having a central bank), and to maintain President George W Bush’s outrageous tax breaks for the wealthy. The United States’ current fiscal problems are rooted in a long period of unfunded spending. Bush’s wars in Afghanistan and Iraq, and the manner in which he conducted the “global war on terror” made matters much worse, contributing to a totally unsustainable situation. Indeed, Obama inherited an almost impossible legacy. In the weeks since the debt ceiling agreement, it has become increasingly clear that good government might be impossible in the US. The coming months of campaigning for the US presidency will be spent in petty brawling over what should be cut. The example of recent weeks gives us no cause for optimism that US legislators will rise above partisan politics and ask themselves what is best for America. In these circumstances, it is not surprising that financial markets have returned to extreme volatility. The expenditure cuts mandated by the outcome of the debt-ceiling debate will reduce economic activity, thereby undermining growth and making debt reduction even more difficult. Providing further fiscal stimulus to boost economic growth would carry its own risks, owing to the debt ceiling and another, more ominous factor: the US is already overly indebted, and there are signs that major holders of US government securities are finally tired of being repaid in depreciated currency. Most importantly, China’s call for the introduction of a new reserve currency stems from its frustration with the failure of major governments - whether in the US or Europe - to govern their economic affairs with realism and good sense. China recognises that the US is in great difficulty (indeed, it recognises this more clearly than the US itself), and that, given the poisonous political atmosphere prevailing in Washington, there will be no easy return to good government, economic stability, and strong growth. US leadership in world affairs began to weaken with the unilateralism of Bush, and today’s economic problems are reinforcing this tendency. To reverse the United States’ decline, Obama needs bipartisan support for his (quite mainstream) policies, but so far the US congress has shown no stomach for a principled approach to its legislative duties. If Germany’s half-hearted efforts to stabilise Europe somehow turn out to be successful, the US position will be further eroded, and central banks around the world will begin to regard the euro once again as a reliable alternative to the dollar as a reserve currency. The alternative, as China has suggested, would be to develop a new reserve currency. These realities represent a power shift of a kind that we have not experienced in our lifetimes. China’s economic power over the US is now substantial, and will limit not only US influence in the financial markets, but also its capacity to use military power. If this forces the United States back towards what the international-relations scholar Joseph Nye calls “soft power and multilateral diplomacy”, it may well be a good thing. But such approaches are anathema to the US Republican Party, and to its Tea Party faction in particular, and they might unnerve the many Asians who are nervous at China’s growing military might. The counter-argument - that any sell-off or failure by China to continue to buy US government securities would hurt China as much as the US - is not valid. As each year passes, China’s markets expand worldwide, and its domestic market comes to represent a greater percentage of its own GDP. As a result, China will not need a strong dollar in the long term. Americans need to get their economic house in order before China loses its incentive to support the dollar. On several occasions in the post-WWII period, the US has learned with great pain that there are limits to the effective use of military power. US objectives could not be achieved in Vietnam. The outcome in Iraq will not be determined until the last American troops have been withdrawn. In Afghanistan, where withdrawal dates have already been set, it is difficult to believe that a cohesive unified state can be established. As the efficacy of military power is reduced, so the importance of economic power grows. Recognition of these central realities - and bipartisanship in addressing them - is critical for America’s future, and for that of the West. Malcolm Fraser is a former prime minister of Australia. A version of this article first appeared on Project Syndicate. The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy. Source: Project Syndicate Email Article Email Print Article Print Share article Share Send Feedback Send Feedback Topics in this article People Barack Obama George W Bush Joseph Nye Malcolm Fraser Country United States China Iraq Afghanistan Australia Germany Vietnam City Washington Organisation Tea Party U.S. Congress US government US Republican Party federal government Environmental Protection Agency Featured on Al Jazeera It's time for all Palestinians to be heard Palestinian leaders lack electoral legitimacy, partly because the Palestinian diaspora has no say. The ethics of digital direct action Denial-of-service attacks and similar tactics are becoming more widely used as protest tools. What does Gaddafi's fall mean for Africa? As global powers become more interested in Africa, interventions in the continent will likely become more common. Rick Perry: Too big to fail? As the race for the US presidency begins, another Texas governor has emerged as a leading contender. Content on this website is for general information purposes only. Your comments are provided by your own free will and you take sole responsibility for any direct or indirect liability. You hereby provide us with an irrevocable, unlimited, and global license for no consideration to use, reuse, delete or publish comments, in accordance with Community Rules & Guidelines and Terms and Conditions. Like Dislike liked this. Add New Comment Required: Please login below to comment. Image Showing 1-20 of 57 comments Sort by Subscribe by email Subscribe by RSS Real-time updating is enabled. (Pause) Dan Plant 3 hours ago This is a terrific column. As a Canadian it shocks me how much traction the Republican party has, I've never seen a voter base so willing to vote against their own self interests. I consider myself a conservative but that party has pushed itself into the right wing abyss. There is a class war going on in America, and many of the victims of it are fighting for the antagonist. Syed R and 29 more liked this Mike4444 1 hour ago in reply to Dan Plant As another conservative Canadian I can respectfully disagree with you. Although the GOP are shooting themselves in the foot by promising 'No New Taxes'; they and the 'Tea-Party' at least advocate cutting the 'out-of-control' spending of Obama. KerrynowCampau 51 minutes ago in reply to Mike4444 Obama is continuing to fund the out of control wars started by his predecessor while simultaneously trying to inject capital into the US economy to save it from the crisis caused by deregulation. I would have a modicum of respect for the Tea Party if it had started it's screaming about spending (losing) hundreds of billions in unnecessary Middle East wars before Obama got elected. I wonder why they think it is A OK to spend so much overseas but not here at home to help the very people who pay taxes? 3 people liked this. Dan Plant 1 hour ago in reply to Mike4444 You cannot cut government spending during a recession; the result would further propagate an already terrible economic reality. The bulk of out of control spending as you term it, is a product of the previous administration who engaged in unfunded wars and cut revenue. It's my personal belief that America has a revenue problem, more than a spending problem. The Tea Party and the Republicans also refuse to consider cutting sacred cows like the Pentagon budget. They would rather remove social safety nets, when the public is more reliant on them than ever. 3 people liked this. Farrok 3 hours ago America is in a great decline that can't be stopped. G.W. Bush ruined America with his insane War's and no taxes on the rich. You walk down the streets in America and they are falling apart. It's as if something has sucked the life blood out of our Nation. Down the street from my home is a blood bank and the lines form to it each morning are long enough to go around the city block. America is now a "has been" Nation without a future. No Jobs, No hope, No Future only WAR................ America has set a date with destiny and will be no more................ It must change course or die..................... asiajack and 19 more liked this Rain Water Systems 2 hours ago in reply to Farrok That's why every American should be out door to door for Ron Paul. We could have launched the space shuttle six times, for the amount of money we spent in Afghanistan, just last month. I hear a whole lot of people that speak as you do, as those speak who have been defeated. We can take this country back. A major first step is to stop listening to those who say we are doomed and demand the election of Ron Paul. No one else will end these stupid, pointless and wasteful wars. 3 people liked this. asiajack 1 hour ago in reply to Rain Water Systems RWS I have another thought -- so you are saying that Norway's problem is illegal immigration and not the rise of Ultra-nationalist Right Wing Christian hate ? I have not seen a number, but how many people in Norway have been killed by immigrants (legal or illegal), compared to the number killed by either formal members of, or people who identify with Ultra-nationalist Right Wing Christian hate. It seems to be the lesson to be learned is 1) violence does not change or solve a problem 2) society needs to confront hate with love and compassion and disarm the hate before it explodes. 4 people liked this. robin yates 4 hours ago what puzzles me is why the ordinary citizens of the USA are not marching in their millions and demanding their President starts to run things properly instead of allowing the loonies from the Republican Party and the Teapotties destroy a great country ? magdy and 19 more liked this asiajack 3 hours ago in reply to robin yates The average American, roughly 65%. makes what can be considered a middle-class income working approximately 50 hours a week. This same group of people generally (70%) live in a non-traditional family arrangement (meaning something other than a wife, husband, 2 kids, a dog, and neither the wife or husband have been divorced), combine that with the financial pressure of maintaining a home in the US (approximately $3,500 a month), and a pet (approximately $150 a month), two kids (approximately 300 a month), and then add the fact that for most children's activities are continuously supervised -- formally and informally, and then throw in "entertainment" time and what you have is an exhausted population who are essentially rats on a spin mill running in place. Combine this with some other facts like church attendance, far-right evangelical activities (approximately 25% of the population). Approximately a 50% high school drop out rate, with only a slightly lower college drop out rate -- do not believe the figures in US News -- they are self reported nonsense. 80% of American children are driven to and from school -- 30 years ago it was the reverse. Voting rates at 50% or less, political contributions at roughly the same rate (40%). One forms a picture of a society drowning just trying to maintain the life it aspires to. I might add a life that is ending -- part of the reason the tea party exists, as the US no longer lives on credit as it once did, and the degradation of the environment to continue to lower the standard of living. Regardless of the politics the US has 40 years to shift from neocolonial to local, and from consumption to conservation. Timothy Schutz and 13 more liked this Timothy Schutz 2 hours ago in reply to asiajack Community support agriculture would be a great start towards localizing the U.S.A. Thats why there is people like me working towards a sustainability degree. Hope is not lost in this country, or maybe i won't let the hope be forgotten. I am a young adult, a idealist, a revolutionist. Do not underestimate the ability of an individual to change the world, for it has only ever been that way. 5 people liked this. DannyEastVillage 4 hours ago in reply to robin yates Because they're Dancing with the Stars? gabrial and 7 more liked this DreamReliquary 2 hours ago The only problem with this article is that it makes Obama out to be some sort of force of good. Unfortunately he hasn't really accomplished much aside from continuing (Iraq and Afghanistan) and expanding (Libya, Pakistan, Yemen, Somalia) wars. I'm pretty sure he ran on the platform of ending wars and nation building... But then again, so did George W. Bush. The Patriot Act was also extended a number of years, effectively nudging us closer to a police state again. I'm not going to sit here and act like he's worst case scenario, but he definitely isn't the best either. No matter who's in office it seems like they're going to bend to the same pressure. American politics are a joke on its citizens without a punch line. asiajack and 10 more liked this PoorCitizen 4 hours ago Unikos's and subsequent mindless responses to Mr. Fraser's well-crafted and well-reasoned argument is an indication of just how dysfunctional and delusional America has become. As one who lives only a few miles from one of America's largest stockpile of nuclear warheads and hence a prime military target it pains me to say that with the potential for a Perry Presidency on the horizon, China may do well to invest its dollars in nuclear weapons and satellite-destroying missile technology along with cutting-edge green technology, since this seems to be the only thing that is likely to constrain and channel the new Tea Party view of the world into something less destructive to humanity's fate. The contemporary GOP/Tea Party, which is now driving US policy given the self-induced shriveling of the Obama presidency, has a bipolar fixation that only responds to and values two things: money and power. One can only hope that non-American world powers reach a sane accommodation for the management of world affairs that can curtail the destructive trend that is unfolding in America, as reason evaporates from the contemporary American political scene, global temperatures continue to rise, and the spectre of environmental doom looms on the horizon. Ironically, the recent Citizens United ruling by the US Supreme Court, which has provided fuel for the insanity, gives foreigners the opportunity to contribute directly in US political campaigns through third party intermediaries. Let us only hope sane leaders in other countries take part with their excess dollars, while there is still time to steer human affairs in a more hopeful direction. Dan Plant and 10 more liked this asiajack 3 hours ago in reply to PoorCitizen interesting idea -- foreign governments spend, through law firms, money to re-elect Obama, so that American actions will be to their advantage -- if I were a drug dealer in Mexico I might just take a Billion here and billion there and do -- at least I would not have the problem of where to stash the cash. Richard Mahony liked this Gary Green 1 hour ago in reply to PoorCitizen Military target of whom? Still living in the cold war? ThirdWorldCharlie 3 hours ago America's decline is primarily due to how she reacted to 9/11. Two external wars, may not have sunk her but was a factor in global distrust by fiends, foe and decline of "soft power" (read capacity to issue threats, cajoling and bullying). But two greatest factors of decline (financial strength, job and employment) are directly due to internal corporate Greed. Housing crisis was due to greed of banks and lead to spectacular collapse and destruction of American financial empire. The second factor was Globalization, championed by U.S. and Western corporations. This was also based on greed. The premiss was that if only U.S. companies could lower the manpower cost (they called it "leveling the playing field") they could compete and win from rest of the world. This notion propelled Globalization as a favorite tool of the governments. They helped pushed U.S. jobs abroad (China mainly) causing domestic unemployment. But the rub was that greedy corporations did not bring profits back home. So there is double whammy: jobs gone and so did taxable profits. Are these self inflicted? Yes. The real culprit is ideology based government policy. Free market, unfettered by any over sight brought both these debacle. Every one from think tanks to academia and captains of industry have dirty hands in supporting these ideas. SkipperGS and 9 more liked this asiajack 3 hours ago in reply to ThirdWorldCharlie America's decline is far deeper than 9-11 -- which was a symptom of its decline. Bush's small minded, self interested, and illegal reaction to 9-11 was the real tragedy. The leadership of Norway is far braver, and far wiser than any in the US. Jan and 13 more liked this asiajack 1 hour ago in reply to asiajack RWS, by rising above tragedy and reaffirming life and love, by not giving into hate and the desire for revenge, by not changing the system in response to a single tragic act -- and thereby denying it - its prize. If the US has reacted as Norway's leadership did the world would be a very different place, and perhaps a couple of million Arabs would be alive (then again I forgot they are towelheads and do not count -- never mind) 2 people liked this. Rupert Murdoch 49 minutes ago in reply to asiajack You can't compare a lone wolf shooter in Norway to 9/11. The Norwegian shooter was a single domestic terrorist, while 9/11 was perpetuated by an international terrorist network supported by the sovereign government of Afghanistan. Norway was criminal, 9/11 was an act of war. Even leftist Middle East writers like Juan Cole recognize that a military response to Al Qaeda was just and necessary. Rain Water Systems 2 hours ago in reply to asiajack Far wiser? By allowing unchecked illegal immigration one is braver? We have seen how some of their citizens react, and it was ugly and violent. " There is no animal more dangerous than a man who has lost all hope. " 1 2 3 Next [4; Reactions jean bozlov 2 minutes ago From twitter America's self-inflicted decline - Al Jazeera English http://t.co/zGfFbTj via @ajenglish Madhusudan Katti 2 minutes ago From twitter America's self-inflicted decline - Opinion - Al Jazeera English http://t.co/dhmFi5C via @ajenglish Sankar Iyer 2 minutes ago From twitter America's self-inflicted decline http://t.co/lobPuny Collin 3 minutes ago From twitter America's self-inflicted decline http://t.co/5qV5LC6 via @zite jhwygirl 33 minutes ago From twitter America from the outside looking in. "A self-inflicted decline" - Opinion from former Australian PM: http://t.co/1XBUFj1 jhwygirl 38 minutes ago From twitter RT @PeterMcCay: America's self-inflicted decline - Opinion - Al Jazeera English http://t.co/C9ocyso via @addthis cimidyue 38 minutes ago From twitter RT @AJEnglish Opinion: America's self-inflicted decline http://t.co/NFT7LUS >> so much greed. Nesrien Hamid 42 minutes ago From twitter A great piece on how the U.S. is digging its own economic grave with its partisan politics http://t.co/PRJBuud Kevin McKay 44 minutes ago From twitter America's self-inflicted decline http://t.co/foBhTUi via @zite Peter L McCay 47 minutes ago From twitter America's self-inflicted decline - Opinion - Al Jazeera English http://t.co/C9ocyso via @addthis Related Rick Perry: Too big to fail? As the race for the US presidency begins, another Texas governor has emerged as a leading contender. ( 31-Aug-2011 ) Interactive: How much did 9/11 cost the US? US job growth grinds to a halt Kamikaze tactics used in US debt battle Top News Libyan fighters 'ready' for Bani Walid attack Libyan papers 'show CIA and MI6 links' Mass rallies revive Israel protest movement Tropical Storm Lee drenches New Orleans Strauss-Kahn returns home to France Opinion Failing to realise the promise of 9/11 Why Turkey is bombing the PKK America's self-inflicted decline Russia's Middle East ambitions The outsourcing bogeyman What's Hot Viewed Emailed 7 Days o America's self-inflicted decline o Failing to realise the promise of 9/11 o Libyan fighters 'ready' for Bani Walid attack o Libya: Media on the frontlines of revolution o Why Turkey is bombing the PKK o US cable tells of Israel's 'harsh measures' o Racism on the rise in Europe o The 9/11 Decade: The Intelligence War o The disaster known as Netanyahu o Mass rallies revive Israel protest movement Now Inside Story Next [ In 16 mins ] NEWSHOUR Today's Schedule More Opinion Failing to realise the promise of 9/11 Robert Grenier Why Turkey is bombing the PKK Mustafa Akyol America's self-inflicted decline Malcolm Fraser The outsourcing bogeyman Jagdish Bhaghwati Russia's Middle East ambitions Nima Khorrami Assl One number says it all Stephen S Roach The disaster known as Netanyahu MJ Rosenberg Turkish aid to Somalia: A new pulse in Africa Pinar Akpinar What will Palestinian statehood mean? Abdel Razzaq Takriti Intricacies of Bahrain's Shia-Sunni divide Shirin Sadeghi Obama's betrayals offer lessons we can't deny Danny Schechter Addressing grievances in Gaza Mohammed Suliman The ethics of digital direct action Gabriella Coleman Zizek and Gaddafi: Living in the old world Hamid Dabashi join our mailing list Email Address Enter Zip Code Go links from english.aljazeera.net vote Secret files found in Gaddafi's compound show that as late as August 2 some influential Americans were advising Gaddafi on how to remain in power and beat the rebels. 806 points | 186 comments vote Turkey downgrades ties with Israel: Ankara expels Israeli diplomats and suspends military co-operation over 2010 flotilla raid. 237 points | 116 comments vote Al-Jazeera Network demands Israeli authorities immediately release Samer Allawi, Al-Jazeera’s Afghanistan Bureau Chief. Mr Allawi was arrested by Israeli official without reason while on vacation with his family in the occupied West Bank. 168 points | 81 comments vote Indian and Pakistani troops exchange fire 118 points | 32 comments vote Gaddafi's wife and three children in Algeria 92 points | 51 comments
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