Keeping the World Safe for Plutocracy

by MICHAEL F. DUGGAN

MARCH 8, 2016

Ninety-nine years ago, an American president committed to an internationalist foreign policy with messianic overtones, pledged to make the world “safe for democracy.” Times have changed. For although “democracy,” rights-based liberalism (including women’s rights), “freedom,” and the rule of law are still very much a part of the internationalist lexicon, these words have become little more than clichés mouthed to justify cynical policies and to win over or lull naïve progressives with whom such terms still resonate with genuine earnestness. They are the policy equivalent of slick Madison Avenue marketing to help make the world safe for plutocracy.

Forget “terrorism” for a moment. Forget “dictatorship” and “totalitarianism,” forget Iran, Putin, Assad, Ghadaffi, Hussein, and all the other international bogeymen—both real and imagined—and related weasel words. Any understanding of the world economic and geopolitical situation must be grounded in an understanding of the takeover of American foreign, economic, and military policy by special interests and the projection of American power abroad to advance the prospects of these powerful players. But how did we come to such a state of affairs and why are more Americans not more upset about it?

Since World War II, the United States has shifted away from a manufacturing economy toward one of deregulation, unrestricted free trade, a split between high and low-end services, multilateral trade agreements, and levels of immigration that have laid waste to American unions and labor markets. During the same time, the great American social democracy that grew out of the New Deal has been gradually dismantled and is dying a death of a thousand cuts. At this point, both political parties are largely bought-and-paid-for by powerful special interests that includes big finance, the credit card companies, big energy, any number of domestic and foreign lobbies, and military industries, to name but a few. There are powerful interests in this country that buy congressional representatives the way a person might check off items on a grocery list.

It is no exaggeration to say that the United State Government is the primary agent in forwarding a neo-liberal world agenda via interventionist neoconservative means—i.e. via the use of undeclared wars and military actions as a basis for policy—and at the highest levels of the DNC and RNC, there is little difference between a Democrat and Republican (Glass-Steagall was a victim of the same Democratic administration that pushed the GATT, and NAFTA through Congress). The reason why these assertions do not constitute a conspiracy theory is because all of the evidence lays in plain sight and has been the subject of such serious journalists and scholars as Donald L. Barlett and James B. Steele, Chrystia Freeland, John Gray, and the late Tony Judt (1) . The problem is that the American mainstream is too distracted or depressed to have noticed, and even if they were not, it is unlikely they would learn of such things via the corporate media.

Perhaps the most striking thing about all of this is how closely the domestic economy and politics are tied to foreign affairs as internal matters have become increasingly incumbent on foreign and military policy, and finance and international corporate interests have all but superseded or co-opted the sovereign national interest as a basis for U.S.—and more generally, Western—foreign policy. Again, this is not a story you will likely find on ABC, CBS, or NBC, or in the pages of most newspapers.

The relationship of free trade to domestic labor markets is a powerful example of the foreign/domestic policy dynamic. When commentators like Thomas Friedman speak of a “flat earth,” they are speaking of flat labor markets and more-or-less uniformly low production costs as a part of the eschatological endgame of globalization. What this means is that in a world of weak sovereignty and nonexistent trade barriers, American workers will eventually make what workers in other nations make as labor wages find an entropic world mean. You can bet that if American workers are near the top of the labor market, their wages will not be going up, as their government encourages policies under which they would compete with workers in Asia, Africa, and Central and South America in a race to the bottom. One can’t help but wonder who benefits from such a scheme.

The basis—the genius—of the American Mid-Twentieth-Century economic miracle was the fact that the U.S. had a working class that was also a middle class. If a high school graduate did not go on to college, he (and in those days it usually was a he) could build bridges, skyscrapers, cars, or could make steel or the many quality durable goods that his salary allowed him to buy, thus sustaining a diversified economy and therefore a tax base allowing for a healthy social democracy. It is a notable fact that the period of our greatest economic success was also the period of highest taxation on the rich and the greatest regulation of business toward the public’s interest. Today, if an American does not go to college—and major in a lucrative field—he or she will likely end up working in food services, or low-end retail for minimum wage, selling cheaply-made foreign products.

Similarly, if you started up a company in the United States in 1945, and made a profit, you would pay off your loans, invest in research and development to make an even better product (the idea of “designed obsolescence” didn’t really come in until the 1950s), and with what was left over, you raised the wages of you employees and provided them with health and retirement benefits.

Today, by contrast, the ideal is to make a product as cheaply as possible by manufacturing it in a nation with a convenient lack of environmental or labor laws, or tax burdens. Steve Jobs might have been an impressive technical innovator, designer, and marketer, but his employment practices were akin to a Gilded Age wager slaver (“wage slavery” has now been transformed into to blandly technical newspeak as “labor arbitrage”). The next time you use your cell phone or electronic devise, think of the people who made it, but probably cannot afford a subscription.

While there is a danger in romanticizing the past, I would gladly pit the conditions and labor practices of a postwar American car company against those of a present-day Asian sweat shops that produce major American clothing lines.

Some defenders of globalist orthodoxy note that the kinds of jobs Americans did in 1940 or 1960 have been automated, and that those jobs are gone for good. This is a curious argument given that Germany, Japan, South Korea, and some of the Scandinavian countries have been able to protect their labor markets and whose diversified economies are anything but low-tech. American leaders would do well to remember that the ultimate purpose of an economy is to employ people and not to implement efficiency for the few at the top at the expense of everybody else. President Kennedy once noted that “a rising tide lifts all boats,” but the current neoliberal deluge is likely to only lift a few yachts, while submerging the rest.

But what does the relationship of domestic and trade policy have to do with foreign affairs and military policy? By looking at the nations against whom there have been U.S. or NATO military actions over the past few decades—or those who we have merely vilified—the answer comes into sharper focus. In fact these nations and leaders are identical to those that have bucked the idea of globalization and U.S. military hegemony as the bulldog of neo-liberalism. What would such a list look like? How about: Russia (whose president has occasionally been compared with Hitler in the American media), Iran and allies, Iraq under Saddam Hussein, and Libya. And while we should make no mistake, that Mohamar Gadaffii, Sadam Hussein, Vladimir Putin, and Bashar Assad are, or were, not nice people, the United States has historically shown an impressive capacity to live-and-let-live with bad people before, as long as they did not interfere with our policies.

The initial victim of the emerging globalist reality and the reregulation of the economy to serve the perceived interests of the 1% is the American social democracy that characterized the years of greatest U.S. prosperity from roughly 1945 to the early 1970s. Other threats will come from the outsourcing of security and even aspects of defense manufacturing. Overreaction to the terrorist threat will likely continue to chip away at the first principles of the liberal republics of the West.

Over the long-term the United States will likely decline as a result of its unsustainable economic policies, massive debt, and military adventurism into a second tier status as its military adventures become too costly for a shrinking tax base (2). Of course neoliberal policies will not really make the world safe for plutocracy for anything other than the short run. All of this underscores the danger of basing national policy on theories, ideology, and bubbles rather than a historical understanding of what has worked and what has not worked, and why.

The current oil glut may actually generate enough wealth to keep the U.S. economy limping along indefinitely while serious problems go unaddressed. If the price of gasoline drops from $4.00 per gallon to $2.00 (as it has), to $1.50 or below, the result will be hundreds of additional dollars of disposable income in the pockets of most Americans. This illusory renewed lease on life will create a kind of export Keynesianism, as the additional disposable assets for no extra labor will renew the demand cheap foreign goods (3). This will sustain an unhealthy, artificial economy that will do far more harm than good. It will also create an illusion of relative prosperity—like the false remission of a cancer patient on steroids—that will allow the next president to take credit for turning things around when she/he has in fact has done nothing of the kind. The real change that is needed—of diversifying and localizing the economy, to say nothing of addressing the looming catastrophe of the environment and population—will most likely not be implemented and the world supply of oil will likely outlast the possibility of reversing world climate change (4).

Eventually the oil bubble will burst, and when it does the spending power of the American consumer markets will tank again. With a dearth of American money to buy foreign products, a worldwide economic crisis, a depression of under-consumption will be the likely result. Of course the ultimate victim will be the world itself, as bad and cynical policies continue, and the illusion of economic health will distract the major powers away from pursuing realistic solutions to more pressing, more final problems, such as a world environmental and related population catastrophe that may already be to far gone to reverse or remedy. But at least gas is cheap again.

Notes

1 Donald L. Barlett and James B. Steele, The Betrayal of the American Dream, New York: Perseus Book Group, 2012; Chrystia Freeland, Plutocrats, the Rise of the Super-Rich and the Fall of everyone Else, New York: Penguin, 2012, John Gray, False Dawn, the Delusions of Global Capitalism, New York: The New Press, 1998; Tony Judt, Ill Fares the Land, New York: Penguin, 2010.

2 Regarding U.S. public debt, see William Edstrom, “Waiting for Collapse: USA Debt Bombs Bursting”, Counterpunch. On the effect of U.S. borrowing and the sustainability of its military operations abroad, see John Gray, Black Mass, Farrar, Strauss and Giroux, 2007, p. 166. “America’s military adventures are paid for with borrowed money—mostly lent by China, whose purchases of American government debt are crucial in underpinning the U.S. economy. This dependency cannot be squared with the idea that America has the capacity to at as the global enforcer of liberal values. It is America’s creditors who fund this role, and if they come to perceive U.S. foreign policy as threatening or irrational that have the power to veto it.”

3 The idea of the U.S. economy as the basis for a kind of export Keynesianism was suggested to me by my friend, David Isenbergh, although they were previously expressed by others like the French historian Emmanuel Todd. Isenbergh believes that many economists greatly underestimate the weakness of the global economy. Although the recent downturn in the Chinese economy and the Stock Markets is generally attributed to the glut of oil, Isenbergh sees the only link as a temporary effect due to the decline in the stock value of the oil companies.

By contrast, Isenbergh believes that the slowdown in the Chinese economy is more long-term in nature and due to a decline in the American demand for Chinese products. In this sense, the oil glut may have actually warded off an underconsumptionist depression by putting more money in the pockets of the American buying public, therefore sustaining demand somewhat. He believes that one source of the underestimation of the weakness of the U.S. and world economies comes from the reliance of economists on metrics of average rather than median income. Consider the following illustration: if Bill Gates walks into a room in which there are 15 underemployed Americans, the income average will go up by billions of dollars, while the median will barely change. Bill Gates skews the average, creating an illusion of prosperity, while the other 15 remain underemployed.

4 On the global environmental crisis, see Roy Scranton, “We’re Doomed. Now What?” The New York Times, December 21, 2015, and Roger Bradbury, “A World Without Coral Reefs,” The New York Times, July 13, 2012. See also John Gray, Straw Dogs, and Edward O. Wilson, Half-Earth.

Michael F. Duggan was a Supreme Court Fellow for 2011-2012. He has taught at Georgetown and in NYU’s Washington, D.C. program.