The Decline and Fall of the American Empire
This is an opinion piece, but an informed one (if I say so myself). I invite debate and contradiction, but I ask that people not write in and call me “biased” because this offends their political or patriotic sensibilities. If you disagree, please tell me where I’m in error (preferably with citations and data). This is an important topic and I would love to entertain discussion!
The United States and the leadership role it occupies in the world today are headed for collapse. At least, that’s the prospect being entertained by analysts, historians, and scholars the world over. It’s not a prospect anyone wants to see happen, mind you. Though I’m sure there are some who derive schadenfreude from the idea, no thinking person would consider that the collapse of the world’s largest economic and military power would be a positive.
However, unless the nation undergoes a serious shift in terms of its policies, both domestic and foreign, and comes to terms with its history, the prospect is a very real one. But given the fact that all attempts at reform in the past four decades have either been categorically rejected or only instituted halfway, there’s not a lot of hope and optimism.
In every respect — economically, politically, socially, militarily and legally— the United States has been regressing since the late 1970s. What’s worse is the fact of this decline has been falsely attributed to people and policies that had nothing to do with it while the actual causes have been concealed and dismissed. The problem has become so acute that people are actually willing to reject science, anything said by the “mainstream media”, and anything that doesn’t reinforce their prejudices and biases.
And it seems like the only reason for any of this is that people can continue to pretend they are not wrong in their convictions, or care more about partisan fighting than they do the state of the nation. As I said, this process began in earnest in the late 1970s and can be discerned from five major symptoms, which include:
- Monetary and trade deficits and massive debt
- Deregulation hurting the US economy and middle class
- A widening gap between the rich and the poor
- An increasing percentage of citizens in jail
- Military force being used to enforce economic interests
These are the classic moves made by empires in a state of decline. As Ronald Wright said in A Short History of Progress, where he described how the Mayan rulers responded to the decline of their civilization:
As the crises gathered, the response of the rulers was not to seek a new course, to cut back on royal and military expenditures, to put effort into land reclamation through terracing, or encourage birth control (means of which the Maya may have known). No, they dug in their heels and carried on doing what they had always done, only more so. Their solution was higher pyramids, more power to the kings, harder work for the masses, more foreign wars. In modern terms, the Maya elite became extremists, or ultra-conservatives, squeezing the last drops of profit from nature and humanity.
When I read this book back in 2005, I instantly thought of the Bush administration and his cabal of neo-cons. Their regressive policies, their glorification of the past, their foreign wars, power grabs, voodoo economics, and the way they demanded others suffer and die for their failures and lies — it all had the stink of imperialists trying to save the empire through senseless measures.
But of course, these policies had roots that went particularly deep. And the fruit of this poison tree has been consumed by too many Americans ever since. As with all historical trends, this one cannot be examined in a vacuum. So here are the broad strokes that (imho) are contributing to the US’ decline, one by one. First things first:
Monetary and Trade Deficits:
In terms of wealth, America’s decline became highly evident during the late 1970s. At this time, America was at a crossroads. The Vietnam War had caused the Gross Public Debt (GPD) to go from over 360 hundred billion in 1960 to just over 1 trillion by 1978. The country’s dependence on foreign oil had also been demonstrated by the OPEC Crisis of ’73 and the Iranian Revolution of ‘79.
Domestically, the Watergate scandal had a drastic impact on the American people’s confidence in their government institutions. And the post-war economic boom was coming to an end and stagnation and aging infrastructure was becoming the norm. Effectively, America was going from being a creditor nation (one that everyone owed money to) to a debtor nation (one that owed everybody).
Confronting these issues, then-president Jimmy Carter addressed the nation and spoke of the “crisis of confidence” Americans were feeling. He spoke of the importance of curbing America’s dependence on foreign oil, the need to develop synthetic fuels and renewable energy, the need for American’s to curb their energy consumption, and the need for Americas leaders to lead again.
This speech came to be known as Carter’s “malaise speech”, even though he never used the term. While it led to sweeping reform that cut America’s oil imports in half, spearheaded the development of alternative fuels and energy, and reduced domestic energy consumption, American’s came to view the speech and the Carter administration with enmity.
In 1980, when they went to the polls, they turned Carter into a one-term president and swept Ronald Reagan into power. As President, Reagan went to work undoing generations of consensus-building politics and laid the groundwork for a new conservative orthodoxy in government. One of his greatest measures was to cut taxes twice for the most wealthy citizens.
He did this in 1981, where income taxes for the highest tax bracket were reduced from 70% to 50%. In 1986, he passed a second round of tax cuts, from 50% to 38.5%, but decreased them further to 28% in the following years. As a result, the budget deficit increased from $74 billion in 1980 to $221 billion in 1990. Corporate taxes were also cut under Reagan, going from 46% to 40% and then down to 34% between 1985–89.
What we learned from Reagan's tax cuts
The tax bill speeding through Congress is being sold - by its advocates - as so good for the economy, that it will…
Reagan combined these revenue-cutting measures with boosted military spending on a number of programs, not the least of which was the Strategic Defense Initiative (the progenitor of Missile Defense). Apparently, Reagan loved the idea because it was nicknamed the “Star Wars” initiative, which is why research continued into the technology despite the fact that multiple assessments said it was unfeasible and prohibitively expensive.
All of this had a noticeable effect on the US economy and society. Between 1981 and 1989, the Federal Government Debt (FGD) almost tripled, going from $1.358 trillion to $3.666 trillion. The gap between the rich and the poor also widened considerably (more on that below), with the vast majority of gains made since the 1980s going to the top 10% and 1% of earners. Things only got worse as time went on.
Under George H.W. Bush, the debt increased by an additional $1.7 trillion, reaching a total of roughly $5.37 trillion by 1993. This tradition of deficit-spending ended temporarily during Clinton’s presidency, who not only managed to preside over one of the longest periods of economic growth in US history, but also turned the deficit into a $200 billion dollar surplus.
However, that surplus was quickly turned back into deficit-spending under Clinton’s successor, George W. Bush. Using the Reagan administration as a model, Bush combined high-spending with tax cuts that favored the wealthy and promised it would lead to economic growth. Instead, the US economy did poorly under Bush and the FPD continued to climb, effectively doubling between 2001 and 2009 — $7.32 trillion to $14.59 trillion.
Under Obama, the situation did not improve much. He also managed to turn the economy around, the FPD continuing to climb and reached more than $21 trillion by 2017 when he left office. However, much of this is attributed to the tax cuts Republicans demanded for top earners in exchange for passing a budget. In addition, revenue declined sharply in part because the US experienced the worst economic downturn since 1929.
Today, the FPD stands at around $30 trillion, and there is no end in site. Especially when you consider that one of the few pieces of legislation that the Trump administration managed to pass included a tax bill that slashed income taxes for the wealthy (again!) and is projected to balloon the deficit (not debt) by between $448 billion and $1 trillion over the next ten years.
In terms of trade, the US also began to accumulate a significant deficit. Beginning in the late 1970s, the US began to run a small trade deficit, which reached a high of $144.77 billion by the mid-1989s. The problem did not improve during the administrations of Bush Sr. and Clinton, but was exasperated in the extreme during the administration of George W. Bush, reaching an imbalance of almost $786.45 billion by 2008.
While it improved slightly under Obama, reaching a low of about $419 billion in 2009, the trade gap has increased and was still dire by 2020 (over $651 billion). In short, the U.S. went from being the largest creditor and manufacturer to the largest debtor and importer decades ago, and the situation has only gotten worse.
U.S. Trade Balance 1970-2022
External balance on goods and services (formerly resource balance) equals exports of goods and services minus imports…
We’re the U.S. any other country in the world, it would be forced to do what other countries have done when faced with huge debts: devalue its currency, service its exports, and severely curb its spending in order to pay off its debts. It’s the national equivalent of credit counseling, something that the International Monetary Fund (IMF) and the World Bank have forced developing nations to do for decades.
But of course, the U.S. is exempt because the dollar is the world’s reserve currency and the global economy is pegged to the U.S. This is something that the U.S. demanded during the Bretton Woods Conference in 1944. However, this will not prop up the U.S. economy indefinitely. As the influence of the U.S. and its economy erodes, nations will seek out a different standard. The alternative is that the world economy will collapse if and when the U.S. economy does.