The Decline of Great Empires


For the last decades,  I have detected alarming signs of a relative economic and industrial decline in the United States, the only superpower that remains after the catastrophic fall of the Soviet Union.  There are two red flags that I see endanger this great country if it wants to remain as a global economic and industrial empire:  the soaring public debt and the enormous burden of its military expenditures.  As the United States declines, China and India are emerging as the next great global players.

According to some alarmists, the entire country is falling down a steep slope that lacks morality and responsibility.  I don’t think this is true, but I will have to admit there are black clouds in the horizon that need to be addressed by those responsible of leading the nation.

While the general message from recent jobs report is relatively sunny, one bleak trend remains: long-term unemployment.  The average length of time the jobless have been out of work has reached 31.2 weeks in March. That’s the longest average jobless period since the government began collecting such data in 1948.  It’s estimated that even though the recession ends, the jobs lost will not return.  There will be a new structural unemployment scenario in the United States as companies adjust their global operations replacing head counts with technology.

Nearly one in four American manufacturing jobs has vanished since 2000, and forty thousand factories have closed since 1998, according to the Alliance for American Manufacturing, a Washington trade group. In 2008, in fact, as the economy crumbled and factory orders–everything from computer chips to steel casings—plummeted to record lows, manufacturing jobs accounted for nearly a third of all those lost in the United States. “We’re at a point where a good job is a good job, and benefits are benefits, whether the companies are based here or somewhere else,” commented a financial pundit.

Foreign companies employ Americans everywhere from Alaska to Florida; there are foreign-owned companies employing American workers in every one of the fifty states. In Indiana alone, for example, one out of every seven manufacturing jobs comes from a company based outside the United States. And the payoff has been invaluable. Without foreign investment, said Mitch Daniels, the Republican governor of Indiana, “We’d be a dust bowl.” Foreign investment has been the single most important economic factor that has helped lift the Deep South out of the past and into a high-tech future.

Now let’s see what’s happening with the soaring national debt.  Under Obama’s budget plan, the USA’s debt in 2020 would be nearly the size of the entire economy. Interest costs would be $900 billion, five times today’s level.

Yet the only solutions capable of raising enough money are politically dangerous for the president and Congress: tax increases and major reductions in Medicare, Medicaid and Social Security.  Although a solution to the nation’s $12.8 trillion debt remains elusive, most of the nation’s power brokers agree on the problem: America owes too much money.

By 2020, the taxes it is projected to collect barely would cover the benefits it has promised and the interest it must pay. Without changes, almost nothing will be left for defense, education, veterans or anything else.

So far this fiscal year, the debt held by the public—not including money the government owes itself—is 58 percent of the U.S. economy.  It’s roughly half Italy’s 113 percent debt as a share of the economy’s annual output. Japan’s is 105 percent; Britain, France and Germany are between 62 and 70 percent.

Health care costs are soaring. Medicare and Medicaid will cost more than $800 billion this year, the CBO (Congressional Budget Office) says.  By 2020, they’ll cost $1.5 trillion.

Paul Kennedy, author of the book “The Rise and Fall of the Great Powers”, predicts that continued deficit spending, especially on military build-up, will be the single most important reason for decline of any Great Power.

I don’t live in the United States and must depend on the media as my source of information.  However, I do see signs that something is not right in the land Up North.  Wall Street behaved erratically during 2008 and the Big Three almost went under during that turbulent year.  Unemployment is high—in the double digits territory—and will remain high in the near future.

In order to research more on this delicate issue, I purchased Mr. Kennedy’s book.  I just received it last week by mail directly to my Post Office box.  The content of the book consists of three main parts:  Strategy and Economics of the Preindustrial World, Strategy and Economics in the Industrial Era and Strategy and Economics Today and Tomorrow. It’s a dense book of 677 pages.  That means it will be a long and  concentrated reading in the days ahead.  I expect to find out if the myth of the decline of the United States as a global political, military and economic power is true or not.

Below is a photograph of the aforementioned book.

Photograph of the main cover of the book, "The Rise and Fall of the Great Powers" by Paul Kennedy. Photo by ©Omar Upegui R.

I plan to extract important information about this reading to share with you in the upcoming days.  Good Day.

4 thoughts on “The Decline of Great Empires”

  1. I may need to add that title to my reading list, Omar. It looks promising.

    I think the main contributor to our problems in the US is the power wielded by the lobbyists on our government officials. Although is campaign was run as time for “Change” it appears that it’s business as usual.

    I don’t know if you can watch this online there but it’s a telling exposure of what should be considered corruption by our government.

    http://www.pbs.org/wgbh/pages/frontline/obamasdeal/

    jim and nena
    fort worth, tx

  2. Hi Jim and Nena:

    If you were nearby, I would give you the book, once I finished it, but sending it to you by mail would be more expensive than buying it at one of the main book stores in Fort Worth.

    Yes, I tried and I can certainly view the PBS video in my computer. Will take a look at it after lunch. I’m afraid the “wheeling and dealing” disease in Washington D.C. is here to stay. Greed and money are very sticky words in every crack of the globe.

    We are lucky in Panama to have a president, Ricardo Martinelli, that ran his campaign based on “Change” (Cambio), and by golly, the guy is following it by the book.

    People don’t like him, because we are not accustomed to law and order. So far he’s doing a terrific job. I hope he doesn’t change in the four remaining years of his term. Fingers crossed.

    Take Care,

    Omar.-

  3. I happened upon your site while researching pictures of my old Whirlpool Mark Series refrigerator. After I found your story of the updating of the ‘frig, I went to your home page. Very nice.

    I think we in the U.S. are in deep trouble and it’s getting deeper each day. For years, we have been running up the national credit card bill way too much, expecting our children and grandchildren to pay. The day of reckoning is almost upon us. We’ll see what happens.

    My wife told me of a report that China has been building housing at an incredible rate, but without building the infrastructure. Who wants a house or apartment without proper electrical and proper sewage? Also, from time to time, there are photos of apartment buildings in China that just collapse on their sides. Terrible foundation work and planning. My nephew, who has travelled there for work, reports similar instances. The gist of the report, accoring to my wife, is that they may be heading to a real estate/housing problem similar to what we’re going through in the U.S.

    Sorry for the rambling. Thank you for the story on your ‘frig. I hope it’s still work well. God bless you and your family.

    Dan in Chicago

    1. Hi Dan:

      Thank you so much for your enlightening comments about the building industry in China. As you say, they could burst the economic bubble if they don’t adopt corrective actions. The destruction in Haiti was due mainly to poor infrastructure.

      Yes, my Whirlpool fridge is working like a Swiss clock. I hope to keep on squeezing its juice for the next twenty years. Nowadays, they don’t make them like they used to.

      Greeting from Panama,

      Omar.-

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