Markus Eder

The coming end of an Empire

Why the American Dream is going to perish in the flames of neoliberal Decadence.

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Kapitel 1

The coming end of an empire: Why the American Dream is going to perish in the flames of neoliberal decadence

Markus Eder

Published by Markus Eder,

Rotdornweg 9

86567 Hilgertshausen-Tandern

Germany

Copyright 2013

Preface

I am writing this political essay with a somewhat divided heart. Socially, I am a conservative man, whose views on the handling of crime, on family, abortion and same sex marriage are close to those of the US-Republican Party, whose neoliberal adherents I am going to attack in this essay.

I am also well aware, that there will be many people in the United States of America, who will ask themselves why I, a German, is writing an essay of that kind.

The answer to these questions is twofold. First of all, I think, that the neoliberal creed, as it presently rules in America, has already brought much damage not only to America itself but economically, environmentally and socially, to the rest of the world, too. The consequences of this damaging neoliberal creed are therefore no mere internal affair of the United States but of interest to the world as a whole. Secondly, the highly problematic neoliberal sections of US- American society, who are in many cases not really social conservatives but just short-sighted, money greedy individuals, will, in my opinion, bring in the future still far greater damage on America and the rest of the world than they already have done in the last two decades.

Although I am very well aware, that despite this reasoning of mine, I will in all probability nevertheless incur the hatred of xenophobic and nationalist US-American circles, I see, for the reasons given above, no alternative to bringing my views to the attention of the world through the publication of this essay.

Nearly thirty years ago, the famous American historian Paul Kennedy expressed in his book The rise and fall of the Great Powers the hope, that the United States of America, while losing some power in relationship to such rising nations as China or India, would nevertheless be in a position to preserve for the future its position as a leading world power.(1)

While from the perspective of the year 2012, America has indeed managed to preserve this position, we nevertheless have to acknowledge, that the fundaments of its power have become increasingly fragile and even morbid. Due to the momentum of this decay, the probability must appear very great, that at least at some point in the following century, e.g. 2101 to 2200, America will suffer the fate of the Roman Empire and will disintegrate. Several factors are likely to pave the way for such a dramatic development.

The destructive neoliberal creed

A lacking preparedness to tax the rich and affluent higher for the sake of infrastructural investments, higher spending on social security and balancing the budget

Over-proportional representation of the rich in the US-Parliament and in the US-Administration

Blockade of legislation through filibustering in the Senate

Short sighted share holder value mentality and permission of derivates

Insufficient efforts on the integration of minorities

Unpreparedness to restructure the energy policy in favour of alternative, cleaner energy

Increasing external aggressiveness as a ventil for internal failure

The likely nuclear Armageddon

1)The destructive neoliberal creed

At the heart of the present US-problems and –due to the still extraordinarily eminent position of the United States in world politics- also of the rest of the world are the destructive neoliberal forces, which consist both of the neoliberal rich themselves and their supporters in academia and business. According to the destructive neoliberal creed of these people, taxes shall be low and the state and national budget deficits shall be reduced by cutting back government investments in social security and infrastructure. Investment in the armed forces on the contrary shall remain high. After all, if necessary or desirable, there must be a strong army in order to conquer the Persian oil fields or other objects considered desirable by neoliberal greediness. Furthermore, these kind of people give top priority to the economy over everything else. No matter, how much the world climate is going to deteriorate, or how many lives hurrican Katharina is going to claim, the US-American economic growth rate is always dearest to their hearts. Moreover, not few within this most problematical section of US-American society combine this economic greediness also with a socially destructive conduct of their private life. “Socially allowing” is the magic word they are using in this context, which means nothing else, that at the economic level they want as much money as possible, while at the private level a few adulterous sex orgies and a liberal attitude to same sex marriage are not excessively repugnant to their minds. These are the kind of people, who are going to destroy the social and economic fundaments of US-American society, thereby doing great damage to the rest of the world, too. The problems likely to be created by these dangerous breed of people shall therefore be discussed in greater detail in the following.

2)The lacking preparedness to tax the rich higher for infrastructural and social purposes

Still in the times of President Bill Clinton a maximum income tax of 39,6 per cent and also a higher tax on capital gains secured, that the United States were adequately funded and even had a surplus budget. Quite evidently, this is no longer the case. Americans, and particularly the upper third of society, pay presently much lower rates, and especially the maximum taxation of capital gains is with 15 per cent in 2012 ridiculously low. Consequently, not only has America`s national debt risen during the period of the Obama administration from about 10000 billion Dollars to about 16000 billion dollars, but also the US-infrastructure has fallen very much into decay. Moreover, an ever increasing wealth gap between the richer and the poorer sections of society has developed. Somewhat connected with the underfunded budget (both at the state as well as at the national level!), efforts on the integration of minorities and investment in alternative energies have suffered, too. As these two last mentioned points, minorities and alternative energies, will be dealt with in other chapters, I will, for the moment, concentrate on the issues of inadequate infrastructural investment and inadequate spending on the social sector. The issue of inadequate infrastructural investments raises several problems. First of all, a successful industrial nation like the USA needs a good, intact and well developed infrastructure, in order to maintain its economic position. Foreign investors, too, might become increasingly reluctant to invest in a country, which allows its infrastructure to decay. Secondly, adequate infrastructural investment gives a boost to the economy, as money is spent on infrastructure, and economic activity and employment are thereby created. Insufficient

investment on social security also has very adverse effects. First of all, it undermines cohesion in a society, and furthermore, very important at this critical point of American history, also denies the poorer sections of society and parts of the middle class the opportunity for social advancement. How, for example, shall a poorer family finance the study costs of its eldest son at Harvard, if this family receives no proper financial support on that behalf by the state or federal government? Economically, too, lacking financial support for the poor proves disastrous. The poor, after all, do not save the money they receive from the state, but immediately reinvest it into the economy by buying goods and services necessary for their daily life. Thereby they stimulate the growth of the economy, which leads to more jobs and larger tax revenues for state governments and the national government. Consequently, increased public funding of the poor and unemployed would be beneficial to the economy, too. The rich -or at least the better off- instead spend only a smaller fraction on their income on their daily living. They, in all probability, also would not reduce their spending, if they were taxed higher. After all, they have enough money anyway.

Higher tax revenues would furthermore not only facilitate investments in infrastructure and investments in beneficial social policy. It would in addition also help to break the vicious circle of debt, that is troubling the US-American nation so very much. The idea behind this great US-American preparedness to indebt itself was –and to a certain extend still is- that in order to fight the big economic world crisis of 2007-2008 tax cuts had to be granted to the middle class and the affluent, who would then reinvest the money into the economy, thereby creating growth and jobs. This strategy has probably misfired. First of all, for the sake of stimulating the economy, providing higher social security payment to the poor and investing the money into infrastructure would have provided a more direct and probably stronger stimulus to the US-economy. After all, as has already been demonstrated above, the poor would immediately have reinvested out of need the received money in the US-economy. Infrastructural investments, moreover, are not only the most direct and most immediately job creating investments of all, but they also make America a more attractive place to invest for domestic and foreign investors. If higher debts are to be incurred at all, social security and infrastructure investments -and not tax cuts- would have to be the proper justification for such rising public debt.

Moreover, America`s increasing national debt creates a situation, in which many foreign money lenders, as especially China, become increasingly reluctant to lend money to the United States. Theoretically, the US- Central Bank Fed could, and to a certain extend already does, issue more money and purchase with this money US-Bonds. However, activating the money printing press will in the long run create a strong inflation. This is nothing to be taken lightly. Already now it is part of the neoliberal credo so much dominant in US-society, that employees, the poor and pensioners are not entitled to receive wage increases, increase in social benefits and increase in pensions offsetting the amount of inflation. If inflation is therefore going to rise strongly in the future, large sections of US-American society will impoverish, and the already large wealth gap between the affluent and the other sections of US-American society will still become much larger than it already is today.

Against the background of all the arguments mentioned before, higher taxes especially for the upper third of society would prove highly beneficial. In particular, a moderate increase in the maximum capital gains tax rate of 15 per cent in 2012 to 29 per cent would enhance public revenues tremendously and would provide governments -both at state as well as at the national level- with the necessary revenues for the desirable infrastructural and social investments. Also conceivable would be special value added tax schemes particularly targeted at the richer sections of society. With regard to car purchasing, for example, it would be possible to exempt the first 15000 dollar of a car price completely from value added tax, but to impose on the section of the car price above this level a twenty five percent value added tax. A rich person buying a 60000 Dollar Mercedes (net price without value added tax!) would then have to pay 11250 Dollar (60000 USD-15000 USD exemption)x0,25) value added tax on this expensive car, while poorer American families, due to the 15000 USD exemption, would remain largely unaffected by such a value added tax. As he is a rich or at least affluent person, he probably would not be deterred by the 25 per cent value added tax from making this purchase. Similar value added tax schemes are conceivable for luxury journeys as Cruises in the Caribbean or luxury food as caviar. Regrettably, resistance to such reforms among the powerful sections of American society is very great, and therefore these reforms are very much unlikely to be implemented.

3) Over-proportional representation of the rich and wealthy in the US-Parliament and in the US-Administration

A further great problem is the over-proportionally high representation of the rich in the US-Parliament. This is particularly true with regard to the US-Senate, which has increasingly become a club of millionaires. One might now be tempted to argue, that richness is a mark of success and business victory, and that there is nothing wrong, if those who “made it” have a strong voice in the US-Parliament. After all,victorious and intelligent businessmen and businesswomen might, by sitting in parliament as legislators, very well apply their great skills, energy and intelligence to the furtherance of the overall national good. Furthermore, the strong presence of the rich in the US-Parliament might be very much preferable to many people to the very strong presence in, let`s say, European Parliaments of quite often greedy and over-privileged civil servants. Although all these arguments carry some weight, nobody should be in doubt, that a Senate dominated by millionaires will be extremely reluctant to pass laws increasing the financial burdens of the rich and affluent. Quite to the contrary, a Senate of such kind is -and has proved to be- a champion of tax reduction for the affluent sections of US-American society. Consequently, at least one of the two chambers of US-Parliament has become more a guardian of the interest of America`s income upper class than an unbiased benefactor of US-American society as whole. As the Senate can block legislation passed in the House of Representatives, its role as a benefactor of the rich and affluent must appear most consequential.

Moreover, this problem is not that much limited to the Senate. The US-executive, too, is dominated by persons, who can legitimately be described as millionaires. President Obama might have started as simple Senator from Illinois and might indeed have lived for quite some time in a small flat and been obliged to pay off his debts. However, already with the books he wrote during his campaign for presidential nomination in 2008 he came quite close to becoming a multi-millionaire. The Clintons, too, had become a family of millionaires, when Hilary Clinton became secretary of state, and the list goes on. While I do not want to accuse anybody in the administration of having sold his principles on the altar of his own financial interests, fondness for taxing the rich stronger might at least not have been increased by the somewhat excellent financial position of the members of the democratic Obama administration.

4) Blockade of legislation through filibustering in the Senate

The 111thsenate has seen an un-preceded amount of filibustering. Filibustering means, that Senators can speak on an issue as long as they want and thereby delay or even blockade legislation. This procedure can only be stopped if 3/5 of the Senators move for ending the debate and making the vote. This implies, that in general in a Senate composed of 100 Senators 60 senators have to vote for stopping the debate on an issue. In a Senate strongly divided and polarized along Party lines between Republicans and Democrats reaching such a quorum of 60 Senators is quite often next to impossible. This might very well lead to a situation, in which legislation is permanently blocked, even if a majority of Senators are in favour of it. The consequences of this for the political system of the United States must be fatal. On the one hand, necessary legislation can not any longer be passed. On the other hand, the American political system loses the acceptance of the people, who become increasingly tired with the inability of the US-Parliament to enact legislation and with the mean tactical weapon of filibustering. Against this background, it is very clear that the practice of filibustering should be put to an end, or at least be strongly limited. Regrettably, this is not to be expected. This is the case for several reasons. First of all, the Senate enjoys the reputation of being a venerable, dignified and highly respected institution, and consequently to abridge the rights of Senators to speak as long as they want seems repugnant to many people. Moreover, any bill aspiring to put an end to filibustering could itself be filibustered.

With regard to the first aspect, high respectability of the institution Senate, one, of course, could very legitimately argue, that there is nothing honourable, respectable and venerable in an attempt to block majority rule by filibustering, and that an increased tendency in the Senate to use filibustering might be an indication of the Senate becoming a less honourable institution than it once had been.

- Ende der Buchvorschau -

Impressum

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Markus Eder, Rotdornweg 9, 86567 Hilgertshausen-Tandern, e-mail: medermark@gmx.de

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