I Have a Bad Feeling About This

We now have money to give to banks and other organizations, in a bid to bail them out. But money does not grow on trees. We are able to get that money because foreign lenders supply it. If it does not appear that government will be getting repaid, foreign lenders will be worried that they are throwing good money after bad. The supply of easy money may dry up. That is economically problematic, to say the least. What gives me a bad feeling at this moment is the thought that the $100, or $100 million, that we are giving to a certain banker now, will be money that we will desperately need for food and other essentials later. It has long been the case that just a few dollars (sometimes, even pennies) would be sufficient to save the life of some Third World wretch. Our bailout talk does not yet contemplate the possibility that, in the worst hard times, a similar financial logic may apply at home as well.

Decline of the U.S.: Where It All Started

Where did it all start? Where did the United States, superpower of the free world, start to slide downhill? It started last year, in something that the President or the Supreme Court or someone else said or did. No, it started before that, when so-and-so did such-and-such. We can trace it back, all the way to whenever and whomever. But here's my take on it. Logically speaking, the decline of the U.S. began from its peak. Right? It was at a peak, and then it ceased to be at its peak, and that's where the decline started. So, then, when was the U.S. at its peak? There was something resembling a peak in the 1990s, when Clinton balanced the budget and the economy was in a long-term expansion. The Soviet Union had collapsed; the U.S. was the world's sole superpower. But in the 1990s, the world was no longer the property of the United States. Japan had soundly thrashed us in manufacturing in the 1980s. Those jobs were gone, as Bruce Springsteen sang, and they weren't coming back. An increasing amount of our stuff was being made abroad. Billy Joel's song "Allentown," commemorating the decline of the Rust Belt, actually came out way back in 1982. In the 1990s, Bill Clinton of the balanced budget was also the Bill Clinton who was humiliated by thugs in Somalia, and who could not lift a finger to stop the Rwanda genocide in 1994. In the 1990s, wages for the average person stagnated. Families were able to keep up economically, in many cases, only because both husband and wife were now working full-time-plus, while struggling to raise the kids. There was no longer so much money for the poor; people were feeling the pinch and were angry about having to pay taxes (for welfare payments, they believed) that bit into what money they did make. The U.S. did have an international adversary, the Soviet Union, from World War II through most of the 1980s. That Cold War rivalry cost the U.S. a great deal in time, money, and anxiety. We lived under the threat of nuclear annihilation. Yet we still do, strictly speaking: the Russians still have their missiles, and so do others. We are not preoccupied with this on a daily basis now, and we were not preoccupied with it then. Yes, we have our photos and, in some cases, our memories of schoolchildren practicing for nuclear war by getting under their desks or going down to the basement. But that threat eventually slipped into the fabric of daily life, in the way that you make sure to clean your dishes so you don't get food poisoning. You mostly don't worry about it until something goes wrong. What we had in the 1960s and thereabouts, that we don't have now, is confidence. Things had kept getting better, and we thought they were going to continue to do so. We had surplusage -- we had enough to waste. Cars had fins in the late 1950s and, a decade later, men had long hair. It was not crucial for young people to get their careers together: they could hitchhike around the country; they could be hippies. The United States, as king of the postwar world, had built layer upon layer of security and control to protect itself. We didn't just have NATO; we also had SEATO and CENTO. We weren't worried about Mexicans sneaking into Texas, not nearly as much as we were worried about Communists sneaking into Vietnam, half a world away. Vietnam. That, I propose, is where the downhill slide began. Eisenhower, especially, had built a stable and prosperous country. JFK's assassination cast a long shadow; but the liberal policies of the time continued to march forward under Lyndon Johnson. The country could afford a lot. But it could not afford Vietnam. Not financially, and not politically or socially. People were worried that Vietnam might tear the country apart. To some extent, it did. Construction workers beat, and young National Guardsmen murdered, young college students who were protesting it. There were riots. The international image of the United States took a drubbing. By present-day standards, the country was in flames in 1968. LBJ did not run for re-election in 1968. Primarily because of his Vietnam policies, he was essentially disgraced. The chant of the day, for antiwar protesters across the street from the White House, was "Hey, hey, LBJ -- how many kids did you kill today?" There hadn't been anything quite like that before. Johnson's departure opened the door for Richard Nixon, who kept us in Vietnam -- who, in fact, escalated the conflagration -- and who would eventually lead us into the oil shock of 1973. Nixon's own disgrace and resignation yielded the ascent of his second vice president, Gerald Ford (the first, Spiro Agnew, having also been disgraced). Ford was a good man, but not a great politician. He was defeated by the hapless Jimmy Carter, another good man of insufficient temperament and experience, who was in turn defeated by Ronald Reagan. Thus we passed the 1970s with an unusual number of presidents and vice presidents, bouncing from Kent State to Watergate to the Iranian revolution to a severe recession. In important ways, we started downhill in 1968. The assassinations of Bobby Kennedy and the Rev. Martin Luther King Jr. that year (and the nationwide riots and city-burnings that followed the latter) had a powerful negative impact. So did the police beatings of protesters at the Democratic convention in Chicago. Many experienced a profound alienation from the Establishment. Rather than participate in the world of Nixon et al., it became increasingly reasonable to "turn on, tune in, and drop out," as Timothy Leary proposed. The generation gap, as it was called, was so large that Jerry Rubin could gain a wide following for his adage, "Never trust anyone over 30." People of greater age were precisely the ones who were sending young men off to die in that absurd, counterproductive war. After 1968, the oil shocks of 1973, and the global humiliation of having to flee Saigon in 1975, the confidence and the power never returned. Ronald Reagan could promise "Morning in America" in 1980, but he could deliver that new day only by adding enormously to the national debt; and when he left office, he left us with a savings and loan crisis that cost more than $100 billion to fix. It had been encouraging to see a confident face in the White House. Reagan was a leader. But he was delivering a pipe dream. Had he not perpetuated the fantasy of an America that could continue to boss the world around, perhaps the next generation of Republicans would not have imagined that it made sense to waltz into Iraq so nonchalantly. This is not to say that the U.S. will have entirely failed in Iraq. Important good things may come of that adventure. Indeed, at this point important good things seem ever more likely to come of it, thanks especially to the leadership of General David Petraeus. But it was an adventure that the nation could not afford. The hundreds of billions (if not several trillion) that it will ultimately cost were badly needed at home, as were the thousands of people who went over there to fight and die. The Vietnam era was the time to face up to that kind of adventure -- to think and talk about it, sort it out, and convert its learning into national policy and consensus. We did not achieve that. People still argue that we should have tried harder to win that war, instead of recognizing that we didn't belong there and didn't really need to be there. It took more leadership than we could find, at the time, to knock our heads together and make us decide what we were all about. None of the presidents during or following the Vietnam era -- Johnson, Nixon, or Ford, or subsequently Carter or Reagan -- were up to that. And so we had to repeat the experience, thirty years later, in a different form and place. God only knows what kind of world we could have produced if we had stood so strongly and had spent so much, not for anticommunism and capitalism, but for human rights and democracy. Especially since 1968 or thereabouts, we have stood, too often, for the bad guys, because they have said and done what our leaders wanted. This has given us a legacy of powerful anti-American movements around the world. In a bid to keep what we used to have, we have done what aging institutions do: we have supported the status quo, which tends to mean the rich and powerful, at the expense of the ordinary person. That's the story of Musharraf in Pakistan, of Mubarak in Egypt, of the Shah in Iran, of Pinochet in Chile, of Batista in Cuba, of Thieu in South Vietnam ... the list goes on. It is also, increasingly, the story of America itself, whose growing gulf between the poor and the super-rich takes us ever closer to the example of Latin America in decades past. Any nation will have many small rises and falls, as it climbs toward or descends from its peak of influence, power, and wealth. A nation has many dimensions, with myriad people and activities underway at every moment. In a very rough and overall sense, however, I submit that 1968 was the year when America reached its peak. Economic and political indicators have lagged at differing rates since then, but that was close enough to the high point. I would also suggest, incidentally, that the nation's decline from that peak has been facilitated, not retarded, by dirty, deceitful, and violent efforts to cling to the past. The United States still stands for special things. One hopes it does not completely squander that reputation, and the power and influence that go with it, in a foolish bid to avoid the future. The future is scary, and it often brings unpleasant changes. But let us not fight reality. Let us rather make the most of it. It is, indeed, morning in America. The nation is older, and some things that were once easy are not so easy anymore. But life is to be lived nonetheless. Let us live it right.

The World May Get Bigger

Africa and Asia used to be very far from America. Then they invented airplanes, and then came the era of mass international travel. Then jet fuel got expensive. I just read an article in Business Week that says jet fuel is now four times more expensive than it was in 2000, when the Supreme Court appointed George Bush to be president. It says they are working on biofuels that will be cheaper than current jet fuels and won't freeze at high altitudes. But demand for fuels of all sorts is expected to continue to grow. Of course, Americans who would fly to faraway places must be able to afford the price of a ticket. As lower and even middle classes in the U.S. continue to be squeezed by readjustment to life in a more interconnected and competitive world, there is presently little prospect that international flights will be more affordable in the foreseeable future than they have been in the past. Young people in recent years have been able to speak of visiting other continents as blithely as previous generations spoke of visiting other parts of the United States. If the cost of such trips increases and the number of people who can afford them decreases simultaneously, there could be a dramatic change in how familiar those other continents seem to the next generation. To the extent that Americans have less direct personal exposure to other countries through travel, it may seem increasingly important, from an educational perspective, to bring larger numbers of foreigners to visit or live here. That may be politically unpalatable, however; hard times at present appear to stimulate xenophobic attitudes. Foreigners may also be less excited about moving to the U.S., as compared to other countries, if attitudes here are not welcoming, if the U.S. appears less wealthy, or if universities in other countries become increasingly competitive with the universities that presently attract students and faculty from abroad. It will doubtless continue to be possible to broadcast news from other nations, but the general public demand for such news may diminish if other lands come to seem increasingly remote and unrelated to one's life. Americans who do not visit or live in other countries, who encounter fewer people from other countries visiting or living here, and who come to feel more distant from other countries, would likely act the part. It is conceivable, that is, that consciousness of diversity would resemble a tide that ebbs and flows, rather than an inexorably growing phenomenon. People in future generations could actually know or care less about foreign lands than people do today. In the worst case, voters in the U.S. may already be embarked upon a course of collective ignorance of other lands, such that the Iraq invasion represents the first or, perhaps, the latest -- but not the worst or last -- large move against the grain of world opinion; and the world may increasingly contain people who can and will punish us for such missteps.

The Ultimate Intellectual Piracy

The United States may soon cease to be the world’s greatest threat to global peace.

That statement may come as news to those who were not aware that the U.S. ever was a great threat to global peace. And surely, by many measures, it is not. How many countries have a Peace Corps? How many provide real estate for a United Nations?

Let us not quibble about the U.S.’s standing as the world’s leading seller of weaponry. Let us not debate the invasion of Iraq, or the devastation and brutality of the Vietnam War (or, indeed, the murder rates in our own cities).

In fact, let us withdraw that statement about the United States altogether. Because soon, it may not matter anyway.

The U.S. has had its Ugly Americans abroad, as well as its piggish Yuppies cluelessly asking themselves, “Why do they hate us?” in the wake of 9/11. But at least some such Yuppies did ask, and some actually seemed to want to hear an answer. That, however, may not be the way of the future.

Surely there will always be a liberal, educated fringe of Chinese individuals who have not only visited the West but who have also come to appreciate the good things that the West’s liberal, educated fringe try to achieve. Such individuals will undoubtedly be grossly outnumbered, though, by those Chinese people who, in good middle-class American style, neither know nor care, very much, what the rest of the world may think or believe.

Most Chinese may be like most Americans – concerned, that is, with what’s on the barbecue or in the fridge, and not so concerned with what someone with a cause, somewhere else in the world, seems to be complaining about.

China has a reputation, these days, of copying what other people invent. There is no law of nature that limits such copying to the good things. Those who plunder goods from others’ homes may inadvertently haul away some dust and cockroaches as well.

In particular, China may be copying some flaws from America of the 1960s. Chinese responses to Tibet certainly make it seem that way.

On Tibet, as in Vietnam, the world speaks out, in the name of fairness and humanity. The Dalai Lama, like a latter-day Ho Chi Minh, actually talks as if he believed that the leaders of the superpower were reasonable people. But those leaders have their eyes on domestic opinion, and domestic opinion is clear enough.

It took a long, long time for Americans to make up their minds, take action, and ultimately end the Vietnam War. Even in a fairly open democracy, with many fictions exposed by a relatively free press, it took years on end for society to get sick of its own anti-communist rhetoric.

Americans of that era knew what they believed. They knew it because it was what someone had told them, and it was also what their friends seemed to believe. We cannot expect anything different from the Chinese, and we are not getting anything different. The effort to talk sense to Chinese people – even educated, westernized ones – about Tibet, these days, seems much like the effort to talk sense to Americans in 1968 (or, actually, in 2003).

Tibet is not the point. Tibet is merely the illustration. If the Chinese people are presently able to support internal or localized nationalist hype á la the Alamo or Cuba, in the future they may also be able to support nationalist hype focused abroad, á la Saigon or Baghdad.

Things are changing very quickly, these days, in the U.S.-China balance. It is easy to notice the shifts in the balances of finance, military power, and influence. But other things are shifting as well.

Sooner than we expect, people of the whole world may begin to encounter the Ugly Chinese. If such a thing happens, it will not be because Chinese individuals are interpersonally ugly. Much to the contrary, they hail from a culture that seems to foster deference and agreeableness. It will happen, not because of who the Chinese people are, but despite that.

Power tends to corrupt, and the Chinese people are gaining power. There are things they want and, as shown in Tibet, there are things they will take – not because they are right, educated, or caring, but simply because they will be increasingly able to follow their beliefs and feed their desires.

It will be too bad if China copies us so diligently in that mistake. But the writing does appear to be on the wall. Chinese public opinion is harshly set against a fair deal for the people of Tibet. Leaders in China, like leaders in the United States, do not generally tell their constituents to set their nationalism aside in favor of respect or decency to others.

Ultimately, the problem is with the accumulation of power itself. When a nation becomes as big as China or the U.S., it tends to expect its leaders to achieve outsized things at the expense of other peoples. There had never before been a superpower like the United States. And in its own, different but conceivably far worse way – as we may soon begin to see – there may also never be a superpower like China.

Recession: Expect More Flakiness

When everyone has money and is busy, they don't have time to sweat the small stuff. That cuts both ways. On one hand, they are more likely to overlook details that may matter to someone else. It's not important to them, therefore it just doesn't seem very important, period. On the other hand, if someone does catch them on something they overlooked, they are more inclined to just pay the money or do whatever seems necessary to take care of it in the easiest possible way. It's different when people have less money and more time. They are more likely to notice the details that weren't handled quite right, because now those little amounts of money seem more important. They have the time to fool with the details, and the time to hassle those who aren't paying attention. In this sense, it can be more difficult to get away with small crimes and offenses in hard times. A countervailing factor is that small offenses are likely to be more common in hard times. When everyone has money, it's pretty much assumed that everyone will pay their bills on time, that broken stuff will be fixed properly, and that generally things will work as they should. But when people don't have money, or are afraid of losing what they've got, they are likely to be more flaky. They will want to be adjusting or backing out of deals and looking for squirrely ways to save a buck. Poor countries are not known for their crisp, efficient handling of problems. As more people find it necessary or helpful to scrounge for the occasional extra little bit, it seems likely that corruption and complication will be increasingly likely, in situations where one would not previously have expected such behaviors. It is ironic, because this theory implies that the countries that most desperately need efficiency are least able to achieve it. If this prediction of one aspect of future life in America should prove accurate, it will reflect an unfortunate and ironic fact. There was a long period of time, a half-century or more, in which the U.S. had a unique opportunity to shape the terms of trade around the world. There was sufficient power to make a tremendous impact upon the processing of routine transactions in developing nations -- transactions that sometimes meant everything to the powerless. Rather than stand for corporate power and the accumulation of wealth by a few, the international image of the U.S. could now be that of a power that believed in its touted principles -- of equality, for example, and of the rule of law over all citizens. The current business climate in places like China could have been influenced favorably. Now, instead, the U.S. economy is increasingly at risk of coming to resemble that of a developing nation. Having failed to make the world a better place in this regard, we may find ourselves forced to live in the world we have helped to create.

China: Reduce Inflation by Dumping Dollars?

The Chinese government is worried about inflation in its overheated economy. I noticed someone's remark, the other day, that China would welcome a slowdown in the U.S., because that would reduce American demand for Chinese goods, giving the Chinese authorities a better chance to stabilize their economy. China is a heavy subsidizer of the U.S. government's budget deficits. If China invested less in American government bonds, the U.S. government would have to offer higher rates of interest in order to attract lenders who would continue to subsidize its deficits. It seems like those higher interest rates would compete with other would-be borrowers (e.g., American corporations). Also, higher borrowing costs would increase pressure on the U.S. government to lower its spending. In both of those ways, a Chinese departure from the dollar would seemingly facilitate the sort of U.S. economic slowdown that China is said to prefer at this point. I don't know if I have all those things right, and I also don't know if those steps will actually occur. A separate point is simply that it is now conceivable that, as one would expect, a big lender (e.g., China) eventually becomes able to manipulate the options and circumstances of its borrower (e.g., the U.S.). Such things have happened in the past -- with e.g., the Arab oil embargo of 1973-74. But the ability to influence the rate of interest that the U.S. government must pay nonetheless does seem to be a different kind of event.

China and Australia: Two Scenarios

You have a large, largely empty, resource-rich, predominantly Anglo land down under. And you have two interested parties who would like to get their hands on it. In one corner, we have the defending champion, the U.S., whose primary claim may be cultural or racial. In the other corner, we have the challenger, China, whose primary claims may be that it wants and needs the resources and the space, it is willing to pay for them, it is a next-door neighbor (relatively speaking), and (in the future) that it is militarily better positioned to take it. In one scenario, China flexes its muscles in ways that worry people. Last year's bit about knocking down a satellite -- a direct threat to the U.S. -- is an example. Enough examples like that, and it won't just be an Anglo-Aussie coalition; it'll be Russo-Anglo-Aussie. (And let's not forget the anglophone Indians.) Then China really will have to fight for Australia, and it may be hard-pressed to succeed. In another scenario, China proceeds gently. Continue putting highly educated Chinese people in various places throughout the anglophone world; continue making appreciated purchases of resources (and also of companies) in the U.S. and Australia; continue letting Chinese people be welcomed as friends in Australia. And meanwhile, continue bringing China into the modern world, with enhanced rights for its people, growing awareness of rights violations, and other quietly woven threads of restraint around its oligarchs. Then Australia is not alarmed, the U.S. is not shocked into confrontation, and the ties between the lands of the koala and the panda grow naturally. In a generation, it will seem odd that the Australians would ever have contemplated an essentially anti-China economic (never mind military) coalition with the U.S. Can the second scenario be the primary one? I'd put the odds at somewhat less than 50%.