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OP-ED: Decline and rise?

  • Published at 10:43 pm November 3rd, 2020
flag wall street nyc usa
A flag hangs over Wall Street as the election looms. The US is still rich, but for how long? REUTERS

The next president of the US will have to manage the decline of a divided society (but he won’t)

Much of our attention has been focused on the mostly unedifying race for the White House. More akin to a wrestling contest rather than a civilized exercise in democratic suffrage. More comic book than Shakespeare. Financed to the tune of $3 billion.

That first debate was so horrendous, one didn’t know whether to laugh or cry. The second brought some dignity back but the damage was done. The campaign lacked deep discussion and forward-looking analysis. They served bones with very little meat. Headlines and vitriolic personal attacks do not inform or allow meaningful public engagement. People have had to make up their minds on instinct and first-hand experiences.

Meanwhile, in China, they have been formulating the next Five Year Plan from 2021 to 2026. The decisions currently being made in Beijing are possibly as important as those in Washington. The direction the current and proximate superpowers will chart in the first half of this decade could be decisive.

The major decision taken in Beijing is that there will be a “dual circulation” economy: Domestic demand will be as important as overseas markets. This will be backed by much more self-reliance, rapid technology upgrades, and meaningful moves on carbon emissions. Key markers have also been laid up to 2035. Within 15 years, China expects to be a fully modernized country.

Despite the significance of the US election, there are some permanent realities in situ. The four hundred American bases ringing Asia, especially China, are going to remain. The “pivot to Asia” from the Obama-Biden era continues, and indeed has been enhanced in the Trump era. The China containment policy is bipartisan.

The balance sheet

The biggest failure of the Trump era to date has been its inability to re-create the industrial age. The jobs didn’t come back. That’s because China, India, and the rest really didn’t steal those jobs. It was primarily Western Big Business which sacked workers in the West and sub-contracted to the East. Trump is selling a MAGA mirage.

The trillion-dollar tax cut was supposed to repatriate money to set up new factories employing Americans. Instead, most was used to buy back shares, thus boosting their prices. The only engineering in favour is financial engineering.

The cries of Fly Over America heartlands were real. Much of the metropolitan and better off classes were too busy to hear the anguish of hollowed out ex-industrial regions.

The colour of money

America overall is still one of the richest parts of the globe, leading financialized economies. The US dollar reigns supreme. The Pentagon outspends all other states in treasure spent on the military. When a US president sanctions a country, it can threaten others by exclusion from financial systems, such as SWIFT. But for how long?

We see the imminent arrival of the Digital yuan. China doesn’t want the yuan to become the world’s sole reserve currency. It does want to cut the dollar down to size. Russia is getting closer and closer to China on deals for energy, infrastructure, raw materials, food, and technology, all to soon bypass the dollar. Indeed, more and more countries are trying to trade without using the dollar.

It may be very early, but the direction of travel is clear. The exorbitant privilege that America enjoys by everyone depending on its currency is not going to last forever. Meanwhile, its debt mountain climbs to astronomical levels. Unpayable. Did we hear anything substantial in the campaign about how the US gets out of this jam?

The next presidents of the 2020s are going to have to manage relative decline in a divided, fractious society. They won’t. Too much money and power depend on the current arrangement.

If there were a Franklin Delano Roosevelt around, then perhaps, just maybe, the decline could be slowed down.

That calibre of candidate was not on offer. Then, despite the era of depression, the US was rising as an industrialized titan and obvious superpower, set to replace the British Empire and sterling. Today, America looks suspiciously like the British, while the Chinese seem to be like that America, back then.

Western Europe lost their empires in the 1940s to 1950s and still remained wealthy and desirable places to live. The US could forget the obsession about “manifest destiny” and return to being a normal state. Again, that is not what we have been promised in this election.

The 2020s promise a noticeable re-arranging of the world. East Asia is wresting power away from America. The pace is accelerating. The election hasn’t changed that dynamic.

Farid Erkizia Bakht is a political analyst.

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