Immobility Furthering Decline

Caleb Hamman

chamman@butler.edu

In a time of financial turmoil and drastic inequality, one would hope the American Dream to be functioning well. This notion, that hard work will bring success to anyone in the United States, has always been central to America’s ideological fabric. Despite such tradition, recent research suggests a need to reevaluate the accuracy of the American Dream.

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Ongoing work at the Economic Mobility Project (EMP) has been attempting to do just that. A nonpartisan effort funded by the Pew Charitable Trusts, EMP has been conducting the most detailed research of U.S. economic mobility to date. Its findings, thoroughly concerning, strongly reinforce the arguments of The End of the American Century.

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Using longitudinal income data, EMP researchers find the United States to be a more class stratified society than commonly believed. Despite the popularity of “rags to riches” notions, the EMP finds that, on average, children born into the poorest fifth of households have only a 6 percent chance of making it to the top income quintile. Conversely, 42 percent will remain in the poorest group. More than six in ten of these impoverished children never become even middleclass.

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Similar mobility barriers exist at the top. While 39 percent of children born into the richest income quintile will remain there, only 9 percent will fall to the bottom. EMP finds remnants of mobility remains in the middleclass, although even these children are more likely to fall into poverty than they are to rise to wealth.

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The project’s findings are particularly disturbing in the areas of gender and race. Women, already suffering multifaceted disparity with men, are also less mobile than their male counterparts. Compared to these, it is considerably harder for women born into poor families to become wealthy. Similarly, it is also easier for wealthy women to become poor.

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The racial contrast is even starker. Black children are half as likely as their white counterparts to move from extreme poverty to extreme wealth. Simultaneously, black children born into the bottom income bracket are almost twice as likely as white children to remain there. Incredibly, EMP finds that nearly three in four middleclass black children will fall into poverty—a condition tremendously difficult for them to escape.

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As such findings suggest, the American Dream is not as dynamic as many believe it to be. In fact, U.S. mobility levels are actually lower than those of many developed countries. As the EMP reports, the two major international comparisons to date have placed U.S. mobility levels either last or second-to-last among nations analyzed (which have included mostly Western Europe and Scandinavia). As EMP’s authors put, “the view that America is ‘the land of opportunity’ doesn’t entirely square with the facts.”

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In light of the numerous economic, political, and social issues contributing to U.S. decline, the discovery of immobility is particularly troubling. As Americans become more economically and politically unequal, the stakes of socioeconomic outcomes continue to rise. That these outcomes are out of the hands of many is more than a contributor to The End of the American Century—it is an issue of fundamental fairness and a contradiction of one of America’s most cherished ideals.

Global Views of US Improve, But Still Negative

A BBC poll of citizens of 21 countries shows that the global image of the U.S. has improved slightly in the last year, but is still largely negative. Far more countries (12) have predominantly negative views of the U.S. than have predominantly positive views (6). On average, across all countries, positive views of the U.S. have increased over the last year from 35% to 40%, but those are still outweighed by the negative views (43%, down from 47%). Respondents in each country were asked if they felt "the following countries are having a mainly positive or mainly negative influence on the world."

Negative feelings about U.S. influence were particularly strong among America's closest neighbors and allies. In the UK, 45% thought U.S. influence was mostly negative; France, 53%; Mexico 54%; Canada 55%; Spain 56%; and Germany 65%. In a ranking of all the countries in the survey, Germany was viewed as having the most positive influence, whereas the U.S. ranked 10th on the list, just below China.

Another BBC poll of 17 countries showed an overwhelming majority--67%--believing that the election of President Obama "will lead to improved relations between the United States and the rest of the world."

These polls were conducted between November 21, 2008 and February 1, 2009.

The BBC polls confirm that there has been some softening of global views about the U.S., at least partially due to President Obama. But they also reveal the persistence, depth and breadth of animosity to the U.S., and how far the U.S. has to go to recover from the damage to the country's reputation. As I suggested in The End of the American Century, the decline of the U.S. and its reputation was deep-seated, and preceded the Bush administration. George W. Bush made things far worse, but new leadership in D.C.--even a very positive influence like Barack Obama--can not easily or quickly restore America's reputation, or its global leadership.

Shanghai Conference on "The End of the American Century"

A one-day conference on The End of the American Century and related themes will be held in Shanghai on May 9, in connection with the publication of the Chinese version of my book by the Shanghai Lexicographical Publishing House. I will make a presentation on the theme of my book.

Other presenters include Professor Ni Lexiong, the principal translator of The End of the American Century; Professor Tang Xiaosong of Guangdong University; and Mr. Ma Guoshou, the Director of the Allwin Economic Institute in Hong Kong.

Topics of presentation include: Is this The End of the American century?; U.S. national strategy and Sino-U.S. relations; the U.S. dollar, global monetary issues and China's future wealth; and sea power and the pattern of global interactions.

The seminar will be held at the Shanghai Friendship Hall, 1333 West Nanjing Road, on Saturday, May 9, from 12:30 to 5:00 p.m.

(Look for a future post with a link to the Chinese site about this event).

Obama in Ankara: Re-setting US Relations with the Muslim World

President Obama has taken deliberate and high-profile initiatives to mend U.S. relations with the Arab and Muslim world. In the first months of his presidency, he welcomed Jordan’s King Abdullah II to Washington, where he endorsed the “two-state” solution to the Israel-Palestine issue—a proposal long favored by the Arab states. He met with Saudi King Abdullah in London during the G20 Summit, causing a media stir when he bowed to the king, as is customary and respectful with royalty.

Most importantly, he delivered a major address in April to the parliament in Turkey, declaring that “the United States is not, and will never be, at war with Islam.” But he went even further, recognizing the richness and influence of Islam, and promising that the U.S. would listen, even when it did not agree:

“I also want to be clear that America's relationship with the Muslim community, the Muslim world, cannot, and will not, just be based upon opposition to terrorism. We seek broader engagement based on mutual interest and mutual respect. We will listen carefully, we will bridge misunderstandings, and we will seek common ground. We will be respectful, even when we do not agree. We will convey our deep appreciation for the Islamic faith, which has done so much over the centuries to shape the world -- including in my own country. The United States has been enriched by Muslim Americans. Many other Americans have Muslims in their families or have lived in a Muslim-majority country -- I know, because I am one of them.”

This is an extraordinary and important passage, in numerous ways, and encapsulates much of the new orientation and policies of the Obama administration, and not just toward the Arab world. First of all, it is diminishing the centrality in U.S. policy of the war on terrorism—which has so distorted American policies, priorities and values.

Secondly, the speech emphasizes “broader engagement” with the Muslim world, which is both necessary and inevitable, given the size—over one billion—and growing influence of the global Muslim population. The President’s approach to Islam is not just tolerant, but respectful and appreciative of the faith, which has done so much to “shape the world” and which, Obama could have added, has much in common with both Christianity and Judaism.

The President emphasized his intent to listen to others, even when there is disagreement. This fits in with his frequent references to the importance of a great power to recognize past errors, to temper hubris, and to approach other peoples with humility. Such a change from the previous administration could hardly be more dramatic, and has been noted around the world. The Egyptian Foreign Minister said that “Obama’s speech is the first and significant step for easing the tension between the Muslim world and the United States.”

Finally, the President’s personal touch at the end of that passage sent an important signal, both to the global community and to his own citizens, that we are all part of one human community. It was a risky political statement, for it would antagonize and alienate some Americans. But it was also a courageous one—identifying himself with what some consider to be the enemy—and calling on his compatriots for tolerance and understanding.

A Moment of Awe and Joy: Susan Boyle

This blog, and my book, have been pretty unremitting in relaying downbeat news and analysis. So I thought it would not hurt to post a story, and some links, that will bring a joyful lump in the throat to even the most hard-bitten of politicos and wonks.

I am often the last to learn about current fads and popular culture, so I stumbled across the story of Susan Boyle in Saturday's New York Times: Unlikely Singer is YouTube Sensation. If you are one of the few remaining sentients unaware of Susan, as I was, I suggest you first read the story, and then go to YouTube to hear her rendition of "I Dreamed a Dream."

Susan Boyle is a 47 year old, unemployed, unmarried church volunteer from tiny Blackburn, Scotland, who competed in the "Britain's Got Talent" show. Both her performance, and the reaction of the glamorous judges, is something to behold. As the writer Letty Cottin Pogrebin wrote in the Huffington Post, the audience and judges "were initially blinded by entrenched stereotypes of age, class, gender and Western beauty standards. . . until her book was opened and everybody saw what was inside."

Read the story, then watch the video at this link.

You might also want to follow this with the video of the other performance mentioned in the Times article, a soaring rendition of Puccini's "Nessum dorma" by Welsh cellphone salesman Paul Potts. It is at this link.

Bartels Finds Declining Equality and Influence

Caleb Hamman

chamman@butler.edu

Economic and political inequality are among the most significant aspects of U.S. decline. Both topics are the focus of the most recent work of Princeton Political Scientist Larry Bartels, Unequal Democracy: The Political Economy of the New Gilded Age. In his book, Bartels sets out to analyze the political causes and consequences of economic inequality, arguing that these are both substantial and urgently relevant to alleviating injustice.

Naturally, Bartels begins by assessing the extent to which economic inequality exists in the United States. After detailed review of current literature and government data, Bartels offers findings very much in line with those of The End of the American Century, essentially that “current levels of inequality rival those of the Roaring Twenties,” making it fitting to speak of a “New Gilded Age” or a “retrogression of historic scope.” As Mason points out, this sort of inequality can lead to monstrous disparities, such as CEOs making more than 500 times their average employee, and has effectively caused the United States to become more unequal than “any advanced industrialized country.”

Like The End of the American Century, Bartels finds that current inequality is not a recent phenomenon, but has been growing sharply since the 1970s. Although this observation is generally accepted, Bartels then goes on to make a less mainstream claim—that increasing economic inequality is a largely a result of public policy. While Bartels readily concedes that economic factors like globalization and technology have contributed to inequality, he staunchly refuses to attribute the entire dynamic to arcane “market forces” or inculpable “economic realities.” Rather, a significant role is played by political intervention, an idea Mason also highlights by discussing issues like the “elimination of the federal welfare system” and the “stagnation of the minimum wage.”

Bartels goes one step further. He argues that U.S. economic inequality is “profoundly shaped by partisan politics”—specifically that “middleclass and poor families” have “fared much worse under Republican presidents than they have under Democratic presidents.” This is not necessarily a novel notion, but rarely has it been supported by such detailed analysis. Using exclusively Census Bureau data and controlling for non-partisan variables such as international crisis, Bartels conclusively demonstrates that the incomes of most have grown at substantially higher rates under Democratic presidents than under their Republican counterparts.

After illustrating his findings with three chapter-length case studies, Bartels turns to his second major point—the political consequences of inequality. Here, his research is particularly disturbing. In calculating the recent responsiveness of U.S. Senators to their constituents, Bartels finds that:

Senators’ roll call votes were quite responsive to the ideological views of their middle- and  high-income constituents. In contrast, the views of low-income constituents had no discernible impact on the voting behavior of the senators…the statistical results are quite consistent in suggesting that the opinions of constituents in the bottom third of the income distribution were utterly irrelevant.

Examining the potential causes of this mass political exclusion, Bartels finds that “biases” in “senators’ responsiveness to rich and poor constituents are not primarily due to differences between rich and poor constituents in turnout, political knowledge, or contacting.” Rather, “the data are consistent with the hypothesis that senators represented their campaign contributors to the exclusion of other constituents.” As Mason puts it, “When people do not…contribute to political campaigns, they are less likely to be listened to by legislators or policymakers, and their interests are less likely to be taken into account in the political process.”

In analyzing the totality of his findings, Bartels delivers a particularly sobering assessment:

In Aristotle’s terms, our political system seems to be functioning not as a 'democracy,' but as an 'oligarchy.' If we insist on flattering ourselves by referring to is as a democracy, we should be clear that is a starkly unequal democracy.

Despite such foreboding, Bartels attempts to end with a more hopeful thought: Since inequality has been largely been brought about by conscious political action, there seems to be potential for prescriptive change. As Bartels puts it, “We can make these choices.” But as Mason points out, we are quickly running out of time.

"The End of the American Century" on Kindle!

The End of the American Century is now available electronically on "Kindle" from Amazon.com. I myself am still a little skeptical of this method of reading books, but even so I think it is cool! And the price is right!

How Torture Hurts and Weakens the U.S.

Mark Danner is our contemporary Diogenes, searching (often vainly) for the honest man and using dogged empiricism to establish the truth. His focus in recent years has been on the U.S. use of torture and his latest report, in the New York Review of Books, is "The Red Cross Torture Report: What It Means."

As a followup to my recent post on the Spanish court considering criminal charges against U.S. officials for the justification and use of torture, I offer these two quotations about the effects of U.S. torture on our values and our security.

The first is from President Obama, in an interview on 60 Minutes:

I mean, the fact of the matter is after all these years how many convictions actually came out of Guantánamo? How many terrorists have actually been brought to justice under the philosophy that is being promoted by Vice President Cheney? It hasn’t made us safer. What it has been is a great advertisement for anti-American sentiment. Which means that there is constant effective recruitment of Arab fighters and Muslim fighters against US interests all around the world.... The whole premise of Guantánamo promoted by Vice President Cheney was that somehow the American system of justice was not up to the task of dealing with these terrorists.... Are we going to just keep on going until the entire Muslim world and Arab world despises us? Do we think that’s really going to make us safer?

And Danner's response to Obama's sentiments:

This is as clear and concise a summary of the damage wrought by torture as one is likely to get. Torture has undermined the United States’ reputation for respecting and following the law and thus has crippled its political influence. By torturing, the United States has wounded itself and helped its enemies in what is in the end an inherently political war—a war, that is, in which the critical target to be conquered is the allegiances and attitudes of young Muslims. And by torturing prisoners, many of whom were implicated in committing great crimes against Americans, the United States has made it impossible to render justice on those criminals, instead sentencing them—and the country itself—to an endless limbo of injustice. That limbo stands as a kind of worldwide advertisement for the costs of the US reversion to torture, whose power President Obama has tried to reduce by announcing that he will close Guantánamo.

Canadian Perspectives on "The End of the American Century"

Perhaps it is not so surprising that I have gotten more reactions to my book from outside the U.S. than inside it--especially from Canada. I have been interviewed on Canadian national television and radio, and have received more emails about the book from Canada than from any other country (including the U.S.).

The following is a recent email from Ann Ridyard from Montreal, who is a retired manager with a manufacturing company. Her thoughts, I venture to say, reflect those of many from north of the border. She gave me permission to post this, with her name. My responses to her points are indicated in brackets [].

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Dr. Mason,

I finished reading your superb book The End of the American Century recently
and I wanted to write to thank you for publishing such a well-documented and
interesting book. You put into words all my thoughts and observations
concerning life in America at the beginning of this century.

As a Canadian living in Montreal, I feel that I received better information
from non-U.S. based media outlets than you did in the USA during the Bush
years. I was elated when Mr. Obama was elected as the new President, his
arrival could not have arrived at a better time.

I would like to offer a few comments.

1- Chapter 8, the World Sours on the US: I believe that most people felt
that the first Bush presidency was stolen from Al Gore. Furthermore, Bush
was still an unknown quantity. However, when Bush was re-elected for a
second term after the invasion of Iraq and the discovery not of weapons of
mass destruction but rather the discovery of Bush/Cheney lies, most
non-Americans were astounded and that caused the 'souring' to extend to the
American people at large.

[I had a similar response, Ann. I thought it was bad enough that this playboy millionaire was elected in the first place. It was his re-election in 2004 that prompted my writing of this book. See my earlier post on "The End of America's Shame")]

2- Military service was obligatory for many years and obeying a superior
officer was drummed into the population. This respect and blind obedience
to authority could be a reason why the people believe the president no
matter what.

[I am also astounded by the tendency of the public--and the media--to blindly accept whatever the president has to say. But I don't think obligatory military service explains this, since the military draft in the U.S. was ended in 1973. In my view, which I discuss in my book, it is the poor state of public education in the U.S., which erodes the ability of Americans to think critically about public affairs, and to effectively evaluate data and evidence]

3- This is just a thought, but could it be that keeping a large segment of
the population in poverty assures that there will always be an ample supply
of soldiers?

[I do not think there is any conspiracy here to stimulate the flow of young people into the military by keeping people poor. But I do think that the high rates of poverty, and the poor career prospects for many young people, does lead them into the military]

4- I believe that the G.W. Bush presidency came as close to a disguised
dictatorship as it could get. It is fortunate that the presidency is
limited to two terms, if not for that, I think Bush would have tried to
steal it another time. We all breathe easier now that Mr. Obama is
president.

[I agree! G.W. Bush, with his abuse of executive authority and of fundamental human and Constitutional rights--especially habeas corpus--took us farther away from democratic politics than we have been in many generations. Obama is, indeed, a breath of fresh air!]

Once again, thank you for your fine book, I have recommended it to family
and friends. I continue to read and reflect on your comments posted on the
'endoftheamericancentury' website.

Yours truly,

Ann Ridyard

China Now Has Top 3 Banks in World

China now has the three largest banks in the world, measured by market capitalization. This is a stunning change, and yet another indicator of China's rapid emergence as a global economic power. According to a New York Times article, three years ago, China did not have a single bank among the world's top 20. Now it has the top three and four of the top ten.

The United States, due in part to the banking and financial crisis, has dropped considerably in global banking. In 2006, the U.S. had 7 of the top 20 banks, including the top 2. Now it has just 3 of the top 20 and the largest, Morgan Stanley, is rated fifth.

If banking is so crucial to market economies--as Americans are constantly being reminded that it is--then the decline of US banks, in combination with the rise of Chinese ones, provides another example of the relative decline of the United States.

Furthermore, it seems that the Chinese economy, and its banking system, is in position to weather the storm of the global financial and economic meltdown. Most of the big banks in the West lost 20% or more of market value in the first two months of 2009. In China, the top two banks lost only 3% and 8% in value, respectively and the third largest, the Bank of China, actually increased by 5%.

As the New York Times notes, while most of the world is in financial collapse, "China's economy has suddenly become too big--and too healthy, expected to grow by at least 6.3 percent this year--for the rest of the world to ignore."

Kenneth Lieberthal, a Brookings Institution scholar who oversaw White House Asia policy from 1998 to 2000, sees China as one of the first countries to emerge from the current crisis and one of the very few countries that will emerge from it "without having high levels of government debt."

Lecture on the Rising Powers and the Decline of the US

On April 1, I gave a lecture on "The Rising Powers and the Decline of the U.S." as part of the Foreign Policy Association's "Great Decisions" series, sponsored by the Mid-North Shepherd's Center in Indianapolis. A video of this presentation (50 minutes) including pictures of the slides in my powerpoint presentation, is viewable at this link. (You might want to fast-forward through the first few minutes, where we struggled with the microphones and audio!).

The End of the American Century Appears in Chinese

Welcome to the Chinese readers of The End of the American Century! I hope some of you will visit this site, and contribute to it.

The book has just appeared in Chinese, published by the Shanghai Lexicographical Publishing House, and translated by Professor Ni Lexiong and Sun Yunfeng of the Shanghai University of Political Science and Law.

(See my 4/28 post on Shanghai Conference on The End of the American Century)



Further information and some Chinese reviews and commentary on the book are available (in Chinese) at this link.

Spanish Court Questions U.S. Use of Torture

Last week, a Spanish court took the first steps in opening a criminal investigation against Bush administration officials for violating international law in providing the legal framework for the U.S. government’s use of torture. Among those the court is expected to indict are former Attorney General Alberto Gonzales and former Justice Department lawyer John Yoo, who is now a professor at the University of California at Berkeley.

John Yoo was the author of the so-called “torture memos” which justified the use of torture and argued that the U.S. should ignore the Geneva Conventions, which explicitly prohibit torture.

The United States is a party to the Geneva Conventions, and also to the 1984 Convention Against Torture, which is binding on 145 countries, including the U.S. Torture is explicitly prohibited in numerous other international treaties, including the 1948 Universal Declaration of Human Rights; the International Covenant on Civil and Human Rights; and the American Convention on Human Rights. Most scholars also believe torture violates the U.S. Constitution’s prohibition on “cruel and unusual punishment.”

So there is plenty of legal precedent to assert that Gonzales, Yoo and other Bush administration officials—probably even the president himself-- were in violation of international law.

The Spanish initiative comes on the heels of two damaging new reports on the Bush administration’s use of torture. The Justice Department’s Office of Professional Responsibility is investigating whether the legal advice of Yoo and others “was consistent with the professional standards that apply to Department of Justice attorneys,” according to Newsweek. If Attorney General Holder accepts the report, it could be forwarded to state bar associations for possible disciplinary action.

An even more damning report by the International Red Cross on the treatment of prisoners at Guantanamo has been brought to light by Mark Danner, in a short article in the New York Times and a longer one in The New York Review of Books. The Red Cross reports—basically verbatim accounts of interviews with Guantanamo prisoners—makes absolutely clear, according to Danner, “that the United States tortured prisoners and that the Bush administration, including the president himself, explicitly and aggressively denied that fact.”

Danner concludes, as I have done in The End of the American Century, that the U.S. use of torture not only eroded our own values, but further poisoned the global reputation of the U.S. and stimulated the recruitment of terrorists around the globe. The decision to torture, writes Danner,

“harmed American interests by destroying the democratic and Constitutional reputation of the United States, undermining its liberal sympathizers in the Muslim world, and helping materially in the recruitment of young Muslims to the extremist cause. By deciding to torture, we freely chose to embrace the caricature they had made of us.”

Of course it was not just at Abu Ghraib and Guantanamo that prisoners were tortured. Jane Mayer, author of The Dark Side: The Inside Story of How the War on Terror Turned Into a War on American Ideals, convincingly shows that the use of torture was a central tool in the battle against terrorism. Even though President Bush denounced the use of torture, the tactics he denounced were exactly the same as those he had authorized and encouraged in the extensive worldwide network of secret prisons set up to hold and interrogate suspected terrorists. As the distinguished historian Alan Brinkley wrote in a review of The Dark Side:

"it would be difficult to find any precedent in American history for the scale, brutality and illegality of the torture and degradation inflicted on detainees over the last six years; and it would be even harder to image a set of policies more likely to increase the dangers facing the United States and the world.”

By almost any measure, the decisions of Yoo and Gonzales were legally incompetent. At the very least, their recommendations, and the decisions taken by President Bush, were violations of international law. They come close to crimes against humanity. They should be brought to account in this country, under American law. But Yoo, far from facing indictments in the U.S. continues to teach at one of the most prestigious law schools in the U.S., and continues to find a hearing for his views in the pages of the New York Times and the Wall Street Journal.

Perhaps it will take a European court, in the end, to have him, and other Bush officials, account for their decisions. For a Spanish court to indict them will be largely symbolic, of course, since the U.S. is unlikely to extradite them to Spain. But symbols are important. And one of the most important symbols of all was President Obama’s categorical assertion, in the first weeks of his presidency, that

“under my administration, the U.S. does not torture.”

Andrew Bacevich on The Limits of U.S. Power

Andrew Bacevich’s book The Limits of Power: The End of American Exceptionalism, has much in common with my own book The End of the American Century but is, if anything, even more pessimistic about the outlook for the United States. Bacevich, a retired military officer and currently professor of history and international relations at Boston University, recently visited Butler as part of the Drew Brahos lecture series.

The Limits of Power sees three interrelated crises afflicting the U.S.: the crisis of profligacy; the political crisis; and the military crisis. The guiding ideological light in his book is the early 20th century American theologian, Reinhold Niebuhr (who I also quote in my book). During the Cold War, Niebuhr complained about U.S. tendency to hubris and sanctimony, which Bacevich views as even more prevalent now, becoming “the paramount expressions of American statecraft.”

As Bacevich sees it, our failures abroad (including especially the Iraq War) are a function of our unending consumer appetites at home. “The collective capacity of our domestic political economy to satisfy those appetites has not kept pace with demand. As a result, sustaining our pursuit of life, liberty and happiness at home requires increasingly that Americans look beyond our borders. Whether the issue at hand is oil, credit, or the availability of cheap consumer goods, we expect the world to accommodate the American way of life.”

“Centered on consumption and individual autonomy, the exercise of freedom is contributing to the gradual erosion of our national power.”

The Iraq War is just the latest step in the gradual erosion of U.S. power, weakening us both externally and internally as we refuse to face up to our own problems. He includes a wonderfully revealing quote from Defense Secretary Donald Rumsfeld from October 2001:

“We have two choices. Either we change the way we live, or we change the way they live. We choose the latter.”

Bacevich is scathingly critical of the American political system, which he sees broken and corrupted by an imperial presidency, a “feckless” Congress, and an incompetent national security structure. Our democracy has been hijacked, he says, by a political elite who “have a vested interest in perpetuating the crises that provide the source of their power.”

These are powerful charges and surprisingly radical, coming from someone who has been part of the establishment and who considers himself a conservative. When Butler faculty and students met with him over breakfast, we raised the question of whether the capitalist system itself was broken, given the arguments he made in his book and his lecture. However, even though he sees little hope for any kind of economic or political recovery in the U.S., Bacevich maintains a firm commitment to capitalism and democracy. Many of us found this to be paradoxical. If the system is broken and can’t be fixed, shouldn’t we be searching for some alternative?

The Limits of Power is a powerful and sobering analysis and critique of the American prospect. The message is similar to that of my book, though there are differences. Bacevich focuses more on the U.S. itself, whereas I link what is happening in the U.S. with broader international and global trends. While both of us decry American consumerism, he focuses more on the cultural (and even spiritual) aspects of this, while I spend more time on the economic and social consequences of it. Neither one of us is terribly optimistic about the outcome, but the last pages of my book offer some inklings of hope, whereas the last paragraph of The Limits of Power is thoroughly downbeat. He quotes, once again, Niebuhr to the effect that social orders inevitably destroy themselves in an effort to prove they are indestructible. “Clinging doggedly to the conviction that the rules to which other nations must submit don’t apply,” concludes Bacevich,

“Americans appear determined to affirm Niebuhr’s axiom of willful self destruction.”

The Limits of Power: The End of American Exceptionalism (American Empire Project)

The Middle Kingdom Reasserts Itself

China has also suffered from America's economic meltdown, but the country's leaders continue to assert themselves on the global stage, both economically and politically. Some Chinese even see the problems in the U.S. as an opportunity for China to fill the void being left by the U.S.

The latest example of China's new confidence is a remarkable story buried on page A5 of this Tuesday's New York Times--"China Urges New Reserve to Replace the Dollar."

"In another indication that China is growing increasingly concerned about holding huge dollar reserves, the head of its central bank has called for the eventual creation of a new international currency reserve to replace the dollar."

The official argued that a new currency reserve system controlled by the International Monetary Fund would be "more stable and economically viable."

As the Times observes, "the proposal suggests that China is preparing to assume a more influential role in the world."

This is a theme I develop in The End of the American Century, where I describe China's opposition to "hegemonic" and "unipolar" power politics--code words for U.S. domination--and the country's growing efforts to promote its "soft power" influence in Asia, Africa, and elsewhere. The "peaceful rise" of China is supported by the population as well: in a 2003 poll in the country, 40 percent picked China as "the most prominent country in the world."

As London's Economist observes in its cover story on "How China Sees the World," "there is a sense in Beijing that the reassertion of the Middle Kingdom's global ascendancy is at hand." Prime Minister Wen "no longer sticks to the script that china is a humble player in world affairs" and now talks of China as "a great power."

The main reason for the proposal for a new international currency is China's growing concern about the safety and stability of its own vast holdings of the U.S. currency. China holds an estimated $1 trillion in U.S. government debt, the world's largest holdings. Earlier this month, the Chinese prime minister, Wen Jiabao, publicly expressed concern about the "safety" of these investments and asked the Obama administration for assurances that these securities would maintain their value.
(See the New York Times story "China's Premier Seeks Guarantee from U.S. on Debt").
Last January, Mr. Wen criticized the "unsustainable model of development characterized by prolonged low savings and high consumption." There was no question about which country he was referring to.

When Premier Wen hosted Secretary of State Hillary Clinton in Beijing in February, it was clear that this was a meeting of equal, sovereign states. Next month, at the meeting of the "G20" economic powers in London, the most important business will be that between Presidents Barack Obama and Hu Jintao. The Middle Kingdom is back.

Leonhardt rebuts Sorkin on AIG Pay

As an addendum to my previous post, the day after Andrew Sorkin's New York Times column defending executive bonuses ("The Case for Bonuses"), the much more astute and sensible NYT economics columnist, David Leonhardt, published a piece entitled "Paying Workers More To Fix Their Own Mess." While Leonhardt did not specifically mention Sorkin's column, he did quote from it, and it is clearly a response and counterpoint to Sorkin's nonsensical defense of big bonuses for incompetent executives. As I have suggested before, Leonhardt is one of the few economics writers who seems to understand the depth and breadth of the current economic crisis.

The "Brainiacs" and "Talent" at AIG

Washington is finally catching on to why people are so upset with these million dollar bonuses for executives who drove their companies into the ground and swindled American taxpayers. But Wall Street apparently still doesn't quite understand the fuss, and the folks there continue to make the argument that these bonuses are necessary to "attract and retain talent." This "talent" are the greedy, immoral,short-sighted scoundrels who bankrupt their own companies, stole the retirement funds of million of Americans and drove the global economy to the brink of depression. Some talent.

The most stupefying assertion of this ridiculous argument about talent comes in the form of a New York Times column by Andrew Ross Sorkin, entitled "The Case for Bonuses at A.I.G."

Sorkin writes that "as unpalatable as it seems, taxpayers need to keep some of these braniacs in their seats" so they can help fix the mess they made and "to prevent them from turning against the company."

Braniacs at A.I.G.?????? These "braniacs" are colossal blunderers and incompetents, just like most of the CEOs at the other companies that went bankrupt based on hugely risky and irresponsibly stupid investment decisions.

Edward M. Liddy, the new (supposedly improved) CEO of A.I.G., perpetuates this shibboleth:

"We cannot attract and retain the best and brightest talent to lead and staff" the company "if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."

This argument about attracting and retaining talent has two major problems. First, it is clear by now that such a strategy did not work. Big money didn't attract talent, but greed. And selfish greed doesn't benefit much of anybody except those few who practice it.

Second, if multimillion dollar payouts are necessary to attract "talent," then how do you explain the influx of very talented, dedicated, public-spirited people into the federal government, especially with the new Obama administration? Washington is inundated by people, young and not-so-young, wanting to hitch their stars to a noble vision and public service. How many of them are being offered million dollar salaries? None.

So let THEM take over administration of these discredited and disgraced financial institutions.

Obama Defends Domestic Surveillance

Caleb Hamman
chamman@butler.edu

As described in chapter five of The End of the American Century, undemocratic trends in the U.S. political system are having immense effect in furthering American decline.

The Bush II administration deserves substantial culpability. Decider & Co. scissored the democratic fabric as they exacerbated economic inequality, infringed upon the rights of American citizens, and ruled by fiat decrees issued from a hierarchical decision-making structure.

Conversely, the Obama administration has brought about some welcome developments. A grassroots presidential campaign, an end to torture, and a more transparent governing style are some recent democratizing measures that bode well for the U.S. political system.

Still, other actions have been less than reassuring. Among the most ominous has been Obama’s refusal to depart from the Bush status quo on the issue of domestic surveillance.

Since January, the Obama Justice Department (DOJ) has taken action to ensure the legality of Bush’s domestic spying policies will go unquestioned, the details of the program will remain unknown, and surveillance practices will remain institutionalized for possible use by future administrations.

Supporting evidence is provided in abundance by the DOJ’s record in the ongoing Al-Haramain court case.

Wendell Belew and Asim Ghafoor, former lawyers for the now defunct Al-Haramain Islamic Foundation, sued the Bush administration after they accidentally received documentation from the Treasury Department revealing that they had been subject to warrantless surveillance in 2004.

To review, Bush’s domestic surveillance program, operating without the use of warrants, was in direct violation of the Foreign Intelligence Surveillance Act of 1978 (FISA) which permitted domestic surveillance only in the case of a court order. Bush’s spying policies were unquestionably illegal. His own DOJ refused to certify them and his attorney general, John Ashcroft, threatened to resign if they were continued (1).

To date, Bush’s spying program has withstood attacks against its legality by employing a clever bit of sophistry. The defenders of surveillance essentially argue:

1. No one can bring suit against the program who does not have standing.
2. No one can claim they have standing (because no one knows they have been spied on).
3. No one can be told they were spied on because the information is a “state secret.”

Because of its unlooked for gift from the Treasury Department, the Al-Haramain case appeared to be the first with substantial promise to penetrate this circular reasoning—at least until the Bush administration declared the document a “state secret” and Al-Haramain was forced to return it to the Treasury Department by court order (2).

For three years, the Bush administration continued to assert the state secrets privilege and thus prevent Al-Haramain from proving the standing necessary to question the legality of the surveillance program.

Recently things began to take a different turn. Last July, U.S. District Judge Vaughn Walker ruled that the state secrets privilege didn’t apply to the Al-Haramain case. Then, on Jan. 5, Walker ruled that, with some minor qualifications, Al-Haramain’s lawyers should be given access to the controversial document in order to establish standing.

Enter the Obama administration. Writing last week in Salon, Al-Haramain’s lawyer Jon Eisenberg described how Obama’s election had given the plaintiffs “hope” that they would see some “change we can believe in” in “the Justice Department’s handling of the case under Attorney General Eric Holder” (3).

Perhaps Al-Haramain’s lawyers had taken heart from Obama’s campaign Web site. Herein, “The Plan to Change Washington” describes one aspect of “The Problem” as being “Secrecy Dominates Government Actions” (4).

Specifically, “The Bush administration has ignored public disclosure rules and has invoked a tool known as the "state secrets" privilege more than any other previous administration to get cases thrown out of civil court.”

Despite its rhetoric, Eisenberg testifies that Obama’s Justice Department “has continued to assert the state secrets privilege in the Al-Haramain case, even though Judge Walker ruled last July that the privilege does not apply.”

Also writing in Salon, constitutional and civil rights lawyer Glen Greenwald describes how “the Obama DOJ” is “not merely trying desperately to keep the Bush administration’s spying activities secret, and not merely devoting itself with full force to preventing disclosure of relevant documents concerning this illegal program, but far worse, doing everything in its power to prevent any judicial adjudication as to whether the Bush administration broke the law by spying on Americans without warrants” (5).

Greenwald details how “Obama lawyers have been running around for weeks attempting one desperate, extreme measure after the next to prevent this case from proceeding—emergency appeals, requests for stays, and every time they lose, threats of still further appeals.”

The process reached a climax late last month. On Feb. 27th, the Ninth Circuit Court of Appeals rejected an emergency request by Obama’s DOJ to halt further proceedings before Judge Walker. This ruling effectively ensured that Al-Haramain’s lawyers would have access to the top-secret document necessary to prove standing.

At this point, Obama’s lawyers took unprecedented action. According to Eisenberg, “they informed Judge Walker in a public court filing that if he intends to give us access to the secret filings in the case, the government will ‘withdraw that information from submission to the court’.”

As Eisenberg describes, this statement implies that “executive branch authorities (who? the FBI? the army?) will attempt to seize the documents from Judge Walker”—something that would be “a violation of the constitutional separation of powers, unprecedented in this nation’s history.”

From its actions in the Al-Haramain case, it seems quite clear that the Obama administration has chosen to defend the Bush status quo on domestic surveillance. Legal arguments aside, it’s a rather disturbing decision—one preventing the achievement of justice for past crimes and effectively guaranteeing that domestic surveillance practices will be available to future administrations.

It’s less than clear why the Obama administration has elected this position. It’s not as if they’ve merely invoked "state secrets" in order to protect a few pieces of sensitive information; rather, in exactly the same fashion as Bush, they’ve employed the privilege to have undesirable cases thrown out in their entirety, ensuring that the legality of domestic surveillance will never meet serious challenge.

At best, Obama’s surveillance policy is simply representative of a hesitancy to investigate past crimes. At worst, it’s an attempt to retain expanded, illegal powers for the executive branch and a tacit approval of establishing an above-the-law presidency effectively immune from judicial restraint.

Unfortunately, the context of past actions seems to rule out the least of all evils. Obama voted for the 2008 FISA amendments—bestowing legitimacy on surveillance practices and described by Yale Law School Professor Jack Balkin as “byzantine” and giving “new powers” to the presidency that are “either sketchy or opaque” and “will have to be worked out” by “the executive branch” (6).

Welcome Caleb Hamman to the team

Caleb Hamman, a former student of mine, will be joining this blog as a guest contributor. Caleb is double-majoring in Political Science and Philosophy at Butler University, and is the opinion editor and columnist for The Butler Collegian. HIs first blog will appear here shortly.

Is the Global Economy a Ponzi Scheme?

In his Sunday New York Times column, Thomas Friedman quotes a climate expert, Joe Romm, who nicely captures a problem that I discuss in my book, and in several blogs posted here(especially "The US Economy Will Shrink A Lot, and It Should.").

"We created a way of raising standards of living that we can't possibly pass on to our children. . .We have been getting rich by depleting all of our natural stocks--water, hydrocarbons, forests, rivers, fish and arable land--and not by generating renewable flows."

This led me to Joe Romm's blog, climateprogress.org, where he has a thoughtful and thought-provoking entry entitled "Is the Global Economy a Ponzi Scheme?" The essay, and that site, are worth a look, and I have added a link to it in my blogroll.

The End of the American Century Published in China

The End of the American Century will appear this month in China, published by the Shanghai Lexicographical Publishing House, and translated by Professor Ni Lexiong and Sun Yunfeng of the Shanghai University of Political Science and Law.

The US Economy Will Shrink (A Lot), and It Should

The U.S. economic stimulus plan passed by Congress aims to regenerate economic growth, spending and consumption. But it is almost certainly bound to fail, and not for the reasons given by partisans on both sides of the Congressional aisle. In spite of the stimulus, the economy will continue to contract. This is inevitable; it is necessary; and it is even desirable. The main task of the government should be protecting those who are displaced and impoverished during this contraction and retrenchment.

The U.S. economy must contract because it is way too large, in numerous respects. It is too large given the U.S. levels of production and exports. It is built largely on consumption and debt, not output. And it is too large for the rest of the world, even given the size and wealth of the country.

The U.S. economy is big—about 28% of global GDP. But the U.S. accounts for only about 8% of global exports; 16% of manufacturing value-added output, and 5% of the world’s population.

The main contributor to the outsized US GDP is consumption, where the U.S. is indeed the world’s leader. Consumption accounts for about 72% of US GDP, which is a record for any large economy in modern history. As we are now learning, this consumption has been built on a mountain of consumer and household debt, which now totals some $13 trillion—approximately the size of the entire U.S. economy. This is unsustainable.

Furthermore, much of U.S. debt is owed to other countries. About half of the federal debt and a quarter of corporate bond debt is held by foreigners. As former Senator Hillary Clinton pointed out in 2007, "16% of our entire economy is being loaned to us by the Central Banks of other nations."

These huge levels of consumption are a drain on the planet, its resources and its people. The U.S. has only 1 in 20 of the globe’s people, but we consume a quarter of the world’s fossil fuels; 29% of “materials” (including minerals, metals and synthetics); 19% of forestry products; and 14% of its water. The U.S. is also the world’s biggest contributor to environmental pollution, greenhouse gas emissions (a quarter of the world’s total) and global warming. At 5% of the globe, we leave a huge carbon footprint.

In the 1970s Yale historian Paul Kennedy, writing in The Rise and Fall of the Great Powers, suggested that eventually the U.S. would have to decline to its “natural” share of the world’s wealth and power, which he estimated should be in the 16-18% range, rather than the 30-40% held by the U.S. at that time. This would indicate a cutting of the U.S. economy by half.. But so would many of the economic indicators I mention above. Consumption, debt, and borrowing all need to be reduced by about that amount, as should petroleum and energy use.

Given the hugely bloated size of the U.S. economy, and of U.S. consumption, and of consumer and government debt, it is hard to see how the economic stimulus package will make much of a dent in things. The economy is bound to decline, and needs to.

This contraction has already begun. The country’s GDP shrunk last quarter at an annualized rate of 3.8 %. If this continues, it will be the largest yearly decline in the US economy since 1946. But a much larger decline will be necessary to bring the economy back to a more natural, balanced and sustainable level. The contraction of GDP is likely to continue for several years, at the very least. This would be unprecedented for the postwar period, when only once (1974-75) did the economy contract two years in a row.

Such a decline could be on a scale of that of the 1930s. The main problem then, as now, will be the reduction in employment, and the consequent growth in poverty. It is hopeless throwing good money after bad in an effort to revive growth, consumption and debt. Instead, the federal and state governments should focus on alleviating the suffering that this contraction will entail, by increasing funds for unemployment compensation, Medicaid, welfare, job retraining and education.

Many people will suffer in this transition, and they should be helped. For most people, though, this economic retrenchment will simply mean belt-tightening. Our standard of living will decline, in ways most of us have not experienced before. But we are still a highly developed wealthy country, and will remain so. Once the U.S. economy has stabilized at a more natural size, it will grow again. And this time, it can happen in a way that is not so destructive of the planet, other peoples, and our souls.

Forthcoming Presentations on "The End of the American Century"

Over the next several weeks, I will be giving several public presentations related to themes of my book The End of the American Century.

March 4, Muncie "The Future of America's Power in the World" Co-presenting with Michael Kraig, Senior Fellow at the Stanley Foundation. The Annual Trivers Lecture, sponsored by the Ball State University Department of Political Science. Wednesday, March 4 at 4:00 p.m. in Bracken Library, Room 226.

March 11, Chicago Two presentations at Northeastern Illinois University (Chicago), as part of their conference on "The Past and Future(s) of Revolutions: A Global Exploration" (see program at this link).

Noon. Teaching a Master Class on "The Unraveling Revolution: The Collapse of U.S. Superpower." NEIU Auditorium.

7pm "Systemic Revolutions and the End of the American Century." Presentation on a panel on "New Forms of Revolution" with other presentations by Julie Mertus and Jonathan Schell. NEIU Auditorium.

March 18, Indianapolis. "The End of the American Century" as part of the Distinguished Speaker Series of the Indiana Council on World Affairs. 6:30pm, The Marten House Hotel, Indianapolis.

April 1, Indianapolis. "The U.S. and Rising Powers" Presentation as part of the "Great Decisions" series presented by the Mid-North Shepherd's Center. 11:00 a.m. at the North United Methodist Church, 3808 N. Meridian Street. More information at this link.

More Evidence That Taxes Must Go Up

David Leonhardt, the prescient and hard-headed New York Times economics columnist, states flatly that "your taxes are going up" in his column of Feb. 25. Leonhardt's data and arguments reinforce those I have made in The End of the American Century, in my Op-Ed for the Christian Science Monitor ("This is not the time to cut taxes"); and in other posts here.

Leonhardt argues that if we want the government services that we have come to expect and rely on (like national security, infrastructure, Medicare, education), we need more federal revenues, because at the moment "we are not paying nearly enough taxes to maintain those programs." He sees taxes going up soon, "and the increase will be permanent."



On the upside, Leonhardt argues, there is room for such an increase, and it will probably not hurt economic growth. As he points out, for a half century federal taxes have remained fairly constant relative to the size of the economy--at about 18% of GDP. "But the 18 percent era has to end soon."

In The End of the American Century, I show that US tax rates are low in global comparisons.

"Compared to other wealthy countries, the United States has among the lowest rates of both individual and corporate income taxes, and total tax revenues in the U.S. (as a percentage of GDP) are lower than those in most of the affluent democracies that are members of the OECD [see OECD data here]. Thus, not only is the U.S. spending and consuming more than most countries, but it is not paying for the relatively few benefits that the government provides. This is the crux of the problem of the deficit and the debt."

Leonhardt argues (as I do in my CSM Op-Ed), the "despite all the scary stories you've heard, the evidence that higher taxes necessarily cripple an economy is somewhere between thin and nonexistent." He points out that the fastest postwar economic growth occurred in the 1950s and 1960s, "when the top marginal tax rate was a now-unthinkable 90 percent."

He also points out that it will not be sufficient to simply raise taxes on the very wealthy, as President Obama has proposed. The incomes and wealth of that group have soared in the last decade, as their federal tax rates have declined. So their higher tax rates should be restored.

But, as Leonhardt says, "the problem can't be solved just by taxing the rich." That top 1% pays only about one quarter of federal taxes. So the tax increases will have to spread more widely.

This will be a very difficult task politically. No politician wants to raise taxes. But not to do so will simply pass the problem onto our children, and burden them with an even bigger mountain of debt. We need to start paying for what we get. And especially now, as we launch huge new spending programs for health care, education, infrastructure and banks, we need to shell out for what we are getting.

Indiana Governor Has "No Idea" of Costs of Commercial Flights

Indiana's Governor Mitch Daniels, using a $1000 per hour state aircraft for a trip to Washington, appeared clueless when a reporter asked him if it might be cheaper to fly commercial and stay an extra night in DC.

Last weekend, Daniels was flying to Washington for the annual meeting of the National Governors Association when the plane developed a crack in one of the windows, forcing it to land in Columbus. He flew on from there on a commercial flight.

The state-owned plane, a King Air prop, costs $791 per hour for fuel plus $184 in maintenance costs for each hour of flying. The flight from Indianapolis to Washington takes about two hours.

According to the Indianapolis Star, when he was asked why he didn't fly commercial in the first place, Daniels said there was no commercial flight that would have gotten him to Washington on time. "I would've had to come the night before and buy a hotel room and I don't know what else." When asked whether it still wouldn't have been cheaper to fly commercial, even if it meant another night in a hotel, Daniels said "I have no idea."

This seems a peculiar response from the former director of the national budget, and a man who President Bush referred to as "The Blade" for his acumen at budget cutting. But even then, Daniels was not so good at keeping spending under control. During his tenure as director of the Office of Management and Budget from 2001 to 2003, the federal budget flipped from a $236 billion surplus to a $400 billion deficit.

So I took the liberty of checking up on prices for the gov. The Governors Association was meeting at the J.W. Marriott hotel in DC. A king size bed on a weekend night costs about $200--though almost certainly the governors attending the conference received a reduced convention rate. A commercial roundtrip flight from Indy to DC--non-stop and at least as fast as flying a smaller turboprop--also runs about $200.

So to fly commercial and stay an extra night would have been roughly $400. To fly the 9-seat King Air, without having to "buy a hotel room and I don't know what else" costs about 2k each way, for a total of $4000. Ten times as much, Mr. Governor.

Maybe this is trivial, but Daniels' cavalier dismissal of the question on costs betrays an arrogance and profligacy that is unbecoming of a public servant. Some of our Congressional representatives have grilled the bailout CEOs about their use of corporate jets. Surely our elected representatives should be held to at least the same standards, particularly in this time of deficits, belt-tightening, and sacrifice.



(Scott Adam's 2/25 "Dilbert" strip.

Guns on Campus Would Add to the Mayhem

One of the themes of The End of the American Century is the exaggerated and destructive aspects of "American Exceptionalism"--the tendency for Americans to see themselves as exceptional, different and better than other peoples and countries. This takes extreme form in the combination of individualism and violence in this country, which is manifested in the peculiar (and exceptional!) obsession with individual gun ownership. The prevalence of firearms in the U.S.--almost as many as there are people--contributes to some 30,000 firearm deaths each year, and a homicide rate that is far higher than any other industrialized country.

For people in other countries, the levels of violence and the prevalence of guns in the U.S. invoke both amazement and horror. Global opinion surveys show that the two most common negative characterizations of Americans by foreigners are "greedy" and "violent." They contribute to the growing disillusionment with the U.S. (and with American citizens) in other countries, and to the view of the U.S. as being violent both in its foreign policy and inside its own borders.

In recent years, the National Rifle Association (NRA) has been pushing for the adoption of "conceal carry" laws in the states, and lately has been arguing for laws that would allow more guns on college campuses. They claim to see this as a way to avoid tragedies like those at Virginia Tech where a student killed 32 people in 2007. But few experts believe that arming students could prevent such a tragedy, and that it will simply lead to an increase in campus firearms injuries and deaths.

The NRA-sponsored bill in my state, Indiana, was introduced by a lifelong NRA member who wrote a letter to the Indianapolis Star arguing in support of the bill, Senate Bill 12. Below is my response to his letter, which appeared on the Star's website at the following link.

-----------------------
Nothing positive to gain from guns on college campuses

Posted: February 13, 2009

In his recent letter to the editor, state Sen. Johnny Nugent contends that "allowing guns will make our campuses safer." He is a sponsor of Senate Bill 12, which would "prohibit a state college or university from regulating in any manner the ownership, possession, carrying, or transportation of firearms or ammunition." Nugent believes that

"the only thing that can stop a bad guy with a gun is a good guy with a gun."

It would seem, though, that the best people to ask about security and safety on campus are the campus safety and police departments. Nugent would find that they overwhelmingly oppose this measure, as would almost all faculty and staff on campuses (as I am). Butler University Public Safety Director is Ben Hunter was formerly an officer with the Indianapolis Police Department. When I asked Hunter his views on this, he wrote "I am against the idea of carrying weapons on campus" and continued as follows:

"As a lifelong supporter of responsible gun ownership, I can attest that educational institutions and employers should be allowed to regulate their buildings and properties. Having students, faculty and staff possibly carrying guns on campus could result in accidental discharges, a false response to a threat and untrained persons that create an operational danger for (police). Proponents of such legislation will often talk about how well trained persons can assist with these threats; the only issue is that their training does not come close to what police officers are required to undertake."

College campuses are already much safer than the community in general, with far lower levels of both homicides and suicides. Surely, this is due, in part, to the prohibition of guns by most universities. Probably the biggest consequence of allowing guns on campus would be an increase in the incidence of suicide. Suicide is already the third leading cause of death for Hoosiers of college age, but suicides are much less common on college campuses than off. Since the most common means of death in suicides is a gun, increasing the number of guns on campus will only make suicides more likely.

Before pushing this law onto colleges and universities, our legislators should consult with those who are most familiar with the situation: the public safety departments, mental health professionals, and the deans of student life. I can't imagine that any of them would want to see more guns on campus.

Russian Reflections in a U.S. Mirror

A prominent Russian professor and former KGB analyst,Igor Panarin, predicts that the U.S. will collapse and break into six pieces next year. His forecasts are “all the rage” in Moscow and Panarin has become a media celebrity in Russia. As interesting as his theories are though, and as bad as things are in the U.S., his predictions are way overblown, reflect a shallow understanding of the United States, and actually tell us more about Russia than about the U.S.

In December the Wall Street Journal reported on an interview with Panarin, entitled “As If things Weren’t Bad Enough, Russian Professor Predicts End of U.S.” The Russian sees mass immigration, economic decline and moral degradation in the U.S. leading soon to a civil war and a collapse of the dollar. Soon thereafter, the richer states will withhold funds from the federal government, effectively seceding. The country will break into six pieces, based mostly on ethnicity, and foreign powers will move in to gobble them up. (There is a map of the future Un-United States in the WSJ article).

As with many such apocalyptic scenarios, there are bits of truth in Panarin’s analysis. He points to the problem of U.S. debt, and foreign debt in particular as a “pyramid scheme” that is unsustainable. In an Izvestia interview in November, he predicted the U.S. financial crisis would worsen, that unemployment would grow, and that people would lose their savings. He sees the revival and growth of both Russia and China as major political and economic powers. All this is pretty accurate.

However Panarin’s more extreme predictions about the U.S. seem more like a reflection of what has happened in Russia—-he is “projecting” as psychotherapists like to say. His concern about “moral decay” in the U.S., for example, is hard to fathom given the extremely high levels of alcoholism, divorce, crime and corruption in Russia. And the breakup of the US seems more a reflection of Russia’s own past—the 1991 breakup of the Soviet Union into 15 separate countries. But the parallels are few: each of these 15 “republics” of the USSR were based on entirely different nationalities, or ethnic groups, with little holding them together but the centralizing force of the Communist Party. As contentious and fragmented as the US can sometimes seem, almost all people here still consider themselves, first and foremost, Americans.

What is most interesting about Panarin’s predictions—and their popularity in Russia—is what it says about Russia’s desired place in the world. The country has been through some very rough times over the last two decades, and under Putin has begun to revive and reassert itself. Vladimir Pozner, a prominent Russian tv journalist, says Panarin’s vision “reflects a very pronounced degree of anti-Americanism in Russia,” which, he says, is “much stronger than it was in the Soviet Union.”

In The End of the American Century, I point to Russia as one of America’s potential “New Rivals.” One can not ignore that Russia is the largest country in the world, occupying almost twice the territory of the U.S. Within those borders it contains the world’s most abundant array of natural resources. It is the world’s second largest producer and exporter of petroleum and has, by far, the world’s largest reserves of natural gas. Russia’s economy has been growing at about 7 percent annually. It also has the world’s largest stockpile of nuclear warheads.

Both Russia’s citizens and its leaders want Russia to play a bigger role on the world stage and to be more respected by other countries. Premier Putin has been particularly vocal and critical of U.S. efforts to dominate the globe, referring not so subtly to a “world of one master, one sovereign.” He has said that “the trust in America as the leader of the free world and free economy is blown for ever.” (See The Economist's special report on Russia, "Enigma Variations," for more on this theme).

Russia has its share of problems, as the U.S. does. But it will be a force to reckon with, and the U.S. will have to learn to deal with Russia, as with other countries, as partners or competitors, rather than subordinates or enemies.

Galllup Poll Widget

I added a Gallup Poll widget to the sidebar of this page (scroll down on the right), which shows the latest favorability ratings for President Obama, and has links back to the Gallup home page for results of some of Gallup's recent surveys. Interesting and nifty!

The Measure of America

The Social Science Research Council and Columbia University Press have published a remarkable and eye-opening book, called The Measure of America: American Human Development Report 2008-2009, which could function as a companion and statistical supplement to The End of the American Century. In analyzing the domestic situation of the U.S., The Measure of America has many of the same themes, and similar (and supporting) evidence as my book. Like my book, it shows that on most measures of societal development, the U.S. has declined over recent decades, and lost ground compared to other countries.

The Measure of America is modeled on the annual Human Development Report published since 1990 by the United Nations Development Programme. That series attempted to get away from the raw economic indicator of Gross Domestic Product, and to determine the level of human development in each country. The “human development index” used by UNDP, an alternative to GDP, was “a composite index measuring average achievement in the three basic dimensions of human development—a long and healthy life, knowledge, and a decent standard of living.” (From the Human Development Report 2006).

The Nobel Prize winning economist Amartya Sen was instrumental in developing the Human Development Report, and wrote the Foreword to The Measure of America. There, he writes that

“we have to judge the success of a society, including its economy, not just in terms of national wealth or the ubiquitous GNP, but in terms of the freedoms and capabilities that people enjoy to live as they would value living” (p. xi).

Sen observes that this approach has been “remarkably neglected in the United States in particular” and notes in this country “a major discrepancy between opulence and achievement.” The U.S. may be on some measures the world’s wealthiest nation, but “its accomplishments in longevity, secure health, fine education and other such basic features of good living are considerably below those of many other—often much poorer—countries.” He also notes, as I do in my book, that the position of the U.S. relative to other countries has been “steadily falling” over the years (p. xii).

The book itself assembles data in clearly presented tables on the three main “building blocks” of the human development index: a long and healthy life; access to knowledge; and a decent standard of living. In all three areas, the U.S. fares poorly in comparison to other countries. Compared to other wealthy countries, for example, the U.S. ranks #24 in life expectancy; #18 in high school graduation rates; and #2 in poverty rates (you don’t want to rank high on that one!).

The data shows the downward trend for the U.S. over time in most of these measures as well. And for the overall index, the U.S. world rank dropped from #2 in 1980 (behind only Switzerland) to #12 in 2005. Countries ahead of us include much of western Europe, Canada, Australia and Japan.

(The American Human Development Project also maintains a useful website at this link.)

These are all trends and themes presented in The End of the American Century, where I also use authoritative data (including many of the same measures used in The Measure of America). They point out how far the U.S. has fallen, and how much work we have to do. The problems of the U.S., both economic and social, predate the disastrous Bush presidency, which simply exacerbated them all. It took more than eight years to dig us into this hole, and will take at least that long to recover. But we have to recognize these problems and understand them before we can begin to solve them.

The Measure of America: American Human Development Report, 2008-2009 (A Columbia / SSRC Book)

Obama Imposes CEO Pay Limits

Limiting CEO pay must be in the air! I posted a blog with such a proposal on Saturday, before learning that Senator McCaskill had introduced a bill with similar provisions on Friday. Then yesterday President Obama himself announced executive pay limits, along very similar lines as my own "modest proposal." (Do you think the Prez reads my blog?!!).

According to the New York Times story, these executive pay limits "seek to alter corporate culture" which in my view is long overdue and would be a major accomplishment. According to the Times, "the new rules would set a $500,000 cap on cash compensation forthe most senior exeutives, curtail severance pay when top executives left a company,[and] restrict cashing in on stock incentives until government assistance was repaid."

President Obama observed that "This is America" and "We don't disparage wealth" or people achieving success. But "what gets people upset--and rightfully so--are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."

"For top executives to award themselves these kinds of compensation packages," the President said, "in the midst of this economic crisis is not only in bad taste, it's a bad strategy, and I will not tolerate it as president." He pointed to this kind of CEO extravagance reflecting "a culture of narrow self-interest and short-term gain at the expense of everything else."

Bravo, Mr. President. This may be mostly a symbolic gesture, but symbols are important. What this country needs now, even more than an economic stimulus package, is a change of heart, and a change in the way we think, believe and behave. Just as when the President said "The United States does not torture," he is sending a message to Americans and to the rest of the world that the United States is changing.

(See my previous entries on CEO pay by clicking on the "CEO pay" label in the right sidebar).

Limit Bailout CEO pay to U.S. President's Salary

President Obama called Wall Street bankers "shameful" after reports that they had given themselves some $20 billion in bonuses this year, just as the economy was deteriorating and the government spending billions to bail them out.

Here's a modest proposal: for companies receiving federal bailouts, let's limit the pay of those CEOs to what the President of the United States earns--$400,000.

Once those bailout companies have repaid our tax-paid bailout money, they can return to paying themselves tens of millions of dollars yearly, as they do now.

Indeed, just this week Senator Claire McCaskill (Dem, Missouri) introduced a bill that would cap compensation at $400K for all employees of bailout recipients.

To give you some context, here are the top ten recipients of federal bailout money under the TARP (Troubled Asset Relief Program).


1. Bank of America, $45 billion
2. Citigroup, $45 billion
3. AIG, $40 billion
4. JPMorgan Chase, $25 billion
5. Wells Fargo, $25 billion
6. General Motors, $10.2 billion
7. Goldman Sachs, $10 billion
8. Morgan Stanley, $10 billion
9. PNC Financial, $7.6 billion
10. U.S. Bankcorp, $6.6 billion

And here are the 2007 total compensations for the CEOs of those same firms:

1. Kenneth Lewis, $20.4 million
2. Vikram Pandit, $3.2 million
3. Martin Sullivan, $13.9 million
4. James Dimon, $28.9 million
5. John Stumpf, $11.4 million
6. G. R. Wagoner, $15.7 million
7. Lloyd Blankfein, $54 million
8. John Mack, $41.4 million
9. James Rohr, $14.5 million
10. Richard Davis, $5.9 million

These men are all multimillionaires, even if you only count their take from last year. They can afford to slum it for a while on the salary of the President of the United States. And if these CEOs are genuinely committed to help their companies, and the United States, recover, then they should be willing to forego a little extravagance for a few years. If they are unwilling to do so, then the federal government should appoint a caretaker CEO until the bailouts have been repaid.

The rules of the game have changed. These companies and their CEOs have brought this country to the brink of economic disaster. The government has stepped in to save these companies, as a means of rescuing the economy. There can no longer be any argument that multimillion dollar compensation packages are necessary to attract "talent." It was not true in the past (when CEO salaries were far lower); it is not true in other countries (where CEO salaries are a small fraction of American ones--see chart below); and it is not true now--when this "talent" drove their companies, and the economy, into the ground.

Congress has talked about limiting the pay of bailout CEOs, but they have done nothing about it. It is time. And this idea--of limiting these CEO salaries to the level of the highest paid government executive--was even profferred by Republican John McCain during the campaign:

"no C.E.O. of any corporation or business that is bailed out by us, that is rescued by American tax dollars, should receive any more than the highest paid person in the federal government.”

CEO Pay as a Multiple of Average Worker Pay, in US and Other Countries

(from The End of the American Century, p. 40.

Interview and Review of "The End of the American Century"

David Hoppe interviewed me and wrote a story on my book in the 1/28 issue of Nuvo magazine. I believe he nicely captures the essence of the book, and my thinking about the current situation and place of the U.S. The story can be found at this link.

Retrenchment, Not Recovery

Economists and politicians are debating whether we are in a recession or a depression, and how many months or years it will take to recover from the downturn. As I have argued on this blog and in my book, what is now happening to the economy is not typical or normal. I would call it a "retrenchment" rather than a recession. In that sense, it is a permanent correction, and will result in a substantial and long-term contraction of GDP, the standard of living and the stock market. It will take many years to return to where we were. The problem is that the U.S. government and consumer have both been living on borrowed money for a generation, so that most of the gains of that period are illusory. We were never really that wealthy, and now we have to start paying for that extravagance.

A similar argument is made in an interesting article entitled "Will There Be A Recovery?" by Paul Craig Roberts, a former Assistant Secretary of the Treasury in the Reagan administration. He also sees the current situation as different from past recessions. Recovery in the past could be stimulated by cuts in interest rates, allowing consumers to spend more against rising real wages. This would lead the economy to rebound.

Now it is different though. For one thing, for most workers, real wages have remained stagnant for almost twenty years. Consumers have maxed out their credit and can no longer borrow so freely. And interest rates are already at rock bottom levels.

"And there’s another problem," says Roberts. "Much of what American consumers purchase today is made offshore. Stimulating consumer demand in America puts factories back to work, but those factories are located elsewhere in the world." The U.S. consumed more than it produced, by borrowing from abroad. But this source of funds is also drying up now.

These are all themes that I raised in The End of the American Century. While I do not totally agree with all of Roberts' arguments, his overall point is a good one. There will not be a recovery, like recoveries in the past. The task for the U.S., and the Obama administration, is to figure out how to navigate this difficult transition, and to convince U.S. citizens that we can live a good life without all the excesses of the past.

Take a look at Roberts' essay, and offer your thoughts in the Comments section here.