George Rebane
In spite of what may happen this November, 2010 promises to be as devastating to the fortunes of our country as was 2009. Since returning from our recent travels, I’ve been trying to reframe the major themes now reshaping our future. These are some thoughts.
The American spirit to remain the order-giving hegemon of this planet is on the verge of being extinguished. Enough crippling legislation and government subsidy packages have come down the pike to insure that future GDP growth will remain anemic. Given the way the new incarnation of cap and tax (now aka the Kerry – Lieberman ‘Power America’ bill) is being misrepresented, and how it is being crafted to temporarily buy off big corporations, the stake hovers above the heart of our country’s ability to generate the wealth we need to educate and arm ourselves. Add to this the massive tax increases and increasing deficits now in the oven, and you have the perfect storm already under way.
One of our systemic maladies is the growth of public service unions which have now metastasized throughout our republic like an invading cancer. My own alarums about this calamity are familiar to RR and Union readers. The established media have been slow to pick up on this for a number of reasons, the prime being incompetence and promotion of a collectivist agenda. A recent awakening comes from editor-in-chief of the US News and World Report, Mortimer Zuckerman. This man is no right-wing horn blower; in fact, for years many have wondered how he has managed to guide USNWR on its mostly center path. He has now written a laudable summary of the impact of public service unions, definitely worth reading by those not familiar with the disease or its symptoms (here).
California, already a federalized basket case, is being closely followed by a number of states, each drinking the unsustaining brew of government subsidies for market mangling ‘green’ jobs. They do this while denying the monster of unfunded public employee retirement obligations and entitlements now reaching into the trillions of dollars. It is all of a piece with what is happening in Europe as the EU fashions a hopeless bailout for Greece while Portugal, Spain, and others are waiting in line to file their claims.
Overseas China is now expected to have its military up to par with ours in the next ten years, and it will be testing and challenging our primacy in the Pacific long before that. As reported by Stratfor and Mark Halprin (in the 17may10 WSJ), China has been increasing its military budget by 10X in the last two decades, we are now busy cutting ours. China is also preparing for a large area (as in the Pacific Ocean) war with the US, while we are paring our ability to project power globally and continue to refashion our forces to chase Islamic ragheads in the mountains of Asia Minor.
At the same time in Asia Minor, our major ally Turkey is re-evaluating its future with Europe, and making all the moves in preparation for reassuming the hegemony of that part of the world. Recently it has been making nice with a collection of countries (e.g. Syria) and terrorist organizations that are on our bad guy list. Today we hear that Turkey has joined with Brazil to make a deal with Iran for the storage of some of its nuclear materials (here). Some of the more naïve on these shores will hail this as a sign that Obama’s bowing and scraping is finally beginning to pay off and reduce Iran’s nuclear threat. I suggest that you look at it as Turkey beginning to acquire a nuclear capability through a back door that goes directly against US interests. Turkey will need the nuclear big stick as it becomes the region’s 800 pound gorilla.
Even though many Muslim countries (Egypt hangs in the balance) have made steady progress in democratizing their institutions of governance, America can enjoy little relief in such outcomes. These sovereign nation-states still have interests which do not dovetail with US interests. And as they become freer, they will generate the wealth required to implement their own national policies with little consideration for the visibly retreating America.
And finally at home, we are under the heel of an administration and ideology that seeks nothing more that to redistribute the country’s wealth and wealth creating capacity. These policies will fail as they have everywhere else in the world because there are natural limits to tax and spend (aka socialism) in the United States. This limit has been called Hauser’s Law which states that federal tax receipts will always fall short of 20% of GDP as explained by David Ranson (here). Since WW2 every tax policy that intended to garner more of the national fisc has instead reduced GDP growth and therefore tax revenues. Success in grabbing more than 20% has given us the USSR, and today’s unsustainable EU with its poster child Greece.
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