Sisyphus on Wall Street

Underlying the endless posturing, bickering, and mean-spirited name-calling associated with the recent Congressional debt ceiling debacle were three important unstated issues – size, excessive globalization, and imperial overstretch, issues which were never even mentioned during the heated Congressional debate.

First, the United States has simply become too big to govern.  Second, it has exported too many jobs over the past three decades to China, India, and the rest of the world.  Third, it is engaged in too many wars and has too many military bases (over 1,000) in too many countries (153).

Just as the Kremlin found it impossible to manage 280 million people in the former Soviet Union from one central bureau in Moscow, so too are the White House and the Congress finding it increasingly difficult to control 310 million Americans from Washington, D.C.  Also, not unlike the former Soviet Union, the United States has a single political party, the Republican Party, disguised as a two-party system.  The Democratic Party is effectively brain dead, having had no new ideas since the 1960s.

Three years after the onset of the worst economic recession since the Great Depression, the battle rages on as to whether the government should raise or lower taxes, increase or decrease spending, or print even more money.  In case you haven’t noticed, the government has been reducing taxes, increasing spending, and printing money as though it were going out of style, and it doesn’t seem to have made any difference.  The economic recovery remains anemic, job growth is pathetic, and the tepid housing market shows few signs of life.  Only the highly manipulated stock market temporarily responded positively to government policy.

Neither President George W. Bush’s 2001, 10-year, $1.6 trillion tax cut nor its 2003, $350 billion follow on could keep the U.S. economy out of recession.  But that did not prevent the Obama administration from pushing through Congress a two-year extension of the Bush tax cuts in December 2010.

Keynesian economics supporters rallied behind President Obama early in 2009 to gain Congressional approval for an $800 billion economic stimulus package.  Although it may have helped prevent the loss of even more jobs, the stimulus package does not appear to have increased the number of new jobs significantly.  The President’s $3.73 trillion budget request and projected $1.5 trillion deficit are more of the same.  The spending cuts mandated by Congress recently as part of the deficit reduction bill are likely to result in even more job losses.  However, they were insufficient to forestall a U.S. credit rating downgrade by S&P.

Following in the footsteps of his predecessor Alan Greenspan, Federal Reserve Chairman Ben Bernanke has kept the U.S. economy, and indeed the global economy, awash with money freshly printed by the government’s high-speed printing presses.  He has primed the monetary pump with near-zero interest rates, loans to poorly managed mega financial institutions worldwide, and government bond purchases worth hundreds of billions of dollars.  Unfortunately the impact of all of this intense monetary policy activity on the housing market and the job market has been virtually nil.

What Bush, Bernanke, and Obama have failed to realize is that they have been engaged in a myth of Sisyphus struggle with Wall Street, which has presided over a thirty-year strategy of exporting real American jobs to Asia and elsewhere, all in the name of maximizing shareholder wealth.  So many high-paying manufacturing and professional service jobs have been offshored that there are not enough people left who can afford to buy all of the Chinese plastic yuck that must be sold to sustain the American economy.

The neocons scream for more tax cuts, the liberal Democrats demand more government spending, and the monetarists call for even greater increases in the money supply, and it’s not going to make one whit of a difference.  Sometimes when you make your bed, you actually have to lie in it.  The effects of a thirty-year exodus of American jobs to the rest of the world cannot be reversed overnight.

It’s as though our national economic policy for the past decade has been under the control of three blind mice – Bush, Bernanke, and Obama.  “See how they run.  Did you ever see such a sight in your life?”

Driving the nation’s trillion-dollar plus military and national security budget is a foreign policy based on full spectrum dominance, imperial overstretch, might makes right, and the proposition, just be like us.  One result flowing from this insidious foreign policy is the never ending, highly racist war on terror (Islam) which has given rise to immoral, illegal, undeclared wars in Afghanistan, Iraq, Libya, Pakistan, Palestine (via Israel), Somalia, and Yemen.  Weapons of mass destruction, the strategic missile defense system, the Cold War relic NATO, pilotless drone aircraft, outrageously expensive F-35 fighter jets, and 1.6 million American troops are all part of the program.

Size, a moribund economy, and excessive militarization were three of the major forces contributing to the demise of the Soviet Union in 1991.  But the United States may be well on its way to replicating Soviet mistakes in an American setting.  We have spent so much time, energy, and other valuable resources fighting the threat of terrorism that we have diverted our attention, our energy, and our resources from fixing our severely broken economy.

One major unstated conclusion of the debt ceiling debate must surely be that we can no longer afford a continuation of the military madness.  It is not in our self-interest to keep perpetuating the myths, half-truths, and out-right lies that have fueled the war on terror since it was launched by President George W. Bush in 2001.

If we were to look back into the eyes of our old adversary, the Soviet Union, we just might see a mirror image of ourselves.  We have become much more nearly alike than most Americans would care to admit.

In the meantime, buy gold and prepare to secede.

Thomas H. Naylor is Founder of the Second Vermont Republic and Professor Emeritus of Economics at Duke University; co-author of AffluenzaDownsizing the U.S.A., and The Search for Meaning.