Map of life expectancy at birth from Global Education Project.

Tuesday, January 18, 2005

The American Century is Over: Part 2

As the American Century came to a close, the United States, despite its immense wealth and power, faced some daunting challenges. While these were apparent to many well informed people, who were actively raising alarms, they went almost unmentioned in political debate and in the corporate mass media. Public discourse focused on trivia at best, often on complete falsehoods, and perhaps worst of all, on the irrational obsessions of people who wanted to lead society into a dark age of superstition and willful ignorance.

class="MsoNormal">What were our real challenges? First, the immense prosperity of the industrial age, on which the power of the United States rested, was largely fueled by petroleum. The U.S. had already consumed most of the petroleum within its borders and could not possibly expand production enough to reverse the steady rise in oil imports. The earth is not about to run out of petroleum any time soon but due to rising global demand as the economies of China and India expand, and the increasing difficulty of extracting petroleum from ever more remote and difficult places, the price will inevitably rise. Unless demand can be reduced, it will keep rising, into the indefinite future. (It is possible that the absolute rate at which oil can be extracted globally will soon begin to decline, but that is actually not important in itself. What matters is the relationship between supply and demand.)

Furthermore, the dependence of the U.S. on imported oil is disconcerting because of the possibility that political instability in oil producing regions, or international conflict, could disrupt supplies.

Supply aside, burning fossil fuels causes a lot of harm, as everyone ought to know. Even if petroleum supplies are limited, there is one hell of a lot of coal in the world – enough to fuel the industrial economy for hundreds of years, in theory. (Most of it is in Siberia and China.) But that is not a solution. Burning coal puts more carbon dioxide, sulfur, soot and other pollutants into the atmosphere than burning oil does. Converting coal into compact, liquid transportation fuel requires using even more coal and creating more pollution. Environmental limitations require that the world reduce its consumption of fossil fuels, not increase it.

A second major problem facing the United States was the impact of global economic development on its workers. Capital, and now goods, cross borders as freely as the wind, but workers are tied to their homes. American workers can no longer expect to be paid $20 and hour, or even $7.50, for factory work that people elsewhere will do for one or two dollars a day. Today, an endless conveyor of container ships pours manufactured goods into West Coast ports, and then returns to Asia filled with scrap metal and rags. Tens of billions of dollars flow out of the United States every month, to purchase manufactured goods and petroleum, and then flow back to purchase debt instruments of the U.S. government, which we and our children and grandchildren will have to repay. We are eating our seed corn.

Then there is what is often referred to as the demographic problem – the aging of the population and the increasing dependency ratio that goes with it. As with all of our problems, the real nature of this one has been grossly misrepresented. Our public pension program for the elderly (and disabled), Social Security, is affordable, assuming we can preserve our economic vitality. However, rising health care costs threaten to swamp our economy and our publicly funded systems of health care insurance. This problem does not exclusively pertain to the aged but the aging of the population certainly contributes to it.

These could all be called structural or exogenous problems. They arose because of forces that were inevitable, not under the control of the United States, although we certainly could have anticipated them a long time ago and taken appropriate steps to ameliorate them. We have failed to do so, and they have grown far more difficult. However, we have also proactively contributed to our problems. Notice, for one thing, that I have not mentioned "terrorism" yet -- now you know why.

I will discuss the folly of our leadership and the culture which has enabled it in the next installment, before turning to the necessary solutions in part 4.

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