Wednesday, November 24, 2010

Economic changes leaving U.S. behind

The U.S.  economic crisis was severe in part because of the   growth of finance capital as the  dominant actor  in our economy .  Finance was in crisis first, then the production of goods and services collapsed taking some $13 Trillion out of the  U.S. economy and caused a  $ 34 Trillion loss in the world economy.  The extreme  income inequality produced  by the three-decade rise of the financial industry has significant  societal consequences including fundamental changes in employment  and education opportunities .
As a consequence of the last thirty years of  the dominance of finance capital and income stagnation, the U.S. is losing its power in the world economy.

            This is how one author describes the economic shifts,
“The earthquake of the past few years has damaged western economies while leaving those of emerging countries, particularly Asia, standing. It has also destroyed western prestige. The west has dominated the world economically and intellectually for at least two centuries. That epoch is over. Hitherto, the rulers of emerging countries disliked the west’s pretensions, but respected its competence. This is true no longer. Never again will the west have the sole word. The rise of the Group of 20 leading economies reflects new realities of power and authority.” -- Martin Wolf, Financial Times, July 14, 2010 .

            The U.S.  is no longer the  one dominant economic power in the world.  Here is a listing of the major economic powers.

Approximate GDP- Purchasing Power Parity
United States of America
United Kingdom

Of course listing economies as nations is somewhat misleading.  The world economic systems have changed.  Today all of the major economies are varieties of capitalism.  Several strong economies are competing with the U.S.  Multinational corporations ( not national corporations) are  dominant economic players.
Since the U.S. economy is strained and there is no one dominant economic power,  we need to adjust  to this new reality.  We can reduce our burdensome military establishment and leave unnecessary wars.   Why should the U.S. continue to fund the dominant military forces in the world ?  Why should we spend so much of our budget on military forces? While the U.S. has become less of the dominant economic power, we continue to spend more than  6 times more in military costs than our closest competition.
In Afghanistan alone, the U.S. is spending over $100 billion per year in a country whose GDP is only $14 billion.  These costs are not free.  They come from the U.S. taxpayers.


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