The rise of
China surely ranks among the most important world developments of the last 100 years. With
America still trapped in its fifth year of economic hardship, and the
Chinese economy poised to surpass our own before the end of this decade,
China looms very large on the horizon. We are living in the early years of what journalists once dubbed “The
Pacific Century,” yet there are worrisome signs it may instead become known as “The
But does the
Chinese giant have feet of clay? In a recently published book,
Why Nations Fail, economists
Daron Acemoglu and
James A. Robinson characterize
China’s ruling elites as “extractive”—parasitic and corrupt—and predict that
Chinese economic growth will soon falter and decline, while
America’s “inclusive” governing institutions have taken us from strength to strength. They argue that a country governed as a one-party state, without the free media or checks and balances of our own democratic system, cannot long prosper in the modern world. The glowing tributes this book has received from a vast array of
America’s most prominent public intellectuals, including six
Nobel laureates in economics, testifies to the widespread popularity of this optimistic message.
Yet do the facts about
America really warrant this conclusion?
By the late 1970s, three decades of
Communist central planning had managed to increase
China’s production at a respectable rate, but with tremendous fits and starts, and often at a terrible cost: 35 million or more
Chinese had starved to death during the disastrous 1959–1961 famine caused by
Mao’s forced industrialization policy of the
Great Leap Forward.
China’s population had also grown very rapidly during this period, so the typical standard of living had improved only slightly, perhaps 2 percent per year between 1958 and 1978, and this from an extremely low base. Adjusted for purchasing power, most
Chinese in 1980 had an income 60–70 percent below that of the citizens in other major
Third World countries such as
Kenya, none of which were considered great economic success stories. In those days, even
Haitians were far wealthier than
All this began to change very rapidly once
Deng Xiaoping initiated his free-market reforms in 1978, first throughout the countryside and eventually in the smaller industrial enterprises of the coastal provinces. By 1985,
The Economist ran a cover story praising
China’s 700,000,000 peasants for having doubled their agricultural production in just seven years, an achievement almost unprecedented in world history. Meanwhile,
China’s newly adopted one-child policy, despite its considerable unpopularity, had sharply reduced population growth rates in a country possessing relatively little arable land.
A combination of slowing population growth and rapidly accelerating economic output has obvious implications for national prosperity. During the three decades to 2010,
China achieved perhaps the most rapid sustained rate of economic development in the history of the human species, with its real economy growing almost 40-fold between 1978 and 2010. In 1978,
America’s economy was 15 times larger, but according to most international estimates,
China is now set to surpass
America’s total economic output within just another few years.
Furthermore, the vast majority of
China’s newly created economic wealth has flowed to ordinary
Chinese workers, who have moved from oxen and bicycles to the verge of automobiles in just a single generation. While median
American incomes have been stagnant for almost forty years, those in
China have nearly doubled every decade, with the real wages of workers outside the farm-sector rising about 150 percent over the last ten years alone. The
Chinese of 1980 were desperately poor compared to
Kenyans; but today, they are several times wealthier, representing more than a tenfold shift in relative income.
Bank report recently highlighted the huge drop in global poverty rates from 1980 to 2008, but critics noted that over 100 percent of that decline came from
China alone: the number of
Chinese living in dire poverty fell by a remarkable 662 million, while the impoverished population in the rest of the world actually rose by 13 million. And although
India is often paired with
China in the
Western media, a large fraction of
Indians have actually grown poorer over time. The bottom half of
India’s still rapidly growing population has seen its daily caloric intake steadily decline for the last 30 years, with half of all children under five now being malnourished.
China’s economic progress is especially impressive when matched against historical parallels. Between 1870 and 1900,
America enjoyed unprecedented industrial expansion, such that even
Karl Marx and his followers began to doubt that a
Communist revolution would be necessary or even possible in a country whose people were achieving such widely shared prosperity through capitalistic expansion. During those 30 years
America’s real per capita income grew by 100 percent. But over the last 30 years, real per capita income in
China has grown by more than 1,300 percent.
Over the last decade alone,
China quadrupled its industrial output, which is now comparable to that of the U.S. In the crucial sector of automobiles,
China raised its production ninefold, from 2 million cars in 2000 to 18 million in 2010, a figure now greater than the combined totals for
Japan. China accounted for fully 85 percent of the total world increase in auto manufacturing during that decade.
It is true that many of
China’s highest-tech exports are more apparent than real. Nearly all
Apple’s iPhones and iPads come from
China, but this is largely due to the use of cheap
Chinese labor for final assembly, with just 4 percent of the value added in those world-leading items being
Chinese. This distorts
Chinese trade statistics, leading to unnecessary friction. However, some high-tech
China exports are indeed fully
Chinese, notably those of
Huawei, which now ranks alongside
Ericsson as one of the world’s two leading telecommunications manufacturers, while once powerful
North American competitors such
Nortel have fallen into steep decline or even bankruptcy. And although
America originally pioneered the
Human Genome Project, the
Beijing Genomics Institute (BGI) today probably stands as the world leader in that enormously important emerging scientific field.
China’s recent rise should hardly surprise us. For most of the last 3,000 years,
China together with the
Mediterranean world and its adjoining
European peninsula have constituted the two greatest world centers of technological and economic progress. During the 13th century,
Marco Polo traveled from his native
Venice to the
Chinese Empire and described the latter as vastly wealthier and more advanced than any
European country. As late as the 18th century, many leading
European philosophers such as
Voltaire often looked to
Chinese society as an intellectual exemplar, while both the
British and the
Prussians used the
Chinese mandarinate as their model for establishing a meritocratic civil service based on competitive examinations.
Even a century ago, near the nadir of
China’s later weakness and decay, some of
America’s foremost public intellectuals, such as
Edward A. Ross and
Lothrop Stoddard, boldly predicted the forthcoming restoration of the
Chinese nation to global influence, the former with equanimity and the latter with serious concern. Indeed,
Stoddard argued that only three major inventions effectively separated the world of classical antiquity from that of 18th-century
Europe—gunpowder, the mariner’s compass, and the printing press. All three seem to have first appeared in
China, though for various social, political, and ideological reasons, none were properly implemented.
China’s rise necessarily imply
America’s decline? Not at all: human economic progress is not a zero-sum game. Under the right circumstances, the rapid development of one large country should tend to improve living standards for the rest of the world.
This is most obvious for those nations whose economic strengths directly complement those of a growing
China. Massive industrial expansion clearly requires a similar increase in raw-material consumption, and
China is now the world’s largest producer and user of electricity, concrete, steel, and many other basic materials, with its iron-ore imports surging by a factor of ten between 2000 and 2011. This has driven huge increases in the costs of most commodities; for example, copper’s world price rose more than eightfold during the last decade. As a direct consequence, these years have generally been very good ones for the economies of countries that heavily rely upon the export of natural resources—Australia,
Saudi Arabia, and parts of
China’s growth gradually doubles total world industrial production, the resulting “China price” reduces the cost of manufactured goods, making them much more easily affordable to everyone, and thereby greatly increases the global standard of living. While this process may negatively impact those particular industries and countries directly competing with
China, it provides enormous opportunities as well, not merely to the aforementioned raw-material suppliers but also to countries like
Germany, whose advanced equipment and machine tools have found a huge
Chinese market, thereby helping to reduce
German unemployment to the lowest level in 20 years.
And as ordinary
Chinese grow wealthier, they provide a larger market as well for the goods and services of leading
Western companies, ranging from fast-food chains to consumer products to luxury goods. Chinese workers not only assemble
Apple’s iPhones and iPads, but are also very eager to purchase them, and
China has now become that company’s second largest market, with nearly all of the extravagant profit margins flowing back to its
American owners and employees. In 2011 General
Motors sold more cars in
China than in the U.S., and that rapidly growing market became a crucial factor in the survival of an iconic
American corporation. China has become the third largest market in the world for
McDonald’s, and the main driver of global profits for the
American parent company of
Taco Bell, and
Transforming a country in little more than a single generation from a land of nearly a billion peasants to one of nearly a billion city-dwellers is no easy task, and such a breakneck pace of industrial and economic development inevitably leads to substantial social costs. Chinese urban pollution is among the worst in the world, and traffic is rapidly heading toward that same point. China now contains the second largest number of billionaires after
America, together with more than a million dollar-millionaires, and although many of these individuals came by their fortunes honestly, many others did not. Official corruption is a leading source of popular resentment against the various levels of
Chinese government, ranging from local village councils to the highest officials in
But we must maintain a proper sense of proportion. As someone who grew up in
Los Angeles when it still had the most notorious smog in
America, I recognize that such trends can be reversed with time and money, and indeed the
Chinese government has expressed intense interest in the emerging technology of non-polluting electric cars. Rapidly growing national wealth can be deployed to solve many problems.
Similarly, plutocrats who grow rich through friends in high places or even outright corruption are easier to tolerate when a rising tide is rapidly lifting all boats. Ordinary
Chinese workers have increased their real income by well over 1,000 percent in recent decades, while the corresponding figure for most
American workers has been close to zero. If typical
American wages were doubling every decade, there would be far less anger in our own society directed against the “One
Percent.” Indeed, under the standard
GINI index used to measure wealth inequality,
China’s score is not particularly high, being roughly the same as that of the
United States, though certainly indicating greater inequality than most of the social democracies of
American pundits and politicians still focus their attention on the tragic
Tiananmen Square incident of 1989, during which hundreds of determined
Chinese protesters were massacred by government troops. But although that event loomed very large at the time, in hindsight it generated merely a blip in the upward trajectory of
China’s development and today seems virtually forgotten among ordinary
Chinese, whose real incomes have increased several-fold in the quarter century since then.
Much of the
Tiananmen protest had been driven by popular outrage at government corruption, and certainly there have been additional major scandals in recent years, often heavily splashed across the pages of
America’s leading newspapers. But a closer examination paints a more nuanced picture, especially when contrasted with
America’s own situation.
For example, over the last few years one of the most ambitious
Chinese projects has been a plan to create the world’s largest and most advanced network of high-speed rail transport, an effort that absorbed a remarkable $200 billion of government investment. The result was the construction of over 6,000 miles of track, a total probably now greater than that of all the world’s other nations combined. Unfortunately, this project also involved considerable corruption, as was widely reported in the world media, which estimated that hundreds of millions of dollars had been misappropriated through bribery and graft. This scandal eventually led to the arrest or removal of numerous government officials, notably including
Obviously such serious corruption would seem horrifying in a country with the pristine standards of a
Sweden or a
Norway. But based on the published accounts, it appears that the funds diverted amounted to perhaps as little as 0.2 percent of the total, with the remaining 99.8 percent generally spent as intended. So serious corruption notwithstanding, the project succeeded and
China does indeed now possess the world’s largest and most advanced network of high-speed rail, constructed almost entirely in the last five or six years.
America has no high-speed rail whatsoever, despite decades of debate and vast amounts of time and money spent on lobbying, hearings, political campaigns, planning efforts, and environmental-impact reports. China’s high-speed rail system may be far from perfect, but it actually exists, while
America’s does not. Annual
Chinese ridership now totals over 25 million trips per year, and although an occasional disaster—such as the 2011 crash in
Weizhou, which killed 40 passengers—is tragic, it is hardly unexpected. After all,
America’s aging low-speed trains are not exempt from similar calamities, as we saw in the 2008 Chatsworth crash that killed 25 in
For many years
Western journalists regularly reported that the dismantling of
Maoist system of government-guaranteed healthcare had led to serious social stresses, forcing ordinary workers to save an unreasonable fraction of their salaries to pay for medical treatment if they or their families became ill. But over the last couple of years, the government has taken major steps to reduce this problem by establishing a national healthcare insurance system whose coverage now extends to 95 percent or so of the total population, a far better ratio than is found in wealthy
America and at a tiny fraction of the cost. Once again, competent leaders with access to growing national wealth can effectively solve these sorts of major social problems.
Chinese cities have negligible crime and are almost entirely free of the horrible slums found in many rapidly urbanizing
Third World countries, housing for ordinary workers is often quite inadequate. But national concerns over rising unemployment due to the global recession gave the government a perfect opportunity late last year to announce a bold plan to construct over 35 million modern new government apartments, which would then be provided to ordinary workers on a subsidized basis.
All of this follows the pattern of
Lee Kwan Yew’s mixed-development model, combining state socialism and free enterprise, which raised
Singapore’s people from the desperate, abject poverty of 1945 to a standard of living now considerably higher than that of most
Americans, including a per capita
GDP almost $12,000 above that of the
United States. Obviously, implementing such a program for the world’s largest population and on a continental scale is far more challenging than doing so in a tiny city-state with a population of a few million and inherited
British colonial institutions, but so far
China has done very well in confounding its skeptics.
These facts do not provide much evidence for the thesis in
Why Nations Fail that
China’s leaders constitute a self-serving and venal “extractive” elite. Unfortunately, such indications seem far more apparent when we direct our gaze inward, toward the recent economic and social trajectory of our own country
Against the backdrop of remarkable
America mostly presents a very gloomy picture. Certainly
America’s top engineers and entrepreneurs have created many of the world’s most important technologies, sometimes becoming enormously wealthy in the process. But these economic successes are not typical nor have their benefits been widely distributed. Over the last 40 years, a large majority of
American workers have seen their real incomes stagnate or decline.
Meanwhile, the rapid concentration of
American wealth continues apace: the richest 1 percent of
America’s population now holds as much net wealth as the bottom 90–95 percent, and these trend may even be accelerating. A recent study revealed that during our supposed recovery of the last couple of years, 93 percent of the total increase in national income went to the top 1 percent, with an astonishing 37 percent being captured by just the wealthiest 0.01 percent of the population, 15,000 households in a nation of well over 300 million people.
Evidence for the long-term decline in our economic circumstances is most apparent when we consider the situation of younger
Americans. The national media endlessly trumpets the tiny number of youthful
Pew Center, barely half of 18- to 24-year-old
Americans are currently employed, the lowest level since 1948, a time long before most women had joined the labor force. Nearly one-fifth of young men age 25–34 are still living with their parents, while the wealth of all households headed by those younger than 35 is 68 percent lower today than it was in 1984.
The total outstanding amount of non-dischargeable student-loan debt has crossed the trillion-dollar mark, now surpassing the combined total of credit-card and auto-loan debt—and with a quarter of all student-loan payers now delinquent, there are worrisome indicators that much of it will remain a permanent burden, reducing many millions to long-term debt peonage. A huge swath of
America’s younger generation seems completely impoverished, and likely to remain so.
International trade statistics, meanwhile, demonstrate that although
IOUs, whose dollar value has sometimes been greater than that of the next ten categories combined. At some point, perhaps sooner than we think, the rest of the world will lose its appetite for this non-functional product, and our currency will collapse, together with our standard of living. Similar
Cassandra-like warnings were issued for years about the housing bubble or the profligacy of the
Greek government, and were proven false year after year until one day they suddenly became true.
Ironically enough, there is actually one major category in which
American expansion still easily tops that of
China, both today and for the indefinite future: population growth. The rate of
America’s demographic increase passed that of
China over 20 years ago and has been greater every year since, sometimes by as much as a factor of two. According to standard projections,
China’s population in 2050 will be almost exactly what it was in 2000, with the country having achieved the population stability typical of advanced, prosperous societies. But during that same half-century, the number of
America’s inhabitants will have grown by almost 50 percent, a rate totally unprecedented in the developed world and actually greater than that found in numerous
Third World countries such as
Indonesia. A combination of very rapid population growth and doubtful prospects for equally rapid economic growth does not bode well for the likely quality of the 2050 American
China rises while
America falls, but are there major causal connections between these two concurrent trends now reshaping the future of our world? Not that I can see. American politicians and pundits are naturally fearful of taking on the fierce special interest groups that dominate their political universe, so they often seek an external scapegoat to explicate the misery of their constituents, sometimes choosing to focus on
China. But this is merely political theater for the ignorant and the gullible.
Various studies have suggested that
China’s currency may be substantially undervalued, but even if the frequent demands of
Paul Krugman and others were met and the yuan rapidly appreciated another 15 or 20 percent, few industrial jobs would return to
American shores, while working-class
Americans might pay much more for their basic necessities. And if
China opened wide its borders to more
American movies or financial services, the multimillionaires of
Wall Street might grow even richer, but ordinary
Americans would see little benefit. It is always easier for a nation to point an accusing finger at foreigners rather than honestly admit that almost all its terrible problems are essentially self-inflicted.
The central theme of
Why Nations Fail is that political institutions and the behavior of ruling elites largely determine the economic success or failure of countries. If most
Americans have experienced virtually no economic gains for decades, perhaps we should cast our gaze at these factors in our own society.
Our elites boast about the greatness of our constitutional democracy, the wondrous human rights we enjoy, the freedom and rule of law that have long made
America a light unto the nations of the world and a spiritual draw for oppressed peoples everywhere, including
China itself. But are these claims actually correct? They often stack up very strangely when they appear in the opinion pages of our major newspapers, coming just after the news reporting, whose facts tell a very different story.
Just last year, the
Obama administration initiated a massive months-long bombing campaign against the duly recognized government of
Libya on “humanitarian” grounds, then argued with a straight face that a military effort comprising hundreds of bombing sorties and over a billion dollars in combat costs did not actually constitute “warfare,” and hence was completely exempt from the established provisions of the
Congressional War Powers Act. A few months later,
Congress overwhelmingly passed and
President Obama signed the
National Defense Authorization Act, granting the president power to permanently imprison without trial or charges any
American whom he classifies as a national-security threat based on his own judgment and secret evidence. When we consider that
American society has experienced virtually no domestic terrorism during the past decade, we must wonder how long our remaining constitutional liberties would survive if we were facing frequent real-life attacks by an actual terrorist underground, such as had been the case for many years with the
Spain, or the
Red Brigades in
President Obama and
Attorney General Eric Holder have claimed the inherent right of an
American president to summarily execute anyone anywhere in the world,
American citizen or not, whom
White House advisors have privately decided was a “bad person.” While it is certainly true that major world governments have occasionally assassinated their political enemies abroad, I have never before heard these dark deeds publicly proclaimed as legitimate and aboveboard. Certainly if the governments of
China, let alone
Iran, declared their inherent right to kill anyone anywhere in the world whom they didn’t like, our media pundits would immediately blast these statements as proof of their total criminal insanity.
These are very strange notions of the “rule of law” for the administration of a president who had once served as top editor of the
Harvard Law Review and who was routinely flattered in his political campaigns by being described as a “constitutional scholar.”
Many of these negative ideological trends have been absorbed and accepted by the popular culture and much of the
American public. Over the last decade one of the highest-rated shows on
American television was “24”, created by
Joel Surnow and chronicling
Kiefer Sutherland as a patriotic but ruthless
Secret Service agent, with each episode constituting a single hour of his desperate efforts to thwart terrorist plots and safeguard our national security. Numerous episodes featured our hero torturing suspected evildoers in order to extract the information necessary to save innocent lives, with the entire series representing a popular weekly glorification of graphic government torture on behalf of the greater good.
Now soft-headed protestations to the contrary, most governments around the world have at least occasionally practiced torture, especially when combating popular insurgencies, and some of the more brutal regimes, including
Stalinist Russia and
Nazi Germany, even professionalized the process. But such dark deeds done in secret were always vigorously denied in public, and the popular films and other media of
Soviet Union invariably featured pure-hearted workers and peasants bravely doing their honorable and patriotic duty for the
Motherland, rather than the terrible torments being daily inflicted in the cellars of the
Lubyanka prison. Throughout all of modern history, I am not aware of a single even semi-civilized country that publicly celebrated the activities of its professional government torturers in the popular media. Certainly such sentiments would have been totally abhorrent and unthinkable in the “conservative
Hollywood” of the
Cold War 1950s.
And since we live in a entertainment-dominated society, sentiments affirmed on the screen often have direct real-world consequences. At one point, senior
American military and counter-terrorism officials felt the need to travel to
Hollywood and urge its screenwriters to stop glorifying
American torture, since their shows were encouraging U.S. soldiers to torture
Muslim captives even when their commanding officers repeatedly ordered them not to do so.
Given these facts, we should hardly be surprised that international surveys over the past decade have regularly ranked
America as the world’s most hated major nation, a remarkable achievement given the dominant global role of
American media and entertainment and also the enormous international sympathy that initially flowed to our country following the 9/11 attacks.
So far at least, these extra-constitutional and often brutal methods have not been directed toward controlling
America’s own political system; we remain a democracy rather than a dictatorship. But does our current system actually possess the central feature of a true democracy, namely a high degree of popular influence over major government policies? Here the evidence seems more ambiguous.
Consider the pattern of the last decade. With two ruinous wars and a financial collapse to his record,
George W. Bush was widely regarded as one of the most disastrous presidents in
American history, and at times his public approval numbers sank to the lowest levels ever measured. The sweeping victory of his successor,
Barack Obama, represented more a repudiation of
Bush and his policies than anything else, and leading political activists, left and right alike, characterized
Bush’s absolute antithesis, both in background and in ideology. This sentiment was certainly shared abroad, with
Obama being selected for the
Nobel Peace Prize just months after entering office, based on the widespread assumption that he was certain to reverse most of the policies of his detested predecessor and restore
America to sanity.
Yet almost none of these reversals took place. Instead, the continuity of administration policy has been so complete and so obvious that many critics now routinely speak of the
The harsh violations of constitutional principles and civil liberties which
Bush pioneered following the 9/11 attacks have only further intensified under
Obama, the heralded
Harvard constitutional scholar and ardent civil libertarian, and this has occurred without the excuse of any major new terrorist attacks. During his
Democratic primary campaign,
Obama promised that he would move to end
Iraq War immediately upon taking office, but instead large
American forces remained in place for years until heavy pressure from the
Iraqi government finally forced their removal; meanwhile,
America’s occupation army in
Afghanistan actually tripled in size. The government bailout of the hated financial manipulators of
Wall Street, begun under
Bush, continued apace under
Obama, with no serious attempts at either government prosecution or drastic reform. Americans are still mostly suffering through the worst economic downturn since the
Great Depression, but
Wall Street profits and multimillion-dollar bonuses soon returned to record levels.
In particular, the continuity of top officials has been remarkable. As
Bush’s second defense secretary,
Robert Gates had been responsible for the ongoing management of
America’s foreign wars and military occupations since 2006; Obama kept him on, and he continued to play the same role in the new administration. Similarly,
Timothy Geithner had been one of
Bush’s most senior financial appointments, playing a crucial role in the widely unpopular financial bailout of
Wall Street; Obama promoted him to
Treasury secretary and authorized continuation of those same policies. Ben
Bernanke had been appointed chairman of the
Federal Reserve by
Bush and was reappointed by
Obama. Bush wars and bailouts became
Obama wars and bailouts. The
American public voted for an anti-Bush, but got
Bush’s third term instead.
Soviet propagandists routinely characterized our democracy as a sham, with the
American public merely selecting which of the two intertwined branches of their single political party should alternate in office, while the actual underlying policies remained essentially unchanged, being decided and implemented by the same corrupt ruling class. This accusation may have been mostly false at the time it was made but seems disturbingly accurate today.
When times are hard and government policies are widely unpopular, but voters are only offered a choice between the rival slick marketing campaigns of
Pepsi, cynicism can reach extreme proportions. Over the last year, surveys have shown that the public non-approval of
Washington’s political establishment—has ranged as high as 90–95 percent, which is completely unprecedented.
But if our government policies are so broadly unpopular, why are we unable to change them through the sacred power of the vote? The answer is that
America’s system of government has increasingly morphed from being a representative democracy to becoming something closer to a mixture of plutocracy and mediacracy, with elections almost entirely determined by money and media, not necessarily in that order. Political leaders are made or broken depending on whether they receive the cash and visibility needed to win office.
National campaigns increasingly seem sordid reality shows for second-rate political celebrities, while our country continues along its path toward multiple looming calamities. Candidates who depart from the script or deviate from the elite D.C. consensus regarding wars or bailouts—notably a principled ideologue such as
Ron Paul—are routinely stigmatized in the media as dangerous extremists or even entirely airbrushed out of campaign news coverage, as has been humorously highlighted by comedian
We know from the collapsed communist states of
Eastern Europe that control over the media may determine public perceptions of reality, but it does not change the underlying reality itself, and reality usually has the last laugh. Economics
Nobel Laureate Joseph Stiglitz and his colleagues have conservatively estimated the total long-term cost of our disastrous
Iraq War at $3 trillion, representing over one-fifth of our entire accumulated national debt, or almost $30,000 per
American household. And even now the direct ongoing costs of our
Afghanistan War still run $120 billion per year, many times the size of
GDP. Meanwhile, during these same years the international price of oil has risen from $25 to $125 per barrel—partly as a consequence of these past military disruptions and growing fears of future ones—thereby imposing gigantic economic costs upon our society.
And we suffer other costs as well. A recent
New York Times story described the morale-building visit of
Secretary of Defense Leon Panetta to our forces in
Afghanistan and noted that all
American troops had been required to surrender their weapons before attending his speech and none were allowed to remain armed in his vicinity. Such a command decision seems almost unprecedented in
American history and does not reflect well upon the perceived state of our military morale.
Future historians may eventually regard these two failed wars, fought for entirely irrational reasons, as the proximate cause of
America’s financial and political collapse, representing the historical bookend to our
World War II victory, which originally established
American global dominance.
When parasitic elites govern a society along “extractive” lines, a central feature is the massive upward flow of extracted wealth, regardless of any contrary laws or regulations. Certainly
America has experienced an enormous growth of officially tolerated corruption as our political system has increasingly consolidated into a one-party state controlled by a unified media-plutocracy.
Consider the late 2011 collapse of
MF Global, a midsize but highly reputable brokerage firm. Although this debacle was far smaller than the
Lehman bankruptcy or the
Enron fraud, it effectively illustrates the incestuous activities of
America’s overlapping elites. Just a year earlier,
Jon Corzine had been installed as
CEO, following his terms as
Democratic governor and U.S. senator from
New Jersey and his previous career as
CEO of Goldman Sachs. Perhaps no other
American had such a combination of stellar political and financial credentials on his resume. Soon after taking the reins,
Corzine decided to boost his company’s profits by betting its entire capital and more against the possibility that any
European countries might default on their national debts. When he lost that bet, his multi-billion-dollar firm tumbled into bankruptcy.
At this point, the story moves from a commonplace tale of
Wall Street arrogance and greed into something out of the
Twilight Zone, or perhaps
Monty Python. The major newspapers began reporting that customer funds, eventually said to total $1.6 billion, had mysteriously disappeared during the collapse, and no one could determine what had become of them, a very strange claim in our age of massively computerized financial records. Weeks and eventually months passed, tens of millions of dollars were spent on armies of investigators and forensic accountants, but all those customer funds stayed “missing,” while the elite media covered this bizarre situation in the most gingerly possible fashion. As an example, a front page
Wall Street Journal story on
February 23, 2012 suggested that after so many months, there seemed little likelihood that the disappeared customer funds might ever reappear, but also emphasized that absolutely no one was being accused of any wrongdoing. Presumably the journalists were suggesting that the $1.6 billion dollars of customer money had simply walked out the door on its own two feet.
Stories like this give the lie to the endless boasts of our politicians and business pundits that
America’s financial system is the most transparent and least corrupt in today’s world. Certainly
America is not unique in the existence of long-term corporate fraud, as was recently shown in the fall of
Olympus Corporation following the discovery of more than a billion dollars in long-hidden investment losses. But when we consider the largest corporate collapses of the last decade that were substantially due to fraud, nearly all the names are
Global Crossing, and
Adelphia. And this list leaves out all the
American financial institutions destroyed by the financial meltdown—such as
Washington Mutual, and
Wachovia—and the many trillions of dollars in
American homeowner equity and top-rated
MBS securities which evaporated during that process. Meanwhile, the largest and longest
Ponzi Scheme in world history, that of
Bernie Madoff, had survived for decades under the very nose of the
SEC, despite a long series of detailed warnings and complaints. The second largest such fraud, that of
Allen R. Stanford, also bears the label “Made in the
Some of the sources of
Chinese success and
American decay are not entirely mysterious. As it happens, the typical professional background of a member of
China’s political elite is engineering; they were taught to build things. Meanwhile, a remarkable fraction of
America’s political leadership class attended law school, where they were trained to argue effectively and to manipulate. Thus, we should not be greatly surprised that while
China’s leaders tend to build,
America’s leaders seem to prefer endless manipulation, whether of words, money, or people.
How corrupt is the
American society fashioned by our current ruling elites? That question is perhaps more ambiguous than it might seem. According to the standard world rankings produced by
Transparency International, the
United States is a reasonably clean country, with corruption being considerably higher than in the nations of
Northern Europe or elsewhere in the
Anglosphere, but much lower than in most of the rest of the world, including
But I suspect that this one-dimensional metric fails to capture some of the central anomalies of
America’s current social dilemma. Unlike the situation in many
Third World countries,
American teachers and tax inspectors very rarely solicit bribes, and there is little overlap in personnel between our local police and the criminals whom they pursue. Most ordinary
Americans are generally honest. So by these basic measures of day-to-day corruption,
America is quite clean, not too different from
By contrast, local village authorities in
China have a notorious tendency to seize public land and sell it to real estate developers for huge personal profits. This sort of daily misbehavior has produced an annual
Chinese total of up to 90,000 so-called “mass incidents”—public strikes, protests, or riots—usually directed against corrupt local officials or businessmen.
American micro-corruption is rare, we seem to suffer from appalling levels of macro-corruption, situations in which our various ruling elites squander or misappropriate tens or even hundreds of billions of dollars of our national wealth, sometimes doing so just barely on one side of technical legality and sometimes on the other.
Sweden is among the cleanest societies in
Sicily is perhaps the most corrupt. But suppose a large clan of ruthless
Sicilian Mafiosi moved to
Sweden and somehow managed to gain control of its government. On a day-to-day basis, little would change, with
Swedish traffic policemen and building inspectors performing their duties with the same sort of incorruptible efficiency as before, and I suspect that
Transparency International rankings would scarcely decline. But meanwhile, a large fraction of
Sweden’s accumulated national wealth might gradually be stolen and transferred to secret
Cayman Islands bank accounts, or invested in
Latin American drug cartels, and eventually the entire plundered economy would collapse.
Americans who work hard and seek to earn an honest living for themselves and their families appear to be suffering the ill effects of exactly this same sort of elite-driven economic pillage. The roots of our national decline will be found at the very top of our society, among the
One Percent, or more likely the 0.1 percent.
Thus, the ideas presented in
Why Nations Fail seem both true and false. The claim that harmful political institutions and corrupt elites can inflict huge economic damage upon a society seems absolutely correct. But while the authors turn a harsh eye toward elite misbehavior across time and space—from ancient
Czarist Russia to rising
China—their vision seems to turn rosy-tinted when they consider present-day
America, the society in which they themselves live and whose ruling elites lavishly fund the academic institutions with which they are affiliated. Given the
American realities of the last dozen years, it is quite remarkable that the scholars who wrote a book entitled
Why Nations Fail never glanced outside their own office windows.
A similar dangerous reticence may afflict most of our media, which appears much more eager to focus on self-inflicted disasters in foreign countries than on those here at home. Presented below is a companion case-study, “
Chinese Melamine and
American Vioxx: A Comparison,” in which I point out that while the
American media a few years ago joined its
Chinese counterparts in devoting enormous coverage to the deaths of a few
Chinese children from tainted infant formula, it paid relatively little attention to a somewhat similar domestic public-health disaster that killed many tens or even hundreds of thousands of
A society’s media and academic organs constitute the sensory apparatus and central nervous system of its body politic, and if the information these provide is seriously misleading, looming dangers may fester and grow. A media and academy that are highly corrupt or dishonest constitute a deadly national peril. And although the political leadership of undemocratic
China might dearly wish to hide all its major mistakes, its crude propaganda machinery often fails at this self-destructive task. But
America’s own societal information system is vastly more skilled and experienced in shaping reality to meet the needs of business and government leaders, and this very success does tremendous damage to our country.
Americans really do prefer that their broadcasters provide
Happy News and that their political campaigns constitute amusing reality shows. Certainly the cheering coliseum crowds of the
Roman Empire favored their bread and circuses over the difficult and dangerous tasks that their ancestors had undertaken during
Rome’s rise to world greatness. And so long as we can continue to trade bits of printed paper carrying presidential portraits for flat-screen
Chinese factories, perhaps all is well and no one need be too concerned about the apparent course of our national trajectory, least of all our political leadership class.
But if so, then we must admit that
Richard Lynn, a prominent
British scholar, has been correct in predicting for a decade or longer that the global dominance of the
European-derived peoples is rapidly drawing to its end and within the foreseeable future the torch of human progress and world leadership will inevitably pass into
Ron Unz is publisher of
The American Conservative and founder of
The American Conservativeby permission of author or representative)