America Not in Decline

[Lemur]

An update on the conspicuous lack of decadence and decline in America:

[T]he lows of March 2009 marked the beginning of an unexpected recovery—not the beginning of an era of irreversible stagnation. The U.S. economy went from shrinking at a 6.7 percent annual rate in the first quarter of 2009 to expanding at a 3.8 percent annual rate in the fourth quarter of that year—a turnaround unprecedented in modern history. The stock market has doubled since March 2009, while corporate profits and exports have surged to records. The U.S. economy has regained its 2007 peak, and is now growing at a 3 percent annual clip—a more rapid pace than any other developed economy. The crucible of the recession forged an economic structure that is more resistant to shocks than the brittle vessel that shattered in 2008. Meanwhile, Europe continues to grapple with insoluble banking and sovereign debt crises, and developing-economy juggernauts like China and Brazil are showing signs of cracking.

It’s clear that the story of America’s recovery—unsatisfying and problematic as it has been—isn’t a Hollywood tale. Rather, it rests on an understanding of its core competencies and competitive advantages: attitudes and capabilities that, even in this age of globalization, remain unique. Contrary to the declinists’ view, global growth has not been a zero-sum game for America’s economy. [...]

Rather than sink deeper into a financial morass, the American private sector emerged better: better equipped to meet obligations, to save, to invest, to spend, and, ultimately, to grow. Pretax corporate profits rose from $1.25 trillion in 2008 to $1.8 trillion in 2010, and to $1.94 trillion in 2011. And rather than throw in the towel and surrender to Chinese competitors, U.S. companies figured out how to get more out of existing resources.

[gaelic cowboy]

I wonder if we were to dig up newspapers from the late 40s up to the late 50's would we see people talking about the coming soviet juggernaut. I bet a tenner in Paddy Power they were talking about relative decline then too.

[HopAlongBunny]

The problem 'merica seems to have is it doesn't deal with peace very well. After burying the USSR rather convincingly it essentially squandered the peace.

The US has dealt under a wartime economy for so long it is questionable whether it can deal with peace. Bush dealt with the threat to America's mobilization economy by starting 2 rather foolish wars; one of which can only be described as the most elaborate art heist in history (since that is the only "observable" success of that campaign) The so called peace dividend was made to vapourize in a black-hole of military largesse and welfare for the rich.

The question (for me) is can the US still flourish under a peacetime economy? Is it possible for the US economy to move ahead w/o the welfare system for corporations that is essentially the MIC? Certainly, the political system seems to be dysfunctional w/o a threat looming over them (real or imagined)

[a completely inoffensive name]

I think you're on to something to here.

No he's not.

[Papewaio]

So Apple alone represents 1.5% of the pretax profits for 2011?

I think it's pretty well geared for non warfare based economy.

Likewise Google and Microsoft and Cisco and HP and Dell... Essentially the juggernauts of the information age are US controlled companies. So what if the assembly lines are offshore, look where the quality control, decisions, benefits and cash flow to.

[Vladimir]

No he's not.

Agreed. In fact, he's completely wrong. America has always done well under a peace time economy and traditionally been horrible during wartime.

A simple understanding of American history would reveal this.

[PanzerJaeger]

The question (for me) is can the US still flourish under a peacetime economy? Is it possible for the US economy to move ahead w/o the welfare system for corporations that is essentially the MIC?

Umm... the US economy moved ahead without significant military spending a long time ago. The MIC comprises just 3.6% of the US economy (as measured by GDP) without the foreign wars and just shy of 5% if that spending is included. Even after the relative boom in military spending that followed 9/11, these are historically low figures for the post-war era.

[HopAlongBunny]

Umm... the US economy moved ahead without significant military spending a long time ago. The MIC comprises just 3.6% of the US economy (as measured by GDP) without the foreign wars and just shy of 5% if that spending is included. Even after the relative boom in military spending that followed 9/11, these are historically low figures for the post-war era.

Like anything else: yes and no. Absolute spending is higher than at the height of the cold war, though it is lower as a % of GDP.

More interesting (to me) is the Government Accountability Office's statement that DoD expenditures are not able to be audited. Really? Is it a budget or a laundromat? If the same statement was made vis. Medicare or Old Age Security, Congress would be purple with rage.

Note too, that although spending as a % of GDP declined in the US, it still dwarfs any other player; or actually any other group of players worth naming. All this with essentially no oversight or accountability, despite being the largest beneficiary of the US budget process.

[a completely inoffensive name]

Like anything else: yes and no. Absolute spending is higher than at the height of the cold war, though it is lower as a % of GDP.

Absolute spending is pretty meaningless. Just looking that the number got bigger could just mean that it kept up with inflation. % of GDP is the only thing that matter when you are trying to make the point that we can't have a "peacetime economy", when clearly we have been getting closer to a peacetime economy in terms of the relative size of the MIC.

More interesting (to me) is the Government Accountability Office's statement that DoD expenditures are not able to be audited. Really? Is it a budget or a laundromat? If the same statement was made vis. Medicare or Old Age Security, Congress would be purple with rage.

Obviously, military spending is going to be on projects that really shouldn't be public knowledge for our enemies to know. This argument doesn't apply to Social Programs, thus we don't see any denials for auditing social programs.

Note too, that although spending as a % of GDP declined in the US, it still dwarfs any other player; or actually any other group of players worth naming. All this with essentially no oversight or accountability, despite being the largest beneficiary of the US budget process.

This is just factually wrong, Medicare/Medicaid was larger than military spending. Social Security by itself was larger than military spending.

If you don't mind me asking, where are you coming up with all this?

[HopAlongBunny]

It depends. Actually finding the answers to your queries has done much to educate me about the Byzantine world of "what counts".

The first bug bear is Social Security; does the author consider it "on budget" or "off budget"? Not a question I even thought to ask initially. The gov't has it "on budget" as of LBJ; critics of this accounting change seem to feel the rationale behind the change was to mask military spending behind a large social expenditure from a self funding program. A program still apparently in surplus, but not for long. So I guess one must ascertain a source's position on this point; as well as questioning whether or not different sources make different assumptions in this regard when calculating "x" as a % of budgetary expenditure.

The second question is: what counts as military spending? Again, different sources count different things. DoD budget alone; Homeland Security?; counter-terrorism expenditures by the FBI? contracting of services to civilian companies for security operations? The difference in "what counts" changes the figure from ~600 billion to over 1 trillion.

So yes, I will have to examine exactly what a source means in terms of "the budget" and "military expenditure"; and will expect no less from others:p