The (Relative) Failure of the US Elites

There has been much written about the failure of the US elites, with three recent thoughtful cases being that of Aurelian and Charles Hugh Smith and Harold Robertson. While all three make excellent contributions to the discussion they make some incorrect assumptions and miss important contextual drivers. All of them seem to assume that at some point in US history the nation was led by a highly competent leadership, rather than by a relatively weak leadership which again and again had its wars fought for it, fought relative weaklings, or had its main opponents commit fratricide while luxuriating in a vast continent full of resources far away from its main enemies. To put it bluntly, the US elite has never really been tested against a peer competitor. Let’s start with a little history.

From the founding of the British colonies in North America to the independence struggle the colonists relied on the British Army, and British military leadership, to do its fighting. Only when the British army had thoroughly vanquished the French in Eastern North America could some of the colonists start dreaming of a safe independence. The War of Independence would not have been won without the extensive support from France (money, arms, men and the containment of the British fleet), a lack of coordination between the British armies, and a Britain that was engaged in a world war with France at the time; later, the US proved incapable of subduing Canada. In the next century, the US battled a much weaker Mexico and Spain to take vast swathes of territory, purchased the middle of the country from the much-weakened French, and ethnically cleansed the Amerindian population. Its elite also made fortunes from Opium in a China subjugated by the European powers and Japan. All this while its heartland was safe from threat, with vast deposits of every mineral possible – including coal, oil and then natural gas. At the end of the century it jumped on the decline of the Spanish colonies to grab The Philippines, Puerto Rico and Guam and dominate Cuba. Also, by the end of the century it was an economic powerhouse with a thoroughly dominant capitalist bourgeoisie. It would be surprising if it hadn’t been.

Then its main competitors committed fratricide over a three-decade period. For most of World War 1 the US sat back and made huge profits from supplying the war. By the time it did enter the war, the main protagonists were absolutely exhausted, and it was at the margin that the sheer number of US troops coming to the front tilted the balance. The actual performance of the US military was awful, committing all of the failings that the other belligerents had at the beginning of the war; with massive casualty rates the outcome. But the Germans knew that more and more would be coming, no matter how many they killed, and the German home front was in absolute collapse. The compulsory licensing of all German patents provided a massive scientific and technical windfall to the US in the post-war period.

For more than two years, the US sat out WW2 while again making money out of supplying the conflict. When it did enter its contribution was nowhere near what is celebrated. Its Pacific campaign was one of limited numbers of soldiers fighting other limited numbers of Japanese for one island after another, while the vast US industry turned to war production. The Chinese were fighting the vast majority of the Japanese army, which they had been doing since 1935. Late in 1945, as the two nuclear bombs (developed with extensive help from foreign scientists) were being dropped on Japan, the Soviet army showed how to carry out large scale operations by utterly destroying the Japanese armies in Manchuria and Sakhalin within weeks. They were poised to invade Japan proper, and a case can very much be made that this was the reason for the Japanese surrender not the nuclear bombs, even the US establishment journal Foreign Policy published a paper taking this position in 2013. In Europe, it was the Soviets who destroyed the Axis armies and the most probable outcome without the Normandy landings would have been Soviet dominance of the whole of Europe. The forces landing at Normandy fought a force significantly made up of divisions resting from their mauling on the Eastern Front, while having overwhelming air and artillery superiority. As Big Serge puts it so well, the US “recipe for victory was simple: dispense of a superior volume of sustained firepower. Or, as George Patton would have put it: ‘Shoot the bastards.’”

With the end of WW2, the US experienced its first unipolar moment, as the Axis powers and Japan were destroyed and occupied, most of the European continent, Russia and China utterly devastated and Britain utterly bankrupt. A financial system favouring the US was set up, and the US once again stole much of German scientific ingenuity though the Operation Paperclip that provided scientists central to the development of such projects as the moon landings. The “father” of the H-bomb was also a Hungarian Jew who had fled to the US from Nazi Germany before the war. The US was good at covert operations but failed at “shooting the bastards” in Korea and then in Vietnam. At the same time, its industry flourished until the Europeans and Japanese recovered enough to become real competitors; after which many leading manufacturing sectors had to be rescued by subsidies and tariffs (e.g. the car and computer memory industries).  So, then the game changed to a reliance on the reserve-currency status of the US dollar, the offshoring of US manufacturing, and the movement of elite extraction from the US Empire to the home country itself. Anyone thinking that the US military was full of brilliant leaders should consider the laughable invasion of the tiny island of Grenada in 1983 against no opposition, where nineteen US military personnel died and others were wounded as shown below (starts at 27 minutes). Another would be the blowing up of the US barracks in Beirut also in 1983, which killed 241 US military personnel.

The collapse of the Soviet Union, which had much more to do with the decay of its institutions and the demolition-style policies of Gorbachev than any US pressures, removed the US strategic competitor; handing over Eastern Europe on a platter. Together with the opening of China and the end of the Indian License Raj, it provided the second US unipolar moment. An overwhelming win without a fight. It is from this period, with the extensive neoliberal policies carried out by the Clinton administrations, that we can point to pure hubris among the US elite. In addition, these massive new market opportunities covered up the failings of the US elite in building a strong domestic base to support their global empire.

At the same time, two underlying trends were eating away at that base. After WW2, the US state and the US foundations (Ford, Rockefeller etc.) worked hard at supporting the development of a non-communist critical theory, which became a non-materialist post-modernist critical theory. This really took off in the academy in the 1970s, and then from the 1990s in gender theory (e.g. Judith Butler). This theory “world war” has been documented by Gabriel Rockhill, here and here, and while removing class as a central precept of critical theory (as planned) also spread throughout academy and undermined the modernist assumptions upon which it was based. At the same time, US universities and corporations utilized H1B visas to keep the remuneration for scientists down through an influx of foreign nationals (and also IT offshoring), reducing any incentives for US students to enter scientific programs. Instead, programs in law, business and the social sciences in general rapidly grew and the escalating cost of a university education produced a customer (as against student) mentality in the student body which was supported by a growing administrative bureaucracy. Once again, the US benefitted from the output of foreign schools and universities to bolster their research and development activities. At the same time, the native population was continuously denuded of these skills as they focused on the social sciences, the professions, and business.

This was the time of the fad of the “Virtual Corporation”, where everything except finance, sales & marketing, design, and legal could be outsourced, and extra profits could be made through financial subsidiaries (e.g. G.E. Capital). Business groups could be treated like a portfolio of stocks, with laggards pruned brutally, “cash cows” milked, and money thrown at growth areas, and continuous mergers and acquisitions done to hone the portfolio. No need for experts in production, IT, logistics etc., that could all be outsourced and offshored. Generic CEOs could run any corporation, epitomized by Jack Welch and the many GE spin-off executives that helped break corporations such as GE and Boeing. Welch’s massive expansion of GE’s finance arm (GE Capital) proved utterly disastrous during the GFC. “Greed Is Good” was the motif of the US executive, epitomized by the corporate raider played by Michael Douglas in the movie Wall Street, as he pumped his stock options with stock buybacks and paid himself exorbitant amounts. Wealth extraction not wealth creation, handing over industrial leadership to a China who was much more focused on national renewal and far more proficient at playing the hand they had.

The US sleep-walked through two disastrous occupations (both after campaigns against extremely weak opponents) which swallowed vast amounts of money and resulted in the growth of Iranian power in the case of Iraq, and an unceremonious exit in the case of Afghanistan. Something started to change near the end of the first decade of the new century, as the US economy crashed in the GFC, Russia started to re-establish its sovereignty and strength (and won the proxy war against Georgia), and China emerged as a massive industrialized nation. Since then the US economy has been on the life support of QE and near-zero interest rates, and the US elites have been struggling to deal with the new geopolitical reality. After the success of the Occupy Wall Street protests, that focused on class struggle, the “woke” thermostat was turned up to boiling by the elite-controlled media, the elite-controlled state and the elite-controlled corporations; the classic divide and conquer tactics that had always worked in the past, this time on the basis of “identity”. But this let rip the toxic post-materialist, post-modernist brew throughout a society where so many were damaged by nearly four decades of neoliberalism, stripped of their identities as well-paid competent workers with futures, or even stripped of the hope of that for the younger generations. Desperately competing with any weapons available for the few remaining “good” jobs.

The wealthy may have been always “not like you”, but as Charles Hugh-Smith notes, decades of financialized asset inflation have separated the asset holders by a yawning chasm from the not so lucky. With interest rates now rising back to more normal pre-2000 levels and the US dollar slowly losing its reserve status, much of that wealth may prove to be a mirage while the massive debts racked up against that wealth will not. It’s the courtier class that stand to lose the most from the end of the financial bubble, and even billionaires can lose everything when they are leveraged. With the bubble will go many, many of the “bullshit” courtier jobs that currently pay so much as they extract rather than create wealth.

Robertson points to a change from a “systemic selection for competence” to a “systemic selection for the ideologically compliant” through diversity politics. He misses the fact that the political-economic base of the US elite has changed, and that they see many of the “competent” jobs as no longer necessary in a world centered around financial and symbol manipulation. They believe that “competence” can be simply outsourced and anyway they will be long gone before any consequences are felt. When he goes on about “diversity” hiring, he makes invisible the legions of mediocre rich kids and kids of faculty that get into the elite schools every year. He also makes invisible the Nigerian-Americans who are one of the richest and most successful ethnic groups in the US, and the Asians-Americans disgustingly discriminated against in US universities, and the Indian-Americans who are also extremely successful. The issue is not “diversity” hiring, it is a general selection bias for the skills required in a “virtual” corporation where specific knowledge is seen as old fashioned, a trend that has been going on for decades.

Aurelien focuses on the Professional Managerial Class (PMC), but does not understand that these are just the courtiers to the really powerful – the owners. Of course, the owners won’t want competent financial crimes prosecutors when so much wealth today is based upon financial crimes. A Professor of Human Rights is very useful in creating excuses to invade or regime change another country so that its wealth and ongoing income can be extracted by the US ownership class. The real “diversity” problem stems from the post-Occupy Wall Street identity politics mayhem that has now invaded so many institutions. Deep down the US elite has now ruled nearly effortlessly for so long it cannot comprehend of a real competitor, as Russia will be soon be “rubble” and China will “inevitably” collapse. So, no problem with letting loose an extremely disruptive identity politics as long as the ownership class keep owning. The owners are slowly waking up to the fact that Russia and China (and Iran) are not following the script, and therefore we may see a rapid reversal of the worst aspects of identity politics. The departments whose name is an anagram for DIE may be doing just that over the next few years. As Aurelien has noted though, there are now legions of PMCs who have happily failed upwards as their failures have served the owners (messed up foreign nations can be very profitable for example), but they are not so useful when the homeland needs to be rebuilt and allies strengthened. They are the troops of the last war of the US on easy street, but now the street has gotten rough and a much tougher breed are required. But they are generally not available, and any that are may want to go back to their own nations given the increasing racism and state-aggression toward Asians.

The US has been lying about the size of its economy in greater and greater ways since at least the 1990s. Costs (financial system fees) are counted as value added when they are pure rentier taxes, inflation is manipulated downwards, and rent imputed on owner-occupied houses, among many other tricks. US official GDP also counts value added that is produced in other nations as created in the US, when US corporations such as Apple can capture that for themselves through the control of global value chains backed up by intellectual property, financial and legal control, and state help in the destruction of competitors when required (i.e. the Huawei handset business). What happens when that disappears, and those nations get to keep that value added? What will be left to fund the US military and stability at home? I tend to agree with Simplicius that actual US GDP, and therefore GDP per capita, is about half of what the US states it is.

If Australia is called the “lucky country”, perhaps the US should be called the “really lucky country”. Its elites have never had to deal with a real competitive threat and have never had to fight a direct war against a peer competitor. The “best army in the world” is really only as good as its ability to overwhelm the opposition with “shoot them” power. It won’t have that against the Russians, the Chinese and even the Iranians. Without it, it will be seen to be a shadow of its well-groomed reputation. At home, the US really only had a period of economic dominance in the post-WW2 period which quickly faded as other countries rebuilt their economies. The US elite may have become significantly worse in the past few decades, but they were never the best. It’s easy to appear to be brilliant when you have a gun in your pocket and your opponent has a plastic fork. The US elite have never needed to be brilliant because they have been so lucky; that time is now gone. The Russian, Chinese and Iranian elites have certainly not been lucky, and therefore their competence level is far, far higher.