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    The Next President Needs to Learn From Past Mistakes

    Thirteen years ago, in summer 2007, I wrote a memo for the future president of the United States. The one who would take office in 2020.

    At the time, I had no idea who would win the 2008 presidential election, much less an election in the distant future. In summer 2007, Hillary Clinton was the Democratic frontrunner, ahead of second-place Barack Obama by as much as double digits. Rudy Giuliani was on top of the polls for the Republican Party, with John McCain trailing behind him. I figured, wrongly, that it would stay that way.

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    One year later, in summer 2008, both Obama and McCain would come from behind to secure their parties’ nomination. And I would predict in a TomDispatch piece that Obama would win the election, serve two terms and leave the US in a perilous place in 2016 because of his policies of “muddling through.” Well, I got that part right.

    But in summer 2007, all I could focus on was the relative decline of the United States, as seen with “2020 hindsight.” The subprime mortgage crisis was unspooling that summer, the Bush administration was still sending more US troops to Iraq as part of its “surge” and the Chinese economy was growing by 14.2%.

    Casting my mind 13 years into the future, I tried to imagine which of these three factors — Iraq, financial crisis, China — would prove most salient in explaining the downward trajectory of US standing in the world.

    Here’s what I wrote back in 2007.

    Memo to the President 2020

    “As a member of the transition team, I’ve been asked to give a backgrounder on the ‘loss of global influence’ issue that played such a major role in the last election. I’ve submitted my study entitled End of Empire and I would encourage you to read my full analysis. I’ve been told that you might not have the time to read all three volumes. As a historian, I find it extraordinarily difficult to boil this question down to 750 words. But I will try. 

    Historians are divided into roughly three camps on the causes behind the end of the unipolar system headed by our country. The largest camp is the Iraq Syndrome group. They argue that the U.S. decision to invade Iraq in 2003 was the critical, history-changing moment. As you well know, the invasion turned into an unsuccessful 10-year occupation that sapped the U.S. economy and significantly eroded U.S. reputation in the world. More damaging, however, was the syndrome that followed the war. The unpopularity of the war made it increasingly difficult for the United States to launch military operations and virtually impossible to solicit international support. Although the Democrats tried to maintain high military budgets through 2010, they ultimately had to make significant cuts in order to salvage the economy. 

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    The second camp is generally called the China Rising group. These historians, influenced by the world-systems work of Wallerstein, locate the end of U.S. influence in shifting geopolitical power and particularly the growing influence of China. As of February 2019, the Chinese economy is now larger than ours, though we still maintain a lead in per-capita GNP. More importantly, China’s turn toward multilateralism in the early part of this century caught us by surprise. The transformation of the Shanghai Cooperation Organization (SCO) into the premier international security mechanism, with its own peacekeeping forces and development bank, undercut both NATO and traditional U.S. bilateral alliances. When the EU became a member of the SCO in 2014, the transatlantic alliance was effectively over. 

    The Iraq Syndrome and the China Rising arguments are familiar and persuasive. But I do not believe that they fully explain our fall. The third camp, to which I belong, is called the Subprime group. Although we are currently considered revisionist historians, I believe that my End of Empire books definitively establish that the financial crisis that the United States experienced in 2007 was the key element in destroying our position in the world. 

    As you might remember, the United States experienced a significant housing bubble beginning in 2001. Americans became obsessed with buying houses, and selling houses. The banks devised a way of lending money to people who ordinarily would not have enough credit to buy a house. This was called the sub-prime loan. Without going into the details — please see Chapters 2-8 in Volume One of End of Empire — I will simply remind you of the rising number of foreclosures in the summer of 2007, the bankruptcy of lenders, the failure of hedge funds, the collapse of retail, the devaluation of the dollar, and the coordinated global bank interventions that turned out to be only a stopgap measure. 

    At the time, U.S. economists predicted that the housing market would recover by 2009. That didn’t happen. The subprime crisis revealed not only the underlying fragility of the domestic U.S. economy but the global economy as well. It is a common fallacy to draw parallels between household economics and the functioning of the national economy. However, in this case, I have argued that the parallel did apply. Average Americans, with their large amounts of debt, had to give up their prized possessions, that cornerstone of the American dream, the house. So, too, did the United States, with its nearly $9 trillion national debt, have to give up its global position, its “house” so to speak. 

    Historians in the two other camps overlook this simple and rather elegant explanation. Yes, the Iraq War was a tremendous drain on U.S. resources and thus a classic case of imperial overstretch. Yes, China played the multilateral card at just the right time and thereby built an international reputation. But it was a handful of greedy mortgage lenders that served as the catalyst. The market correction that followed the subprime crisis in fact turned out to be a much larger geopolitical correction that restored a certain balance to international affairs. Finally, with 2020 hindsight — to use this year’s most popular catch phrase — we can see that Iraq and China pale in comparison to the cold, hard bottom line. As you repeatedly said on the campaign trail, quoting one of last century’s most enduring lines, ‘It’s the economy, stupid.’” 

    Fact-Checking the Memo

    Before evaluating my central argument, let’s see what I got right with the three factors. The occupation of Iraq was indeed unsuccessful in many respects, though it lasted officially for only eight years, not a full decade as I predicted. US troops returned in 2014 as part of the campaign against the Islamic State, and approximately 5,000 are still there today (though Trump has announced a reduction to 3,500 by November).

    The debacle of the Iraq War has deeply affected US military thinking. It has made it more difficult for the United States to mobilize popular support and international backing for military campaigns. But during the Obama era, the US largely shifted from “boots on the ground” to war at a distance through airstrikes and drone warfare. The military budget, as a result of economic pressures, peaked in 2010 at $849 billion and then began to fall (just as I predicted but not as significantly as I would have liked to see).

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    China has steadily strengthened its global position since 2007. The US economy remains larger than the Chinese economy, as measured by nominal GDP. But if you look at GDP by purchasing power parity, China surpassed the US in 2017. Either way, of course, China is still behind the United States in GDP per capita. Whether China on balance has become economically more powerful than the US remains controversial.

    What is not controversial, however, is China’s creation of a rival multilateralism. It decided to do this not through the Shanghai Cooperation Organization (SCO), as I predicted, but through a set of institutions that it could more easily control: the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank it launched in 2014 and the various “One Belt, One Road” (OBOR) initiatives that it started in 2013. Many European countries, by the way, joined the AIIB, over the objections of the US. Those defections didn’t end the transatlantic relationship, but they certainly weakened it.

    At the moment, the US is focused on China’s nationalism and the more assertive foreign policy of Xi Jinping. But even as it clashes with certain of its neighbors — India, Vietnam — China remains more focused on building a web of strong economic and diplomatic relationships around the world. And that makes China a more powerful rival for global influence than the flexing of its muscles in its neighborhood.

    Finally, let’s take a look at the US economy. The subprime mortgage crisis of 2007 turned into a full-blown financial crisis the following year when Lehman Brothers collapsed in September 2008. Nearly 10 million Americans lost their houses to foreclosure between 2006 and 2014, and less than a third of them would buy another house. In 2008, 2.6 million Americans lost their jobs. The housing market didn’t recover by 2009. But the Obama administration stabilized the economy with a significant bailout of the banks, and the US economy would eventually recover.

    But the financial crisis, in part because of the bank bailouts, also helped shift enormous resources to the wealthy. The resentment that caused, in the US and elsewhere around the world, helped generate a wave of right-wing politics that eventually deposited Donald Trump in the White House.

    Trump and the Next President

    In 2007, I could not have predicted the ultimate political triumph of Donald Trump. In fact, up until election night 2016, I still expected him to go down to defeat. Instead, I predicted that the backlash to Obama’s tepid, middle-of-the-road politics would hit in 2020. America B, the large part of the country that got hit hard by the financial crisis and never recovered, was itching for revenge. As I wrote in June 2016:

    “As long as America B is left in the lurch by what passes for modernity, it will inevitably try to pull the entire country back to some imagined golden age of the past before all those ‘others’ hijacked the red, white, and blue. Donald Trump has hitched his presidential wagon to America B. The real nightmare, however, is likely to emerge in 2020 or thereafter, if a far more capable politician who embraces similar retrograde positions rides America B into Washington.”

    Today, America faces a much more serious economic crisis. The stock market has barely taken any notice, as it heads back to its historic highs. Nor has Jeff Bezos and his fellow billionaires suffered from all the business closures and surging unemployment (indeed, Bezos has benefited tremendously from it all). America B, already weakened by President Trump’s trade war with China, is getting hit by the COVID-19 pandemic both economically and medically.

    So, it turns out that my memo to the 2020 president is eerily prescient. The cratering economy is shaping up to be the downfall of Trump. Let’s assume that the Democrats win in November. If they want to save the country — and that is the goal, not restoring America to its unipolar position — they’d better not repeat the mistakes of the Obama era. The cold, hard bottom line is that stabilizing the economy is not sufficient, particularly if it means locking in the economic inequality of US society, preserving the unsustainable nature of US manufacturing and agriculture, and relying on financial services to pull the economy out of its current hole.

    The next president has to deal with all the debacles of the Trump era — the failure to contain the pandemic, the miscalculated confrontations with China, the self-defeating hostility to internationalism. But the next president must also ensure that Trumpism doesn’t return in a politically more palatable form. To do that will require the kind of economic transformation that Obama didn’t have the political nerve (or the congressional backing) to enact.

    To win in November, the Democrats have to remember that simple electoral catchphrase of the 1990s. To govern successfully and remain in charge in Washington, however, they’d better repeat to themselves an updated mantra: It’s the sustainable economy, stupid.

    *[This article was originally published by FPIF.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    The Brain Malfunction Affecting the US and Its Respectable Media

    Ever since Dwight Eisenhower denounced the military-industrial complex in no uncertain terms, the intelligence community (IC) can be seen as the literal brain of an immense, tentacular but poorly-structured system of economic and political governance. The clandestine nature of its activities within an officially democratic system of government means that this reality will never be publicly acknowledged. 

    Without IC, the Democratic Party could not have entertained the nation for four years with the Russiagate show. One of the unintended consequences of the media’s obsession with alleged Russian interference in US elections has been to highlight both the central role of the IC brain and its fatal weaknesses. 

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    The New York Times and The Washington Post have relied on the IC to provide the substance of unending streams of stories revealing the functions of the brain. MSNBC and CNN have rivaled against each other to recruit and then display the insight of former intelligence chiefs, presenting them as paragons of objectivity.

    The NY Times provided an example of this last week in an article by Robert Draper concerning the latest National Intelligence Estimate (NIE), a classified report on Russiagate. A close reading of Draper’s analysis reveals some of the subtleties both of how the IC brain works and how The Times has become the voice of that brain.

    Here is an example in which Draper quotes veteran national intelligence office, Christopher Bort: “The intelligence provided to the N.I.E.’s authors indicated that in the lead-up to 2020, Russia worked in support of the Democratic presidential candidate Bernie Sanders as well. But Bort explained to his colleagues … that this reflected not a genuine preference for Sanders but rather an effort ‘to weaken that party and ultimately help the current U.S. president.’”

    Here is today’s 3D definition:

    Genuine:

    In the language of intelligence agencies, the official interpretation of facts that should be retained to the exclusion of the facts themselves

    Contextual Note

    Draper and Bort want Americans to understand that Vladimir Putin’s Russia is committed to one thing alone: maintaining their man, Donald Trump, as the US president. If Russia speaks kindly of Senator Bernie Sanders, it can only be a tactic to comfort Trump’s reelection. It certainly cannot be the hope that, if elected, Sanders might be less rigid than past presidents — including both Trump and Barack Obama — in terms of his Middle East policy, for example. Elections are not about concrete issues. They are only about personalities and loyalties.

    As the brain of the system, the IC has the role of defining acceptable and unacceptable codes of behavior for itself and for the population as a whole. It can define, for example, what is “genuine.” Unlike moral codes, the behavioral code it defines is a single ethical criterion called “interest.” This is particularly evident in the realm of foreign policy, where actions can always be justified as the defense of “American interests.”

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    The system’s most obvious feature is the nature of what fuels it: money. But the IC doesn’t understand money as an allocated budget measured in dollars and cents. Instead, money exists in a far more abstract sense, taking it beyond any form of traditional reckoning. The IC uses unlimited amounts of unaccounted-for means of payment to conduct operations designed precisely to optimize the national and global environment in ways that will boost the production of unaccounted for streams of profit.

    The profit will ultimately accrue to the commercial beneficiaries of the system. These are the famous “American interests,” though they are never specifically named. The system functions as a community structure but with no dimension of personal kinship. In its opaqueness and focus on money, it resembles the mafia, but devoid of the cumbersome sense of honor that can sometimes get in the way of straight business.

    The IC has traditionally steered clear of electoral politics. Because the US is technically a democracy, the IC must play the role of the influencer rather than a manipulator. The task of manipulation has been confined to the media, essentially privately-owned tentacular structures whose role is to orient and stabilize an ideology and worldview shared by the population. Influenced by the brain, the media define what is normal (good and reassuring), what is tolerable (not so good but non-threatening) and what is extreme (to be banished or shamed). Such a system is designed to ensure the stability that will permit the perpetuation of profits for the entire corporate class, of which the media is a part.

    In normal times, the IC prefers to remain invisible. But Trump’s election victory in 2016 forced the Democratic Party and its sympathizers in the media to bring it into the spotlight. Together, they provided the American public with four years of Russiagate entertainment. They also revealed how close the ties are between the Democratic Party and the brain of the oligarchic system.

    Historical Note

    In a Foreign Affairs article published on August 5 bearing the title, “There Is No Russian Plot Against America” and the subtitle, “The Kremlin’s Electoral Interference Is All Madness and No Method,” seasoned analyst Anna Arutunyan examines the history of Russia’s purported interference in the 2016 US presidential election. In contrast with Christopher Bort, who, among other things, claimed to know that Russia did not have “a genuine preference for Sanders,” the author warns that “ascribing motive and intent is a tricky business, because perceived impact is often mistaken for true intent.”

    Arutunyan notes that the intelligence community has unearthed plenty of evidence of “activities of Russian actors with ties to the Kremlin during the 2016 election.” But the IC possesses “comparatively little information about the real impact of these measures on the election’s outcome—and still less about Moscow’s precise objectives.” In other words, the brain is doing only half its job. It fails to see the connection between what it sees as causes and the reality of the effects produced.

    The author concludes that the campaign to subvert the 2016 election was essentially “a series of uncoordinated and often opportunistic responses to a paranoid belief that Russia is under attack from the United States and must do everything it can to defend itself.”

    Concerning the motives, Arutunyan describes a chaotic environment encouraging the “activities of this or that activist, or special forces group, or businessmen and entrepreneurs—these people are always active in fields like this. It’s what they do.” And what do they want? “They are trying to earn money or political capital that way,” she writes. 

    As for the 2020 election, she speculates: “If there is another Russian operation, expect contrarian messages targeting both candidates’ campaigns and highlighting generally divisive issues such as the United States’ response to the coronavirus pandemic. The messaging will not be coherent, and it will have no further purpose than to provoke arguments.”

    Could this be Vladimir Putin’s ultimate stroke of genius? The Russian president understands how to exploit, with the least amount of effort, the fact that Americans love nothing more than to argue, insult, cancel, shame and, by any other means possible, put in their place fellow Americans who don’t agree with them. It requires far less effort than dialogue or debate. Addressing the issues implies listening, revising one’s judgments, seeking nuanced understanding of complexity, and finally agreeing on collaborative actions adapted to the nature of the challenge.

    If the 2020 election continues to focus on nothing more than the increasingly visible inadequacies of the two candidates — Donald Trump and Joe Biden — their failure to understand the historical context in which they are living and their lack of vision for the future, Putin’s strategy will have paid off. 

    The big question facing electors today seems to be: Which of the two men is the most cognitively impaired? Which has the worst history of corruption? Neither appears to want to focus on the concrete measures required to address the issues that Americans are struggling with today, whether it’s race, the economy or health care. 

    On the other hand, there will be plenty of room for arguments. But the satisfaction of a good dispute may not appease those about to be evicted or deprived both of the prospect of finding a job and, in the midst of a pandemic, the guarantee of health care that would accompany it.

    *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

    The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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    CNN and the Art of Overstatement

    After echoing a report leaked by The Washington Post a day before the Nevada caucuses claiming that an intelligence briefing a month earlier had informed members of Congress that Russia was once again interfering in US elections to get President Donald Trump reelected, CNN made an effort to find out what was behind the story. […] More