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The atrocities and wholesale destruction visited upon the nation of Ukraine beginning February 24, 2022, and the annexation of Crimea in 2014 by Vladimir Putin’s Red Army is as much due to the megalomania of a madman as it is to the fecklessness of democracies who have failed to stand together to confront such evil. Tragically, we have seen this movie before.

One can argue that it all started with the 32nd president of the United States. President Franklin Delano Roosevelt always had a soft heart for the Russians and especially Joseph Vissarionovich Stalin relishing the privilege of calling the ruthless dictator “Uncle Joe.” The President actually believed that “If I give Stalin everything I can, and ask for nothing in return, noblesse oblige, he won’t try to annex anything and will work with me for a world of peace and democracy.” Peace and democracy?

This appraisal of Stalin as historian Paul Kengor has noted “… was one of the most naïve assessments of any major foreign leader in the history of the United States.”

The President believed, until it was much too late, that he could “play” Stalin, that he could make a “Christian gentleman” out of the dictator. Yet, it was the President who was played with great virtuosity to the detriment of millions of innocents who ultimately felt the wrath, rape, and plunder of Uncle Joe.

According to historian Timothy Snyder, during the period 1930 to 1933 approximately five million people died as a result of Stalin’s famines with Ukrainian peasants bearing the brunt of the savagery. And, that between 1936 and 1938 in what was called the Great Purge approximately one million people were executed. Further, on September 17, 1939 the Soviets invaded Poland from the east only days after Germany invaded the nation from the west in keeping with the diabolical Hitler-Stalin pact. More emblematic, however, of the apparent hypnotic influence Stalin had over President Roosevelt was the president’s refusal to accept the fact that the Soviets had murdered nearly 22,000 POW Polish military officers on March 5, 1940 in the Katyn Forest near Smolensk, Russia. President Roosevelt was adamant in his disbelief that the Soviets had been responsible – despite overwhelming and indisputable evidence – claiming that the Germans had “rigged things up.” In sum, President Roosevelt was playing “nice” with Stalin knowing full well that he was dealing with a murderous tyrant long before he had reason to interact with the dictator about how to defeat the Nazis.

Clearly, President Roosevelt was lulled by his genuine – albeit profoundly naïve – belief that the Soviets were hostile because they felt threatened by external forces. These days, Vladimir Putin sings a common refrain: Russia feels threatened by the West and especially the NATO alliance. The buffer state that once was, so the argument goes, has been lost to Russia from the time Ukraine declared its independence from the Soviet Union in 1991.

The Russian argument, echoed by some in the American media, is a red-herring. If Ukraine were part of present-day Russia, it would still be cheek to jowl with NATO countries Latvia, Estonia, Romania, Poland, Hungary, and Slovakia. So much for the close proximity argument. What drove Putin to invade Ukraine is that since the dismemberment of the Soviet Union he has sought to cobble back together the former Soviet empire.

 HOW DID WE GET HERE?

At President Roosevelt’s insistence, Berlin was ceded not to the Western Allies but to the Soviets at war’s end. Time and again, the President ignored the advice of Winston Churchill who felt that allied forces should “meet the Red Army as far east as possible”. He also ignored the advice of General George S. Patton who pleaded that “we had better take Berlin, and quick.” In fact, the Ninth Army led by General William Simpson was all of forty-eight hours from Berlin. No matter. General Patton was told to stand down.

What was the consequence of Roosevelt’s fondness for Stalin? After the fall of Berlin, the carnage under Stalin continued apace, and the stage was set for the eventual nuclear confrontation between the Soviets and the United States: the capture of Berlin allowed the Soviets to get their hands on several tons of uranium oxide used as fuel in nuclear reactors, and to seize Germany’s leading scientific minds most significantly those who had worked on Hitler’s nuclear projects.

Scores of German scientists were forced – some apparently were happy to volunteer – to work on the Soviet A-bomb. Luminaries such as Manfred von Ardenne, Gustav Hertz, winner of the Nobel Prize in Physics with James Franck, Max Volmer, Max Steenbeck and Nikolaus Riehl all worked hard and were able to deliver to Stalin a nuclear bomb by 1949 a scant four years after the takeover of Berlin.

President Roosevelt’s “gift” of Berlin to Stalin as a way to ingratiate himself to the dictator failed miserably. At the Yalta Conference, February, 1945, President Roosevelt assured Winston Churchill that “…Stalin was not an imperialist.” Geopolitical savvy was never President Roosevelt’s strong suit. Not long after the conference Stalin put in place the Communist Bloc of nations which enslaved millions of people for decades to come.

In the end, “the courtship of Stalin during World War II failed abysmally” according to Robert Nisbet in his groundbreaking book, Roosevelt and Stalin: The Failed Courtship.

PRESIDENT ROOSEVELT ROLLS OUT THE RED CARPET FOR STALIN’S STOOGES

President Roosevelt was especially keen to host members of a Soviet delegation preferably those who had seen action against the Nazis. Mrs. Pavlichenko was one of three people sent by the Soviet Union to the United States to participate in an international student assembly sponsored by Washington that would tour the country and speak out against Fascism at various colleges and universities. Delegates to the assembly were to include representatives from the United States, the Soviet Union, Great Britain, and China.

Red Army sniper Lyudmila Pavlichenko known to have had 309 confirmed enemy kills – that is, verified by another party – and possibly many more that went unrecorded was the darling of the Soviet delegation that met with President Roosevelt and First Lady Eleanor Roosevelt in both Washington D.C. and the President’s ancestral home in Hyde Park, New York. The First Lady literally fawned over Mrs. Pavlichenko. She went so far as to cut to size and sew a pair of her own silk pajamas for Mrs. Pavlichenko’s use.

In addition to Mrs. Pavlichenko, a second member of the Soviet delegation was also a sniper with 100 enemy kills to his credit, and the third was secretary for propaganda of the Young Communist League’s Moscow district. So much for “student” representatives.

 PRESIDENT ROOSEVELT’S DOMESTIC LEGACY

If it can be safely said that President Roosevelt was an ineffective wartime president especially in his relations with the Soviets. What did his administration actually accomplish for the common man?

President Roosevelt was puzzled about what to do about the Great Depression except that through his senseless meddling in the economy (“experimentation” the President called it) he made the Depression great. In 1937, four years after President Roosevelt had taken office, the United States economy snapped back to its 1932 levels. It took a world war and not government intervention to finally put a nail in the coffin of the Depression.

As to the President’s New Deal, it was meant to supplant private enterprise initiatives with public sector policies and programs that would, in the end, affect Americans from all walks of life. Most corrosively, the New Deal helped launch a welfare state from which there is now no return. The President, as well as a number of his closest advisers, were very comfortable with the collectivist policies of the Soviet Union as well as those of the Fascist regime of Italy’s dictator Benito Mussolini.

That he had a soft heart for communist ideals was clear from his statement that “They [the Soviets] all seem really to want to do what is good for their society instead of wanting to do for themselves. We take care of ourselves and think about the welfare of society afterward.” A “mystical devotion” rhapsodized President Roosevelt.

Unfortunately, that sentiment was grievously misguided. There is little one can point to of Stalin’s actions that were good for Soviet society. That he took a backward, illiterate, and agrarian nation and transformed it into an industrial power, as some would have it, is a specious argument. Leaving aside for the moment the enormous price in human lives that afforded such a transformation the reality is that the fruits of such industrialization were kept in the hands of the party’s apparatchiks. The average Soviet citizen was hardly the beneficiary of such inhuman sacrifices. More broadly, Stalin promoted Marxism-Leninism across the world to the point that it became the least democratic, least successful, and thus most reviled form of government on the face of the earth.

New Post has been published on https://servicemeltdown.com/is-the-united-states-at-end-of-empire-2/

IS THE UNITED STATES AT END OF EMPIRE?

AMERICA’S ECONOMIC PRIMACY IS ON A SLIPPERY SLOPE

America’s economic primacy is pretty much behind us. And, I don’t believe there is any chance of reversing a trend that began thirty plus years ago. The best-case scenario for the nation is to slow the rate of economic decline – never mind social and cultural decline, which are probably lodged in irreversible decay.  As Robert Kaplan says in his book, The Revenge of Geography, we might prolong our position of strength by preparing the world for our own obsolescence and thus ensuring a graceful exit.  But even this outcome will require the strength of will and leadership skills such as the nation witnessed during President Trump’s term in office.

Economic primacy might be measured along many fronts – income per capita, rate of growth, productivity, foreign exchange reserves, among others – but if one looks at Gross Domestic Product (GDP), perhaps the coarsest measure of a nation’s economic well-being, then the United States has lost its economic primacy to China when compared on a Purchasing Power Parity (PPP) basis.

The PPP approach levels the GDP calculation to each country’s relative price of goods. So, if a television set costs $500 in the United States while the same television costs $250 in China then, theoretically at least, we’re under counting China’s GDP by $250. Using the PPP rationale, China’s GDP was approximately $23.5 trillion in 2019 compared to that of the United States which came in at $21.4 trillion.

Some politicians, economists, lobbyists, and others, like to use a different measure of GDP to suit their own purposes. The nominal GDP, which looks at the total of goods and services produced at current exchange rates yields a substantially different calculation. The nominal GDP of the United States in 2019 came in at $21.4 trillion, a number which is identical to the nation’s GDP on a PPP basis. The reason for this is that the nominal GDP calculation is based on the dollar and so there is no currency conversion rate difference. By comparison, China’s nominal GDP came in at $14.3 trillion. If we only look at nominal GDP, it is clear we are being lulled into a false sense of economic security.

CHINA HAS UNRIVALLED DIPLOMATIC PATIENCE

Diplomatically, China has an edge on the United States. In the 1980’s, the then leader of the People’s Republic of China, Deng Xiaoping, enunciated his famous maxim of tao guang yang hui. Interpreted variously, the maxim is meant as a foreign policy directive that regardless how muscular the nation might become economically, geopolitically, and militarily it is always best to keep a “low profile diplomatically.” No more beguiling example of Deng Xiaoping’s maxim is in evidence than in China’s Belt and Road Initiative. Simply put, China plans to build one “road” from China to Europe and thus control all manner of transcontinental commerce. Already, China controls or has a presence in ports that handle about two-thirds of the world’s container traffic. In Greece, the port of Piraeus, a storied port dating to the Fifth Century B.C., is majority owned by the China Ocean Shipping Company (COSCO) which makes Greece a strategic entry point for China into the heart of Europe.

In Central Asia, China’s power projection is as undeniable as it is ominous. Through the auspices of the euphemistically named Shanghai Cooperation Organization (SCO), China has, in effect, expanded its borders westward by 1,500 miles to the Caspian Sea. Strategically, the mostly land-based route from Khorgos, Kazakhstan on China’s western border to Piraeus has now achieved super-highway potential from China to Europe. And, with the ignominious and cowardly cut-and-run of the United States military from Afghanistan, August 15, 2021, courtesy of President Biden and his band of armchair generals, China has indeed the potential to have gained yet another ally in this important region rich in iron, copper, lithium, and rare earth elements essential in the manufacture of reusable energy, electric vehicles and Defense Department applications such as precision-guided weapons, projectiles, and guidance systems.

China established the SCO with original signatories Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan for the ostensible purpose of promoting border security along its Xinjiang autonomous-region home to millions of mostly Muslim ethnic Uyghurs. Emblematic of China’s clout in the region, moreover, is that since the formation of the SCO both India and Pakistan have been granted membership in the organization. For the United States, it isn’t clear how much leeway it will now have to operate in Central Asia given the leverage that China has over SCO countries economically, diplomatically, and militarily.

Africa, too, is highly coveted by China. The Chinese have outmaneuvered the Americans economically on the African continent. As a consequence, China now does six times as much trade with African nations as does the United States. China has over ten-thousand companies doing business on African soil – mostly through State-Owned Enterprises (SOE’s) – and is now Africa’s number one trading partner and infrastructure financier. The Chinese presence in Africa is nothing short of startling. According to a report by consulting company McKinsey & Company published in 2017, Chinese construction contractors command around 50% of Africa’s international engineering, procurement, and construction market. For the West, China’s overwhelming presence in Africa demands a watchful eye. Especially in Western Africa, it’s more than just about bridges, dams, and railroads: a Chinese military presence in the Atlantic Ocean brings a potential Chinese naval threat within 4,000 miles of America’s east coast.

China has also learned to game international organizations in a big way.  Some examples should suffice to make the point: 1) The Paris Climate Accord, biased to begin with in favor of China, is a fraud as it has no enforcement mechanism. As a consequence, China burns far more coal than it officially admits. So, while emissions in the United States trend lower, potentially hobbling our fossil fuel energy sector, China’s continue to increase. China’ s shell game also involves the building of coal plants outside its borders to further fuel its economy without having to account for the consequent emissions domestically. President Trump wisely withdrew the United States from the accord – which in the end is nothing but a huge redistribution of wealth at the expense of the American taxpayer – in 2019 before the Biden Administration genuflected before globalists and the Left in his own party and agreed to re-enter the accord. 2) The World Trade Organization (WTO) is in China’s pocket as it refuses to rein in China’s channeling of state subsidies to its manufacturing companies so as to better compete on the world’s stage.  3) China’s membership on the United Nation’s Human Rights Council is ironic in the extreme. President Trump withdrew the United States from the Council in 2018 because of its hostility towards Israel. As Nikki Haley, American Ambassador to the United Nations said at the time, “Earlier this year, as it has in previous years, the Human Rights Council passed five resolutions against Israel – more than the number passed against North Korea, Iran, and Syria combined.” China has also been working diligently to defund peacekeeping missions in troubled areas around the world. Incredibly, China also sits on the United Nation’s Commission on the Status of Women alongside Iran known for its horrific treatment of women. 4) The most egregious example, of course, of how China has played international and presumably apolitical agencies lies with the country’s spread of the devastating and deadly Coronavirus and how the World Health Organization’s (WHO) was complicit in the coverup of China’s misdeeds. In December, 2019, when Taiwan warned about the infectiousness of the virus, the WHO refused to share Taiwan’s warnings with the rest of the world. Clearly, the WHO was doing China’s bidding. To this day, Taiwan, at China’s behest, is boycotted from participating as a full-fledged member of the WHO.

IF WE’RE NOT MAKING STUFF WHAT ARE WE TO DO?

Let’s face it, manufacturing was lost to our shores for all intents and purposes several years ago. In 2015, China displaced the United States as the top manufacturing nation in the world. In 2019, China’s value-added output – in essence, the difference between price and the cost of production – in manufacturing amounted to $3.9 trillion compared to $2.4 trillion for the United States. That gap will doubtless continue to grow.

There are now roughly 15 million workers in the United States engaged in manufacturing down from approximately 18 million in the 1980’s. President Trump, to his credit, was determined to revitalize manufacturing, steel, and coal but despite gains in these areas total employment numbers will continue to slip on a trend-line basis.  When one considers that China has approximately 112 million manufacturing workers, the competitive disadvantage for the United States becomes palpably clear.

In 2019 our nation’s goods deficit with China was approximately $345 billion. That gap is not likely to be made up in any of our lifetimes. So, that leaves Services as the new game in town. In 2019, Services accounted for roughly 69% of our nation’s GDP. And, as a nation, we better excel in that new cycle reality. It is true, the United States ran an annual balance of payments surplus in services with China of about $36 billion in 2019 – with U.S. exports amounting to about $56 billion and imports from China totaling $20 billion. But don’t let that fool you as a $20 billion gap will be easy for China to make up especially when one considers that China’s Services sector is growing at an average of 2% per year. And, unless we accelerate the rate of growth of exports – the rate of growth is about even for both imports and exports – we might soon be facing a deficit in this sector of the economy so crucial for the good health of the nation in the twenty-first century.

It is the remotest possibility, however, that we can salvage the service economy and consequently our nation unless our standard of performance is nothing less than service excellence in everything we do. But, from the way we treat our veterans, clients, patients, students, donors, and citizens – customers, all, to my way of thinking we have a lot of work to do before we can claim to excel in service. A survey by consulting company Accenture in 2007 showed that 41% of respondents described service quality as fair, poor, or terrible – more recent surveys suggest service is worsening. Perform any human endeavor at that level of proficiency and you are an abject failure. In the services sector, however, that is par for the course. In the Far East, cultural determinants do not confuse service with servitude. As a rule, suppliers will go the extra mile to please a consumer. In the West, and particularly in the United States, the most that a service worker can muster when asked to perform a personalized service is to utter something like, “no problem.” That kind of indifferent attitude is ingrained and certain to keep our level of service quality from climbing out of the aforementioned levels of mediocrity.

In the meantime, off-shore locations feast on our indifference to service and do whatever it takes to secure and maintain a customer relationship. The oft-cited explanation for the comparative advantage of off-shore locations, namely, their low cost, is a facile response to a more complicated dynamic. It is true that off-shore locations enjoy all-in cost advantages vis-a-vis the United States. It is also true, that President Trump worked hard to enhance our competitiveness on the world stage by reducing the oppressive web of regulation; reducing our world-leading corporate tax rates; negotiating better trade deals; exiting globalist compacts financed on the backs of American taxpayers; offering a tax holiday for repatriated corporate profits, among other initiatives. Those initiatives, however, have either been rolled back or will soon be under President Biden’s Administration.

My experience is that, particularly in technical disciplines, services delivered by off-shore locations are superior to ours. An apprenticeship initiative, if it were aggressively expanded to include science, technology, engineering, and mathematics (STEM) occupations, might make us more competitive in this area. In the rarefied world of supercomputers so critical to pushing the frontiers of science and technology, for example, the United States is out-produced by China on the order of two-to-one. So, until and unless we grow a much larger crop of more competent technical workers we will continue to be outperformed by nations more determined, better educated, more dedicated, and hungrier than we are.

THE NATION FACES SOME VERY STIFF HEADWINDS

The United States economy has structural defects which will not go away simply by holding rallies and mouthing rhetorical flourishes in the halls of Congress. Decline might be inexorable but we should not stand by as mere spectators. The will and purpose to restore our economic vitality must be marshaled by every American. It must begin, first and foremost, by demanding of our leaders, our institutions, and ourselves to be unafraid to serve in keeping with American priorities. 

We don’t have a lot going for ourselves: Labor productivity growth is stalled at near zero levels; the rate of household savings is paltry; regulation and taxation still suffocates businesses and individuals despite President Trump’s initiatives; unemployment – not the nominal rate but the U6 rate which measures the unemployed, those that are not looking for work, and those who have had to settle for part-time work –  is mired at levels of 7% (during the Obama years the U6 rate never got below 9.2%); and he national debt is now in excess of 120% of GDP. Entitlement spending while currently at a level of approximately 70% of the federal budget is on the threshold of becoming a perfect storm of out-of- control spending. The progressive policies of the Biden Administration will see to that as it attempts to solve every problem by printing greenbacks. The growing number of baby boomers reaching retirement age and the population’s longer life expectancy will further exacerbate the nation’s economic health.  

Perhaps the most troubling portent for the nation’s future is its inability to clamber out of a deep and black hole in education. Among the 37 industrialized nations which comprise the Organization of Economic Cooperation and Development (OECD), for example, the United States ranks 31st in mathematics and roughly in the middle on science. Clearly, all of the monetary and fiscal policies in the world will hardly fix this crippling deficiency which has more to do with a cultural indifference to serious and rigorous education.

Prior to Mr. Trump’s coming to office, the federal government was hell-bent on redistributing wealth rather than getting out of the way so that risk capitalists could create wealth. Unfortunately, President Trump’s reforms designed to bring back a full-throated and free market approach to the nation’s financial issues died the moment President Biden came into office. Indeed, the Heritage Foundation’s Index of Economic Freedom for 2021 shows that the United States recorded “its worst score and ranking ever, a result of out-of-control spending and a a loss of confidence by Americans in the even-handed rule of law.” The United states now ranks 20th just behind Chile.

Meanwhile, in the corporate world, business leaders are fixated on how quarterly earnings affect their pay packages, and when push comes to shove, cutting corners and worse. How else can one explain the utter disregard American companies operating in China have for the human rights abuses perpetrated by the Chinese Communist Party (CCP) on its people. Abuses such as forced labor (unions are illegal in China), the internment of over a million Uyghurs and other ethnic minorities, bans on religious freedom and free expression, arbitrary arrests, and the repression of Hong Kong citizens seem not to bother the likes of executives at Caterpillar, General Motors, Ford, AMD, Micron Technologies, Intel, Texas Instruments, Nike, and many others which are doing a land-office business in China. Apple, most notably, has raised to an art form tax, regulatory, and labor dodges which allow it to stash hundreds of billions of dollars overseas while paying little or no income taxes in the United States. The company, apparently, is nonplussed by the fact that its armies of workers in China are employed for wages and benefits that would be in contravention of United States laws. How the CEO’s of these companies can live with themselves knowing full well that they are profiting from someone else’s misery is a testament to their greed and lust for power.

CAN THE UNITED STATES GUARANTEE THE PEACE?

If the nation has ceded its economic primacy, its military primacy is being severely tested. United States’ land-based forces are heavily committed to counterinsurgency operations to fend off non-state actors while conventional warfare strategic planning appears to be dead. In Europe, a likely conventional hotspot, NATO and U.S. forces are outgunned and outmanned by a factor of at least ten to one by Russian forces. Worse, China’s land-based forces outnumber United States forces by a factor of at least two to one. Incredibly, with the United States facing potentially bad actors ranging from China, to Russia, to Iran, and North Korea the nation’s National Defense Strategy is not equipped to deal with a “two-war” scenario.

Our ocean defenses are in no better shape. The nation’s principal bulwark protecting our shores is in steep decline. The United States Navy is but a ghost of its former self. The nation now has fewer vessels than it had before World War I. Most notably, our aircraft carrier fleet which must number sixteen in order to patrol three separate ocean theaters now numbers ten or barely enough to protect two theaters. Indeed, in a study dated July 12, 2021 titled “A Report on the Fighting Culture of the United States Navy Surface Fleet” authored by USMC (Ret.) Lieutenant General Robert Schmidle, and USN (Ret.) Rear Admiral Mark Montgomery found that “The Navy is too small to accomplish all the missions with which it is tasked by civilian leaders and combatant commanders.” But there is more to the Navy’s problems than simply being undersized. Management indiscipline and lack of supervision are also to blame. How else can one explain a junior sailor’s setting fire to the amphibious assault ship Bonhomme Richard which needed the 40,000 ton vessel to be scrapped? This is nothing new. In 2012, a shipyard worker set fire to the nuclear submarine, USS Miami, which required the Navy to scrap that vessel s well. More tragically, the terrorist attack on the USS Cole which cost the lives of seventeen sailors was due according to the Navy’s own investigation to a lack of “…intelligence, focused training, appropriate equipment or on-scene security support…”

In the Mediterranean, the U.S. Sixth Fleet is a non-entity the result of which is to have created a vacuum that is now filled by the Russians, Syrians, and Iranians. In the South China Sea, where American Navy vessels and submarines seem unable to sail without colliding into tankers, containerships, and underwater objects, the United States is being challenged by a territorially aggressive and technologically advanced Chinese Navy. Already, an armada of sophisticated dredging vessels is reclaiming land from the sea for the sole purpose of building military airfields, hangars, radar installations, missile systems, anti-aircraft gun emplacements, and naval port facilities. China’s territorial claims in the South China Sea would be laughable if they were not so ominous: China asserts that it has “historic rights” to approximately 90% of the South China Sea including the Spratly island archipelago which is roughly 1,200 miles from the Chinese mainland. A United Nations Tribunal on the Law of the Sea unanimously tossed out China’s claim in 2016 ruling in favor of the Philippines which filed the case in 2013. True to form, China has stated that it will not abide by the court’s ruling. More worrisome, Chinese fighter jets and bombers now violate Taiwan’s air space with impunity and regularity.

Former U.S. Undersecretary of the Navy, Seth Cropsey, in his chilling and sobering account, Mayday the Decline of American Naval Supremacy, reminds us that China was the naval hegemon in the fifteenth century. Under the leadership of Admiral Sheng He, Chinese sailors coursed the oceans from their territorial waters to the Strait of Hormuz. Chinese vessels of the time were of a length and tonnage that were not to be seen in the West until centuries later. China’s naval supremacy only came to an end when civil servants forced severe budget cutbacks on the kingdom. Does our own defense budget sequestration of 2013 under President Obama, with its mandate to, in effect, disarm the military, ring a bell? The results of each nation’s budget missteps are eerily similar. China, for its part, will probably not repeat its mistake. In all likelihood, it will take the United States a generation, assuming proper funding and political will, to restore the U.S. Navy so that we can confidently state that the nation can project power and protect seaborne commerce beyond the horizon.

Just as troubling as the rickety state of the nation’s military naval forces is the state of the United States Merchant Marine. The Merchant Marine fleet hauls cargo during peacetime and is attached to the Defense Department during wartime to transport troops and supplies into war zones. The United States should hope it does not get into a major conflagration oceans away as it has experienced a dramatic attrition in its Merchant Marine fleet and manpower inventory. In 1960, the United States had nearly 3,000 vessels in the Merchant Marine fleet. Today, the nation has fewer than 175 vessels or less than one-half of 1% of the total vessel count worldwide. Worse, United States-flagged vessels carry a mere pittance of the total volume of goods and materials that transit through the nation’s ports. The consequence of what is obviously a weak flank in the nation’s defense posture is that in the event of a major outbreak of hostilities the United States would be reliant on foreign-flagged vessels to carry troops, armaments, and supplies with all of the attendant security risks.

One can argue that China’s bellicosity toward the United States is as asymmetrical as it is frontal and direct: China’s theft of roughly $225 billion, at the low end and as much as $600 billion at the high end, annually in counterfeit goods, pirated software, and theft of trade secrets from the United States; its monopoly of rare earth metals critical not just for consumer products but for Defense Department applications; its financing of over fifty Confucius Institutes on college campuses and schools designed to spread CCP propaganda; and its unleashing of the Wuhan virus which has cost the lives of more than seven-hundred thousand innocent Americans is proof positive that China’s strategy is to envelop the United States on all fronts. In this context, it is instructive to remember General George Patton’s admonition at the end of World War II that the Soviet Union posed an existential threat to Eastern Europe and the world at large that had to be confronted – an admonition that was ignored and which cost the lives of tens of millions of people over a period lasting forty-six years. Patton’s words then ring eerily appropriate today when he said, “If we have to fight them, now is the time. From now on, we will get weaker and they will get stronger.”

PROGRESSIVE GOVERNMENT POLICIES HAVE SERIOUSLY DIMINISHED THE READINESS OF AMERICA’S MILITARY

President Obama could hardly hide his disdain for the military during his eight years in office. Progressive ideologues both in his Administration and in the Pentagon used the military as a social experiment Petri dish which has seriously undermined the combat readiness of those in a position to protect our shores in the event of war. Obama’s appointment of secretaries to lead the Navy, Army, and Air Force – Ray Mabus, Navy, Eric Fanning, Army, Deborah Lee James, Air Force – was a slap in the face to the fighting men and women of our armed forces. To a person, this farcical trio knew little or nothing about military matters but were instead motivated to bring their personal and biased cultural baggage dealing with so-called women’s issues, transgender initiatives, and “green” policies to the Pentagon without discussion or debate. In effect, these policies said “military readiness, be damned!”

The Biden Administration, unfortunately but predictably, picked up where President Obama left off. All you need to know in this regard comes from the current Commander in Chief: “We’re making good progress designing body armor that fits women properly; tailoring combat uniforms for women; creating maternity flight suits; updating – updating requirements for their hairstyles…” More emblematic of the fecklessness of our military leadership is noted by the fact that both the Chairman of the Joint Chiefs of Staff, General Mark Milley, (who did not attend a military academy but who studied Political Science at Princeton), and his boss Lloyd Austin, Secretary of Defense are now actively promoting within the ranks the merits of so-called “critical race theory” whose first tenet reads that “racism is ordinary, not aberrational.” Milley, for his part, is apparently struggling to deal with his own “white rage” which he has made abundantly clear in public and which, if true, should be his personal business and no one else’s.

That the Soviets were able to withdraw over 100,000 troops from Afghanistan in 1988 in an orderly way and over a ten month period – after their failed attempt to install a Communist regime in the country – makes a mockery of the amateurish way in which Milley and Austin directed the chaotic exit of the United States from Afghanistan. The slapdash exit from the country not only left behind billions of dollars worth of military equipment to the Taliban but most tragically cost the lives of 169 people including thirteen Americans when a suicide bomber struck a gate at the Kabul airport. The sheer incompetence of the U.S. military under its current leadership was further on display when a drone strike meant to demonstrate Biden’s machismo killed ten innocent people including seven children.

Military incompetence, however, is not the worst of General Milley’s character flaws. Most egregiously, Milley behaved more like a Chinese mole than a U.S. General when he went behind President Trump’s back and offered his Chinese counterpart a “heads up” in the event we should launch a preemptive strike. He also thought nothing of having tete-a-tetes about confidential White House matters with muckraking journalist Bob Woodward and other authors. This is the same General Milley who publicly apologized for being seen in uniform with President Trump at Lafayette Square because, as he said, “it created a perception of the military involved in politics.” General Milley was also vocal before the House Armed Services Committee when he stated that he was “personally outraged by George Floyd’s brutal and senseless killing.” Yet, hypocritically, the General has never decried the death, destruction, and violence which gripped the nation in the Summer of 2020. Clearly, General Milley has proved to be more adept at polishing his woke celebrity credentials than at protecting our troops. Milley’s deeds, and his words have done nothing but encourage our foes.

No worse example of our nation’s loss of a warrior ethos can be found than in Naval Academy Lieutenant David Nartker’s groveling before his Iranian captors in January, 2016 when the two riverine boats under his command sailed off course into Iranian waters due to his incompetence. “The Iranian behavior was fantastic while we were here and we thank you very much for your hospitality and your assistance.” Contrast the Lieutenant’s sniveling behavior to the dying words of Commander James Lawrence when he ordered “don’t give up the ship” during a battle in the War of 1812.

It is no wonder that in the aforementioned Report on the Navy’s Fighting Culture the authors’ findings include: “an insufficient focus on warfighting skills, the perception of a zero-defect mentality accompanied by a culture of micromanagement, and over-sensitivity and responsiveness to modern media culture.”

Sadly, officers who do speak their minds suffer the consequences. For one, Space Force Commander, Lieutenant Colonel Matthew Lohmeir, a U.S. Air Force Academy graduate and fighter pilot, was relieved of his command when he noted on a podcast that diversity and inclusion training “is rooted in critical race theory which is rooted in Marxism.” Lieutenant Colonel Lohmeir, a fifteen-year veteran, has since left the service under a cloud as his boss charged that Lohmeir was “unable to lead.” For another, seventeen-year veteran Lieutenant Colonel Stuart Scheller, a marine infantry officer and battalion commander was thrown in the brig when he challenged the wisdom and approach to the Afghanistan withdrawal. The Chinese must be laughing in their tanks! (For a full account of how progressive liberal policies have emasculated the American military read James Hasson’s book Stand Down).

AMERICA IS AT A CROSSROADS

In sum, if as the great military historian B.H. Liddell Hart suggests, a nation’s Grand Strategy is a composite of its political, military, economic and diplomatic tools in its “arsenal” which can be brought to bear to advance a state’s national interest then the United States appears to be convulsing in its gradual decay. As I have argued in my essay, The United Kingdom Is Resurgent, the former world economic power lost its supremacy because it failed to adapt to the winds of change which buffeted its shores long after the economy reached its apex in the early twentieth century.

It is also provocative to think that there might be a “natural” life cycle to nations as there is to human beings that is irreversible. Regardless of one’s view in embracing one or another theory that might explain the demise of nations, there is no reason to remain indolent in resisting such decline even if there is only the remotest possibility of such an outcome. Keep in mind that the demise of Rome was hardly cataclysmic but the result of a long succession of imprudent decisions made by the Empire’s leaders. The United States, two hundred years after its founding, cannot continue its righteous journey if it fails to confront those who unite either within or outside its borders against it. President Theodore Roosevelt admonished the nation to never shrink from strife, moral or physical: “For it is only through strife, through hard and dangerous endeavor, that we shall ultimately win the goal of true national greatness.”

New Post has been published on https://servicemeltdown.com/book-review-sea-power-by-admiral-james-stavridis/

BOOK REVIEW: SEA POWER BY ADMIRAL JAMES STAVRIDIS

It is a sad state of affairs when a four-star Admiral of the United States Navy publishes a book on the geopolitics of sea power that is filled with non-sequiturs, serious omissions, and platitudes. That the book has apparently been praised by the likes of Robert Gates, Secretary of Defense; Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff; and Senator John McCain is further discomfiting. It is inconceivable that these men would be so effusive in their praise if they indeed read the book.

HOW IDEOLOGY CAN GET IN THE WAY OF CLEAR THINKING

Stavridis, an appointee of President Obama to lead NATO, is an obvious globalist (he now works for the most globalist of globalist NGO’s the Rockefeller Foundation). Stavridis’ globalist ethos is his business but he – or his editor, assuming he employed one – should have been sufficiently disciplined to save it for another time or another tome. As a result, his personal views get in the way of a substantive discussion on the geopolitics of the sea: 1) Guantanamo Bay (return it to the Cubans, he says, despite the fact that it has strategic value to the U.S. and that it was won as a spoil of war); 2) the Cuban embargo, (end it, states Stavridis, without mentioning the need for democratic reforms in return and despite the fact that 190 nations trade with the communist regime); 3) walls don’t work (incredibly, he likens a wall between the U.S. and Mexico to the Maginot Line a stretch of fortifications between France and Germany during World War II that saw French troops cower before the German advance and which in the end was outflanked by the Germans via Belgium); 4) support for the Trans Pacific Partnership (despite its deleterious impact on American blue-collar workers); 5) continued support for NATO (with nary a word on how the Germans have welched on their financial obligations to the organization, or on the cowardly inaction of the organization when Turkey invaded Cyprus in 1974 despite the fact that both Turkey and Greece had been NATO members since 1952. To this day, Turkish naval aggression in the eastern Aegean meant to intimidate both Greece and Cyprus continues with hardly a peep from NATO. A former NATO commander should have had more to say on this.); 6) a rambling discussion on climate change “…some observers saying that sea levels are rising twice as fast as in the past.” (“which” observers were referencing “what” geological timeframe?)

THE WHOLE TRUTH AND NOTHING BUT THE TRUTH

Stavridis’ errors of omission are hardly excusable for a presumed naval scholar. Examples abound: 1) the crucial difference in why the English prevailed in the face of the Spanish Armada was due to the fact that “… the English ships were smaller, lighter, more maneuverable, and expert sailors manned them.” That Sir Francis Drake launched a pre-emptive strike on the port of Cadiz destroying thirty-seven Spanish vessels and 1,700 tons of barrel staves sufficient to make barrels capable of storing at least 25,000 tons water and provisions gets no mention; 2) the Spanish-American War saw a “few naval engagements in and around Cuban waters.” This, despite the fact that the battle of Santiago de Cuba at the southeastern end of the island, July, 1898, witnessed four Spanish cruisers and two destroyers sunk and nearly 500 Spanish sailors killed at the hands of the U.S. Navy; 3) according to Stavridis the USS Maine was sunk not by Spanish saboteurs but by an accidental internal explosion. A serious scholar would add that the latter explanation has never been proved conclusively. 4) “Up the coast of Central America you sail past the most dangerous countries in the world – after Panama (whatever “after” means) comes Costa Rica, Nicaragua, El Salvador, Guatemala, Honduras, Belize, and Mexico.” The fact is that El Salvador has roughly five times the number of homicides per one hundred thousand population as either Panama or Costa Rica. Honduras, for its part, has four times the number of homicides as does Panama or Costa Rica; 5) “The United States did all that it could to undermine the Cuban regime, most notably with the failed invasion at the Bay of Pigs in 1961.” Stavridis makes no mention of the fact that both Eisenhower and Kennedy approved of the plan to forestall the communist incursion on an island so close to our shores. In the end, Kennedy ignominiously cancelled all air support leaving 1,400 Cuban patriots stranded and at the mercy of the Castro regime. Worse, a Navy squadron consisting of 12 destroyers, a submarine, and two aircraft carriers 25 miles offshore which had they been engaged would clearly have tipped the battle in our favor was sent home when Kennedy wilted under political pressure. Clearly, the Cuban missile crisis would never have come to pass had the Bay of Pigs invasion been successful; 6) Less weightily, Stavridis claims Christopher Columbus was not Spanish but Italian that he was born in Genoa. Actually, Columbus never claimed to have been born in Genoa but in the Republic of Genoa. There is a vast amount of evidence that suggests Columbus was born on the Greek island of Chios which at the time was part of the Genoese republic. Again, a careful scholar would have hedged his bets and stated the evidence was not conclusive in this regard.

GEOPOLITICS OR POLITICS?

For a book presumably dealing with geopolitics little mention is made of the fact, that U.S. naval supremacy is in decline. It is clear that the Navy is undersized, ill-equipped, lacking in training, riddled by management indiscipline, and infected by progressive policies that have eroded its military readiness. Admiral Stavridis could have mentioned, if only in passing, why it seems that our vessels seem unable to sail in the South China Sea without colliding with tankers and containerships; what our failures were that led to the terrorist attack on the USS Cole which cost the lives of seventeen sailors; what measures might have prevented the arson aboard the nuclear submarine USS Miami, and the amphibious assault ship Bonhomme Richard both of which had to be scrapped due to the extensive damage they suffered. Embarrassingly, when Stavridis does mention the Bonhomme Richard it is to point out that John Paul Jones commanded a ship by that name in the 1780’s!

New Post has been published on https://servicemeltdown.com/book-review-sea-power-by-admiral-james-stavridis/

BOOK REVIEW: SEA POWER BY ADMIRAL JAMES STAVRIDIS

It is a sad state of affairs when a four-star Admiral of the United States Navy publishes a book on the geopolitics of sea power that is filled with non-sequiturs, serious omissions, and platitudes. That the book has apparently been praised by the likes of Robert Gates, Secretary of Defense; Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff; and Senator John McCain is further discomfiting. It is inconceivable that these men would be so effusive in their praise if they indeed read the book.

HOW IDEOLOGY CAN GET IN THE WAY OF CLEAR THINKING

Stavridis, an appointee of President Obama to lead NATO, is an obvious globalist (he now works for the most globalist of globalist NGO’s the Rockefeller Foundation). Stavridis’ globalist ethos is his business but he – or his editor, assuming he employed one – should have been sufficiently disciplined to save it for another time or another tome. As a result, his personal views get in the way of a substantive discussion on the geopolitics of the sea: 1) Guantanamo Bay (return it to the Cubans, he says, despite the fact that it has strategic value to the U.S. and that it was won as a spoil of war); 2) the Cuban embargo, (end it, states Stavridis, without mentioning the need for democratic reforms in return and despite the fact that 190 nations trade with the communist regime); 3) walls don’t work (incredibly, he likens a wall between the U.S. and Mexico to the Maginot Line a stretch of fortifications between France and Germany during World War II that saw French troops cower before the German advance and which in the end was outflanked by the Germans via Belgium); 4) support for the Trans Pacific Partnership (despite its deleterious impact on American blue-collar workers); 5) continued support for NATO (with nary a word on how the Germans have welched on their financial obligations to the organization, or on the cowardly inaction of the organization when Turkey invaded Cyprus in 1974 despite the fact that both Turkey and Greece had been NATO members since 1952. To this day, Turkish naval aggression in the eastern Aegean meant to intimidate both Greece and Cyprus continues with hardly a peep from NATO. A former NATO commander should have had more to say on this.); 6) a rambling discussion on climate change “…some observers saying that sea levels are rising twice as fast as in the past.” (“which” observers were referencing “what” geological timeframe?)

THE WHOLE TRUTH AND NOTHING BUT THE TRUTH

Stavridis’ errors of omission are hardly excusable for a presumed naval scholar. Examples abound: 1) the crucial difference in why the English prevailed in the face of the Spanish Armada was due to the fact that “… the English ships were smaller, lighter, more maneuverable, and expert sailors manned them.” That Sir Francis Drake launched a pre-emptive strike on the port of Cadiz destroying thirty-seven Spanish vessels and 1,700 tons of barrel staves sufficient to make barrels capable of storing at least 25,000 tons water and provisions gets no mention; 2) the Spanish-American War saw a “few naval engagements in and around Cuban waters.” This, despite the fact that the battle of Santiago de Cuba at the southeastern end of the island, July, 1898, witnessed four Spanish cruisers and two destroyers sunk and nearly 500 Spanish sailors killed at the hands of the U.S. Navy; 3) according to Stavridis the USS Maine was sunk not by Spanish saboteurs but by an accidental internal explosion. A serious scholar would add that the latter explanation has never been proved conclusively. 4) “Up the coast of Central America you sail past the most dangerous countries in the world – after Panama (whatever “after” means) comes Costa Rica, Nicaragua, El Salvador, Guatemala, Honduras, Belize, and Mexico.” The fact is that El Salvador has roughly five times the number of homicides per one hundred thousand population as either Panama or Costa Rica. Honduras, for its part, has four times the number of homicides as does Panama or Costa Rica; 5) “The United States did all that it could to undermine the Cuban regime, most notably with the failed invasion at the Bay of Pigs in 1961.” Stavridis makes no mention of the fact that both Eisenhower and Kennedy approved of the plan to forestall the communist incursion on an island so close to our shores. In the end, Kennedy ignominiously cancelled all air support leaving 1,400 Cuban patriots stranded and at the mercy of the Castro regime. Worse, a Navy squadron consisting of 12 destroyers, a submarine, and two aircraft carriers 25 miles offshore which had they been engaged would clearly have tipped the battle in our favor was sent home when Kennedy wilted under political pressure. Clearly, the Cuban missile crisis would never have come to pass had the Bay of Pigs invasion been successful; 6) Less weightily, Stavridis claims Christopher Columbus was not Spanish but Italian that he was born in Genoa. Actually, Columbus never claimed to have been born in Genoa but in the Republic of Genoa. There is a vast amount of evidence that suggests Columbus was born on the Greek island of Chios which at the time was part of the Genoese republic. Again, a careful scholar would have hedged his bets and stated the evidence was not conclusive in this regard.

GEOPOLITICS OR POLITICS?

For a book presumably dealing with geopolitics little mention is made of the fact, that U.S. naval supremacy is in decline. It is clear that the Navy is undersized, ill-equipped, lacking in training, riddled by management indiscipline, and infected by progressive policies that have eroded its military readiness. Admiral Stavridis could have mentioned, if only in passing, why it seems that our vessels seem unable to sail in the South China Sea without colliding with tankers and containerships; what our failures were that led to the terrorist attack on the USS Cole which cost the lives of seventeen sailors; what measures might have prevented the arson aboard the nuclear submarine USS Miami, and the amphibious assault ship Bonhomme Richard both of which had to be scrapped due to the extensive damage they suffered. Embarrassingly, when Stavridis does mention the Bonhomme Richard it is to point out that John Paul Jones commanded a ship by that name in the 1780’s!

New Post has been published on https://servicemeltdown.com/is-the-united-states-at-end-of-empire-2/

IS THE UNITED STATES AT END OF EMPIRE?

America’s economic primacy is pretty much behind us. And, I don’t believe there is any chance of reversing a trend that began thirty plus years ago. The best-case scenario for the nation is to slow the rate of economic decline – never mind social and cultural decline, which are probably lodged in irreversible decay.  As Robert Kaplan says in his book, The Revenge of Geography, we might prolong our position of strength by preparing the world for our own obsolescence and thus ensuring a graceful exit.  But even this outcome will require the strength of will that has yet to be demonstrated by leaders in business, education, and government.

Economic primacy might be measured along many fronts – income per capita, rate of growth, productivity, foreign exchange reserves, among others – but if one looks at Gross Domestic Product (GDP), perhaps the coarsest measure of a nation’s economic well-being, then the United States has lost its economic primacy to China when compared on a Purchasing Power Parity (PPP) basis.

The PPP approach levels the GDP calculation to each country’s relative price of goods. So, if a television set costs $500 in the United States while the same television costs $250 in China then, theoretically at least, we’re under counting China’s GDP by $250. Using the PPP rationale, China’s GDP was approximately $23.5 trillion in 2019 compared to that of the United States which came in at $21.4 trillion.

Some politicians, economists, lobbyists, and others, like to use a different measure of GDP to suit their own purposes. The nominal GDP, which looks at the total of goods and services produced at current exchange rates yields a substantially different calculation. The nominal GDP of the United States in 2019 came in at $21.4 trillion, a number which is identical to the nation’s GDP on a PPP basis. The reason for this is that the nominal GDP calculation is based on the dollar and so there is no currency conversion rate difference. By comparison, China’s nominal GDP came in at $14.3 trillion. If we only look at nominal GDP, it is clear we are being lulled into a false sense of economic security.

CHINA HAS UNRIVALLED DIPLOMATIC PATIENCE

Diplomatically, China also has an edge on the United States. In the 1980’s, the then leader of the People’s Republic of China, Deng Xiaoping, enunciated his famous maxim of tao guang yang hui. Interpreted variously, the maxim is meant as a foreign policy directive that regardless how muscular the nation might become economically, geopolitically, and militarily it is always best to keep a “low profile diplomatically.” No more beguiling example of Deng Xiaoping’s maxim is in evidence than in China’s Belt and Road Initiative. Simply put, China plans to build one “road” from China to Europe and thus control all manner of transcontinental commerce. Already, China controls or has a presence in ports that handle about two-thirds of the world’s container traffic. In Greece, the port of Piraeus, a storied port dating to the Fifth Century B.C., is majority owned by the China Ocean Shipping Company (COSCO) which makes Greece a strategic entry point for China into the heart of Europe.

In Central Asia, China’s power projection is as undeniable as it is ominous. Through the auspices of the euphemistically named Shanghai Cooperation Organization (SCO), China has, in effect, expanded its borders westward by 1,500 miles to the Caspian Sea. Strategically, the mostly land-based route from Khorgos, Kazakhstan on China’s western border to Piraeus has now achieved super-highway potential from China to Europe.

China established the SCO with original signatories Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan for the ostensible purpose of promoting border security along its Xinjiang autonomous-region home to millions of mostly Muslim ethnic Uyghurs. Emblematic of China’s clout in the region, moreover, is that since the formation of the SCO both India and Pakistan have been granted membership in the organization. For the United States, it isn’t clear how much leeway it will now have to operate in Central Asia given the leverage that China has over SCO countries economically, diplomatically, and militarily.

Africa, too, is highly coveted by China economically, diplomatically, and most importantly militarily. China has outmaneuvered the United States economically on the African continent and now does six times as much trade with African nations as does the United States. China has over ten-thousand companies doing business on African soil – mostly through State-Owned Enterprises (SOE’s) – and is now Africa’s number one trading partner and infrastructure financier. The Chinese presence in Africa is nothing short of startling. According to a report by consulting giant McKinsey & Company published in 2017, Chinese construction contractors command around 50% of Africa’s international engineering, procurement, and construction market. For the West, China’s overwhelming presence in Africa demands a watchful eye. Especially in Western Africa, it’s more than just about bridges, dams, and railroads: a Chinese military presence in the Atlantic Ocean brings a potential Chinese naval threat within 4,000 miles of America’s east coast.

China has learned to game international organizations in a big way.  Some examples should suffice to make the point: 1) The Paris Climate Accord, biased to begin with in favor of China, looks the other way when the nation burns far more coal than it officially admits. So, while emissions in the United States trend lower, potentially hobbling our fossil fuel energy sector, China’s continue to increase. China’ s shell game also involves the building of coal plants outside its borders to further fuel its economy without having to account for the consequent emissions domestically. 2) The World Trade Organization (WTO) is in China’s pocket as it refuses to rein in China’s channeling of state subsidies to its manufacturing companies so as to better compete on the world’s stage.  3) China’s membership on the United Nation’s Human Rights Council is ironic in the extreme. President Trump withdrew the United States from the Council in 2018 because of its hostility towards Israel. As Nikki Haley, American Ambassador to the United Nations said at the time, “Earlier this year, as it has in previous years, the Human Rights Council passed five resolutions against Israel – more than the number passed against North Korea, Iran, and Syria combined.” China has also been working diligently to defund peacekeeping missions in troubled areas around the world. Incredibly, China also sits on the United Nation’s Commission on the Status of Women alongside Iran known for its horrific treatment of women. 4) The most egregious example, of course, of how China has played international and presumably apolitical agencies lies with the country’s spread of the devastating and deadly Coronavirus and how the World Health Organization’s (WHO) was complicit in the coverup of China’s misdeeds. In December, 2019, when Taiwan warned about the infectiousness of the virus, the WHO refused to share Taiwan’s warnings with the rest of the world. Clearly, the WHO was doing China’s bidding. To this day, Taiwan, at China’s behest, is boycotted from participating as a full-fledged member of the WHO.

IF WE’RE NOT MAKING STUFF WHAT ARE WE TO DO?

Let’s face it, manufacturing was lost to our shores for all intents and purposes several years ago. In 2015, China displaced the United States as the top manufacturing nation in the world. In 2019, China’s value-added output – in essence, the difference between price and the cost of production – in manufacturing amounted to $3.9 trillion compared to $2.4 trillion for the United States. That gap will doubtless continue to grow.

There are now roughly 15 million workers in the United States engaged in manufacturing down from approximately 18 million in the 1980’s – President Trump, to his credit, was determined to revitalize manufacturing, steel, and coal but despite gains in these areas total employment numbers will continue to slip on a trend-line basis.  When one considers that China has approximately 112 million manufacturing workers, the competitive disadvantage for the United States becomes palpably clear.

In 2019 our nation’s goods deficit with China was approximately $345 billion. That gap is not likely to be made up in any of our lifetimes. So, that leaves Services as the new game in town. In 2019, Services accounted for roughly 69% of our nation’s GDP. And, as a nation, we better excel in that new cycle reality. It is true, the United States ran an annual balance of payments surplus in services with China of about $36 billion in 2019 – with U.S. exports amounting to about $56 billion and imports from China totaling $20 billion. But don’t let that fool you as a $20 billion gap will be easy for China to make up especially when one considers that China’s Services sector is growing at an average of 2% per year. And, unless we accelerate the rate of growth of exports – the rate of growth is about even for both imports and exports – we might soon be facing a deficit in this sector of the economy so crucial for the good health of the nation in the twenty-first century.

THE NATION FACES SOME VERY STIFF HEADWINDS

The United States economy has structural defects which will not go away simply by holding rallies and mouthing rhetorical flourishes in the halls of Congress. Decline might be inexorable but we should not stand by as mere spectators. The will and purpose to restore our economic vitality must be marshaled by every American. It must begin, first and foremost, by demanding of our leaders, our institutions, and ourselves to be unafraid to serve in keeping with American priorities. It is the remotest possibility that we can salvage the service economy and consequently our nation unless our standard of performance is nothing less than service excellence in everything we do.

We don’t have a lot going for ourselves: Labor productivity growth is stalled at near zero levels; the rate of household savings is paltry; regulation and taxation still suffocates businesses and individuals despite President Trump’s initiatives; unemployment – not the nominal rate but the U6 rate which measures the unemployed, those that are not looking for work, and those who have had to settle for part-time work –  is mired at levels of 7% (during the Obama years the U6 rate never got below 9.2%); and he national debt is now in excess of 120% of GDP. Entitlement spending while currently at a level of approximately 70% of the federal budget is on the threshold of becoming a perfect storm of out-of- control spending. The progressive policies of the Biden Administration will see to that as it attempts to solve every problem by printing greenbacks. The growing number of baby boomers reaching retirement age and the population’s longer life expectancy will further exacerbate the nation’s economic health.  

Perhaps the most troubling portent for the nation’s future is its inability to clamber out of a deep and black hole in education. Among the 37 industrialized nations which comprise the Organization of Economic Cooperation and Development (OECD), for example, the United States ranks 31st in mathematics and roughly in the middle on science. Clearly, all of the monetary and fiscal policies in the world will hardly fix this crippling deficiency which has more to do with a cultural indifference to serious and rigorous education.

Prior to Mr. Trump’s coming to office, the federal government was hell-bent on redistributing wealth rather than getting out of the way so that risk capitalists could create wealth. Unfortunately, President Trump’s reforms designed to bring back a full-throated and free market approach to the nation’s financial issues died the moment President Biden came into office.

Meanwhile, in the corporate world, business leaders are fixated on how quarterly earnings affect their pay packages, and when push comes to shove, cutting corners and worse. How else can one explain the utter disregard American companies operating in China have for the human rights abuses perpetrated by the Chinese Communist Party (CCP) on its people. Abuses such as forced labor (unions are illegal in China), the internment of over a million Uyghurs and other ethnic minorities, bans on religious freedom and free expression, arbitrary arrests, and the repression of Hong Kong citizens seem not to bother the likes of executives at Caterpillar, General Motors, Ford, AMD, Micron Technologies, Intel, Texas Instruments, Nike, and many others which are doing a land-office business in China. Apple, most notably, has raised to an art form tax, regulatory, and labor dodges which allow it to stash hundreds of billions of dollars overseas while paying little or no income taxes in the United States. The company, apparently, is nonplussed by the fact that its armies of workers in China are employed for wages and benefits that would be in contravention of United States laws. How the CEO’s of these companies can live with themselves knowing full well that they are profiting from someone else’s misery is a testament to their greed and lust for power.

WHERE DOES THE CUSTOMER FIT IN?

From the way we treat our veterans, clients, patients, students, donors, and citizens – customers, all, to my way of thinking we have a lot of work to do before we can claim to excel in service. A survey by consulting company Accenture in 2007 showed that 41% of respondents described service quality as fair, poor, or terrible – more recent surveys suggest service is worsening. Perform any human endeavor at that level of proficiency and you are an abject failure. In the services sector, however, that is par for the course. In the Far East, cultural determinants do not confuse service with servitude. As a rule, suppliers will go the extra mile to please a consumer. In the West, and particularly in the United States, the most that a service worker can muster when asked to perform a personalized service is to utter something like, “no problem.” That kind of indifferent attitude is ingrained and certain to keep our level of service quality from climbing out of the aforementioned levels of mediocrity.

In the meantime, off-shore locations feast on our indifference to service and do whatever it takes to secure and maintain a customer relationship. The oft-cited explanation for the comparative advantage of off-shore locations, namely, their low cost, is a facile response to a more complicated dynamic. It is true that off-shore locations enjoy all-in cost advantages vis-a-vis the United States. It is also true, that President Trump worked hard to enhance our competitiveness on the world stage by reducing the oppressive web of regulation; reducing our world-leading corporate tax rates; negotiating better trade deals; exiting globalist compacts financed on the backs of American taxpayers; offering a tax holiday for repatriated corporate profits, among other initiatives. Those initiatives, however, have either been rolled back or will soon be under President Biden’s Administration.

My experience is that, particularly in technical disciplines, services delivered by off-shore locations are superior to ours. An apprenticeship initiative, if it were aggressively expanded to include science, technology, engineering, and mathematics (STEM) occupations, might make us more competitive in this area. In the rarefied world of supercomputers so critical to pushing the frontiers of science and technology, for example, the United States is out-produced by China on the order of two-to-one. So, until and unless we grow a much larger crop of more competent technical workers we will continue to be outperformed by nations more determined, better educated, more dedicated, and hungrier than we are.

CAN THE UNITED STATES GUARANTEE THE PEACE?

If the nation has ceded its economic primacy, its military primacy is being severely tested. United States’ land-based forces are heavily committed to counterinsurgency operations to fend off non-state actors while conventional warfare strategic planning appears to be dead. In Europe, a likely conventional hotspot, NATO and U.S. forces are outgunned and outmanned by a factor of at least ten to one by Russian forces. In the far East, China’s land-based forces outnumber the United States by a factor of at least two to one. Incredibly, with the United States facing potentially bad actors ranging from China, to Russia, to Iran, and North Korea the nation’s National Defense Strategy is not equipped to deal with a “two-war” scenario.

Our ocean defenses are in no better shape. The nation’s principal bulwark protecting our shores is in steep decline. The United States Navy is but a ghost of its former self. The nation now has fewer vessels than it had before World War I. Most notably, our aircraft carrier fleet which must number sixteen in order to patrol three separate ocean theaters now numbers ten or barely enough to protect two theaters. In the Mediterranean, the U.S. Sixth Fleet is a non-entity the result of which is to have created a vacuum that is now filled by the Russians, Syrians, and Iranians. In the South China Sea, where American Navy vessels seem unable to sail without colliding into tankers and containerships, the United States is being challenged by a territorially aggressive and technologically advanced Chinese Navy. Already, an armada of sophisticated dredging vessels is reclaiming land from the sea for the sole purpose of building military airfields and naval port facilities. More worrisome, Chinese fighter jets and bombers now violate Taiwan’s air space with impunity and regularity.

Former U.S. Undersecretary of the Navy, Seth Cropsey, in his chilling and sobering account, Mayday the Decline of American Naval Supremacy, reminds us that China was the naval hegemon in the fifteenth century. Under the leadership of Admiral Sheng He, Chinese sailors coursed the oceans from their territorial waters to the Strait of Hormuz. Chinese vessels of the time were of a length and tonnage that were not to be seen in the West until centuries later. China’s naval supremacy only came to an end when civil servants forced severe budget cutbacks on the kingdom. Does our own defense budget sequestration of 2013 under President Obama, with its mandate to, in effect, disarm the military, ring a bell? The results of each nation’s budget missteps are eerily similar. China, for its part, will probably not repeat its mistake. In all likelihood, it will take the United States a generation, assuming proper funding and political will, to restore the U.S. Navy so that we can confidently state that the nation can project power and protect seaborne commerce beyond the horizon.

Just as troubling as the rickety state of the nation’s military naval forces is the state of the United States Merchant Marine. The Merchant Marine fleet hauls cargo during peacetime and is attached to the Defense Department during wartime to transport troops and supplies into war zones. The United States should hope it does not get into a major conflagration oceans away as it has experienced a dramatic attrition in its Merchant Marine fleet and manpower inventory. In 1960, the United States had nearly 3,000 vessels in the Merchant Marine fleet. Today, the nation has fewer than 175 vessels or less than one-half of 1% of the total vessel count worldwide. Worse, United States-flagged vessels carry a mere pittance of the total volume of goods and materials that transit through the nation’s ports. The consequence of what is obviously a weak flank in the nation’s defense posture is that in the event of a major outbreak of hostilities the United States would be reliant on foreign-flagged vessels to carry troops, armaments, and supplies with all of the attendant security risks.

One can argue that China’s bellicosity toward the United States is as asymmetrical as it is frontal and direct: China’s theft of roughly $225 billion, at the low end and as much as $600 billion at the high end, annually in counterfeit goods, pirated software, and theft of trade secrets from the United States; its monopoly of rare earth metals critical not just for consumer products but for Defense Department applications; its financing of over fifty Confucius Institutes on college campuses and schools designed to spread CCP propaganda; and its unleashing of the Wuhan virus which has cost the lives of more than six-hundred thousand innocent Americans is proof positive that China’s strategy is to envelop the United States on all fronts.

PROGRESSIVE GOVERNMENT POLICIES HAVE SERIOUSLY DIMINISHED THE READINESS OF AMERICA’S MILITARY

President Obama could hardly hide his disdain for the military during his eight years in office. Progressive ideologues both in his Administration and in the Pentagon used the military as a social experiment Petri dish which has seriously undermined the combat readiness of those in a position to protect our shores in the event of war. Obama’s appointment of secretaries to lead the Navy, Army, and Air Force – Ray Mabus, Navy, Eric Fanning, Army, Deborah Lee James, Air Force – was a slap in the face to the fighting men and women of our armed forces. To a person, this farcical trio knew little or nothing about military matters but were instead motivated to bring their personal and biased cultural baggage dealing with so-called women’s issues, transgender initiatives, and “green” policies to the Pentagon without discussion or debate.

The Biden Administration, unfortunately but predictably, had picked up where President Obama left off. All you need to know in this regard comes from the current Commander in Chief: “We’re making good progress designing body armor that fits women properly; tailoring combat uniforms for women; creating maternity flight suits; updating – updating requirements for their hairstyles…” The Chinese must be laughing in their tanks! For a full account of how progressive liberal policies have emasculated the American military read James Hasson’s book Stand Down.

AMERICA IS AT A CROSSROADS

In sum, if as the great military historian B.H. Liddell Hart suggests, a nation’s Grand Strategy is a composite of its political, military, economic and diplomatic tools in its “arsenal” which can be brought to bear to advance a state’s national interest then the United States appears to be convulsing in its gradual decay. As I have argued in my essay, The United Kingdom Is Resurgent, the former world economic power, lost its supremacy because it failed to adapt to the winds of change which buffeted its shores long after the economy reached its apex in the early twentieth century.

It is also provocative to think that there might be a “natural” life cycle to nations as there is to human beings that is irreversible. Regardless of one’s view in embracing one or another theory that might explain the demise of nations, there is no reason to remain indolent in resisting such decline even if there is only the remotest possibility of such an outcome. Keep in mind that the demise of Rome was hardly cataclysmic but the result of a long succession of imprudent decisions made by the Empire’s leaders.

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A DISREGARD FOR SERVING THE PUBLIC: THE UNITED STATES GOVERNMENT AT WORK

Editor’s note: A recent reader to my blog asked: “I’m interested in your perspective on the recent government stalemate regarding spending. Is this a total disregard for serving the public or rather two sides that are firmly looking to serve their constituents? Your book addresses how to reconcile the seemingly conflicting objectives of pursuing revenue while achieving customer satisfaction. How would you apply the same thinking to this problem?” My response follows.

In today’s economy it is not so much a debate about spending but about debt spending. The debt of the United States is currently in excess of $28 trillion or about 127% greater than the nation’s annual economic output or GDP. This makes the debt-to-GDP ratio the highest since the end of WWII. And, with Democrats at the helm in Washington hell-bent on buying votes the level of spending is expected to grow by many more trillions of dollars before they get voted out of power. Thirty years ago, in contrast, the ratio of debt to GDP hovered around 50%.

Roughly seventy-eight percent of the current debt total or about $22 trillion represents IOU’s – Treasury bills, bonds or notes – held by you and me as taxpayers, corporations, and foreign governments. The rest of the debt or about $6 trillion is money owed by the government to various departments and agencies. The Social Security Trust Fund, most notably, accounts for about 50% of all intra-governmental obligations. Given this backdrop, we have a perfect right to be antsy about when or whether we’ll get paid back.  Social Security, particularly, should be of grave concern as it is precariously balanced at a break even between tax revenues taken in and benefits paid out.

The current debt level is financially troubling for the nation. Each U.S. taxpayer now carries nearly $200,000 of national debt on his back. This is roughly three times the debt-load citizens carried when President Obama came to power. That administration was all about spending, driving total debt from around $10 trillion – or about 67% of GDP – to in excess of $20 trillion, while stifling GDP growth by enacting endless regulatory roadblocks, and raising taxes. It is no wonder that the nation’s average annual growth rate of 2% was the slowest in almost a generation. You don’t have to be an economist to conclude that our nation’s lot has not improved over the last twelve years or so and it can be argued, quite convincingly, that it is nearly three times as worse off.

IF YOU CAN MEASURE IT THERE IS A CHANCE YOU CAN MANAGE IT

Granted, not every phenomenon is measurable – pride, purpose, patriotism, etc. But a financial metric indicative of a nation’s economic health is clearly measurable, trackable, and given sufficient political will manageable. George Shultz, former Secretary of State and Secretary of the Treasury, and economist John Taylor remind us in their book Choose Economic Freedom that the nation was devoid of the economic indicators that would have forecast, if not prevented, the inflationary and interest rate crises of the 60’s and 70’s never mind the fiasco that was the Great Recession of 2007-2009. We are apt to repeat those mistakes, however, if our political leaders fail to act. Incidentally, the Federal Reserve seems nonplussed by any of this while continuing to accommodate deficit spending. Just recently, Jerome Powell, Chairman of the FED indicated that “there is no question of our ability to service our debt for the foreseeable future.” This is the same FED that under Alan Greenspan refused to regulate over-the-counter derivatives which played a huge role in the aforementioned Great Recession.

Leaders in various countries have become more responsive to their citizens by coalescing around a national metric of financial prudence. Countries such as Switzerland, and Germany, have instituted “debt brakes” to keep spending within specified limits subject only to emergency conditions. Poland has gone a step further by constitutionally mandating a debt-to-GDP ratio of 60%. In the United States, nearly all states have balanced budget requirements while some even have specific spending caps. The stringency with which those requirements and caps are applied, however, varies widely from state to state.

Our political system has no such financial unifying principle or metric at the federal level other than the vague aspiration of serving the public and providing for the “common good” to guide the actions of elected officials. The upshot of such ambiguity is that even if in our wildest dreams we could imagine a Congress populated largely by selfless public servants the lack of a concrete metric to gauge the so-called common good would still lead to endless divisions and debates. Clearly, if a metric lacks clarity prescribing a course of action – never mind judging the merit of an action – is hardly an objective exercise.

The United States Congress, despite jawboning the matter for decades, has failed to set an objective standard of performance for which we as citizens can hold its members accountable – at least insofar as the nation’s debt management is concerned. It is little wonder that the debt ceiling is raised almost on cue every year. From 1980 to 2017, for instance, the debt ceiling was raised a total of 46 times. That’s 46 times in thirty-seven years. And, some years especially in the decades of the 1980’s and the 1990’s the debt ceiling was raised multiple times in a given year. The debt ceiling was most recently raised in 2019 by more than $2 trillion.

It is true, that a coterie of GOP senators – John Kennedy of Louisiana, and Rand Paul of Kentucky among them – has long argued for instituting spending cuts to offset debt limit increases but their enthusiasm for such an initiative has never been shared by the big spenders on both sides of the aisle. And, so the hobos dance around the barrel fire while taxpayers endure an eroding standard of living.

CAN GOVERNMENT LEARN ANYTHING FROM BUSINESS?

In business there are metrics aplenty. The vast majority of these metrics are indeed financial in nature. Fortunately, while of recent vintage, the debate has begun to turn so as to temper the uber-emphasis on revenue performance – or more correctly, earnings performance – versus customer satisfaction. And, although there are plenty of ways to directly gauge a customer’s satisfaction the assumption now is that there is no better proxy for the long-term potential of a business in the service and information age than the strength of its customer satisfaction ratings. Yes, there is much lip service that still surrounds the need to to serve customers with avidity. But executive leaders are now nearly unified in their belief – if not in their actions – that a satisfied customer is a most desirable long-term corporate objective.

The battles that now rage are more tactical and center mostly around the planning horizon over which the benefit of achieving high customer satisfaction ratings should be measured. Most executive leaders, unfortunately, are still of a mind that undertaking initiatives on behalf of the customer are fine if the benefit of such initiatives can be seen on the bottom line in the short term. This behavior, of course, is born of ingrained compensation schemes that reward executives for financial performance, this month, this quarter, this year. And, until such time as this myopic view of corporate performance is altered executives will flail in pursuit of sustainable competitive strategies while ironically lining their own pockets at the expense of shareholders.

THE DEBT CEILING DEBATE: A FINGER IN THE EYE OF THE U.S. TAXPAYER

In many ways, the hair-trigger reaction by Congress to raise the debt ceiling as spending nudges ever upward has much to do with voting constituencies that are not willing to give up any benefits that come their way. Keep in mind that roughly 62% of all federal spending goes for mandatory programs such as Social Security and Medicare so there is little Congress can do in these areas without undertaking major and radical changes. Approximately 8% goes to service the federal debt – a ratio which is apt to explode when interest rates, currently at .25%, return to historical averages. This leaves a not inconsiderable 30% of available budget dollars for discretionary items such as national defense, foreign aid, transportation, and education. It is the magnitude of the discretionary budget that gives rise to the spending jamboree which citizens witness each year as Congress kows to one political expediency or another. If that weren’t the case members of Congress would soon develop a stiff backbone and they would get serious about adopting a more prudent fiscal policy. 

The behavior of politicians in the debt ceiling debate has been nothing more than political theater and posturing. In the process, nothing much gets done. And, until unifying principles emerge that can rally a bi-partisan Congress to satisfy the will of the people in this regard the stalemate over the debt ceiling will continue to constitute a finger in the eye of the U.S. taxpayer. If there is a positive to the endless debates about the debt ceiling, however, is that it shines a light on the seriousness of our nation’s financial mismanagement by those in Washington. Clearly, the nation’s debt is growing faster than the economy. That path is unsustainable and will inevitably lead to making painfully difficult spending choices – guns or butter – that will only make the current debate look like kids’ play.

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HOW IDEOLOGY MASQUERADES AS IMPARTIAL ECONOMIC ANALYSIS

Editor’s note: Nobel Prize winning economist Paul Samuelson has been hugely influential in promoting his views from the day he published his economics textbook in 1948. He also penned a regular column in Newsweek magazine for fifteen years during the 1960’s.  Little wonder then, that Samuelson has been referred to by one economic historian as the “Father of Modern Economics.” Samuelson’s book is now in its 19th printing and has sold nearly four million copies in over forty languages. Generations of students, economic scholars, business men, and government officials have grown up with few counterpoint views of what makes the economy tick. Yet, Samuelson’s belief that it is best for government to social engineer our society is still a prevalent view. He has, in fact, stated that “America spends too little rather than too much on government.” Samuelson’s ideological lens was simply too clouded to consider alternate views. Economist, Robert Nelson, after a thorough study of Samuelson’s work has concluded that “If economists have in the end been priests of a secular religion, the ‘theology’ of economics was particularly well expressed in [Samuelson’s textbook] Economics.”

It is a rare economist who doesn’t wear a mask of ideology. And, it is ideology that drives what the American lay public (and many who are otherwise sophisticated about business and finance) presumes is apolitical, clinical, and neutral economic analysis rendered for the betterment of our society. Alas, such is not the case as ideology is the predicate for much of what we understand to be dispassionate economic analysis. Ideology comes in many forms: as academic arrogance, institutional bias, or political partisanship. Maybe all of this makes sense if we view economics as more of a political ideology than an objective science. Still, Americans must be aware of the masquerade. As the noted Economics journalist Henry Hazlitt stated in his book, Economics in One Lesson, “Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough…but they are multiplied a thousandfold by … the selfish pleading of selfish interests.”

The “can’t fail” models of Myron Scholes and Robert Merton, Nobel Prize winning economists both, were the centerpiece of the hedge fund they, with others, founded as Long Term Capital Management (LTCM) in 1994. The founders’ notoriety was based on the mathematical work they did, along with Fisher Black, to value the theoretical price of derivatives (the so-called Black-Scholes model). Big investment banks among them Merrill Lynch and UBS went for the bait with minimum $10 million investments. At the end of August 1997, the firm sported a capital base of $6.7 billion and the firm was rocking. Scarcely a year later, however, following the collapse of the Russian economy, LTCM was left with an almost worthless portfolio of assets. The firm, whose self-assessed risk of failure, had been calculated to be near zero had to be bailed out by the Federal Reserve Bank of New York in league with fifteen banks as a way to avoid a contagion of the financial markets.

Some economic models are so narrowly framed (never mind that they lack empirical verifiability) that their applicability has little or no value in a real-world context. The founders’ own post-mortem after the LTCM collapse was that their data base had not gone back far enough to pick up all historical market perturbations. So, their mathematical pyrotechnics were one-of-a-kind but their common sense was nil. Still, there is a bumper crop of economists, notwithstanding the debacle that was LTCM, whose elegant equations are believed by many to speak to science and truth in explaining some real-world phenomenon. Worse, once a certain celebrity is achieved by the PhD economist doing the theorizing or the modeling, especially when abetted by a compliant academic or popular press, if not a Nobel committee, then the individual is venerated for his sagacity in areas far afield from his narrow-gauge expertise. This makes a burlesque of the field of economics and it should be seen as such by all Americans.

“THE CENTRAL PROBLEM OF DEPRESSION PREVENTION HAS BEEN SOLVED…”

The caption heading above was a prognostication voiced by the 1995 Nobel Prize winning economist Robert Lucas. In 2003, in his presidential address to the American Economic Association, Lucas further added that the problem, “…has in fact been solved for many decades.” Then, as if to double down on his incantation, in the aftermath of the Lehman Brothers collapse, Lucas stated he was skeptical that the economy would slip into recession or that the subprime mortgage crisis was of any more general consequence. “If we have learned anything from the past 20 years,” said Lucas, “it is that there is a lot of stability built into the real economy.”

Eugene Fama, the Nobel Laureate in Economics in 2013 is the father of the efficient-market hypothesis. The hypothesis essentially argues that it is impossible to beat the market as all of the information that is available about a stock is already baked into the price. In essence, Fama was saying that stock picking was a dart throw. So far so good except that if you take Fama’s hypothesis to heart there is no place for regulations of any kind. How could there be when everything you need to know about a stock is already known? Fama’s influence was profound. It was no coincidence that in late 2000 Congress passed the Commodity Futures Modernization Act which, for all practical purposes, deregulated derivatives and credit default swaps. Brooksley Born, a non-economist and Chairwoman of the Commodity Trading Futures Commission at the time warned of the dangers posed by the unregulated market. She was summarily slapped down, however, by Larry Summers, Secretary of the Treasury and by his mentor, the almost universally deified, Federal Reserve Chairman, Alan Greenspan. Neither one of these men saw fit to rein in the gunslingers on Wall Street. Predictably, when credit markets froze in 2008 forcing the collapse of firms such as Bear Stearns, American International Group, and Lehman Brothers it was a direct result of a failure to regulate the derivatives market. At that point, the notional or face value of derivatives swirling around in the market was $683 trillion.

When asked if his efficient market hypothesis applied to housing, Fama went on to explain that: “Housing markets are less liquid, but people are very careful when they buy houses. It’s typically the biggest investment they’re going to make, so they look around very carefully and they compare prices. The bidding process is very detailed.” Fama, the brilliant economist, obviously failed to incorporate the human factor into his equations. As we have noted in a separate essay, The Service Ethic: The Ultimate Guarantor Against Moral Hazards, everyone from home buyers, to mortgage brokers, to mortgage underwriters, to regulators, to credit-rating agencies, to the Federal Reserve all had a hand in the subprime mortgage meltdown of 2007. So much, for Fama’s efficient-market hypothesis.

David Lereah, chief economist for the National Association of Realtors, in 2005 published the awkwardly titled, Are You Missing the Real Estate Boom? The Boom Will Not Bust and Why Property Values Will Continue to Climb through the End of the Decade – And How to Profit from Them. Lereah, as others before him, was lionized by the media and his message became both ubiquitous and indisputable.

To be fair, not every economist failed to read the housing market tea leaves. Two are noteworthy:

Robert Shiller. An economist who didn’t drink the Kool-Aid was a Nobel Laureate with Eugene Fama and Lars Peter Hansen in 2013. Shiller argued of irrational markets – not of efficient ones as his co-Nobel Prize winner Eugene Fama argued – and warned of a housing crash in 2006. Amazingly, Shiller also warned of a tech bubble just before the dot com fiasco.

Raghuram Rajan. A professor at the University of Chicago and a former Governor of the Reserve Bank of India as well as Chief Economist at the International Monetary Fund is credited for his prescience, when in 2005 he warned about the growing risks in financial markets. For his insight, Rajan was called a Luddite and his warnings “misguided” by Larry Summers.

“TEN THOUSAND WILL DIE PER YEAR DUE TO TAX REFORM”

British economist Lionel Robbins famously stated that the job of the economist is to report what is and not what ought to be.

It is fair to say, however, that economists then and now have failed to heed that lesson (or have chosen to ignore it) and thus theorize, not necessarily in accordance with the facts, but in accordance with their own political worldview and predispositions.

Larry Summers  did more than denigrate Raghuram Rajan as a modern-day Luddite.  While in a position of great influence and power during the 2008 meltdown Summers argued against a cram down that would have allowed the courts to force banks to reduce mortgage balances, cut interest rates or lengthen loan amortizations that would have helped millions of homeowners. Sadly, Summers’ signal policy achievement while in Washington was the aforementioned disaster known as the Commodity Futures Modernization Act. Long after the damage was done, President Clinton lamented that he had received the wrong advice from Summers in not regulating derivatives.

Summers is now on his high horse as an “intellectual” anti-Trump activist. When Summers proffered that ten thousand people would die as a result of the President’s tax reform package his rationale was couched in so many “what-ifs” as to be meaningless. And, when he told CNN that the tax plan will make “middle class Americans poorer” he demonstrated that he is pseudoscientific as well as incapable of rising above petty political jealousies. Summers is not alone, however, as a contemporary big mouth and wrong-headed economist.

“WE ARE LOOKING AT A GLOBAL RECESSION…”

Nobel Prize winning economist Paul Krugman is not to be outdone for his caustic partisanship. In the aftermath of President Trump’s election Krugman assured his readers at the New York Times that the world’s stock markets would never recover. The election of such an “irresponsible, ignorant man,” said Krugman, would bring about the “the mother of all adverse effects” on the economy. “So, we are very probably looking at a global recession, with no end in sight.” That is hardly an intelligent economic observation so much as it is unbridled animus toward the President.

The numbers, ruefully for Krugman and his acolytes, tell a different story from his apocalyptic view. During President Trump’s Administration Gross Domestic Product  exceeded 3% and the unemployment rate dropped to levels not seen in decades. Consumer confidence, too, rose to historically high levels. The stock market added over $5 trillion in wealth. And, the number of Americans receiving employee bonuses, pay hikes, and increases in benefits was in excess of 2,000,000.  Bumps in capital spending, and charitable contributions were also announced by companies in reaction to President Trump’s December, 2017 tax reform: AT&T, for one, announced plans to spend an additional $1 billion in capital spending in 2018; Comcast, also indicated it would spend $5 billion over the next five years; and Wells Fargo announced that it would pump $400 million into community chests in 2018.

It is clear that Krugman’s bias is such that he would rather engineer the economy according to his predilections than simply study it and objectively report on it. His mantra has been for years that America’s apparent economic success is due to the fact that “…our rich are much richer.” So much for the analytical prowess of a Nobel Laureate: a man whose ideology prompts an answer before a question has even been asked.

The Nobel committee’s vetting of Krugman’s work in economic geography was sloppy if not politically motivated. The field, including the mathematical elegance that is ascribed to Krugman, goes back for decades. What is worse, Krugman gives scant credit to those who preceded him. That is shameful.

Mathematical economist J. Barkley Rosser Jr., Professor of Economics at James Madison University, who has reviewed Krugman’s work has cited all of the previous relevant work which Krugman purposely ignored. Rosser concludes his review by stating that “if [Krugman] is indeed the emperor of the new economic geography, then he is an emperor who has no clothes.”

Other economists are more forthright about their social engineering biases. Economist Robert J. Gordon, notable among them, lays the nation’s lack of productivity growth at the feet of social factors such as the inequality between the haves and the have nots which he proposes to correct. Among the nostrums he points out in his book, The Rise and Fall of American Growth, are the following: drug legalization, incarceration reform to include shorter sentencing guidelines and aggressive pardoning of people behind bars, raising the minimum wage, increasing the Earned Income Tax Credit, introducing “super bracket” tax rates for high income earners, relaxing patent and copyright laws, spending more for education, and reducing occupational licensing requirements.

That the nation’s prosperity might have been eroded through decades of government overreach, imprudent fiscal policies, sleight-of-hand monetary policies, high taxes on corporations and individuals, a vast tangle of regulations, the decay of law and order, and an assault on individual liberties seems not to have occurred to these social engineers who masquerade as objective economists.

AN INFLUENTIAL PROFESSION WITHOUT AN ETHICAL COMPASS

Do economists have a code of ethics that ensures they won’t dissemble, parse the facts, or reveal their personal biases when conducting their analyses? No, says Martha Starr, Professor of Economics at American University. As editor of the book Consequences of Economic Downturn: Beyond the Usual Economics, Professor Starr states that “Unlike almost any academic profession – statisticians, physicists, sociologists, you name it – economists have always opposed adopting an ethical code outlining how they should act.”

Professor Starr goes on to say that “A well written code of conduct could make people think hard before, for instance, accepting $135,000 in speaker’s fees from an investment bank, then giving that investment bank privileged access to the White House.” This, an obvious reference to the payment made by investment bank Goldman Sachs to White House economic adviser Larry Summers in 2008.

As I suggested at the outset, it is possible that economists can’t help but show their prejudices because economics is not a science after all. When the public interest is at stake – as it often is in the hands of macroeconomists especially – then empirical evidence and not ideology should guide the work of economists. Regardless, economists will never win the public trust unless and until they abide a professional code of ethics.

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CLIMATE CHANGE: SCIENCE OR PROPAGANDA?

The fear being stoked by the power elites in academia, business, government, and the media that climate change poses, as the current cliché has it, an “existential” threat to the planet is a threat alright but one that seeks to undermine a sovereign nation’s interests and priorities.

The self-absorbed elites around the world and in the United States now believe that they have found the boogeyman they have long sought to scare the public into accepting a construct of governance that would supplant the will of individual citizens with the whims of unelected, globalist technocrats accountable to no one but themselves. That boogeyman, of course, is climate change and it renders the mission of climate change proponents – presumably to save the world from extinction – little more than an anti-democratic power grab.

No more prominent a supranational organization than the United Nations, through its International Panel on Climate Change (IPCC), has sounded the alarm that unless urgent measures are enacted to limit global-warming we will have been responsible for a planetary crisis that will likely trigger severe storms, wildfires, pestilence, droughts, flooding, starvation, and death. The IPCC’s position is clear: the carbon dioxide emitted by the burning of fossil fuels such as coal, natural gas, and oil is the principal cause behind the Earth’s rise in temperature. But the facts don’t square with the IPCC’s position: The main driver of greenhouse gases is not carbon dioxide but water vapor according to geologist Gregory Wrightstone author of the climate myth-busting book, Inconvenient Facts. It turns out that the atmospheric composition of water vapor is fifteen times that of carbon dioxide.

As evidence mounts that there is no global-warming calamity in the offing or that global-warming has its roots in mostly anthropogenic causes, climate change advocates have become more and more reliant on propaganda and disinformation to deliver their message of fear. Major media outlets, for their part, are complicit in parroting the latest shrill accounts of impending climate disaster without pushback or a critical analysis of the facts. One journalist in a Midwest newspaper, for example, recently stated that “The weather machine… is starting to act erratically…”, and that “The flood of immigrants around the world has been set in motion…principally by unbearable temperatures and loss of water and arable land.” No mention is made in the writer’s column of the fact that millions of people have been displaced by war, persecution, land exploitation, and overpopulation. The Biden Administration now blames global warming for the unprecedented surge of illegal immigrants coming across the southern border of the United States. “We are looking at extensive storm damage because of extreme climate.” So says Vice President Kamala Harris. Never mind that the average temperature across the country of Mexico, a key source of illegal immigration, has been on the order of .2 degrees Celsius or about one-third of one degree Fahrenheit for the years that span 1950 to 2009.

 Not to be outdone, Nobel Laureate in Economics, Joseph Stiglitz, tells the New York Times that “Wall Street could be underwater by the year 2100.” One can only assume that Dr. Stiglitz was not forecasting a stock market crash.

But what could top the Associated Press story of June 29, 1989, when it reported that a senior U.N. environmental official had stated that “entire nations could be wiped out off the face of the Earth by rising sea levels if global warming trends are not reversed by the year 2000.” We are now well into the year 2021 and as far as we know no nations have been wiped off the face of the Earth!

THE THEOLOGY OF CLIMATE CHANGE BLINDS OBJECTIVITY

The IPCC, which should stand as a paragon of scientific objectivity, and impartiality, is far from it. Emblematic of the agency’s bias, the IPCC has published a “manifesto” to guide authors in writing reports. Members of the IPCC are obligated to uphold the strictures contained in the manifesto. As such, authors are urged to parse their otherwise negative findings and to state questionable points of view without qualification. Certain word choices are prohibited and expressions which would cast doubt on an author’s expertise in a certain area are to be avoided. Members are in effect censored as they must not express opinions beyond the scope of published reports. Finally, minority opinions expressed in the body of an IPCC report rarely get mentioned in the Policymakers’ Summary. Journalists, and other non-experts unable or unwilling to wade through several hundred pages of technical data presumably read only the Summary. So much for scientific objectivity and impartiality.

The Earth’s temperature has been exceptionally stable for a very long time. For five thousand years global temperatures have been within the range of plus or minus one-half of one degree Celsius, or nine-tenths of one degree Fahrenheit, from average. And, according to astrophysicist S. Fred Singer “While it is true that global temperatures have risen about one-half of one degree Celsius in the last century, most of this warming occurred before 1940, while most of the human-caused carbon dioxide emissions occurred after 1940.” Recent global temperature readings come as a surprise to many.For example, scientists at NASA’s Goddard Institute for Space report that the average global temperature for 2019 was unchanged from 2016 with two dips – global cooling, in effect – in 2017 and 2018.

The connection between carbon dioxide emissions and global temperature remains flimsy at best. A study in the American Meteorological Society’s Journal of Climate shows computer models exaggerated global warming temperatures from carbon dioxide emissions by as much as 45%. Professor of Geosystem Science at Oxford University, Myles Allen, explains that “…we haven’t seen the rapid acceleration in warming after the year 2000 that we see in models.”

And, while there has been much said in the media about how global-warminghas been responsible for a surge in major hurricane activity the data proves otherwise.The fact is thatthe number of severe hurricanes has not measurably increased during the last fifty years. According to the Stormfax Weather Almanac, the average annual number of Category 3,4, or 5 hurricanes in the Atlantic from the year 1970 to 2017 is 2.5. If we look at more recent data say from the year 2000 to 2017, the average annual number of major hurricanes shows a slight and inconsequential uptick to 3.2 or slightly more than one-half of one storm per year.The long-term trend is even more dramatic if disconcerting to climate alarmists as researchers at the National University of Mexicofound that, “from 1749 to 2012 the linear trend in the number of hurricanes is decreasing.”

Tornadicactivity, too, has been on the decline for the last sixty years. According to the National Oceanic and Atmospheric Administration (NOAA) the number of F3+ (≥ 158 miles per hour) tornadoes in 2016 was the lowest on record.  Scant notice of any of these findings have been seen in media reports. All of which goes to say that the apocalyptic data usually reported by the media is anti-empirical as it is not backed up by actual observation.

Climate change has been found to be the result of hugely complex phenomena such as oceanic tides, solar radiation, volcanic activity, tectonic plate movements, magnetic field variations, winds, the earth’s orbit and tilt, and ocean current fluctuations that are far beyond the scope of existing computer models to accurately simulate. It is no wonder then that computer modeling predictions fail to line up with observable data and for any government to rely on them as a guide in reordering a nation’s economic priorities is sheer folly and does a serious disservice to its citizenry.

The United Nations Paris Climate Accord, as a case in point, requires the United States to reduce its greenhouse emissions by the year 2025 to between 26 and 28 percent below its 2005 levels. Compliance with the dictates of the accord will cost the nation 2.7 million jobs, by 2025, according to the National Economic Research Associates and cause a sizeable contraction in GDP.  Our arch-enemy Communist China, the world’s biggest polluter, was given a pass in the Paris Accord and by the terms of the agreement was allowed to continue increasing its carbon emissions until 2030. In any event, according to an article published in the Global Policy Journal on November 2015, Danish Statistician, Dr. Bjorn Lomborg wrote, “Even if all nations keep their promises under the agreement, temperatures will be cut by just one-half of one degree Celsius by 2100.”

 In the end, the Paris Climate Accord amounts to a huge redistribution of wealth at the expense of the United States taxpayer. Seeing the writing on the wall, President Trump wisely withdrew the United States from the accord in 2019 before the Biden Administration genuflected before globalists and the Left in his own party and agreed to re-enter the accord.

WHERE DO WE GO FROM HERE?

Climate change proponents are undeterred by the facts. As MichaelCrichton, author of Jurassic Park, once said, “Increasingly, it seems facts aren’t necessary because the tenets of environmentalism are all about belief.” In other words, belief trumps facts.

Generally, it is not possible to disprove an ideological construct simply with facts. More to the point, no amount of evidence can ever be brought to bear to counter the theology of those who believe in the urgent crisis that is posed by climate change. Environmental historian, William Cronon, calls environmentalism a new religion because it offers “a complex series of moral imperatives for ethical action and judges human conduct accordingly.”

A counter narrative to deal with the potentially destructive economic and political consequences of an unbridled and imperialistic climate change agenda must therefore go beyond a reliance on scientific arguments alone. Deep-seated doctrinaire beliefs cannot be overcome through logic and reason. A more effective counter narrative must have citizens demand of their government officials that the potentially coercive practices of supranational organizations like the United Nation’s IPCC will not be tolerated.

If we cherish the freedoms we have come to enjoy as citizens of an independent sovereign state we have little choice but to forcefully resist institutional and government intimidation whether foreign or domestic. When it comes to climate science, free-thinking citizens must remain skeptical and engage in greater self-study and research. Citizens must also take to the public square and hold policymakers accountable if they seek to embark on hastily thought out policies that will result in harsh economic consequences. Keep in mind that the Left in the United States is proposing a net-zero emissions standard by the year 2050 which would cost the nation on the order of $5 trillion per year. Worse, even global warming zealots need to heed Gregory Wrightstone’s admonition that carbon dioxide is not the devil it has been made out to be but a gas that is essential for life – all life. The current concentration of carbon dioxide in the atmosphere of 400 parts per million should be viewed as a blessing as plant life cannot survive without at least 150 parts per million.

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IS THE UNITED STATES AT END OF EMPIRE?

America’s economic primacy is pretty much behind us. And, I don’t believe there is any chance of reversing a trend that began thirty plus years ago. The best-case scenario for the nation is to slow the rate of economic decline – never mind social and cultural decline, which are probably lodged in irreversible decay.  As Robert Kaplan says in his book, The Revenge of Geography, we might prolong our position of strength by preparing the world for our own obsolescence and thus ensuring a graceful exit.  But even this outcome will require the strength of will that has yet to be demonstrated by leaders in business, education, and government.

Economic primacy might be measured along many fronts – income per capita, rate of growth, productivity, foreign exchange reserves, among others – but if one looks at Gross Domestic Product (GDP), perhaps the coarsest measure of a nation’s economic well-being, then the United States has lost its economic primacy to China when compared on a purchasing power parity (PPP) basis.

The PPP approach levels the GDP calculation to each country’s relative price of goods. So, if a television set costs $500 in the United States while the same television costs $250 in China then, theoretically at least, we’re under counting China’s GDP by $250. Using the PPP rationale, China’s GDP was approximately $23.5 trillion in 2019 compared to that of the United States which came in at $21.4 trillion.

Some politicians, economists, lobbyists, and others, like to use a different measure of GDP to suit their own purposes. The nominal GDP, which looks at the total of goods and services produced at current exchange rates yields a substantially different calculation. The nominal GDP of the United States in 2019 came in at $21.4 trillion, a number which is identical to the nation’s GDP on a PPP basis. The reason for this is that the nominal GDP calculation is based on the dollar and so there is no currency conversion rate difference. By comparison, China’s nominal GDP came in at $14.3 trillion. If we only look at nominal GDP, it is clear we are being lulled into a false sense of economic security.

CHINA HAS UNRIVALLED DIPLOMATIC PATIENCE

Diplomatically, China also has an edge on the United States. In the 1980’s, the then leader of the People’s Republic of China, Deng Xiaoping, enunciated his famous maxim of tao guang yang hui. Interpreted variously, the maxim is meant as a foreign policy directive that regardless how muscular the nation might become economically, geopolitically, and militarily it is always best to keep a “low profile diplomatically.” No more beguiling example of Deng Xiaoping’s maxim is in evidence than in China’s Belt and Road Initiative. Simply put, China plans to build one “road” from China to Europe and thus control all manner of transcontinental commerce. Already, China controls or has a presence in ports that handle about two-thirds of the world’s container traffic. In Greece, the port of Piraeus, a storied port dating to the Fifth Century B.C., is majority owned by the China Ocean Shipping Company (COSCO) which makes Greece a strategic entry point for China into the heart of Europe.

In Central Asia, China’s power projection is as undeniable as it is ominous. Through the auspices of the euphemistically named Shanghai Cooperation Organization (SCO), China has, in effect, expanded its borders westward by 1,500 miles to the Caspian Sea. Strategically, the mostly land-based route from Khorgos, Kazakhstan on China’s western border to Piraeus has now achieved super-highway potential from China to Europe.

China established the SCO with original signatories Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan for the expressed purpose of promoting border security along its Xinjiang autonomous-region home to millions of mostly Muslim ethnic Uyghurs. Emblematic of China’s clout in the region, moreover, is that since the formation of the SCO both India and Pakistan have been granted membership in the organization. For the United States, it isn’t clear how much leeway it will now have to operate in Central Asia given the leverage that China has over SCO countries economically, diplomatically, and militarily.

China has also learned to game international organizations. The Paris Climate Accord, biased to begin with in favor of China, looks the other way when the nation burns far more coal than it officially admits. So, while emissions in the United States trend lower, potentially hobbling our fossil fuel energy sector, China’s continue to increase. China’ s shell game also involves the building of coal plants outside its borders to further fuel its economy without having to account for the consequent emissions domestically. The World Trade Organization (WTO) is also in China’s pocket as it refuses to rein in China’s channeling of state subsidies to its manufacturing companies so as to better compete on the world’s stage. The most egregious example, of course, of how China has played international and presumably apolitical agencies lies with the country’s spread of the devastating and deadly Coronavirus and how the World Health Organization’s (WHO) was complicit in the coverup of China’s misdeeds. In December, 2019, when Taiwan warned about the infectiousness of the virus, the WHO refused to share Taiwan’s warnings with the rest of the world. Clearly, the WHO was doing China’s bidding. To this day, Taiwan, at China’s behest, is boycotted from participating as a full-fledged member of the WHO.

IF WE’RE NOT MAKING STUFF WHAT ARE WE TO DO?

Let’s face it, manufacturing was lost to our shores for all intents and purposes several years ago. In 2015, China displaced the United States as the top manufacturing nation in the world. In 2019, China’s value-added output – in essence, the difference between price and the cost to produce – in manufacturing amounted to $3.9 trillion compared to $2.4 trillion for the United States. That gap will doubtless continue to grow.

There are now roughly 15 million workers in the United States engaged in manufacturing down from approximately 18 million in the 1980’s – President Trump, to his credit, was determined to revitalize manufacturing, steel, and coal but despite gains in these areas total employment numbers will continue to slip on a trend-line basis.  When one considers that China has approximately 112 million manufacturing workers, the competitive disadvantage for the United States becomes palpably clear.

In 2019 our nation’s goods deficit with China was approximately $345 billion. That gap is not likely to be made up in any of our lifetimes. So, that leaves Services as the new game in town. In 2019, Services accounted for roughly 69% of our nation’s GDP. And, as a nation, we better excel in that new cycle reality. It is true, the United States ran an annual balance of payments surplus in services with China of about $36 billion in 2019 – with U.S. exports amounting to about $56 billion and imports from China totaling $20 billion. But don’t let that fool you as a $20 billion gap will be easy for China to make up especially when one considers that China’s Services sector is growing at an average of 2% per year. And, unless we accelerate the rate of growth of exports – the rate of growth is about even for both imports and exports – we might soon be facing a deficit in this sector of the economy so crucial for the good health of the nation in the twenty-first century.

THE NATION FACES SOME VERY STIFF HEADWINDS

The United States economy has structural defects which will not go away simply by holding rallies and mouthing rhetorical flourishes in the halls of Congress. Decline might be inexorable but we should not stand by as mere spectators. The will and purpose to restore our economic vitality must be marshaled by every American. It must begin, first and foremost, by demanding of our leaders, our institutions, and ourselves to be unafraid to serve in keeping with American priorities. It is the remotest possibility that we can salvage the service economy and consequently our nation unless our standard of performance is nothing less than service excellence in everything we do.

We don’t have a lot going for ourselves: Labor productivity growth is stalled at near zero levels; the rate of household savings is paltry; regulation and taxation still suffocates businesses and individuals despite President Trump’s initiatives; unemployment – not the nominal rate but the U6 rate which measures the unemployed, those that are not looking for work, and those who have had to settle for part-time work –  is mired at levels of 7% (during the Obama years the U6 rate never got below 9.2%); and he national debt is now in excess of 120% of GDP. Entitlement spending while currently at a level of approximately 70% of the federal budget is on the threshold of becoming a perfect storm of out-of- control spending. The progressive policies of the Biden Administration will see to that as it attempts to solve every problem by printing greenbacks. The growing number of baby boomers reaching retirement age and the population’s longer life expectancy will further exacerbate the nation’s economic health.  

Perhaps the most troubling portent for the nation’s future is its inability to clamber out of a deep and black hole in education. Among the 37 industrialized nations which comprise the Organization of Economic Cooperation and Development (OECD), for example, the United States ranks 31st in mathematics and roughly in the middle on science. Clearly, all of the monetary and fiscal policies in the world will hardly fix this crippling deficiency which has more to do with a cultural indifference to serious and rigorous education.

Prior to Mr. Trump’s coming to office, the federal government was hell-bent on redistributing wealth rather than getting out of the way so that risk capitalists could create wealth. Unfortunately, President Trump’s reforms designed to bring back a full-throated and free market approach to the nation’s financial issues died the moment President Biden came into office.

Meanwhile, in the corporate world, business leaders are fixated on how quarterly earnings affect their pay packages, and when push comes to shove, cutting corners and worse. How else can one explain the utter disregard American companies operating in China have for the human rights abuses perpetrated by the Chinese Communist Party (CCP) on its people. Abuses such as forced labor (unions are illegal in China), the internment of over a million Uyghurs and other ethnic minorities, bans on religious freedom and free expression, arbitrary arrests, and the repression of Hong Kong citizens seem not to bother the likes of executives at Caterpillar, General Motors, Ford, AMD, Micron Technologies, Intel, Texas Instruments, Nike, and many others which are doing a land-office business in China. Apple, most notably, has raised to an art form tax, regulatory, and labor dodges which allow it to stash hundreds of billions of dollars overseas while paying little or no income taxes in the United States. The company, apparently, is nonplussed by the fact that its armies of workers in China are employed for wages and benefits that would be in contravention of United States laws. How the CEO’s of these companies can live with themselves knowing full well that they are profiting from someone else’s misery is a testament to their greed and lust for power.

WHERE DOES THE CUSTOMER FIT IN?

From the way we treat our veterans, clients, patients, students, donors, and citizens – customers, all, to my way of thinking we have a lot of work to do before we can claim to excel in service. A survey by consulting giant Accenture in 2007 showed that 41% of respondents described service quality as fair, poor, or terrible – more recent surveys suggest service is worsening. Perform any human endeavor at that level of proficiency and you are an abject failure. In the services sector, however, that is par for the course. In the Far East, cultural determinants do not confuse service with servitude. As a rule, suppliers will go the extra mile to please a consumer. In the West, and particularly in the United States, the most that a service worker can muster when asked to perform a personalized service is to utter something like, “no problem.” That kind of indifferent attitude is ingrained and certain to keep our level of service quality from climbing out of the aforementioned levels of mediocrity.

In the meantime, off-shore locations feast on our indifference to service and do whatever it takes to secure and maintain a customer relationship. The oft-cited explanation for the comparative advantage of off-shore locations, namely, their low cost, is a facile response to a more complicated dynamic. It is true that off-shore locations enjoy all-in cost advantages vis-a-vis the United States. It is also true, that President Trump worked hard to enhance our competitiveness on the world stage by reducing the oppressive web of regulation; reducing our world-leading corporate tax rates; negotiating better trade deals; exiting globalist compacts financed on the backs of American taxpayers; offering a tax holiday for repatriated corporate profits, among other initiatives. Those initiatives, however, have either been rolled back or will soon be under President Biden’s Administration.

My experience is that, particularly in technical disciplines, services delivered by off-shore locations are superior to ours. An apprenticeship initiative, if it were aggressively expanded to include science, technology, engineering, and mathematics (STEM) occupations, might make us more competitive in this area. In the rarefied world of supercomputers so critical to pushing the frontiers of science and technology, for example, the United States is out-produced by China on the order of two-to-one. So, until and unless we grow a much larger crop of more competent technical workers we will continue to be outperformed by nations more determined, better educated, more dedicated, and hungrier than we are.

CAN THE UNITED STATES GUARANTEE THE PEACE?

If the nation has ceded its economic primacy, its military primacy is being severely tested. United States’ land-based forces are heavily committed to counterinsurgency operations to fend off non-state actors while conventional warfare strategic planning appears to be dead. In Europe, a likely conventional hotspot, NATO and U.S. forces are outgunned and outmanned by a factor of at least ten to one by Russian forces. In the far East, China’s land-based forces outnumber the United States by a factor of at least two to one.

Our ocean defenses are in no better shape. The nation’s principal bulwark protecting our shores is in steep decline. The United States Navy is but a ghost of its former self. The nation now has fewer vessels than it had before World War I. Most notably, our aircraft carrier fleet which must number sixteen in order to patrol three separate ocean theaters now numbers ten or barely enough to protect two theaters. In the Mediterranean, the U.S. Sixth Fleet is a non-entity the result of which is to have created a vacuum that is now filled by the Russians, Syrians, and Iranians. In the South China Sea, where American Navy vessels seem unable to sail without colliding into tankers and containerships, the United States is being challenged by a territorially aggressive and technologically advanced Chinese Navy. Already, an armada of sophisticated dredging vessels is reclaiming land from the sea for the sole purpose of building military airfields and naval port facilities. More worrisome, Chinese fighter jets and bombers now violate Taiwan’s air space with impunity and regularity.

Former U.S. Undersecretary of the Navy, Seth Cropsey, in his chilling and sobering account, Mayday the Decline of American Naval Supremacy, reminds us that China was the naval hegemon in the fifteenth century. Under the leadership of Admiral Sheng He, Chinese sailors coursed the oceans from their territorial waters to the Strait of Hormuz. Chinese vessels of the time were of a length and tonnage that were not to be seen in the West until centuries later. China’s naval supremacy only came to an end when civil servants forced severe budget cutbacks on the kingdom. Does our own defense budget sequestration of 2013 under President Obama, with its mandate to, in effect, disarm the military, ring a bell? The results of each nation’s budget missteps are eerily similar. China, for its part, will probably not repeat its mistake. In all likelihood, it will take the United States a generation, assuming proper funding and political will, to restore the U.S. Navy so that we can confidently state that the nation can project power and protect seaborne commerce beyond the horizon.

Just as troubling as the rickety state of the nation’s military naval forces is the state of the United States Merchant Marine. The Merchant Marine fleet hauls cargo during peacetime and is attached to the Defense Department during wartime to transport troops and supplies into war zones. The United States should hope it does not get into a major conflagration oceans away as it has experienced a dramatic attrition in its Merchant Marine fleet and manpower inventory. In 1960, the United States had nearly 3,000 vessels in the Merchant Marine fleet. Today, the nation has fewer than 175 vessels or less than one-half of 1% of the total vessel count worldwide. Worse, United States-flagged vessels carry a mere pittance of the total volume of goods and materials that transit through the nation’s ports. The consequence of what is obviously a weak flank in the nation’s defense posture is that in the event of a major outbreak of hostilities the United States would be reliant on foreign-flagged vessels to carry troops, armaments, and supplies with all of the attendant security risks.

One can argue that China’s bellicosity toward the United States is as asymmetrical as it is frontal and direct: China’s theft of roughly $225 billion, at the low end and as much as $600 billion at the high end, annually in counterfeit goods, pirated software, and theft of trade secrets from the United States; its monopoly of rare earth metals critical not just for consumer products but for Defense Department applications; its financing of over fifty Confucius Institutes on college campuses and schools designed to spread CCP propaganda; and its unleashing of the Wuhan virus which has cost the lives of more than six-hundred thousand innocent Americans is proof positive that China’s strategy is to envelop the United States on all fronts. And, the United States’ military is playing into China’s hands by its determination to “feminize” its armed forces. Progressive ideologues both in the Biden Administration and the Pentagon are using the military as a social experiment petri dish which is undermining the combat readiness of those in a position to protect our shores in the event of war. All you need to know in this regard comes from the Current Commander in Chief, Joseph Biden: “We’re making good progress designing body armor that fits women properly; tailoring combat uniforms for women; creating maternity flight suits; updating – updating requirements for their hairstyles…”

AMERICA AT A CROSSROADS

In sum, if as the great military historian B.H. Liddell Hart suggests, a nation’s Grand Strategy is a composite of its political, military, economic and diplomatic tools in its “arsenal” which can be brought to bear to advance a state’s national interest then the United States appears to be convulsing in its gradual decay. As I have argued in my essay, The United Kingdom Is Resurgent, the former world economic power, lost its supremacy because it failed to adapt to the winds of change which buffeted its shores long after the economy reached its apex in the early twentieth century.

It is also provocative to think that there might be a “natural” life cycle to nations as there is to human beings that is irreversible. Regardless of one’s view in embracing one or another theory that might explain the demise of nations, there is no reason to remain indolent in resisting such decline even if there is only the remotest possibility of such an outcome. Keep in mind that the demise of Rome was hardly cataclysmic but the result of a long succession of imprudent decisions made by the Empire’s leaders.

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THE MASK OF MAYORKAS: MORE DISINFORMAYION FROM THE BIDEN ADMINISTRATION

The White House Propaganda machine was working overtime when it labeled its choice for Secretary of Homeland Security, Alejandro Mayorkas, a “Latino.” A good try, perhaps, but disingenuous in the end. The fact is that Mr. Mayorkas’ father was Turkish and his mother Romanian. That the Secretary was born in Havana is irrelevant. Army brats born in Korea of U.S. parents, for instance, are not Korean; they are American. Similarly, Ali, as he is nicknamed, is neither Cuban nor Latino. The fact that he left Cuba with his parents while still an infant defies further his being billed as “Latino” by a White House hell-bent on shoving “diversity” down our throats one way or another as it did when it claimed Vice President, Kamala Harris was African-American. We now know that she is Jamaican and Indian. In Mr. Mayorkas’ case, he can be proud of his family history and ethnicity but he is neither Cuban nor Latino.

Ali’s ethnicity aside, his progressive politics are clear: 1.) Mayorkas was the architect of the Obama Administration’s Deferred Action for Childhood Arrivals (DACA) sweeping immigration policy which sought to give amnesty to seven hundred thousand illegal aliens, by means of executive fiat, and in contravention of federal law; and, 2.) Mayorkas was also instrumental in making “nice” with Raul Castro in 2015 when he traveled to Havana as part of President Obama’s “let-bygones-be-bygones” approach to the murderous and narco-trafficking dictator. That Ali was all smiles during his sojourn to Havana is a slap in the face to patriotic Cubans, and is reminiscent of the disgusting spectacle of Mr. Obama doing the wave at a Cuban baseball game. In sum, Mr. Mayorkas’ Cubanism is nothing more than a paper-thin show and tell meant to impress progressive audiences with the apparent inclusiveness of the Biden Administration.

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GREECE REMAINS THE EUROPEAN UNION'S FAVORITE WHIPPING BOY

Editor’s note: In my frequent travels to Greece on business, I have witnessed firsthand the devastation which has been visited on this beautiful land by the nation’s European lenders. But the legacy of the corrosive and misguided actions of the nation’s former Prime Minister Alexis Tsipras – an atheist and former member of the Communist Youth of Greece – and his government in dealing with the nation’s fiscal crisis, and his fecklessness in dealing with the Troika particularly, makes him complicit in the spoliation of the country. Tsipras lied to his nation as he came to power on an anti-austerity platform. Yet, despite the fact that 61% of the nation voted to reject the European conditions for a bailout only days after the vote he agreed to the suffocating conditions of the bailout. For his part, Mr. Tsipras was more concerned with whether the Former Yugoslav Republic of Macedonia (FYROM) – a largely Slavic and Albanian nation with no claim to the legacy of Alexander the Great and with perhaps irredentist ambitions for a united Macedonia – could keep the name “Macedonia” in its country name than in navigating the nation through its perilous economic shoals.

The assault of the Troika – the triumvirate of the European Commission, the International Monetary Fund, and the European Central Bank – on the sovereignty of Greece was harsh, unrelenting, and meant to punish the small nation. Ten years after Greece received the first tranche of bailout monies, the nation remains under strict supervision to repay its foreign lenders, principally Germany and France, at the expense of further impoverishing its people, and strangling its economy. As a result, Greece will remain forevermore under scrutiny by its lenders until the approximately $400 billion debt is repaid – which is to say forevermore.

“The fundamental reason why the Greek crisis [has, my italics] lasted so long was the extreme level of austerity that was imposed.” So, says, Ashoka Mody, a former deputy director of the IMF, in his book, Euro Tragedy: A Drama in Nine Acts. Mr. Mody, has gone on to say that the IMF should have “…insisted on a restructuring as a condition of its participation.” It was, however, mind-numbingly irresponsible of Mr. Mody and others at the IMF that they didn’t raise a loud and bloody hell at the time knowing full well that Greece’s debt was unsustainable as many of us on the outside understood.

THE CRISIS IS OVER!

Disgustingly, some Greek politicians are hailing the “end” of the crisis and disingenuously claiming, as Euclid Tsakalotos did, that “…things are improving and people can see that they are improving.” Mr. Tsakalotos, Minister of Finance in Tsipras’ Syriza radical-left government and a student member of the Communist Party of Greece, was reacting to a debt relief deal struck with the Eurozone that would allow Greece to begin to repay its debt in 2032. But, no amount of debt relief – “relief” is merely a euphemism for digging a deeper grave – will make up for a shrinking economy. In any event, that “things are improving,” as Mr. Tsakalotos alleges is more a statement of political expediency than of economic reality, and is the furthest thing from the truth. According to the Organization for Economic Cooperation (OECD), nearly one-third of the population of Greece is living near poverty. Retirees are living with reduced pensions; employers are “hiring” without contracts to avoid making social security and health contributions; and employees with bona-fide jobs can go months without pay while always keeping an eye on the calendar as their one-year anniversary approaches after which it becomes more difficult for them to get fired.

“CONTAGION” IS SCAREMONGERING BY THE EUROPEAN UNION

It has been my position for years that Greece should unilaterally repudiate its debt as it stands and restructure existing bonds at no more than, say, 20%. Interest arrears would be off the table in my scenario.  Clearly, easy credit fueled the socialist practices of current and previous Greek administrations and it is clear, as well, that no one was minding the shop as the nation lived well beyond its means. What is done is done. But, make no mistake about it, the longer a voluntary default is forestalled the greater the cost will be to both Greece and its European lenders. And, an involuntary default might be inevitable anyway.

The strongest expressed argument coming from the Eurozone against a voluntary default is that it would lead to “contagion” that would spread to other countries. But contagion is precisely what is being precipitated by straight-jacketing the Greek economy with austerity measures that will deepen an already deep recession. These austerity measures will almost guarantee that the growth needed to pay an increasing debt obligation is precluded. And, rest assured, the Greek economy is flat-lining if not eroding. Unemployment currently stands at over 18% (the highest in the European Union), with youth unemployment running at twice that rate. The nation also faces serious long-term demographic challenges. Since the height of the financial crisis to the present, Greece has seen approximately 500,000 of its citizens – mostly young and educated citizens – leave the country. And, it is not likely to get better anytime soon as the nation’s fertility rate of 1.35% is much below the required rate of 2.1% needed to maintain the population stable. A scarier demographic scenario can hardly be imagined as the nation will continue to atrophy in size.

No bailout is worth the loss of sovereignty that is in full bloom in Greece at the hands of the bureaucrats in Brussels and who already are making noises about not having enough control over the sovereign nation’s budget. The United Kingdom which had a lot less to lose than Greece voted 52% to 48% to exit the European Union in June of 2017 precisely because they didn’t want Eurocrats calling the shots.

I would give the Eurozone lenders a take it or leave it offer. Either they take the proffered haircut at 80% or Greece returns to the drachma, converts the remaining debt at the old exchange rate, prints money and thus ends up in in a better place financially. Meaningfully, credit-card-toting bureaucrats will not be telling Greece how it should run its internal affairs. This path of devaluing the currency will work by ratcheting down prices across the board and thus encouraging entrepreneurs to again take measured risks in lieu of running to offshore locations. It is true, the country will be excoriated in the European and American press and the economic, social, and political flak in the short term will be unceasing. Creditors, too, will have their day in court. Nerves of steel will be the order of the day.

IS ARGENTINA THE MODEL?

The roughly 50% write-down agreed to by Greek bondholders as part of the bailout has proved to be a Faustian deal.  Again, with little or no economic growth all the debt swaps in the world will fail to work miracles. And, for all of the talk about how Greece cannot be trusted to pay its debts unless it puts up sufficient collateral – some countries have suggested including the Parthenon and some Greek islands as collateral – the country has begun mortgaging its infrastructure by disposing of airports, seaports and highways. Clearly, fire-sale privatizations were also part of the bailout scheme. But it doesn’t end there. The esoteric shell game cooked up by the European Central Bank known as the Securities Market Program, allowed the bank to buy Greek bonds in secondary markets at deep discounts while selling them at par. The profits, which should have been returned to Greece are in arrears to the tune of nearly $10 billion.

The unarticulated reason for protecting Greek bond-holders throughout Europe, and the raison d’être for the Eurozone, in the first place, is that Germany covets as many captive, non-manufacturing country markets for its products as it can stand on the backs of its own citizens. It is clear that what Germany did not accomplish with tanks during World War II it is accomplishing with the complicity of the euro. In fact, it is an undervalued euro – in combination with relatively low wages – which in large measure explains Germany’s world-leading trade surplus of nearly $300 billion in 2019. Lest there be any doubt in anyone’s mind about German designs, it must be remembered that beginning in the late nineteenth century prominent German economists, politicians, and scientists held the view that it fell to Germany to “organize” the continent of Europe. That is hardly a faded dream. To this day that theme persists. German Sociologist, Wolfgang Streeck, author of How Will Capitalism End? Essays on a Failing System, for example, hails what he calls a “consolidation state” where a nation state’s market-conforming fiscal policy, a policy of austerity, and debt service take precedence over public policy.

There is no ignominy in being associated with an Argentine-styled default. Certainly, no more scorn could possibly be heaped on Greece than by those who have taken to the airwaves, social media or their print presses across the globe and spoken of the country’s “moral collapse.”  There is life after default. Argentina is proof of that. Argentina’s 2001 default restructuring offered investors a 70% haircut, which three out of four investors accepted. That was a wise decision on the part of investors as the country was not open to further negotiation.  The restructuring was also a wise decision on the part of Argentina as GDP subsequently soared. That Argentina has suffered additional defaults since 2001 speaks as much to creditor greed as it does to the fiscal mismanagement of South America’s second largest economy.

CAN ANYTHING ELSE GO WRONG?

Adding to Greece’s financial woes are two other exacerbating factors neither of which are of Greece’s doing: The first is the migrant crisis which has seen over one million refugees transit through the country. An equivalent percentage of migrants into the United States, by way of example, would amount to over thirty million people. The migrant crisis was born of German Chancellor, Angela Merkel’s open border conceit and financial leverage over a diffident Greek government but it is aggressively fueled by Turkish smuggling bands. Many Greek islands of the Eastern Aegean – Kos, Lesvos, Samos, and Chios have been particularly hard hit – have been turned into public sewers by the migrants which have overrun historically pristine beaches, desecrated Christian crosses, complained about Greek food and free accommodations, caused civil disturbances, and helped fuel a surge in prostitution. The European Union, an amalgam of 500 hundred million people, now finds reason to rebuke a nation of eleven million for not doing enough for the migrants.

Now comes the onslaught brought on by the Chinese Communist Virus. The current Prime Minister, Kyriakos Mitsotakis, panicked and overreacted by taking a heavy hand to impose severe lockdown conditions on the country such as banning inter-city travel, closing schools, shuttering places of worship, and enforcing early evening curfews. Violating lockdown restrictions can cost a citizen up to $600. This, despite the fact that Greece’s death rate is one of the lowest in the world at 642 deaths per one million population.  The Prime Minister, however, has seen fit to re-establish diplomatic relations with the murderous regime of Syria’s Bashar-al-Assad whose civil war has cost the lives of approximately 500,000 people.

LET’S START AT THE BEGINNING

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IS THE UNITED STATES AT END OF EMPIRE?

America’s economic primacy is pretty much behind us. And, I don’t believe there is any chance of reversing a trend that began thirty plus years ago. The best-case scenario for the nation is to slow the rate of economic decline – never mind social and cultural decline, which are probably lodged in irreversible decay.  As Robert Kaplan says in his book, The Revenge of Geography, we might prolong our position of strength by preparing the world for our own obsolescence and thus ensuring a graceful exit.  But even this outcome will require the strength of will that has yet to be demonstrated by leaders in business, education, and government.

Economic primacy might be measured along many fronts – income per capita, rate of growth, productivity, foreign exchange reserves, among others – but if one looks at Gross Domestic Product (GDP), perhaps the coarsest measure of a nation’s economic well-being, then the United States has lost its economic primacy to China when compared on a purchasing power parity (PPP) basis.

The PPP approach levels the GDP calculation to each country’s relative price of goods. So, if a television set costs $500 in the United States while the same television costs $250 in China then, theoretically at least, we’re under counting China’s GDP by $250. Using the PPP rationale, China’s GDP was approximately $23.5 trillion in 2019 compared to that of the United States which came in at $21.4 trillion.

Some politicians, economists, lobbyists, and others, like to use a different measure of GDP to suit their own purposes. The nominal GDP, which looks at the total of goods and services produced at current exchange rates yields a substantially different calculation. The nominal GDP of the United States in 2019 came in at $21.4 trillion, a number which is identical to the nation’s GDP on a PPP basis. The reason for this is that the nominal GDP calculation is based on the dollar and so there is no currency conversion rate difference. By comparison, China’s nominal GDP came in at $14.3 trillion. If we only look at nominal GDP, it is clear we are being lulled into a false sense of economic security.

Diplomatically, China might also have an edge on the United States. In the 1980’s, the then leader of the People’s Republic of China, Deng Xiaoping, enunciated his famous maxim of tao guang yang hui. Interpreted variously, the maxim is meant as a foreign policy directive that regardless how muscular the nation might become economically, geopolitically, and militarily it is always best to keep a “low profile diplomatically.” No more beguiling example of Deng Xiaoping’s maxim is in evidence than in China’s Belt and Road Initiative. Simply put, China plans to build one “road” from China to Europe and thus control all manner of transcontinental commerce. Already, China controls or has a presence in ports that handle about two-thirds of the world’s container traffic. In Greece, the port of Piraeus, a storied port dating to the Fifth Century B.C., is majority owned by the China Ocean Shipping Company (COSCO) which makes Greece a strategic entry point for China into the heart of Europe.

IF WE’RE NOT MAKING STUFF WHAT ARE WE TO DO?

Let’s face it, manufacturing was lost to our shores for all intents and purposes several years ago. In 2015, China displaced the United States as the top manufacturing nation in the world. In 2019, China’s value-added output – in essence, the difference between price and the cost to produce – in manufacturing amounted to $3.9 trillion compared to $2.4 trillion for the United States. That gap will doubtless continue to grow.

There are now roughly 15 million workers in the United States engaged in manufacturing down from approximately 18 million in the 1980’s – President Trump, to his credit, was determined to revitalize manufacturing, steel, and coal but despite gains in these areas total employment numbers will continue to slip on a trend line basis.  When one considers that China has approximately 112 million manufacturing workers, the competitive disadvantage for the United States becomes palpably clear.

In 2019 our nation’s goods deficit with China was approximately $345 billion. That gap is not likely to be made up in any of our lifetimes. So, that leaves Services as the new game in town. In 2019, Services accounted for roughly 69% of our nation’s GDP. And, as a nation, we better excel in that new cycle reality. It is true, the United States ran an annual balance of payments surplus in services with China of about $36 billion in 2019 – with U.S. exports amounting to about $56 billion and imports from China totaling $20 billion. But don’t let that fool you as a $20 billion gap will be easy for China to make up especially when one considers that China’s Services sector is growing at an average of 2% per year. And, unless we accelerate the rate of growth of exports – the rate of growth is about even for both imports and exports – we might soon be facing a deficit in this sector of the economy so crucial for the good health of the nation in the twenty-first century.

THE NATION FACES SOME VERY STIFF HEADWINDS

The United States economy has structural defects which will not go away simply by holding rallies and mouthing rhetorical flourishes in the halls of Congress. Decline might be inexorable but we should not stand by as mere spectators. The will and purpose to restore our economic vitality must be marshaled by every American. It must begin, first and foremost, by demanding of our leaders, our institutions, and ourselves to be unafraid to serve in keeping with American priorities. It is the remotest possibility that we can salvage the service economy and consequently our nation unless our standard of performance is nothing less than service excellence in everything we do.

We don’t have a lot going for ourselves: Labor productivity growth is stalled at near zero levels; the rate of household savings is paltry; regulation and taxation still suffocates businesses and individuals despite President Trump’s initiatives; unemployment – not the nominal rate but the U6 rate which measures the unemployed, those that are not looking for work, and those who have had to settle for part-time work –  is mired at levels of 7% (during the Obama years the U6 rate never got below 9.2%); the national debt is on the order of 80% of GDP; entitlement spending is approximately 70% of our budget dollars and is likely to increase with both a growing number of baby boomers reaching retirement and the population’s longer life expectancy; and fraud and corruption run rampant among other serious afflictions.

Perhaps the most troubling portent for the nation’s future is its inability to clamber out of a deep and black hole in education. Among the 37 industrialized nations which comprise the Organization of Economic Cooperation and Development (OECD), for example, the United States ranks 31st in mathematics and roughly in the middle on science. Clearly, all of the monetary and fiscal policies in the world will hardly fix this crippling deficiency which has more to do with a cultural indifference to serious and rigorous education.

Prior to Mr. Trump’s coming to office, the federal government was hell-bent on redistributing wealth rather than getting out of the way so that risk capitalists could create wealth. Unfortunately, President Trump’s reforms designed to bring back a full-throated and free market approach to the nation’s financial issues died the moment President Biden came into office.

Meanwhile, in the corporate world, business leaders are fixated on how quarterly earnings affect their pay packages, and when push comes to shove, cutting corners and worse. How else can one explain the utter disregard American companies operating in China have for the human rights abuses perpetrated by the Chinese Communist Party (CCP) on its people. Abuses such as forced labor (unions are illegal in China), the internment of over a million Uyghurs and other ethnic minorities, bans on religious freedom and free expression, arbitrary arrests, and the repression of Hong Kong citizens seem not to bother the likes of executives at Caterpillar, General Motors, Ford, AMD, Micron Technologies, Intel, Texas Instruments, Nike, and many others which are doing a land-office business in China. Apple, most notably, has raised to an art form tax, regulatory, and labor dodges which allow it to stash hundreds of billions of dollars overseas while paying little or no income taxes in the United States. The company, apparently, is nonplussed by the fact that its armies of workers in China are employed for wages and benefits that would be in contravention of United States laws. How the CEO’s of these companies can live with themselves knowing full well that they are profiting from someone else’s misery is a testament to their greed and lust for power.

WHERE DOES THE CUSTOMER FIT IN?

From the way we treat our veterans, clients, patients, students, donors, and citizens – customers, all, to my way of thinking we have a lot of work to do before we can claim to excel in service. A survey by consulting giant Accenture in 2007 showed that 41% of respondents described service quality as fair, poor, or terrible – more recent surveys suggest service is worsening. Perform any human endeavor at that level of proficiency and you are an abject failure. In the services sector, however, that is par for the course. In the Far East, cultural determinants do not confuse service with servitude. As a rule, suppliers will go the extra mile to please a consumer. In the West, and particularly in the United States, the most that a service worker can muster when asked to perform a personalized service is to utter something like, “no problem.” That kind of indifferent attitude is ingrained and certain to keep our level of service quality from climbing out of the aforementioned levels of mediocrity.

In the meantime, off-shore locations feast on our indifference to service and do whatever it takes to secure and maintain a customer relationship. The oft-cited explanation for the comparative advantage of off-shore locations, namely, their low cost, is a facile response to a more complicated dynamic. It is true that off-shore locations enjoy all-in cost advantages vis-a-vis the United States. It is also true, that President Trump worked hard to enhance our competitiveness on the world stage by reducing the oppressive web of regulation; reducing our world-leading corporate tax rates; negotiating better trade deals; exiting globalist compacts financed on the backs of American taxpayers; offering a tax holiday for repatriated corporate profits, among other initiatives. Those initiatives, however, have either been rolled back or will soon be under President Biden’s Administration.

My experience is that, particularly in technical disciplines, services delivered by off-shore locations are superior to ours. An apprenticeship initiative, if it were aggressively expanded to include science, technology, engineering, and mathematics (STEM) occupations, might make us more competitive in this area. In the rarefied world of supercomputers so critical to pushing the frontiers of science and technology, for example, the United States is out-produced by China on the order of two-to-one. So, until and unless we grow a much larger crop of more competent technical workers we will continue to be outperformed by nations more determined, better educated, more dedicated, and hungrier than we are.

CAN THE UNITED STATES GUARANTEE THE PEACE?

If the nation has ceded its economic primacy, its military primacy is being severely tested. United States’ land-based forces are heavily committed to counterinsurgency operations to fend off non-state actors while conventional warfare strategic planning appears to be dead. In Europe, a likely conventional hotspot, NATO and U.S. forces are outgunned and outmanned by a factor of at least ten to one by Russian forces.

Our ocean defenses are in no better shape. The nation’s principal bulwark protecting our shores is in steep decline. The United States Navy is but a ghost of its former self. The nation now has fewer vessels than it had before World War I. Most notably, our aircraft carrier fleet which must number sixteen in order to patrol three separate ocean theaters now numbers ten or barely enough to protect two theaters. In the Mediterranean, the U.S. Sixth Fleet is a non-entity the result of which is to have created a vacuum that is now filled by the Russians, Syrians, and Iranians. In the South China Sea, where American Navy vessels seem unable to sail without colliding into tankers and containerships, the United States is being challenged by a territorially aggressive and technologically advanced Chinese Navy. Already, an armada of sophisticated dredging vessels is reclaiming land from the sea for the sole purpose of building military airfields and naval port facilities. More worrisome, Chinese fighter jets and bombers now violate Taiwan’s air space with impunity and regularity.

Former U.S. Undersecretary of the Navy, Seth Cropsey, in his chilling and sobering account, Mayday the Decline of American Naval Supremacy, reminds us that China was the naval hegemon in the fifteenth century. Under the leadership of Admiral Sheng He, Chinese sailors coursed the oceans from their territorial waters to the Strait of Hormuz. Chinese vessels of the time were of a length and tonnage that were not to be seen in the West until centuries later. China’s naval supremacy only came to an end when civil servants forced severe budget cutbacks on the kingdom. Does our own budget sequestration of 2013, with its mandate to, in effect, disarm the military, ring a bell? The results of each nation’s budget missteps are eerily similar. China, for its part, will probably not repeat its mistake.

In all likelihood, it will take the United States a generation, assuming proper funding and political will, to restore the U.S. Navy so that we can confidently state that the nation can project power and protect seaborne commerce beyond the horizon.

Just as troubling as the rickety state of the nation’s military naval forces is the state of the United States Merchant Marine. The Merchant Marine fleet hauls cargo during peacetime and is attached to the Defense Department during wartime to transport troops and supplies into war zones. The United States should hope it does not get into a major conflagration oceans away as it has experienced a dramatic attrition in its Merchant Marine fleet and manpower inventory. In 1960, the United States had nearly 3,000 vessels in the Merchant Marine fleet. Today, the nation has fewer than 175 vessels or less than one-half of 1% of the total vessel count worldwide. Worse, United States-flagged vessels carry a mere pittance of the total volume of goods and materials that transit through the nation’s ports. The consequence of what is obviously a weak flank in the nation’s defense posture is that in the event of a major outbreak of hostilities the United States would be reliant on foreign-flagged vessels to carry troops, armaments, and supplies with all of the attendant security risks.

One can argue that China’s bellicosity toward the United States is as asymmetrical as it is frontal and direct: China’s theft of roughly $225 billion, at the low end and as much as $600 billion at the high end, annually in counterfeit goods, pirated software, and theft of trade secrets from the United States; its monopoly of rare earth metals critical not just for consumer products but for Defense Department applications; its financing of over fifty Confucius Institutes on college campuses and schools designed to spread CCP propaganda; and its unleashing of the Wuhan virus which has cost the lives of more than five-hundred thousand innocent Americans is proof positive that China’s strategy is to envelop the United States on all fronts.

AMERICA AT A CROSSROADS

In sum, if as the great military historian B.H. Liddell Hart suggests, a nation’s Grand Strategy is a composite of its political, military, economic and diplomatic tools in its “arsenal” which can be brought to bear to advance a state’s national interest then the United States appears to be convulsing in its gradual decay. As I have argued in my essay, The United Kingdom Is Resurgent, the former world economic power, lost its supremacy because it failed to adapt to the winds of change which buffeted its shores long after the economy reached its apex in the early twentieth century.

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THE UNITED STATES WITNESSED AN ECONOMIC RENAISSANCE UNDER PRESIDENT TRUMP

Much has been said by pundits on the Left that the nation’s recent economic dynamism was due in large measure to President Obama’s policies and initiatives. Setting aside that these talking heads happen to be economic illiterates they also have a great deal of animus toward President Trump which further clouds their thinking. It is incumbent on citizens, therefore, to go behind the curtain of demagoguery and propaganda and get at the truth.

On practically every measure that has economic significance President Trump’s economy was decidedly superior to the paltry results left behind by President Obama.

Some notable examples should suffice to make the point.

Stock Market Performance:

The Dow Jones Industrial Average when President Obama left office stood at 21,126. In contrast, the closing average on December 31, 2020 registered 30,409 points. Better still, on President Trump’s last day in office, January 20, 2021, the market closed at 31,118. This represented an increase of roughly 47% in the Dow Jones Index.

The increase in the Index was more than just about points on stock market boards as the total market capitalization of public companies increased by about 89%. When President Obama left office total market capitalization stood at around $27 trillion. In contrast, total market capitalization as of December 31, 2020 came in at $51 trillion. Americans who own stock directly or indirectly through pension funds, 401K’s or mutual funds are the beneficiaries of this dramatic wealth creation.

Gross Domestic Product:

The Gross Domestic Product (GDP), a scorecard which represents the value of all goods and services produced across the economy, was superior under President Trump. Under President Obama, GDP averaged $16.375 trillion. Under President Trump, GDP averaged $20.605 trillion despite the onslaught of the Chinese Communist Virus and the draconian lockdown measures instituted by politicians nonplussed by how their actions would affect a “Trump” economy. Nonetheless, America’s GDP improved by 26% under President Trump.

GDP growth is similarly unsympathetic to President Obama. Growth under President Obama’s regime averaged 1.6%. And, in his last year in office he handed off an economy that was growing at that same meager rate of 1.6%. Under President Trump’s first three years in office, GDP growth averaged 2.5%. [In the President’s last year in office, the economy contracted 3.5% as a direct result of the aforementioned lockdowns]. There is more to this percentage increase than meets the eye for the simple reason that one has to take into account the base amount on which the growth is calculated. In other words, an equal percentage increase on a higher base yields a greater amount than on a lower base. In sum, the growth of the Trump economy, added approximately 26% more real dollars.

The nation’s balance of payments deficit accumulated over roughly four decades now stands at about $12 trillion. President Obama is responsible for roughly a third of that total or about $4 trillion but he was not alone in his malfeasance. Prior administrations Democrat as well as Republican simply looked the other way as countries, friend and foe alike, excelled at cheating through currency manipulation, intellectual property theft, import tariffs, and prohibited commercial transactions. The accusations that were made of President Trump that he was somehow triggering a “trade war” ignored the fact that the nation was financing a deficit which cost millions of American workers their jobs, depressed wages, closed thousands of factories, contracted R&D, and exported capital to foreign shores. In fact, the United States had been engaged in a trade war long before President Trump came on the scene.

Sovereign Debt:

President Obama ran up the country’s debt from $10 trillion to about $20 trillion while in office. President Trump’s Administration ran the national debt to just shy of $27 trillion in his four years. This amount, however, includes the debt effect of $3 trillion of virus-related stimulus expenditures.

A critical barometer of a nation’s economic health is the ratio of debt-to-GDP. While President Obama was in office this ratio climbed over twenty percentage points. Worse, during the last six years of President Obama’s tenure the debt-to-GDP ratio was near or in excess of 100%. In contrast, President Trump maintained the country’s debt-to-GDP ratio steady at about 104% during his first three years in office. With the advent of the pandemic, however, the nation’s debt-to-GDP ratio went through the roof and as of December 31, 2020 stood at 122%. This makes it the nation’s highest debt-to-GDP ratio since World War II, and places the financial performance of the United States economy in the same ugly neighborhood as the near basket-case that is Italy.

Unemployment and Wages:

The unemployment rate under President Obama averaged 7.5%. Under President Trump’s first three years in office the unemployment rate averaged 3.9% for a nearly 50% improvement. The unemployment rate as of February 2020 was 3.5% for a roughly fifty year-low. The underemployment rate – the so-called U6 rate – which measures the unemployed, those that are not looking for work, and those that have had to settle for part-time work never got below 9.2% under President Obama and was at its highest in 2010 at 17%. In contrast, the underemployment rate under President Trump came in at 6.9%. Again, both the unemployment and the underemployment rate deteriorated significantly with the onset of the virus beginning in March of 2020.

The number of workers seeking work under the Obama Administration averaged 3.6 for every job opening. Under President Trump the number of workers seeking work was on par with the number of job openings. Which is to say that for every one job opening in the nation there was one worker seeking work.

Wage growth for production workers during President Obama’s term in office averaged 2.3%. Wage growth during President Trump’s first three years in office averaged 2.9% for a 24% increase.

Left unsaid in the sophistry which is dished out by the talking heads on the Left is that President Obama had $700 billion of Troubled Asset Relief Program (TARP) monies authorized to spend with which to stabilize the economy. In the end, Wall Street Banks were the principal beneficiaries of the government’s largesse while approximately ten million homeowners lost their homes.

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THE AMERICAN DREAM IN TATTERS: ENTREPRENEURIAL JOBS IN FREEFALL

The nation’s engine of growth in new jobs, historically, has been the young and emerging enterprise. Twenty years ago, companies less than one year old generated nearly five million new jobs. Currently, one-year old startups are creating a shade above three million new jobs.

The driver behind new job creation is the new business startup. And, the arithmetic makes clear why new job creation in the United States is the lowest in memory. According to the Small Business Administration, the failure rate of young firms is roughly on par with the rate of new business formations. Again, twenty years ago the number of new business formations handily exceeded the number of companies which failed.

It is no wonder that the United States is nowhere in the top ten of nations for spinning up new companies when compared to the number of existing businesses. When looked at in this way, the Organization for Economic Cooperation and Development (OECD) calculates that the United States is second from the bottom ahead of only Canada. The OECD methodology punishes advanced economies as they have a larger base of established businesses thereby diminishing the ratio of new business startups. Even so, the United States ranks behind Austria, Israel, and the Netherlands – hardly impoverished nations with thin industrial bases – in the OECD rankings.

I can think of no greater threat to our democratic spirit than our inability to inspire, if not incent, young entrepreneurs to take the plunge. The rate at which entrepreneurs ages 25-54 – the prime years for throwing caution to the wind – choose to risk it all is about half what it was three decades ago. Millennials, the offspring of the digital age, who should be best poised to launch a low cost, technology inspired, entrepreneurial enterprise have proved to be risk-averse and now account for the least represented demographic responsible for new business formations. The evidence is muddled as to why this demographic behaves the way it does. Is there no wellspring of ideas coming from this group? Is this a group whose inspiration has been sapped by the creature comforts provided by their parents or by one government program or another?

Consider this, Mike Rowe, former host of the Dirty Jobs television series which featured Mr. Rowe doing disgusting jobs – which apparently no one else wanted to tackle – launched a scholarship fund for high school students willing to take on a skilled trade like welding, plumbing or electrical. And, despite Mr. Rowe’s largesse, he can’t give away scholarship money fast enough because few applicants are willing to step up to an Oath of hard work and hard study.

I started my first business – a delivery service – with all of $500 in start-up capital at the ripe young age of nineteen. I started my business because I was motivated to be my own boss, make my own money, work my own hours, and because, in the end, I had “ants in my pants”. To my way of thinking, there is no better definition of an entrepreneur than an individual who has ants in his pants and who is never satisfied with his station in life.

In contrast, I don’t believe that sporting a sheepskin emblazoned with “Bachelor of Science in Entrepreneurship” will make an entrepreneur of the person. The $50,000 per school year investment that most colleges call for is money better spent in an entrepreneurial venture.

Regardless, the lack of representation by Millennials in the entrepreneurial ranks is all the more serious given that as of 2020 Millennials represented the largest age segment of the population at about 22%. Clearly, the confidence, passion, and ambition of our latest generation has eroded to the point where it now seeks refuge where rewards are more in line with pursuits involving little or no attendant risk.

THE GOVERNMENT’S ROLE IN NEW BUSINESS FORMATIONS

The French nineteenth century free-market economist Frederic Bastiat, insightfully warned of the cost of overwrought government intrusion: “The real cost of the State is the prosperity we do not see, the jobs that do not exist, the technologies to which we do not have access, the businesses that do not come into existence, and the bright future that is stolen from us.” Sadly, over one-hundred years after Bastiat’s admonishment, we still have not learned that less government is always best.

The continuing onslaught of stultifying regulatory prohibitions (licensing, permitting, and other forms of red tape), is a serious impediment to the young start up. Community bank credit, the source of about 60% of the nation’s small business lending, has been decimated by the suffocating compliance provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act, passed in 2010 by the Obama Administration in response to the financial meltdown of 2008, was intended to address the abuses of large banks.

Unfortunately, the Act’s nearly 2,300 pages made few provisions to address the operating characteristics of thinly capitalized banks whose purpose it is to deal with the special needs of their local communities. As a result, since the passage of Dodd-Frank, nearly 2,000 community banks have gone out of business. And, those that have survived have seen nearly 25% of their net income sucked up by compliance costs. It is no wonder then, that new business formations so heavily dependent on the lubricant that is Community bank-lending have suffered so dramatically.

If stifling regulations, and reluctant bank credit weren’t burdensome enough for the young entrepreneur to deal with throw in, for good measure, a tax code of mind-numbing complexity, and confiscatory tax rates. Now comes the lockdown measures implemented by many States which, for largely political reasons, have sought draconian responses to the outbreak of the Chinese Communist Virus. This factor alone has the potential to extinguish whatever spark might be left in our young entrepreneurs.

AMERICAN DREAM OR SOCIALIST NIGHTMARE?

It seems hardly surprising, therefore, that the brightest young minds seek sanctuary in menial, corporate, or government jobs where innovation will hardly move the needle on the nation’s global competitiveness. In this context, the United States might learn something from the pro-business regulatory, and tax regimens that have been enacted in both Dubai and Panama – small, albeit financially astute nations – as I have written in separate essays.

The numbers tell the story: according to the World Bank Rankings for 2019, the United States ranks 55 out of 190 nations – behind countries such as the Democratic Republic of Congo and Albania, and ahead of Niger – for the ease of starting a business. The World Bank’s metrics factor in the minimum capital required to launch a commercial or industrial start up, the licensing and permitting required, and the time and cost to get started. One can quibble with a methodology that attempts to compare 190 economies but if the World Bank’s calculation is only half right the United Sates would still not rank near the top.

More troubling is the nation’s lack of innovation coming from young firms. Here again, the United States is a laggard. Patent applications on a per-capita basis ranks the United States behind Korea, Japan, Switzerland, China, Canada, and Germany, and ahead of Denmark, Sweden, and Finland. But that doesn’t tell the whole story as patent filings in the United States are dominated by large, deep-pocketed corporations which are able to finance the legal, administrative, and accounting work necessary to process a patent application, and defend it if challenged. In this connection, it is a known fact that industry-disruptive technologies are less likely to spring from established market leaders – which are largely motivated to preserve the status-quo – than from entrepreneurial companies.

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THE $15 MINIMUM WAGE: A NAIL IN THE COFFIN OF CUSTOMER SERVICE

A PROGRAM TO HELP THE POOR?

In yet another harebrained government scheme designed to redistribute wealth, rather than allowing free-markets to create it, the $15 minimum hourly wage – more than twice the current level of $7.25 an hour – bandwagon is gathering momentum especially among Progressives. Cities, counties, and states from New York to California have passed legislation or taken action through executive orders to begin to phase in the new minimum wage. This lunacy now has a national expression as President-elect Joe Biden, goaded by Socialist Vermont Senator Bernie Sanders, means to raise the federal minimum wage to $15 an hour clearly ignoring the demographic and economic differences of the fifty “economies” of the United States.

The upshot of this madness is clear: a huge escalating spiral of labor cost for business large and small alike. The motivation behind the push for a $15 minimum wage is all political demagoguery and a further death knell for customer service as organizations will seek to cut costs in order to make ends meet. Longer term, the consequences are grim as they are sure to result in job losses. The initiative to raise wages is a facile way to curry favor with voters who would much rather have the government do their bidding. The shrill of politicians that a worker cannot raise a family on the current minimum wage ignores a central fact: only about 6% of minimum wage workers over the age of 24 are single parents working full time. As to the claim that the proposed increase in the minimum wage will help reduce poverty is similarly bogus: the average family income of a minimum wage earner is in excess of $53,000 per year. Most of those earning a minimum wage are low-skilled workers starting out in their first jobs. Roughly 50% of workers at or below the federal minimum-wage level of $7.25 are below the age of 24 and approximately 67% are employed in part-time occupations. These workers are hardly their family’s sole breadwinner.

The political plaint also exaggerates the scale of the problem. According to the Bureau of Labor Statistics, approximately 1.5 million workers earned the federal minimum wage. Another roughly 1.7 million workers were paid below the federal minimum. Left unreported from the above numbers is the fact that many workers paid at or below the federal minimum also earn overtime pay, tips, or commissions. In any event, the two groups of workers amount to about 3.9% of all hourly paid workers in the United States and can hardly be said to figure prominently among the economic priorities of the country.

If the drive for a $15 minimum wage makes for good political theatre the economics behind the move are specious. The Congressional Budget Office in 2014 estimated that a rise in the minimum wage to $10.10 – never mind $15 –  would result in the loss of 500,000 jobs. Perversely, those job losses will have to be shouldered by the same people that the increased wage was supposed to have benefited in the first place. So much for running the economy according to government diktat and not free-market principles.

THE NEW OVERTIME RULE: ANOTHER NAIL IN THE COFFIN

Effective December 1, 2016, The Department of Labor issued new guidelines to employers for non-exempt employees entitled to earn overtime pay. Historically, non-exempt employees were subject to overtime pay at the rate of time-and-one-half their regular hourly rate if they worked in excess of 40 hours a week. Exempt employees, those in professional, administrative, and executive roles have heretofore been ineligible for overtime pay regardless the number of hours worked if their salary was, at minimum, $455 a week. The new rule which goes into effect more than doubles the previous salary minimum to $913 a week. Salaried workers paid below the stipulated new minimum will generally be eligible for overtime pay. The Department of Labor’s new guidelines also establish a mechanism for automatically updating salary and compensation levels every three years beginning in 2020. Under this minimum wage mandate employers will face a Hobson’s choice of either paying excessive amounts of overtime or alternatively hiring additional staff to avoid overtime pay. To be sure, many employers have used the exempt moniker for “administrative” employees in order to avoid paying overtime.

Under the new rules, however, employers will have to be ever-watchful to ensure that employees earning below the new salary minimum do not attempt to game the system as a way to earn overtime pay. Good luck with that! A potential workaround for employers would have them perform financial somersaults in order to determine a rate for an employee reclassified from exempt to non-exempt at a rate which would yield an amount equal to the former salary when overtime was factored in. There is a lot of legal grey in this area and plaintiffs’ lawyers are probably champing at the bit that they may have struck a mother lode of potential litigation. Good luck with that! The added cost of administering the new guidelines by instituting systems which monitor what employee works how many hours and when will be staggering. It’s a safe bet, however, that we as consumers will bear the brunt of the added overhead expense.

 WHAT’S SERVICE GOT TO DO WITH IT?

Small business owners in retail, fast food, hospitality, and other service industries are expected to react to the new wage mandates in ways that will ensure the survival of their businesses and consequently their livelihoods. Costly business venues will likely be shuttered, expansion plans will be placed on hold, fewer workers will be hired, investments will be directed at replacing expensive direct labor with technology, overtime hours will be reduced to a bare minimum, employee benefits will be stripped, and outsourcing will be pursued with a vengeance. Where market conditions allow, prices will be raised to recover some of the expected margin erosion.

Self-checkout retail counters, hotel check-in kiosks, self-check-in airline ticket kiosks, DVD rental kiosks, hospital admission check-in kiosks, interactive voice response systems, and ATM’s all are meant to disintermediate the service or salesperson. In other words, these technologies are being deployed to reduce cost. If service implies flexibility, understanding, responsiveness, and an ability to communicate effectively, then I know that this self-service world has set us back immeasurably. Even in this brave new world a kiosk can never supplant a competent, well-trained, well-equipped, and empowered front-line worker.