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Dr. Paul Craig Roberts, the famous Reagan administration economist and now an embittered and cranky paleoconservative social critic, penned a short but intriguing American “collapse” scenario set in the near future. Some of what Roberts writes fits neatly with the thesis in Joseph Tainter’s The Collapse of Complex Societies:

The Year America Dissolved

….As society broke down, the police became warlords. The state police broke apart, and the officers were subsumed into the local forces of their communities. The newly formed tribes expanded to encompass the relatives and friends of the police.

The dollar had collapsed as world reserve currency in 2012 when the worsening economic depression made it clear to Washington’s creditors that the federal budget deficit was too large to be financed except by the printing of money. With the dollar’s demise, import prices skyrocketed. As Americans were unable to afford foreign-made goods, the transnational corporations that were producing offshore for US markets were bankrupted, further eroding the government’s revenue base.

The government was forced to print money in order to pay its bills, causing domestic prices to rise rapidly. Faced with hyperinflation, Washington took recourse in terminating Social Security and Medicare and followed up by confiscating the remnants of private pensions. This provided a one-year respite, but with no more resources to confiscate, money creation and hyperinflation resumed.

Organized food deliveries broke down when the government fought hyperinflation with fixed prices and the mandate that all purchases and sales had to be in US paper currency. Unwilling to trade appreciating goods for depreciating paper, goods disappeared from stores.

Several interesting things here. First, the demagogic front men who are currently engaging in op-ed tirades against public pensions in order to loot them to ostensibly plug state budget deficits will, if successful, use that precedent to go after private pensions, IRAs, 401(k), mutual funds, Social Security, Medicare, Home mortgage interest deduction – any remaining big pot of money in the hands of the middle-class has a big target on it. Secondly, food shortages historically were the spark that set off the French and Russian Revolutions.

When hubris sent America in pursuit of overseas empire, the venture coincided with the offshoring of American manufacturing, industrial, and professional service jobs and the corresponding erosion of the government’s tax base, with the advent of massive budget and trade deficits, with the erosion of the fiat paper currency’s value, and with America’s dependence on foreign creditors and puppet rulers.

The Roman Empire lasted for centuries. The American one collapsed overnight.

Rome’s corruption became the strength of her enemies, and the Western Empire was overrun.

America’s collapse occurred when government ceased to represent the people and became the instrument of a private oligarchy. Decisions were made in behalf of short-term profits for the few at the expense of unmanageable liabilities for the many.

Overwhelmed by liabilities, the government collapsed.

Connectivity, contra Roberts, is good. Corruption, on the other hand, is not. Free markets are generally efficient, so long as you do not expect them to automatically create public goods of a certain scale or be perfectly self-regulating. They require a scrupulously impartial rule of law in order to not become corrupted by abusive players seeking rents. Unfortunately, a scrupulously impartial rule of law is incompatible with technocracy, where expert administrators are granted arbitrary discretion without democratic accountability, the prevailing ethos in the EU supranational bureaucracy, to cite a real world example. The late, unlamented, Soviet nomenklatura would be another, more sinister, historical one.

The primary problem with the American political economy is that in the last 10-15 years, elite, moderately liberal technocrats have made common cause with the elite, moderately conservative rentiers of the financial and corporate world to form an incipient oligarchy. One sees their fellow Americans paternalistically as children. The other sees us as sheep to be sheared. It’s a common enough ground on which to unite and it is the reason you see a very liberal Democratic Obama administration and a Pelosi-Reid Congressional leadership counterintuitively putting corporate regulation in impenetrable shadows not seen since before the Stock Market Crash of 1929 as if they were the minions of Jay Gould and J.P. Morgan.

Don’t expect mainstream Republicans in Congress to die on any hills fighting for the free market either – they aspire to be the party of no-bid contracts to the Democratic party of government by clout.

Alderman Paddy Bauler would be proud.

Dr. Thomas P.M. Barnett is not only his own man, he’s his own webmaster. 

Having embarked on a major overhaul of his longstanding and very successful blog, which had been steered previously by Critt Jarvis and then Sean Meade, Tom rolled up his sleeves, engaged his creative eye and went “hands-on” and shaped the new look himself ( he is still tinkering with it), an impressive decision given the magnitude of the details involved. 

It’s good. I find the redesign to be warmer but still crisp. A much more personal, less “corporate”, look with greater balance between text, visual imagery and negative space. It reflects more of Dr. Barnett’s different interests. Check it out:

Thomas P.M. Barnett’s Globlogization

I also like the long margin Twitter-feed, a nice wrinkle that puts two web 2.0 platforms together well. Much better than a little window plug-in would work in terms of reader attention.

Very nice.

Professor Richard Pipes, the Harvard University political scientist, is a seminal figure among sovietologists, historians and scholars of Soviet Studies. I highly recommend his trilogy, Russia under the Old Regime, The Russian Revolution and Russia Under the Bolshevik Regime ( I would pair the first with W.Bruce Lincoln’s The Romanovs Autocrats of All the Russias to see the differences between the way eminent historians and political scientists handle the same topic). Dr. Pipes has written an op-ed for WSJ.com and it was reviewed by his former student, Dr. Thomas P.M. Barnett.

First the Pipes op-ed, then Tom’s assessment and then my comments:

“Pride and Power: Russia is caught between continents and haunted by its past,”

One unfortunate consequence of the obsession with “great power” status is that it leads Russians to neglect the internal conditions in their country. And here there is much to be done. To begin with: the economy. The Russian aggression against Georgia has cost it dearly in terms of capital flight. Due to the decline in the global prices of energy, which constitute around 70% of Russian exports, exports in the first half of 2009 have fallen by 47%. The stock market, which suffered a disastrous decline in 2008, has recovered, and the ruble has held steady, but the hard currency reserves are melting and the future does not look promising: The latest statistics indicate that Russia’s GDP this year will fall by 7%. It is this that has prompted President Dmitry Medvedev recently to demand that Russia carry out a major restructuring of her economy and end her heavy reliance on energy exports. “Russia needs to move forward,” he told a gathering of parliamentary party leaders, “and this movement so far does not exist. We are marking time and this was clearly demonstrated by the crisis… as soon as the crisis occurred, we collapsed. And we collapsed more than many other countries.”

….Today’s Russians are disoriented: they do not quite know who they are and where they belong. They are not European: This is attested to by Russian citizens who, when asked. “Do you feel European?” by a majority of 56% to 12% respond “practically never.” Since they are clearly not Asian either, they find themselves in a psychological limbo, isolated from the rest of the world and uncertain what model to adopt for themselves. They try to make up for this confusion with tough talk and tough actions. For this reason, it is incumbent on the Western powers patiently to convince Russians that they belong to the West and should adopt Western institutions and values: democracy, multi-party system, rule of law, freedom of speech and press, respect for private property. This will be a painful process, especially if the Russian government refuses to cooperate. But, in the long run, it is the only way to curb Russia’s aggressiveness and integrate her into the global community.

Read the rest here.

Now, Tom on Pipes:

Pipes the Elder on Biden comments: so impolite because they are so true

The biggest issue, like with China, is official corruption. The second is the pervasive depoliticization of the populace: they’ve never really had any experience picking their own leaders over the past 1,000 years. That fend-for-yourself mentality pervades the political system and its foreign policy. All citizens want from the state is order, and what they miss most about the Soviet past was that it preserved Russia’s contiguous empire beyond that of any in Europe or Asia.

Russians have no idea who they are today: they don’t feel either European or Asian. Eventually, they’ll come to some conclusion about what sitting between those civilizations means in terms of identity.

So patience and care is required.

Very nice piece by Pipes.

Read the rest here.

Russia has had repeated bouts of historical, “geographic schizophrenia”: the long Tatar Yoke, the age-old conflict between Petrine westernization and Orthodox slavophilism, the iron Soviet dictatorship, especially Stalin’s democidal rule. Russia has neither joined the West nor considered itself to be fully Asiatic. Instead, the Russians inherited a “Third Rome” complex from Byzantium that has helped keep them isolated from their own best opportunities as a great power. Fringe groups of ideologues promoting nutty “neo-Eurasianism” in Russia play upon this historical legacy.

To the extent that the cold-blooded Vladimir Putin and the Siloviki clan have made their nation into “Russia, Inc.” – a gas and energy monopoly in the tattered rags of a nation- state, the long term trend will be accepting globalization and integration, regardless of any deep cultural angst and Ivan Q. Public Great Russian nationalist-chauvinism along the way.

ADDENDUM:

“The Western View of Russia” by George Friedman

I have a mixed opinion on STRATFOR’s analytical products but Friedman is playing to his strengths here in a piece that is measured and thoughtful. Hat tip to Lexington Green.

Forget Me Not. Obama’s Russian “Reset” Risks Alienating Eastern European Allies by Mike Wussow

Adds some regional context to Friedman’s post .

Go here.  Hat tip to Chadmalik.

They are talking not “Great Depression” but a system perturbation  on an epochal scale that causes an economic Black Hole.

Makes John Robb look like Pollyana on antidepressants.

My Chicago Boyz fellow blogger, Dan from Madison, posted up on an important book – an economic history of Nazi Germany during WWII by Adam Tooze entitled The Wages of Destruction: The Making and Breaking of the Nazi Economy:

“Book Review – The Wages of Destruction: The Making and Breaking of the Nazi Economy”

….I have just finished up a book by Adam Tooze called The Wages of Destruction: The Making and Breaking of the Nazi Economy. This book is about WW2 from an economic point of view. The book doesn’t really talk about generalship, tank tactics, or anything else military except in economic terms.

This book is simply outstanding. The beginning portions in particular are very dense and will require a basic understanding of economics to comprehend. I had to re-read several portions, especially in the first two hundred pages. Carl, who recommended the book to me, is an expert in economics and admitted to me that he even had to re-read portions. That aside, after you immerse yourself in this book you are in for a real treat and will learn a lot.

Too many times students of WW2 like myself tend to think of things happening in a vacuum. As an example, I knew that the Germans stormed across Europe in 1939 and 1940, but gave very little thought that this massive army didn’t just “appear”. The German economy had to be managed very effectively for them to be competitive on the world stage.

It was fascinating how the German economic minds managed their production in the thirties, all the while trying to escape from under their war reparations. In detail it is discussed how these minds bashed each other on how to manage their currency, trade, and raw materials.

Also interesting are many predictions by those close in Hitler’s circle of people that once the US got into the war on the side of the Allies all was lost. Germany simply could not produce enough of everything for long enough. After reading this book I can say with relative certainty that even if D-Day had failed, eventually the Allies would have prevailed, simply from the numbers involved. Not to mention Berlin would have been nuked, but that is certainly grist for another post.

Albert Speer, who for a time when he enjoyed Hitler’s favor as the Reichsminister for Armaments and War Production, was able to rationalize the crazy-quilt, quasi-planned, neo-autarkic Nazi economy by pushing decentralization (“industrial self-responsibility”) in the face of opposition by ambitious rivals (like Sauckel), corrupt gauleiters, the SS leadership and Nazi radicals. Such was Speer’s organizational abilities and skill at bureaucratic intrigue that Nazi Germany was actually becoming more industrially productive in the face of Allied bombing and invasion – to a point. Eventually, as Speer realized, critical resources such as wolframite, chromium and oil would simply become unavailable and the war machine would have come to a sudden, screeching, halt in late 1945, early 1946 at the latest, regardless of the progress of the Allied armies.

Economic strength and efficiency does not predetermine victory in war but the longer the war, the greater the weight economic power will have on the outcome.