"The greatest enemy of the US is the contradiction from within its own system."
Many are speculating whether the US has the budget to sustain the cost for the long-delayed rehabilitation of America’s infrastructure. It was announced it will cost the Biden administration a whopping $2 trillion to undertake the repairs of the country’s mostly aging infrastructure.
As observed, the US economy is saddled with great contradictions. It is deeply mired in debt that it cannot just do all things at the same time. Some say the problem is for the US economy to undergo some kind of economic metamorphoses, similar to what China did to overcome the obstacle inherent in the US system.
One must remember that the greatest enemy of the US is the contradiction from within its own system. The US is hampered in what Marx says “internal contradictions” – that the interest of the various pressure groups could stymie most of its objectives.
Russia has reduced its defense budget and for that the US enjoyed the status of being the only superpower in the world. Russia’s defense budget is much lower than China’s, Saudi Arabia’s, India’s and France’s, but its nuclear arsenal has not been diminished to recklessly allow others to attack it. The end of the Cold War allowed Putin to redirect its budget to improve Russia’s standard of living. Russia today is much more prosperous than it was during the socialist era.
On the other hand, the US cannot unshackle itself from the arms race. It is trapped in a con game initiated by the military industrial complex and financiers from Wall Street. It cost the US around $5.8 trillion, and involved itself in numerous and countless wars that contributed to its own financial ruin.
Since the decoupling of the dollar from the gold standard and measuring its economy on the strength of its GPD, the value of the dollar has since skyrocketed. Lenders are resorting to various forms of currency manipulation like the legalization of usury, the unbridled printing of the dollar to adjust the interest rate, demanding payment based on the current value of the dollar and to the imposition of miscellaneous fees and penalties for violation of the anti-money laundering law.
The US, in effect, erased all jurisprudence; hence resorted to arresting persons anywhere in the world should it deem to have violated its currency as in the case of the daughter and top executive of Huawei, Meng Wanzhou. Questions have been raised much that the transaction took place in Hong Kong, and she was merely in transit to Mexico when arrested in Canada at the behest of US authorities.
Americans maintain the thought that the high cost of labour would forever favor China; that China will remain beholden to US investors taking advantage of the unjust valuation of the currency that kept wages low. They forgot that wealth is created through production, and once China perfects their production, the system would unavoidably rear its own contradictions to control, monopolize and dictate the price to their own advantage.
The US relied solely on the principle of finance: that China would be dependent on capital anchored on the misplaced application of Friedman’s monetary theory. The theory believes the US dollar will remain high ignoring the indubitable Marxist truth that it is production that creates wealth. How the capitalist system could sell more remains their key to prosperity.
Since 1978, the US has practiced the habit of consigning production to China. Most Americans never thought China would surpass their economy and compete with them in all aspects of industry. Americans have a simplistic view of economics; that letting China do the production and selling them above cost through their conceived system of currency adjustment; they think they could still earn them the much needed profit margin.
As this system operated, it was China that effectively and continually created wealth through production. The US acted mostly as a salesman for Chinese-manufactured goods. As the cycle continues, China gradually accumulated wealth that today, it holds so much reserve to generate fear and envy to American policy makers. The wealth that China has produced allowed it to transform its economy to lift nearly 800 million from poverty.
As said, Americans focused on the value of its currency like the mercantilists during the Spanish era who relied wholly on gold and not on goods produced by the workers from other countries. They held on that theory to keep high the value of their currency, unmindful that they are in fact paying to deplete their own reserves for imports needed for their own consumption.
As the US riles against China for the widening trade deficit, it continues to consign production to that country. Some treat this unorthodox trade arrangement as just some kind of mechanical nuance that could not pull down the overall standard of living of their people. This thinking is being re-enforced by the belief that it is their economy that controls and adjusts the value of the currency, and wage is the least of their worries.
American economic planners never anticipated their economy would be affected. The US relied on the idea that importing “cheap” products from other countries would forever sustain American economic prosperity. No one anticipated that US trade unions like the AFL-CIO would no sooner wither, forgetting that it is the reason why workers organize unions and collectively demand wage increases.
American corporations easily argued that they are not engaged in the manufacture but are simply consigning goods for production abroad. Impliedly, this means that US corporations stand as empty shells and their workers could not bargain to improve their standard of living. As a result, through the years, US labour unions gradually substituted the system of contractualization openly violating the security of tenure of the workers. US ignored that any increase in wage would redound to help consumer spending that eventually would reinvigorate the economy.
This blunder of the monetarists stems from their failure to acknowledge that the practice of consigning production to China would residually deprive the US workers the basic truth about employment. The US capitalists just want to pocket the wealth created by the Chinese workers by playing the role of consignors to jack up the price and earn their marginal profit.
Worse, they never anticipated their own economy would be affected, including the cost of wage and services and their standard of living. They failed to foresee that consigning production abroad was the surest way to accelerate bankruptcy, for in that situation they only earn by selling of goods produced by others. This is concretized by the serious trade imbalance patched up by external borrowings.
As the US continues to suffer unprecedented trade deficit, aggravated by increased consumption of manufactured goods, this resulted in the wiping out of industries. The question now is, for how long can the US survive to keep the economy afloat in such a situation where it cannot even produce its own wealth? Can Biden still proceed to embark on its ambitious infrastructure projects without ruining its economy as a superpower?