[p2p-research] Abundance Destroys Profit [was: Tick, tock, tick, tock… BING]

[Ryan Lanham]

On Sun, Dec 13, 2009 at 2:29 PM, Andy Robinson <ldxar1 at gmail.com> wrote:

> A few questions.
>
> 1)  America is losing global hegemony.  How will the loss of global
> hegemony affect the position of the US executive and the US as a monolithic
> entity?
>

The US would largely prefer to have a much diminished role.  It simply
cannot afford a lot more war.  Without war, it is really powerless to do
much.  It is no longer a trade dominant force.  The real power of the US and
the US presidency is the military...and deploying that is more expensive
than it was for Roman caesars.  I think hegemonic US power is already badly
weakened. It is deeply in debt to China...powerless with India, Brazil,
Indonesia and Africa.  No significant turn-around is on the horizon.  It
will be forced to cut its military.  No military, no power.


> 2)  The current trend internationally is away from mega-states and towards
> either nifty small states or big confederal arrangements like the EU.  The
> US was a major beneficiary of the previous period, when the global situation
> favoured "superpowers".  Today, networks of all kinds favour the local - for
> instance, Silicon Valley has its own economic networks distinct from America
> as a whole.  Will localising networks create pressures towards fragmentation
> of massive states?
>
> Admittedly if we just look at American politics in isolation - and take for
> granted what is taken for granted in general - and look within living memory
> rather than longue duree - it seems America is centralising and will remain
> highly centralised, and that either a collapse or a renegotiation of power
> will occur.
>
> On the other hand, as I've argued elsewhere, I think states are
> centralising their power, concentrating power in executives, and behaving in
> increasingly authoritarian ways precisely BECAUSE they are losing their
> connection to and power over the real sources of power.  They are
> shit-scared of networks.
>
> If we compare a few cases.
>
> China is a massive state but has moved towards increasingly localised
> economic models.  China has also conceded extensive autonomy - basically
> internal independence over everything except foreign policy - to former
> territories which it has reacquired, i.e. Hong Kong and Macao (it would
> doubtless do the same if it acquired Taiwan).  It has also established
> regions specialising in particular economies, and Special Economic Zones
> where usual rules don't apply.  We also don't know what will happen if and
> when China undergoes extensive social instability.  China is building up
> crises waiting to happen in relation to rural dispossession and the growth
> of an unemployed population.  Eventually China will have a major crisis or
> revolution.  When it does, Tibet, Xinjiang, Inner Mongolia, Guangxi Chuang,
> possibly Manchuria and the new regions may break away or else renegotiate
> their inclusion in China.
>
> India also allows extensive autonomy to local states over internal
> policies.  A lot of the most interesting stuff in India happens at a state
> level.  Just yesterday, we saw this in the case of Telangana.  Indian
> economic growth is very uneven and localised.  While India doesn't look like
> breaking up (its difficulties in the Northeast and Kashmir notwithstanding),
> it also seems to be moving towards more (not less) leeway to states.  India
> also has a number of regimes of decentralised power in terms of
> multiculturalism - different legal codes for religious groups, special
> status for adivasis and dalits and so on.
>
> The EU is not looking like becoming a super-state any time soon.  Europe
> could be becoming something like an even more decentralised version of India
> or China.  Certain things like free movement (most but not all the time),
> free trade and labour mobility have been established, which take advantage
> of economic flows.  But national differences remain very pertinent.  I'm not
> sure anyone really wants a European superstate except maybe a few
> bureaucrats at the centre.  There aren't even major moves towards foreign
> policy centralisation.  It seems very unlikely today, with the big split
> over the Iraq war.  So, the EU will be a regional economic power with labour
> and trade mobility, but with each region locally governed, and have its own
> foreign policy for the foreseeable future.
>
> The Soviet Union HAS broken up.  It broke up partly because it lost the
> advantage of scale in the global economy, leading to its defeat in the Cold
> War.  Not only this, but the Russian Federation has itself moved towards
> decentralisation.  A lot of regions (Kalmykia, Tatarstan, Ingushetia,
> Bashkortostan) are de facto internally independent, allowed to exist as
> independent fiefdoms based on supporting the power-holders at the centre in
> "national" elections.  Also, the Russian East is moving away from European
> Russia economically.  Russia could easily either break up again, or have to
> turn into something like the EU.  People were saying the CIS would become a
> second EU when it was formed, but this was undermined by conflict between
> Russia and the newly independent countries (an effect of decades of
> colonialism methinks - the same problem which saw off the British
> Commonwealth earlier).
>
> So, it seems the powers of states are being disaggregated and diffused both
> upwards and downwards.
>
> Upwards in terms of the establishment of large blocs in which certain
> general rules are applied and certain traditional powers of states are
> suspended.
>
> Downwards in terms of increasingly localised economies, and the
> proliferation of local and partial sets of laws and regulations.
>
> How does the future of America look in this long-term and comparative
> perspective?
>
>
First, I agree with all above that you wrote.  Second, there isn't a plan.
Look to US state budget crises to give a clue.  If they Fed bails out states
like California, it means a much stronger Washington.  If it doesn't...the
US will be in a quiet doldrums that will make Japan look vibrant.  My guess
is that the states languish and the US goes into a regional decay.



> America started out as a federation of local states with similar attributes
> to the EU or India today, centralised massively as a result of superpower
> status arising from massive geopolitical and economic advantages in a
> particular period, and is now facing a period where these advantages no
> longer matter so much.  Today America has two major advantages which persist
> as leftovers from the previous period: military forces which are
> overwhelmingly larger and better-resourced than anyone else, and advantages
> derived from the hegemonic position of the dollar in the world economy (the
> reason America is able to get away with effectively rent extracting from the
> world by deficit financing and revaluing).  Both of these advantages are
> leftovers - the dollar is the world currency because it was formerly the
> strongest (not because it is now the strongest), and the military was built
> up because of America's economic strength.  Presumably the flows of
> resources coming through these two advantages - both, crucially, advantages
> held by the *federal* government - are the reason the government can buy
> off the states and maintain resource flows which keep the states dependent.
>
> We have every reason to believe these advantages are in their last stage.
> (The attempt to turn military advantages into persistent tribute-extraction
> have faltered in Iraq).  What will happen when they fail?
>

See above.  While I think Iraq was in part about oil, financially, it is has
been financial disaster.  The Right in the US is very upset because they did
not anticipate policy turns leading to a massive stimulus...now the AAA
rating is mildly in question.  The whole of the national financial system is
predicated on printing money at a whim by issuing 30 year debt.  Lately the
30 year issues have been very weak..."stinking up the place" is a phrase
I've heard repeatedly from blogs and family members in the business.  The
yield curve is steep now and will probably get steeper.  The US has little
credit capacity longer than 10 years (really 2 years)...a very hard place to
be because you can only issue so much short-term debt and inflation isn't a
logical defense.

Thus, Right wing of the US in particular have been blocked by their own
game...deficits. If the US situation becomes bad enough, the only prospect
will be military cuts.  Politically, military cuts are suicide for a
president.  I think the Senate would rather flirt with bankruptcy than cut
the military.  A president would have to lead...as with healthcare.  And
even giving healthcare is controversial on costs...imagine proposing
military cuts...every politician who has done it since WW2 has been
slaughtered.

The US is going to quietly have to ask China and India to start importing US
goods and services significantly.  That's like asking the town beggar to
give you a blood transfusion when you've been the guy in the big
house...tricky politics.



> From the other cases I wouldn't necessarily expect America to fragment into
> different nation-states, because elsewhere the advantages of transnational
> regional entities are being recognised.  However, I would expect wealthier
> regions to seek more control over their own resources, poorer
> anti-cosmopolitan regions to seek to break out of the cultural hegemony of
> cosmopolitan regions, and regions with high levels of poverty arising from
> industrial collapse to move internally towards welfarist policies of a kind
> the centre would not tolerate.  The result may well be that economic policy
> is decentralised, but within a region retaining a single currency, and that
> cultural and legislative regimes are similarly returned to the state level
> (there are substantial pressures towards this from the liberal left, the
> libertarian right, and the conservative right - there are areas seeking
> actively to opt out of the drug war, even a few which have opted out of the
> war on terror, while on the right a lot of the pressure is against social
> liberalisation coming from the metropolitan areas).
>
>
In the long run, I'd bet on fragmentation of one sort or another.  No one
thought the USSR would come apart.  I think the US could act swiftly if the
financial crisis were bad enough.  Suspending the Constitution in the US is
impossible/very hard because people swear oaths to it and small states have
the controlling votes...another joke.  Thus, it would have to be an obvious
good for all...hard to see that as a possibility, but I'd still bet it is
the way it goes. One way of doing it is to re-empower the states.  I just
can't see that happening.  We've been going so long and so hard in the other
direction, I can't see US states ever becoming meaningful entities again (in
the nation-state sense).



> I could even imagine a scenario in which peacekeepers from a newly
> democratic China invade independent Arizona to end a civil war between
> Confederate militias and black nationalists, while seeking to stop
> fundamentalist Texas from obtaining nuclear weapons!  Though I think it's
> more likely that there will just be a redistribution of powers between the
> levels.
>
>
Wow.  It is Americans who make movies about these sorts of scenarios.  Not
other people about us.

It is a bad time.  The issues are profound.  I have to admit, I don't see a
good path right now and I haven't read one from pundits.  In my opinion, it
will prove bad for the world to see the US stumble...but that may be
national pride and hubris showing.  I love my country.  I was raised to be
patriotic and see myself as so.  That said, I think there has to be good
options.  One option would be to become a military power that is not
benign.  Again, hard to imagine--like your scenario...but easy to do as a US
president.  If I were the world, I'd want to see the US weaker than it is.
My guess is that will happen.  Obama was a bone to the world to stop being
threatened by us...I don't think it worked for 2 reasons.  1...Obama sees
himself as a Kennedy Democrat...essentially a Right winger by modern
standards.  2. Time is going to expose 1 to the world...if it hasn't
already.  He's very centrist...even Right.  The Left naively thought he was
a Leftist.
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