Post-Industrial States: USA

NSA Center

Post-War History

For the first half century, especially from 1939 to the 1960s, the American government was a national problem solver, steering the country through the Great Depression, war and the peacetime boon. Government was respected as competent and supportive of national interests: it partnered with industry to maintain American technological superiority, and made some strides towards reducing social exclusion and poverty. Roosevelt's New Deal gave hope to the average American in hard times, and Lyndon Johnson's legislation greatly extended Government help to the needy. {1}

All that changed under Ronald Reagan, who claimed that government was itself the problem. Under a return to 'free market principles', there were tax cuts on higher incomes, restraints on federal spending, deregulation of key industries (especially finance and the media) and outsourcing of government services (in education, infrastructure, R&D, the military, prisons, health care and income support.) Tax cuts would be self-financing, it was claimed, as a more innovative and entrepreneurial spirit would revitalize industry. Helped by offshoring, the larger corporations did indeed do well, with their effective tax rates falling from 35% to 25%, but not the great mass of citizens. On all relevant indicators, the 1981-2008 period was worse than that of 1955-1970. Deregulation led to the 2008 financial meltdown. Employment and economic growth declined. America became a more divided and less well informed country. Belief in government also started its current downward spiral, each new wave of cynicism seeing wrong-doing as only to be expected, which in turn increased cynicism and withdrawal from politics and public service. Individuals and  corporations put their needs above those of the country, making America less of a cooperative player on the world scene in areas where inter-government action is imperative — in immigration, military action, offshoring, environmental protection, alleviation of hunger, pollution, climate change, currency and capital movements. Government turned away from the long-term planning for national needs, and increasing became dependent on the military-industrial, Wall Street, Big Oil and the health care sectors for its campaign funding, rewarding them with favoured treatment. So became the US government what it is today, a duopoly that places sectional interests above the views and needs of the average citizen. {1}

US Hegemony

The USA emerged from WWII as the richest country in the world, its industries unscathed and unemployment of the Depression years finally over. Personal betterment in the American dream became a reality in the 1945-71 period as the middle class swelled in wealth and numbers, aided by measures introduced by Congress to promote high employment, high profits and low inflation. The Eisenhower administration (1953-1961) adopted Keynesianism, accelerating public works programs, easing credit, and reducing taxes. {2}

The postwar boom ended with the soaring costs of the Vietnam War, which couldn't be covered by gold. The 1944 Bretton Woods accord was replaced by a system of floating currencies, agreed by governments but increasingly dictated by markets. Also restraining the economy were the trade imbalances from imported manufacturing goods from Japan, and possibly the costs of President Johnson's Great Society. In 1973 came the oil crisis and increased energy costs, and then the 1973-4 stock market crash. Keynesian policies were replaced by monetarist economics and market deregulation. {3}

Performance was mixed in the period to 1997: recovery, the 1980 recession which shed 1.1 million jobs, tax breaks and increased military spending under Reagan, de-industrialization, increased free trade and globalisation. Productivity increased in the 1990s, but so did the national debt. {4}

Nonetheless, the American economy in 2007 was the largest and most diverse in the world. Total output of US goods and services (GDP) was $14 trillion in 2007, a shade under that of the EEC bloc, but nearly three times the size of Japan's economy and five times China's. The finance industry accounted for 41% of corporate profits. With just 5 percent of the world's population, the United States was responsible for 20 percent of total economic output. Its GDP per capita was nearly $45,000, four times the world average of $11,000. The average American worker produced more than $92,000 worth of products and services per year — nearly 20% more than that of the average of a dozen leading European countries and 85% higher than that of China. US productivity expanded by an average 2% a year from 2000 through 2006, twice the gain in most of Europe. In one study of 16 major industrial nations, only South Korea, Sweden, and Taiwan had higher productivity growth than the United States over the 2000-2006 period. {5}

The long-gathering storm struck a year later. Housing bubbles burst in California and Florida. Lehman Brothers went bankrupt. Leading banks, insurance and mortgage companies had to be bailed out by the government. The stock market plunged 40%, wiping out tens of trillions of dollars. A $700 billion plus Troubled Assets Relief Program (TARP) was made available to banks and leading businesses, {150} and Obama announced a $787 bn stimulus package in February 2009. {6}

Current Status

manufacturing jobs and corporate profits

The US is currently in recession, or under a 'jobless recovery', and has seen its status diminish, both as an economic powerhouse and the champion of the free world. The country is still extraordinarily productive, efficient and resilient, however, and few expect that to change in the short term. {7}

The table below predates the financial crash, and it may be wise to reduce estimates for 2003-30 GDP growth in the USA, Germany, France and the UK to Japan's 1.3%. {8}





2003-2030 (est)



















































Outlook: US Hegemony

The US still largely controls the pattern of world trade. Keynes, for example, had suggested a basket of currencies (Special Drawing Rights) be employed as the international currency unit at the 1944 Bretton Woods accord, but America opted for the dollar. The economic strength of the country, the volumes traded on the NY stock exchange, and the sums deployed by Wall Street ensured that the country had its way. Britain was also dependent on US aid, and in no position to argue. When Nixon took America off the gold standard in 1971, the rest of the world accepted floating exchange rates. When large trade imbalances developed with Japan, that country was told to revalue its currency, which led to re-gearing of the Japanese economy, and then overproduction, euphoria, recession and deflation of the 'lost decade'. When Paul Volcker curbed US inflation over the 1981-3 period and so strengthened the dollar, debtor countries found it more costly to repay loans. Mexico and Chile in particular were pushed into difficulties, which turned into bankruptcy as investment fled overseas. Though these actions have made the larger trading blocks (China and the Eurozone) rethink their strategies, and perhaps create an undeclared currency war between the US, China and the EEC, the advantage still lies with America. {9}

Outlook: Unemployment

Unemployment is a persisting worry. The financial crisis has been contained, the stock market is booming again, but jobs are not returning to the US. Congress does not expect full employment to return immediately, and the public are equally gloomy. As the current recession lengthens, lessons are being drawn from the Great Depression, and these are not encouraging. Lowered exchange rates, government deficits, trades union actions and time itself were not successful then, nor were overseas fascist solutions unless accompanied by rapid rearmament as in Germany. Today's employment recovery may be years away, and students leaving universities may suffer as the 'lost generation' of Japan, overlooked when the economy finally picks up again. Including those discouraged from searching further for employment, and those employed part-time who want full time work, the true unemployment rate may be several times the official figure. {10}

Debt servicing is not a problem, and China has not abandoned the dollar. The problem may lie in the level of private debt, aggravated by university and hospital fees. There are three measures of importance: a. ratio of debt to GDP, b. the rate at which a. changes, and c. the rate at which b changes (i.e. the acceleration of private debt/GDP levels). Modelling by Steve Keen suggests that b. correlates with unemployment levels, and c. with changes in unemployment level. The relationship holds for the current recession in America, the anaemic 'recovery' in Japan and the Great Depression. Private debt rose 50% over the 1920s, from $106 bn in 1920 to $161 bn in 1930. Private debt rose from $17 tn to $ 42 tn over the 1999-2009 period. The debt/GDP ratio was 175% when the Great Depression began, and 298% when the current recession began. As every econometrician knows, correlation does not mean causation, but the correlation is close, and makes intuitive sense. Unlike countries, households have to repay debt, and do so by reducing spending when debt reaches high levels, especially in a recession when employment prospects are threatened. {11}

The era of citizens living beyond their means is coming to an end, and the quantitative easing measures in the USA, Japan, Britain and the EEC are probably making matters worse. The remedy is debt reduction, probably by debt redemption in measured steps. Since that would ruin many banks, and reduce the wealth of powerful players on the political scene, Keen is not hopeful of its early adoption, and expects the world's economies to follow the Japan experience of extended unemployment and sluggish growth, with many cycles of small improvements and relapses. Only China, where private debt is low (and possibly Russia, India and Brazil) could reasonably expect to escape these problems. {12}

Outlook: Offshoring

Offshoring of jobs to countries with cheap labour and lax environmental standards has received a mixed press. Most argue that increased company profits return to America in the form of foreign investment, or company savings. Developing countries are provided with much-needed employment, and manufactures made cheaper to US customers, allowing savings to be invested elsewhere in the country. Economists generally believe the overall loss of American jobs is small, and Global Insight estimate offshoring created a net 90,000 jobs in the 2003 IT industry alone by bringing down costs. The process works in reverse, moreover, as several hundred American companies make parts for the Japanese car industry. {13}

Others point to the social cost and that increased spending power does not flow to manufacturing industries but to services, on which America is overly dependent. More importantly, returned profits are also small compared to labour costs (i.e. overseas wages), and not dispersed widely into the economic spectrum. Indeed the tide is turning, and more companies are now questioning the offshoring model. {14}

Research has identified 'hidden costs', which can be extensive or even crippling: relocation, management complexities, quality control, documentation and shipment. Key is management: how the increased revenues and capital productivities are employed and risk contained. Offshoring to countries where salaries are 10% of America's does not cut labour costs to the same extent, and savings are commonly 20% at best, and only after a long teething period. {15}

Nonetheless, the IT industry commonly outsources help desks, security, ecommerce systems, and the development, and maintenance of applications. Most companies seem satisfied with results, and outsourcing results in poorer services in only 6% of cases for IT security and 8% for disaster recovery. {16}

Outlook: Military Pre-eminence

The military is an inescapable part of the America economic model. The country had 1,366,000 military personnel in 2011, and arms sales contributed 4.7% to its GDP. {18}

Besides providing employment, much needed in the current recession, the military machine helps enforce use of the dollar. Few would question the desire to serve their country which informs the vast majority of men and women employed in the armed forces, nor the many selfless rescue missions that are undertaken worldwide by those forces, but the military also serves — critics of 'imperialism' allege — economic realities by defending, and if necessary imposing, foreign governments favourable to American interests. Military spending would otherwise be excessive — diverting funds away from local needs, exacting high costs in blood and economic effort, and making America more feared than admired. Military objectives are becoming more costly and difficult to achieve, however, and America may be in danger of turning a strength into a weakness by overreach. {17}

WWII left two superpowers. The USSR had paid dearly for victory: 24 million dead, much of its manufacturing base destroyed, and a continuing dictatorship under Stalin, whose first actions were to erect a wall of satellite states around Russia and impose subservience through rigged elections and the Red Army. The war had cost the USA some 418 thousand dead, but its industry was unscathed and the country enjoyed great prestige as the champion of freedom, justice and democracy. Indeed the war had brought the country out of the Depression, and helped develop its phenomenal mass production techniques that were widely adopted, though possibly not with such wealth-generating results as claimed. America was certainly rich, however: its 10% of world population owned 35% of world GDP. {18}

So appeared — it is alleged — the post-war US economic model which required continuing expenditure on armaments (especially nuclear), a world kept open to US goods, a dominant role in the UN, the IMF, the World Bank, the World Trade Organization, and the USIA, and some 1000 US bases across the world. Japan was occupied, democracy reintroduced and manufacturing of cheap electronic components for US industries encouraged through trade alliances. Europe accepted US protection and its impoverished industries (Britain alone owed US$ 4.3 bn at 2% p.a. in war loans) were given their Marshall plan, a generous grant of US$ 13 billion that put Germany and others back on their feet, and prevented a lapse to totalitarian government. US-friendly governments were supported in Latin America and the Middle East, many of them undemocratic or even repressive. The CIA conducted covert operations in over 40 countries to aid US interests. {19}

The model began unwinding when America supported the South Korea and South Vietnam governments against communist aggression. Local parties to the conflict were repressive, and not squeamish about murdering their equally unsqueamish opponents. The 1950-3 Korean War saw a north Korean invasion of the south, a counterattack, Chinese support for north Korea and finally, despite the tactical brilliance of General MacArthur, a stalemate. The uneasy settlement drew the border in its pre-war position. The war cost America $320 bn and took the lives of some 3 million soldiers and civilians, but south Korea survived to become a US-friendly manufacturing centre for electronics, cars and shipping. {20}

The 1955-75 Vietnam War, where the US took over the French colonial position and prevented free elections that would have united the country under communist rule, was as bloody as Korea but less successful. The USA lost 58,000 soldiers. Vietnam and surrounding countries lost 1-3.8 million soldiers and civilians, and many thousands more when the Khmer Rouge and the Vietnam governments took control. The countries were devastated by heavy bombing, and the recovery has seen open trade more with China, Japan and Australia than America. {21}

American military spending represents 40% of the world's military expenditures, and is larger by an order of magnitude than its foreign aid programs. Indeed global spending on armaments in 2011 exceeded that at the peak of the Cold War ($561 bn to $547 bn) and was 17 times the amount earmarked for alleviating world hunger. {22}

Outlook: Erosion of Civil Liberties

The Justice Department and the Drug Enforcement Administration have been tracking telephone calls since 1992. Events of 9/11 allowed increased surveillance. Images from body scans at airports are being stored. The FBI is installing a $1 billion face recognition system across the country. In many US states, police may now retrieve and store information from mobile phones of motorists stopped at will. {23}

The US Patriot Act and the creation of Homeland Security (with a $99 bn annual budget) have greatly increased state powers, and all records, business and individual, can be accessed without warrants, owners' permissions or the access being divulged for a year. Telephone conversations are monitored, and current technology allows the authorities not only to pick up key words but immediately identify individuals from acoustic and learned patterns of their voice. Emails are stored, and suspect content flagged for further investigation. Banks must report on US customer activities, and foreign banks refusing to do so may be subject to a withholding penalty on US-sourced funds. Electronic surveillance grows in penetration, and — contrary to its favourable presentation in popular TV serials — can now subvert the democratic purpose: the damaging secrets of any politician, institution or military leader can be now used for blackmail, or simply manufactured. {24}

Outlook: Increasing Media Control

Americans, among the friendliest and most hospitable of people, would be bewildered to find their government detested abroad — for its increasing violation of US and international law, for supporting repressive governments in the Middle East and Latin America, for imposing coercive economic policies, and for the many coups and invasions that have removed 'unfriendly' governments. The one essential and beneficent nation, the defender of democratic freedoms, is widely seen as the greatest threat to world peace. {25}

Foreigners blame Washington, realizing that the self-image Americans enjoy is one carefully groomed by a media controlled by a few large and self-serving corporations: in films, TV and newspapers. Most Americans take their news from the TV, and even quality newspapers provide very little in-depth reporting. Foreign news coverage is partisan, generally no more than Reuters' feeds with slant added to make it more palatable to the target audience. Newspapers cultivate links with government and the CIA. Journalists who stray off message are marginalized or fired. The alternative media, whose articles are often more independent and better researched, is bad-mouthed and dismissed as amateur. Very large claims of widespread media dissimulation are sometimes made, difficult to believe in entirety, but backed an equally wide spread of informed opinion. {26}

Outlook: Increasing Power of Big Business

Lobbying and campaign contributions now bankroll the American political process. Money as advertising has promoted the fraudulent claims of GM crops, of antidepressants, and of vaccines. Medical treatment would be much cheaper without Big Pharma. Quantitative easing has most benefited the already wealthy, and that wealth purchases a college education and the contacts needed for success in business and public life. Bank wrongdoing continues unchecked. The American dream largely belongs to the past, and even a college education no longer guarantees a decent job. Big money corrupts the US courts. {27}

Outlook: Increasing Inequality

Realized by a growing proportion of the public, but largely ignored by Washington and the mainstream press, America faces serious problems — prolonged unemployment, growing inequalities in income, wealth and power, corruption of national politics by big business and finance, and the lack of long term planning in its budget, education and energy policies. Poverty has increased. Equally marked has been a decline in civic virtue. Public opinion deeply distrusts banking, large corporations, the news media, the entertainment business, unions and the federal government. Where China is spending over 50% of its national income on infrastructure, the USA is spending practically nothing: some $2.2 tn is now needed to make good the deficiencies in roads, bridges, railways, schools, etc. The Program for International Assessment ranks America at 15th in reading, 23rd in science and 31st in mathematics — way behind its Asian competitors. CEO salaries and perks have soared, and those of clerical and production staff have stagnated. In the early 1970s the average salary of 100 top CEOs was 40 times that of the average worker's pay. The figure in 2000 was 1000 times, and CEOs continued to receive high salaries though leading their companies into illegality and meltdown in the 2008 financial crisis. Inequality today may be greater than in 1929, and 1 in 8 Americans relies on food stamps. Spending on education, environment and infrastructure was cut to 4% of GDP in 2010, and is scheduled to be cut to 2% in 2020. Student loans are an increasing burden on those seeking better jobs, and many are not written off for thirty years. Americans respect decency, hard work and honesty, but have little opportunity of expressing those values in the two party system. Big Oil owns the Republicans. Wall Street bankrolls the Democrats. The high cost of political campaigns ensures that other voices are crowded out. The police and legal system are increasingly at war with the citizens they are pledged to protect. {28}

The US hegemony model after 1945 was of shared worldwide prosperity, led by the US through world government organizations, trade, the dollar as the international currency, diplomacy, covert action, and — if necessary — military force. Initially, the model was enormously successful, raising millions from poverty and giving many in western democracies a standard of living unknown before. From the 1970s, however, the model came under pressure from three developments: 1. High levels of debt (institutional, federal and private) arising from trade imbalances and unfettered spending, which placed American fortunes in the hands of banks and trading partners. 2. Increasingly costly military action and 3. unregulated globalisation, which drained resources from developing countries, and then jobs from middle-class America, concentrating wealth in the richer echelons of American society. {29}

When the Bretton Woods agreement collapsed in 1971, and the 1973-4 oil price hike brought stagflation to the western world, the Reagan and Thatcher governments persuaded their electorates that government itself was the problem. Free markets encouraged by tax cuts and deregulation would unleash creative and entrepreneurial skills, with the benefits 'trickling down' to the less well off. But the benefits did not trickle down. And free markets are not self-correcting, not always efficient, and fail badly with 'single suppliers', i.e. in creating public services, supplying armaments and protecting environments through legislation or taxation of polluters. {30}

Many of the suggested improvements seem utopian, and unlikely to be implemented by a political system so closely identified with wealth and big business. Most predictions are for employment to remain depressed for a while, perhaps a decade or so if this recession is similar to previous ones, or permanently if private debt is the controlling factor. Public debt is also a danger. Runaway defence costs, social relief program reductions and commercial espionage are further issues, now heavily politicised. {31}

American Empire and the Outlook for War

The imperial ambitions of America in the late nineteenth century were fiercely debated between politicians arguing that America had a social duty towards the less fortunate and those countering with the costs of wars likely to be fought — costs to America and to the countries concerned. History has vindicated both parties. The USA garrisons the world with military bases, spends vastly more on war and military equipment than any other nation, overthrows governments deemed inimical to American business interests, and treats any interruption of goods and services needed by America as a hostile act, to be met with military force if necessary. A tribute system operates through the American dollar, enabling Americans to print money, run up large trade deficits, and oblige China, Russia and other countries buying treasury bills to fund the very armed forces that impose the American order. {32}

Equally plain are the many benefits America has brought to the world in scientific discoveries, research and development, manufacturing know-how, technology commercial practices film companies and in the practical conveniences of everyday living. It is the concentration of wealth, innovative ideas, and sheer productivity of America that makes these achievements possible, coupled with self belief and the 'can do' mentality. {33}

Only Russia has a comparable nuclear arsenal, and only China is beginning to rival America in scientific and industrial development. Determination to remain the world's leading nation has shaped America's foreign policy since 9/11 — its destabilisation of Islamic countries bordering Russia, and its attack on Chinese commercial interests, in China and worldwide. The American 'top one percent' is forming 'an empire within an empire', controlling the media, favouring big business and big finance with discretionary tax schemes, weakening civil liberties, and turning less affluent 'fellow Americans' into second-class colonials within its own borders. Whether that policy will ultimately succeed like the British Empire, or founder as the Delian League, very much depends on how rivalries with Russia and China are handled: electorates have little say in the matter. {34}

Military actions to defend markets and American influence have been horrendously costly in cash and lives of all concerned — far more than they were worth: none was successful. {35}


Cost US$


US Lives lost


Civilian Lives Lost


Korean War




Vietnam War




Gulf War




Iraq, Afghanistan

& Pakistan




Covert Ops




The Vietnam War was first lost at home. Belief in its civilizing role allowed the administration to overlook the unfortunate realities of war — the Mai Lai massacres, the Phoenix Program and the heavy loss of civilian lives — but coverage by independent reporters and the return of disaffected conscript troops fueled a growing anti-war movement. Even the military, inclined to simplify matters into 'good guys' and 'bad guys', began to realize that the war was unwinnable when the Vietnamese would take any casualties to secure their independence. Later US wars would employ professionals, depend more on technological advantage, and keep a tighter rein on the media, yet the same over-simple interpretation of events and cultures have characterized conflicts in Latin America, the Balkans and the Middle East. {36}

So is the 'war on terror', which goes beyond wishful thinking. El Qaida was created by America, first to destabilize Afghanistan by supporting the mujahideen prior to the Russian invasion (i.e. to give Russian its own Vietnam) and then to foment trouble in Yugoslavia. 9/11 allowed the administration to curtail civil liberties and extend military budgets and operations. Events were planned in Germany and financed by Saudi money, but America attacked Afghanistan and then Iraq. The Taliban offered to hand over bin Laden after 9/11 if the usual extradition papers were served, but the US resorted to heavy bombing of the country and support of Northern League warlords. Iraq was invaded to neutralize atomic/biological weapons, and then to remove El Qaida terrorists the regime was believed to be harbouring. When both proved illusory, the reason morphed into 'regime change', an act illegal under the UN Charter and international law. Like the earlier Desert Storm operation, the invasion was carefully planned and executed, but insufficient troops for occupation led to security lapses, sectarian violence, insurgency and ethnic cleansing. A minority of critics see the havoc created by US economic, military and covert actions as specifically designed to that end, i.e. to damage countries that refuse to accept US leadership. {37}

The widespread solidarity with America after 9/11 was eroded by invasions, rendition and torture, the large loss of life serving to radicalise Muslim opinion and ensure a supply of enemies for years to come. Basic facilities in Iraq have been destroyed, and large parts of the country were overrun for several years by ISIS, a violent Islamic group funded by America, Saudi Arabia and Gulf States to destabilise the Middle East. Afghanistan, formerly a secular country with modest freedoms and educational levels, has become a failed state. Religious intolerance has increased in Pakistan, and hostility to US drones and military action reduces opportunities for US investment and trade. {38}

Entirely contrary to its professed humanitarian intent, western military action has destroyed the very governments that were bringing secular values to the Muslim world: in Afghanistan, Iraq and Libya. Much of the action is covert, and illegal by US and international laws. Though armament and reconstruction companies are the only beneficiaries of war, aggressive NATO policies now threaten Russia, encouraging it to forge closer links with China, which the US seems unwilling to accept as a useful and equal partner on the world stage. China and Russia can have no illusions as to the determination of America to retain full spectrum dominance, and America has indeed published plans for a nuclear first strike. {38}

Outlook: Vested Interests

Beneath the surface, and only examined properly in contrarian publications that few Americans read, the United States of America is becoming another country — one less equal, less democratic and less concerned to promote a prosperous world. Policies in recent years have gone so far beyond free market concepts, and seem so contrary to the good of ordinary citizens, that some surmise the existence of a 'deep state', a group or loose affiliation of interests that have quietly secured the commanding heights of power, wealth and influence. David Rothkopf describes a shadowy but powerful affiliation of business interests. Al Martin documents the criminal state within a state that was the Iran-Contra affair. Michael J. Glennon, who is well placed to know, calls them Trumanites — several hundred unelected officials who control the military and intelligence agencies, and so constitute an all-powerful but hidden arm of government answerable to no one but themselves. {39}

More speculative academic studies have postulated that superlatively rich families and Wall Street banks occupy its inner recesses. Around them will be the CEOs of transnational and finance companies. Then come the political classes, the military and their advisers. In the fourth ring are found top academics, media moguls, prominent artists, NGOs and the occasional religious leader. All regard the United States as the global governing authority, the world's legitimate government, and all threats to its hegemony as unpatriotic sabotage of worthy ideals: one government, one market system, one country's continual growth by economic pressure or restorative military action. Electorates are not consulted. {40}

Outlook: More Corruption

None of those responsible for the 2008 financial crash has gone to prison. The few serving custodial sentences were generally whistleblowers. Corruption is becoming systemic, or has been so for decades. The CIA has become a law unto itself, beyond government control. {41}

Outlook: More Bank Bailouts

us bank bailouts
As the model above indicates, the Wall Street banks were able to dump their toxic assets through American taxpayer bailouts. Some products, although worthless, (synthetic CDOs) and indeed created 'out of thin' air, were monetised and added to the US debt burden. Public services were cut to balance budgets, and the resulting recession made banks even less inclined to invest.

Quantitative easing (printing money) devalued the dollar, but recovery has not come through improving trade figures. Finding its large dollar holdings under threat, China has diversified into resource development, in the country itself, and increasingly in Africa, Latin America and elsewhere. {42}

Given the financial sector's influence on government, sceptics doubt that reform will be implemented soon, though the proposals are not unreasonable: break up the bigger banks, make them less interdependent, outlaw synthetic CDOs and make other derivatives more transparent, regulate shadow banking, protect deposits at high street banks, provide incentives in the form of partnerships rather than bonuses, and encourage banks to be more socially responsible. {43}

Myth and Reality

Coinage projects the power, wealth and legitimacy of the issuing authority, and that projection is now the task of the mainstream media. As such, the temptation is to avoid home truths and play instead to the common beliefs and purposes that every democratic government claims to represent. America is still a rich, marvellously diverse and largely free country, but the increasing disenchantment with politics and politicians suggests that blaming the usual culprits — immigration, Russia, terrorism — will not correct matters. Thoughtful citizens are already aware that the portrayals of American institutions and policies in the mainstream press are becoming divorced from needful reality, as is the promotion of financial interests over commerce, community and industry. Yet the danger is not that discriminatory monetary policies will bring down the banks — mechanisms exist to prevent that — but that the aspects noted above will become endemic to government — i.e. surveillance, militarism, big business, financial power and inequality will become part of the survival kit of post-industrial states.

References and Further Reading

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