The US economic model is dead

My 13 year old son has noticed that I read “The Property Pin” quite a bit.

He’s asked me a few times what it is that is so interesting. So I thought about it.

I’ve been a lurker and an occasional poster on this site for 3 odd years and what I think I’ve learnt is this:

1.The so-called “American” post WW II market economic model is dead. Actually there was nothing unique about it in the first place, as it was merely an extension of the slash and burn / conquer and pillage economic models of it’s Euro-Asian predecessors.

2.This model appealed to many people as it happened to coincide with a period in which the North American landmass provided an empty continent and therefore a unique opportunity for people the world over to come to America and repeat the economic-agrarian practices of the past.

3.Having expanded and run out of space, America (North and South) is no longer a land of opportunity, except for a few specialist (if important) fields.

4.Euro-socialism need not feel triumphant about this – it is not a winner. It’s policies only ever stood a chance while the demographics were favourable.

I have other conclusions, but I would be interested in getting feedback on the first four.

I’m sure the 60/70 million odd native peoples who lived on the northern portion of the American continent didn’t feel it was so empty! :frowning:

However that underlies your point, the model has always been dead, voodoo economics give you zombie banks. I mean like ya haw!?

Postwar/post new-deal model wasn’t bad. The west grew at record levels, technological advances were many, economic equality was good.

It all went sour once the financiers and bankers restored themselves to the position they enjoyed pre-1933, that process started in the '70’s, accelerated in the '80’s, and reached it’s conclusion a few years ago.

Are you saying free market capitalism is dead? to be replaced with what?
People want to compete, to invent stuff, to sell stuff.

It’s just going thro a phase…a bust to get rid of all the dead wood…and zombie type bankers/businessess… or it would if they let it.
Need the bust, forced sales, 10c on the dollar to get a renewal and let some new blood into the system

Completely agree. If anything its the welfare’ist mixed market economy model that’s dead. Supported only by the increasing productivity, increasing tax take, and very positive dependency ratio of the baby boom decades. They’re gone now. So the mixed market welfare state has a choice of either to cut back in preparation for the next few decades of high dependency / low productivity or else suffer an inexorable decline into weak second world country level of national squalor.

Its funny how all those developing countries that have followed the “American” model, most of them, are doing so well, and those few that have tried to followed the “European” model have done so badly. Its the same story in the US. Those states that have the most “European” political tendencies are also the most bankrupt and moribund. The states that have held on to the “American” model most strongly all seem to be weathering the storm pretty well.

The US economic model may be “dead” for certain people in the lower and middle classes, but it is certainly far from dead for their elite.

If their elite continue to donate just enough resources to the plebs then it will continue to thrive for decades to come.

It seems you read no further than the title of the thread. I could have called it “global market capitalism” but I chose to label it “US economic model” as that is what it was presented to us, the generations in which the Berlin Wall was built and came down.

So I am not attacking America, or lauding Europe (read points one and four again). I am just trying to distill some basic principles, before moving on to next steps, i.e. what do we do about all of this.

By the way, for anyone who is interested Michael Portillo is presenting a programme called “Capitalism on Trial” at 09h00 on BBC R4 today. Haven’t heard it but sounds like it mght be interesting.

Hilarious. I presume you are equating “American” with right wing or “neo liberal” before that particular philosophy got shown up for the Voodoo it is. Red states not looking too healthy here. What a surprise. :unamused:

en.wikipedia.org/wiki/American_H … ent_Report

https://newman.baruch.cuny.edu/election/web/page2.png

…and I chose to label what you called US economic model to be free market capitalism (though I should have said “freeish”).

Your points 1 to 4 related to demographics and land use, slash and burn!.. I don’t agree with this as a defination of the US economic model, and dont really want to pursue a discussion in this direction.

So first principles I think would be to define exactly what you mean…or maybe I don’t agree with your basic principles if its the above.
It may be easier just go ahead with the “what shall we do about it part” to see where you are headed.

Funny I thought the Republic of Ireland was closer to Boston than Berlin and I think we could safely be classified as kaput/stony broke/moribund/stagnant at the moment.

Well there is your first mistake. The US system is anything but free market. It’s a tribute economy dresses up in free market drag

This happens to be pretty accurate, you may not want to talk about it, it may be uncomfortable, but it’s the truth.

The US operates an imperial tribute economy: They print mountains of worthless paper and exchange it for the mountains of wealth that come their way in return. They are allowed to do this by ensuring the dollar is supported by real wealth that is not theirs, and they use an imperial military garrisoned in 100 countries around the world to maintain this order. This is a very similar model to what the Romans used, but they mask it by not taking direct control in the subject countries, and ‘pretend’ to pay for what they get, by above mentioned means. This mask of deceit makes it look like a free market economy, but it is nothing of the sort.

The US benefited greatly from this arbitrage for a long time, but the model always moves in the same direction, whether it is them, the Spanish if the English empire: Domestic wages rise, and the domestic economy eventually gets hollowed out. Imperial empire is the methamphetamine of nations, and this cycle of dependency becomes a liability when diminishing returns are reached, which in the case of the US is now. The US is on the fast track to becoming a third world nation, and has most of the necessary ingredients for this in place already. Third world nations usually share a checklist of traits which doom them to their fate, most of which are true for the US: exporting raw materials and importing finished goods (check), insufficient domestic capital, relying on loans from abroad (check), a dysfunctional health system (check, the US has the lowest life expectancy of the industrial nations, and no better than some third world economies), ruled by kleptocracies (check).

JMC, you are right that the welfare state cannot be supported ad infinitum, but to suggest other nations succeed by following the US model is pretty much as far from the truth as you can get. Ireland is a perfect example of being closer to boston than berlin, and I dont think anyone will disagree the model of the protestant countries is outshining that of the anglo saxons. I have no problem debating that point if you want to push it, but for now I’ll give you time to reflect on that.

By the way, this will probably fuck with your head, but the US spends a similar proportion of income on welfare compared to the most generous of european countries (norway), its just that it gets embellished behind a vast array of welfare programs.

Here speak the voice of narrow provincialism. The world is bigger than Europe you know. I was referring to the rapidly developing nations of Asia, especially SE Asia. From where I sit on the edge of the Pacific Rim the future of Europe looks moribund whereas Asia has been developing in leaps and bounds over the last two decades and has a rosy future. Guess which model they use?

In the same way that the Gold Standard Crisis of '31 was the death knell for the UK’s financial primacy the current self-inflicted Euro fiasco will ring the end of Europe as a primary economic political actor. From now on Europe will just be one among many and the Asians will be growing fast and have very sharp elbows. I expect Europe to have a Suez moment in the next 5 years when they finally learn, in the most brutally humiliating way, that they have throw away their international political primacy.

As for welfare spending, yes the percentage of total is about the same, the difference is that European countries take twice as much of national GNP. Basically 25% v 50%. I know all the stats.

And states that use a huge tax take to support profligate spending generally have lower economic growth and much higher employment rates than states that dont. Bubble period distortions dont count, as they have all been lost by this stage just leaving the inevitable carnage on the ground.

Would that be no infrastructure india, one child china or no child japan?

The UK was screwed by that time anyway - a declining empire and wars so expensive they may as well have lost them.

The problem is primarily one of labour flexibility and meritocratic reward (or lack thereof) not tax rates. Have an lazy incumbent in the private sector, dominating markets by pure scale, is no better than having an overstaffed pampered public entity doing the same. Having a generation in gold-plated contracts whistling towards retirement, be it in the public sector or e.g. GM, while the next generation can’t get a job anywhere, isn’t exactly a recipe for success either.

GM is an example of ‘European’ style collective bargaining - like the British car industry in the 1970s.

I’ve been a reader and very occasional contributor to the Pin for the last 3 or 4 years also and I have to say I’m surprised that this grab-bag of half-digested rubbish above is what you have “learned” over the period.

Nothing about Irish property. Nothing about the behaviour of crowds under the spell of popular delusions. Nothing about the venality of politics. Nothing about the inadequacies of journalism. Just a theory that the US has “run out of space” and is no longer able to sucessfully pursue the Euro-Asian conquer and pillage economic model.

Come on

Funny that the european car industry, apart from the bits owned by americans, seems to be doing pretty well. There’s no shortage of me fein / sinn fein attitude in the US.

Er, do you really believe the US consumer is going to ride to the rescue of the world economy again sometime soon? That they will be unaffected by resource constraints?

Nothing that has been written about property on the 'pin is new or unique. There have been posts that have successfully compared Ireland with other places to try and figure out what is happening, but it is really just a very ordinary popular delusion of the kind that Mr. McKay documents so well.

The banking crisis that is going on outside these shores is far more interesting than the one that has happened within them. Having said that, understanding how the banks failed here gives, I think, some insight into how they could fail elsewhere. Likewise, we are not the only ones to have had a consumption bubble. We are probably the first to have had to deal with the consequences of it, though - the Fed was able to kick the can a bit with QE, but they seem to have reached the limits of their string for the moment.

:slight_smile: I didn’t feel like penning a lengthy post, just very broad strokes. But fair enough, I could have given it a few more minutes before pushing the Submit buton. Not that terribly unusual in a discussion forum I would have thought.

Honestly? None of this was any great surprise to me. I’m a long time expat and I first started reading this site to try to understand what was going on with the Irish property market but nothing I have read here or elsewhere has led me think it was much different to other bubbles elsewhere. Venal politics? Bad journalism? No, sorry, no news there.

So yes, I found the international threads more interesting. I was a fully paid up member of the “Free Markets Are Good For You” club. Having spent some of my time in the US I was also convinced of the dynamism of the American economy in particular and I am still an admirer of several aspects. Innovation to name just one.

But I do not see it as long term sustainable. And my half-digested grab-bag was an attempt to get some thoughts from others.
So here we are.

Edited for grammar

That is just complete and utter nonsense.
Take a look at this chart:
https://web.stratfor.com/images/northamerica/art/Land_Labor_cap_800.jpg

How much of this land is idle? How much is used for livestock either for grazing or for fodder crops?

Answers here and here