US economic decline and impact on force projection capabilities

Andrew

New Member
It has emerged from the various threads here that the US enjoys an advantage in almost every area of regular warfare, most crucially perhaps in the domains of C3, air dominance (stealth) and (anti-) submarine warfare. While a few decades ago, it was said that in terms of brute force Russia could overpower virtually any enemy with the sheer mass of its military assets, this no longer holds true, the Russian militry being a mere shadow of former Soviet might.

I think it's worthwile to pause for a while at this point. The reason why Russia's military contracted is twofold, the more important cause being economic bankruptcy. Even if the Soviet Union had not disintegrated the spending levels of the late 80s could not have been sustained.
Now, the US is not a centrally planned economy, nevertheless it is facing tremendous problems. The country is dead broke but it keeps going because other nations are willing to buy its dollars. Others, namely China and Japan, are buying US dollars because they want US consumers to purchase their goods they export into the United States. This whole arrangement implies a mutual dependency.

I understand very little about economics but from what I have read it appears that the US is importing goods and has found some way of not having to deliver anything of real value in return - just its paper money. Clearly, this situation can and will not continue indefinitely. The whole arrangement resembles a game of musical chairs. When the music stops, there will be a lot of pain. China is well aware that sitting on a pile of dollars could have disastrous consequences if a world recession pulls up, triggered for example by an oil-crisis.
Hence, China's aim is it, as anybody else's, to purchase or invest in tangible assets and undertake a fair distribution of its risk. As it domestic economy grows stronger, it will gradually try to get rid of its vast dollar reserve holdings.

Nobody can tell how the process will proceed. China might well one day find itself in a similar position as the US after World War one, suddenly finding itself unable to sell its goods because of a grave world economic crisis. But it is certain that perceptions will ultimately collapse to the fundamentals with regards to the world economy. The United States is living on the tick and this cannot continue forever. Observers have been remarking that US population growth is much higher than in Europe but in my view they fail to see that this is largely a reflection of what has been said before: Would millions of Mexicans attempt to come to the US if ecomic conditions were harsher by the order of a magnitude? Maybe, but then they might come as looters and invaders, not queueing up anymore at the immigration office. Talking about immigration, with every 3rd black American in his twenties being either in prison, on parole or facing court the United States is facing huge domestic problems which will also make themselves felt at some stage.

This post is not an attempt at America-bashing. The example of the British Empire is a good case to be studied. Its colonies becoming a burden, its industries obsolete, Britain had to quickly bury its global ambitions after the Second World War and was accomodated into Nato's auxiliary forces. After the end of the First World War it had attained its greatest territorial expansion, 40 years later the game was over. What I am trying to say is that we may have to be careful when making statements like "in 40 years China (e.g.) may have a 5th generation fighter but then the US will have laser beams in space and a UAV bomber fleet". Such predictions suggesting a contintuation of America's hegemonic position in world affairs may well turn out to be correct, however, they are based on the extrapolation of current figures, expenditure on research on development for the military and internal stability. Most certainly, however, a fundamental correction is due which will lead to a different balance over the next 50 years.

With kind regards
Andrew
 

vincelee

Junior Member
actually the US loses capital. You know, tangible assets in the US, such as real estate. Capital also extends to machineries and sometimes rights.
 

Andrew

New Member
As I said, I feel uneasy when it comes to economic affairs. Still, common sense tells us that something has to and will change at some stage. Yesterday, for example, I read that 90% of all ships are built in Asia. Not so long ago, the majority of ships were built in Britain, today Britain's contribution is negligible. This applies to a growing range of goods and services. America's formerly great car industry is in great trouble. The US used to export oil, today it is trying to cut China off from Mideastern oil. Meanwhile, the Italian textile and fashion industry is suffering from Chinese competition. We could all go on giving examples. We should make no mistake about the IT industry, surely, Asian nations will sooner or later take the lead here, too.

The west has a domestic market, but so has South America. South America is actually speciallising in the production of cocaine for the world market if you ask me. They cannot compete with Asia. Russia is selling gas and weapons, the money lands in a few pockets while the rest of the country remains poor, population levels are dwindling in Eastern Europe. What does the west want to offer? We cannot all become facilitators of coordination and coordinators of facilitation. I think we are headed for difficult times.

with kind regards
Andrew
 

SampanViking

The Capitalist
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Super Moderator
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Well its not a stupid arguement, but I think it is inaccurate in a number of critical areas.

The key area is to remember that much of the Investment Capitol that has fuelled China's growth is from the US and as aconsequence much of the revenue generated still finds it way back there. You do need to balance this though against high personal debt (as opposed to high Govt debt). The danger is of US Protectionism closing China's enthusiasem for US T Bonds. This would require US Interest reates to rise and this would impact negatively on high pesonal debt.

But this is a very complex area and really beyond the scope of one thread to be able to explore and evaluate.

Could I be so bold as to suggest you follow the link in my signature in order to benefit your interest and research in this area.
 

Totoro

Major
VIP Professional
It's not really fair to say that US is losing capital. Capital is everything that has some worth. Anything you can sell/loan/etc. Heavy industry (like the example of shipbuilding) is leaving US (and any other western nation) because its too expensive to build such ships in the US or UK or other. But US still sells ideas overseas. Know-how, technology. And yes, china and india and other countries will develop their own tech but for some foreseable future US will still be one step ahead. I guess with years (decades) that might fall down to half a step, then perhaps less.

US debt is vast, yeah, but percentage wise its not the worst there is. There are countries with much higher dept, much higher unemployment, problems, etc and theyre still going on, working, no big riots, no big crisis, widespread recession, etc.
 

SampanViking

The Capitalist
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I was not trying to paint an apocolyptic picture. But if US Interest rates go up and debt becomes more expensive, it will have a global knock on, mainly by bursting the Property Bubble. No bad thing ultimately, but it will be a major jolt to confidence and for many individuals who are now too close to the line, a fairly devastating personal disaster.

For the last 10 years China has become the engine of global growth and the global economy has configured itself around it. I just do not think it is a good idea to tinker with the engine too much!
 

DumLoco

New Member
I come from Argentina, therefore i have a lot of experience in economic crises . I can tell from mi perspective that what really matters are actual physical things. Buildings, airports, weapons, facilities, factories, infrastructure of all kind. In a total financial crash scenario, it doesen't matter the ficticious value of money, bank accounts, stock exchange and all that stuff. It can dissapear completely and people might rush the streets, unemployment and even hunger can make appearence while the chaos persists... But it is a very short-term situation. The factories are there, the buildings are there, the weapons are there, the people is there. That's what really matters for the economy of a country. It happened in the US in 1929 and they survive to become the superpower they are, it happened in my country in 2002 and we are totally recovered and with GDP growing 9% per year.
The world thinks too much financially and miss the real picture. Financial life is ficticial. Like sampanviking said, the man who losses the savings of all his life or his car from one moment to another will suffer greatly, but the country will go on, and if it gots a solid base to stand, it will recover soon from the crash.
 
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FreeAsia2000

Junior Member
DumLoco said:
I come from Argentina, therefore i have a lot of experience in economic crises . I can tell from mi perspective that what really matters are actual physical things. Buildings, airports, weapons, facilities, factories, infrastructure of all kind. In a total financial crash scenario, it doesen't matter the ficticious value of money, bank accounts, stock exchange and all that stuff. It can dissapear completely and people might rush the streets, unemployment and even hunger can make appearence while the chaos persists... But it is a very short-term situation. The factories are there, the buildings are there, the weapons are there, the people is there. That's what really matters for the economy of a country. It happened in the US in 1929 and they survive to become the superpower they are, it happened in my country in 2002 and we are totally recovered and with GDP growing 9% per year.
The world thinks too much financially and miss the real picture. Financial life is ficticial. Like sampanviking said, the man who losses the savings of all his life or his car from one moment to another will suffer greatly, but the country will go on, and if it gots a solid base to stand, it will recover soon from the crash.

Not really.

In order to have an economy you need access to resources.

How long do you think the allies would have been able to fight WW1 or WW2 without oil ?
 

Ender Wiggin

Junior Member
I a while back sumarized the fall of the British Empire based on sources such as Paul Kennedy's book "The Rise and Fall of the Great Powers"

And here we go:

As for England there are many reasons:

-England was an "island of shopkeeper's" and stayed that way they rarely industrialized the colonies and prefered to import rare materials for industry. Good for them bad for colonies.

-England with one war after an other to secure its naval monopoly found itself in constant confrontation with France, forcing it away from other events such as Russian domination of the Far East, growing American troubles, etc.

-The Napoleanic war was the first time England fought in a total war like situation putting its full monetary strength into the war by distracting Napolean on the periphery to kill him through attrition of his best troops and constantly forming collalitions whenever Napolean was about to gain his breathing space.

-After the war, for the first time England found itself with nearly total hegemony of the oceans, but were weakened by the American split and for the first time defending Canada became important. Also England with its new found strength in maritime trade and a large production capacity thanks to the steam engine and the industrial revolution began taking on military obligations around the globe in India, North America, South America, etc.

-Then game the Opium wars in China and the founding of Hong-Kong as a British Possetion for the next 150 years and the start of a string of British obligations in the Far East.

-England with its great wealth and influence can maintain its empire with the doctrine of "A navy big enough to take on any other 2 navies" and did so, but such a maritime expansion came at a price. England's ability to maintain a strong army was lacking, focusing on long proffesional carreer soldiers whose tour of duty were 7-10 years and maintained a relatively small colonial army and garrisons.

-The cost to maintain these forts and garrisons, as well as the naval infastructure to maintain such a navy as England was fielding was encredibly expensive. And their pretensions oversea's kept England in a certain amount of animosity with the French and Continental Europe. Also England prefering to maintain its Empire was by the end of the 18th centuary was finding itself too big to expand anymore and the costs of maintainance was increasing with new technologies.

-But thing's werent all bad, until 1860's where Russia attempted to expand at Turkey's expense. This war showed England's military weakness and further isolated England as Europe became suspisious of England's goals. Russia found itself too internally messed up to do anything in central europe, and Prussia with Von Molke's reforms managed to cream Austria so thouroughly that Austria could only watch the coming conflict and thus France was the only power able to chalenge the growing military and economic might of Berlin. With the end of the Franco-Prussian war came the beginning of the end of England's Hegemony in the long term.

-With a Unified Germany and Italy in Central Europe the Balance of power was shifting. Germany's huge manufacturing potential was enough to begin with the dismissing of Bismark a rivarly between the "water rat and the land rat".

-Also Germany was not the only new power to challenge England, with the end of the Civil War the United States found itself in a great economic position, with the potential to build ships in a rate that England found unnerving and America possessed the economic capacity to challenge England.

-England's oversea's obligations, coupled with the need to build up the naval forces in competition with Germany and America, as well with the growing pains with the Shilling's value with the growing protectionism of various nations was forcing England in an uncomfotable position. The actual politics of this time is in my mind cloudy I know the great powers divided Africa and intervened in the Boxer Rebellion in China (sowing the seeds for somwthing more recent). And all this increased the frition between the Detente, and the Central Powers.

Finally with the spark of the powder keg, the Balkans forced the eruption of WWI. England was neutral until the German DOWing of the Low Countries. So with WWI England sent its BEF (British Expeditionary Force) to aid the french and fought well keeping the one little belgian town in Allied hands. Anyone who makes any pretensions to know hsitory should know anough of WWI to not need me explaning it, but the financial costs of the war and the massive loans from the states is what finally and ireparitly put England on the path to obscurity in the coming decades.

-Post War england found itself establishing commitee's and think tanks trying to figure out how to maintain the Empire and prevent a fall (kinda like what the States is doing now). It's navy they had no choice with the Washington and other naval treaties to reduce overwhelmingly the size of the Royal Navy and decrease the size of her Battleships per treaty specifications. The loss of her Navy and the gorwing autonomy of her Colonies was also distrissing to England forcing the Commonwealth into more and more of a loose confederation of equal members led at first officially and now unofficially by the Queen of England.

-Post war debts, an pacifist populace, a growing inability to deal with Fascism... all these were heavy upon British policy makers. But finally it was WWII that ended it. The collapse at Dunkirk and the close call during the Battle of Britain showed the World that England had fallen a great deal and England was thus forced a second time in her History to rely on the Arsenal of Democracy within the United States.

-England gave away her gold reserves to Fort Knox to pay in part her debts and to gain new aid for the crisis and with the American entry into the war England was saved from occupation from the Nazi's but found itself worse off in the world influencially, economically and militarily then before.

The end of WWII found England forced to accept a subordinate role in politics with the USA at the helm to defend the West from the threat of Soviet Aggression who were so much bigger and more powerful then the British and French that American help was mandatory or else they'ld be doomed to fall under the Iron Curtain themselves.

We look at history and analyze what went wrong for the British and we also see the signs of wear and tear in America as well. If anything rather then American beating China, it is China who will be the end of the United States and its position as the sole super power.

China is a nation who has the populace, the manufacturing potential (whose growth is powered by foreign investment), military determination to prevent what happened in the Boxing Rebellion (where 8 european countries invaded China), and the technological know how and the potential to become technologically affluent.

They've only just begun exporting their own car brands and are developing indiginous software/hardware components how long before cheap Chinese designed and manufactured Computers are flooding the markets? If anything soon China will become the second major super power in regards to the United States and then exceed it.

But its likely they're will be a conventional war the result? No one knows.
 

FreeAsia2000

Junior Member
Ender Wiggin said:
I a while back sumarized the fall of the British Empire based on sources such as Paul Kennedy's book "The Rise and Fall of the Great Powers"

And here we go:

Ender Wiggin the decline of Britain's empire was based on one reason, it refused to permit the people's of the colonial state's to have full citizenship.

It's ironic that Britain would still have been a world power if it had accepted a muticultural/multi-racial basis in the 1930's rather than in the 1960's
 
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