 Paying
for the purple
Bill Bonner
The
Daily Reckoning
May 16, 2005
The Daily Reckoning PRESENTS: Did you ever wonder how America came
to be the world's superpower? Bill Bonner explores the self-deception,
and the mad and preposterous ideas that led America to her first
awkward steps as an empire...
America took its first awkward
steps towards empire at the end of the 19th century, with Theodore
Roosevelt intervening in various diarrhea countries for forgettable
reasons and with regrettable results. Later, in April of 1917,
Woodrow Wilson took off at a trot with the fat Rough Rider still
breathing down his neck. He urged Congress to declare war on
distant country with which it had no real beef and in which it
had no genuine interest.
America had mixed and confusing
sentiments about empire from the get-go. Its founders were schooled
in the history of Rome and determined to avoid what they saw
as her mistakes. But at the same time, they couldn't help but
lust for the grandeur of it themselves. The longed for the imperial
purple, perhaps, from the very beginning.
William Drayton, chief justice
of the highest court in South Carolina, wrote in 1776: "Empires
have their zenith - and their declension and dissolution... The
British period is from the year 1758, when they victoriously
pursued their Enemies into every Quarter of the Globe... The
Almighty...has made the choice of the present generation
to erect the American Empire...and thus has suddenly arisen
in the World, a new Empire, styled the United States of America.
An Empire that as soon as started into Existence, attracts the
attention of the Rest of the Universe; and bids fair by the blessing
of God, to be the most glorious of any upon Record."
John Quincy Adams, however,
cautioned that while "she might become the dictatress of
the world: she would be no longer ruler of her own spirit."
More than two centuries later, her spirit has run wild. She has
soldiers garrisoned all over the world. She has "interests"
in places few Americans have ever heard of, and even fewer still
care about. There is no corner or dead-end street in the world
that is not somehow patrolled by U.S. forces. The Pentagon has
divided the entire globe into four regional military commands
- each with its own commander-in-chief. The role of these, said
General Anthony Zini is "like that of a proconsul of the
Roman Empire." At the end of this year, America is scheduled
to spend more in a single year on "defense" than all
the rest of the world combined.
Already, Daily Reckoning readers
must be asking themselves questions: America is the world's only
super power; since the capitulation of the Soviet Union, she
has no enemies capable of inflicting serious damage; what is
she defending herself against? But that is just the point. The
imperial spirit has gotten the best of her. She no longer plays
a role that she can understand and control. Now, she is an imperial
power; she must play the role that has been thrust in her hands.
She must provide "security" for the entire world. She
must provide the "public good" of law and order. Someone
has to do it. Who else could, but America? She is dictatress
of the world, but no longer master of herself...or her
own finances.
We stop a moment to reflect.
The urge to empire is as irresistible as a free lunch. The male
of the species can't pass up a chance to strut around feeling
superior, like the cock of the walk in the henyard. Scarlet tunics
and ostrich feathers have gone out of style, but the men who
wore them are the same as those who sacked Rome with Alaric,
laid waste to Albi with the Duke de Montfort, and entered Baghdad
with the U.S. Army 3rd Infantry Airborne. The uniforms change,
but men are the same grasping, vaunting, humbugging schmucks
they always have been.
That is what makes history
so entertaining. And what makes the history of empires particularly
entertaining is watching the great emperors...the Napoleons,
Alexanders, Caesars, Attilas, and Adolfs of the world - with
all their glorious pretensions and sordid butchery - put on the
red tunics and burnished helmets...mount their white chargers...and
ride right into a stone wall.
There is nothing quite so amusing
as watching another man make a fool of himself. It makes you
feel superior; that is why you grow taller and more good looking
when you read the history of empires.
Evolutionary biologists reduce
the whole impulse to empire to nothing more than genes and math.
After a man has enough to eat, his genes - and by command, his
thoughts and emotions - want nothing more than for him to spread
his seed as widely as possible. Genes are only interested in
replication, according to the hypothesis. All the trappings of
wealth and power - including the urge to lord it over others
- are merely proxies and substitutes for sexual attractiveness.
A great ruler conquers a city much for the same reason a middle-aged
lawyer buys an expensive sports car or a peacock spreads his
tail feathers. It indicates to females that he has good genes.
The entertainment comes in when the great ruler himself is defeated
and hung from a meat hook...when the peacock is taken
by a fox...and the red sports car gets the boot!
Genghis Khan's empire was simple
to understand, and hugely successful. His Mongols conquered cities
from the Nile to the China Sea. He demanded that they pay a tribute
of 10% of their revenues. If they resisted - and often even if
they didn't - he killed the men...and took the women for
his own pleasure. A recent DNA study across Asia shows how successful
he was. He has about 16 million descendants, researchers estimated.
Most imperial pretenders are
neither so honest, nor so successful. They are reluctant to admit
their own ambitions. Instead, they deceive others...and
often themselves. These vanities and deceptions make the story
of empires doubly entertaining. Not only is there sex and violence,
but chicanery and tomfoolery, too. We see the mighty fall...and
we also see that they are pathetic fools and liars. It makes
the whole thing even more comically satisfying.
President Wilson got America's
self-deception off to a running start early in the 20th century:
"I believe that God planted
in us visions of liberty," he said, seeking the Democratic
nomination in 1912, "that we are chosen and prominently
chosen to show the way to the nations of the world how they shall
walk in the path of liberty."
There was the problem right
there. So worthy was the mission there seemed no need to figure
out how to pay for it. If God had set us on the trail of Empire,
He could jolly well figure out to make it a paying proposition.
Neither then, nor now, have Americans bothered to understand
how the business of empire really works. They think they are
doing the world a favor. That deception alone would not be so
grave, but they totally miss the point: nearly every imperial
power has claimed to act for the good of others, but every one
of them found a way to make it pay. When it stops paying, they're
out of business.
The imperial power provides
a useful service, according to the theory of it. Like the Mafia,
it maintains order. Under the protection of the imperial pax
dollarum, trade and commerce can flourish. People get rich. They
should be grateful and happy to pay for the service. The imperial
power, though, must charge for the service; otherwise, what would
be the point?
But America has so cleverly
deceived itself, that it believes it gets its "tribute"
from globalized commerce itself, and from the loans given it
by its tributary states and trading partners. The whole idea
is mad and preposterous. The idea of empire is that the imperial
power controls the lesser states. In America's absurd version,
it is the subordinate powers that control her. Not only can they
stop paying 'tribute' whenever they want, they now have the power
to destroy her economy completely.
"Will China be setting
U.S. rates?" asks an article in today's International Herald
Tribune. Floyd Norris explains:
"The way things work now,
China sells to the world most everything the world wants. China
then uses the dollars it receives to buy Treasury securities.
That helps to hold down U.S. interest rates and stimulates consumer
spending, enabling Americans to buy more from China." It
is the "largest vendor-financing program ever."
What it has done is put China
in a commanding position. As Americans spend, China builds its
productive capacity. China gets rich, selling geegaws and electronic
paraphernalia...and assorted consumer goods...to
Americans. The imperial consumers, on the other hand, grow poorer.
Each day, about $2 billion net passes from American hands to
stronger hands in Asia.
The idea of imperial finance
is that the central, imperial power gets richer than its vassals.
America has found a way to do it in reverse; its grows poorer,
relatively.
And now the periphery powers,
which are supposed to be subordinate, are actually capable of
ruining the central imperium.
If the Chinese and other major
holders of US Treasury bonds were to sell...there would
be hell to pay in America. Interest rates would rise. The housing
boom would turn into a housing bust. The imperium would have
to beg is subordinate states for more credit.
What kind of odd empire is
this? We have a long line of U.S. leaders strutting across the
world stage like peafowl - the buffoonish Theodore Roosevelt,
the weasely Wilson, the other Roosevelt...Truman...Kennedy...Johnson...Reagan...Bush
- but none of them seems to have understood how to make an empire
pay.
"The United States, even
more than any other economically and militarily dominant powers
in the recent past, has acquired an empire," writes Deepak
Lal, "but is reluctant to face up to the resulting imperial
responsibilities."
Au contraire, Americans have
hoisted the imperial purple onto their backs. The spectacle is
more exhilarating than any we've seen.
Regards,
Bill Bonner
email: DR@dailyreckoning.com
website: The
Daily Reckoning
Bill Bonner
is the founder and editor of The Daily Reckoning.
Bill's book,
Mobs,
Messiahs and Markets: Surviving the Public Spectacle in Finance and
Politics, is a must-read.
He is also the
author, with Addison Wiggin, of The Wall Street Journal best seller
Financial
Reckoning Day:
Surviving the Soft Depression of the 21st Century (John Wiley
& Sons).
In Bonner and
Wiggin's follow-up book, Empire
of Debt:
The Rise of an Epic Financial Crisis, they wield their sardonic
brand of humor to expose the nation for what it really is - an
empire built on delusions.
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