Saturday, January 07, 2006

The Hubbert Industrial Peak: When Countries Lose Relative Power, Wars Result


By Elaine Meinel Supkis

Professor Kennedy's "Rise and Fall of the Great Powers" is a seminal work on relative power relationships, the Industrial/military revolutions and the outbreak of vast wars. Today's news is all about American delusions of relative power as we lose our industrial base and fall into debt to other industrial giants. I call this process "the Hubbert Industrial Peak" and we are falling rapidly away from our own peak already.

From the BBC:
President George Bush has shrugged off weaker-than-expected jobs figures, hailing the strong US economy as "the envy of the industrialised world".
Mr Bush also declared the US economy was heading into 2006 "with a full head of steam", at a speech in Chicago.

He trumpeted rising consumer confidence and strong retail sales as evidence of America's economic strength.

The claims came despite figures showing 108,000 jobs were created in December, less than half analysts had forecast.
I went to the official government website to check out job stats. Whew. Very bad news buried in the numbers there! Manufacturing, already a measly 17 million jobs in 1994 have dwindled to only 14.3 million in 2004 and this year saw another million lost, total under Bush Jr being 2.9 million and falling rapidly! The government stats have a funny future projection. Losing "only" 1 million more by 2014. Yeah, right. Like, in a rat's ass.

Maybe the Japanese will give us more jobs assembling their cars they sell here if they sell any here. If we don't buy them, they will fire us, naturally. These cars aren't for export.

The service sector is expected to add the same number of jobs by 2014 as they added the last ten years: 18 million. How this will happen in the teeth of declining wages and opportunity with the industrial base baffles me unless they are projecting many rickshaw pullers? This week, the biggest of the "we were family corporations, IBM, announced they are dropping all pension plans forever and if their staff wants to retire, they can save for it themselves, basically.

Construction is projected to add only another 700,000 jobs over ten years and this is very optimistic if the housing bubble pops which it inevitably shall in the next decade. 90,000 jobs in this field were added this year alone in California. Nothing produced here is exportable. And the export/import numbers continue to worsen.

Financial services added 1.2 million jobs but is slated to grow by only 600,000 in the next ten years which is plain silly since already, they are laying off thousands in this field this very month alone due to consolidations and developing monopolistic powers as well as rising interest rates cutting down demand for loans. If we see a bad recession in housing, this will impact employment in financing very hard.

From the Washington Post:
By almost all measures, last year was a good one for the American economy. The economy expanded by about 3.6 percent in 2005, the fourth consecutive year of solid growth, despite the soaring energy prices and the destruction caused by Hurricane Katrina.

Consumer prices climbed at a rate of 3.5 percent for the 12 months ended in November, but only about 2 percent after excluding the volatile sectors of food and energy.
So, the economy "grew" by 3.6% but inflation grew by 3.5%. Um, since the "economy" is defined by how much money flowed, see the problem here? The "growth" of jobs were in poor paying, poor benefits areas so more people in families must work to support their lifestyles, thus, there are more jobs and more people employed but the family household numbers are very bad, what with incomes in decline.

No American industry would be forcing pay cuts, benefit losses and pink slips if the economy were growing! So the fact we see the exact opposite means the economy is in very serious trouble.

Trouble that is typical of all industrial empires. I took the liberty of simplifying the statistics of industrialization/monetarization/ decay and turned them all into simple lines. They all follow the same arc: once the industrial revolution's tools are grasped, the nation takes off, once they master the many levels of industrial activity including producing many engineers and college educated white collar staff, it rises steeply only to crest and then drop! All drop. Even the Japanese who have hitched the American people to their wagon. The Japanese are losing their industrial base due to not reproducing themselves, a signal collapse of industry on the domestic front. This is occuring in many older industrial nations and there seems to be a sociological direct connection here.

Unlike peasant communities where most the family stays nearby and work on the family collectives, in industrial nations, everyone is atomized and moves far and wide, seeking work, quickly disintigrating the family. This plagues the two working adults family structures in America when a job transfer destroys the work of a spouse. This aggravates the high divorce rate.

All industrial revolutions are set firmly on the familial peasant base. Tensions between the two have fueled political and military conflicts throughout history. England dealt with this quite brutally by transporting the excess population to colonies they were subduing. The displaced populations were set up as rural colonizers so they wouldn't compete with the industrial base back in England, indeed, industrialization was often forbidden for a long time, forcing colonists to import everything and exchange agricultural goods with the capital. This was true of Russia and France as well.

If the colonists grew exotic produce, they could become quite rich. Sheep and cattle were good for this, too.

America, once freed of English rule, industrialized rapidly. Due to the continuous influx of European populations, we had a large, already displaced peasant base to exploit. They opened up new farmlands while simultaneously filling the factories. So we shot up in industrial power.

Every time the tracks of two empire's industrial rise and fall intersect, wars happen. The graph simplifies this process but according to Kennedy's work, this is a significant force behind world wars.

To this day, the British pretend they had nothing to do with WWI or WWII breaking out. They feel that their industrial decline was a result rather than the cause of these cataclysms. But this has been going on for thousands of years without even much industry. All empires follow the same stubborn bell curve.

Industrialization has compressed the process so empires can't quietly collapse over long periods but rather fall in great convulsions. The only reason England isn't a quaint backwater is due entirely to be compeletely susumed into the American empire which is now collapsing.

All our efforts to revive our industrial power have failed. Like all previous empires, we end up running a bigger and bigger military machine, trying in vain to spend our way to industrial wealth only to discover, this means running up debts to the point of bankruptcy.

From Forbes:
The real causes of job losses were weak domestic demand, rapid productivity growth and the dollar's strength, which dampened U.S. exports. It is vital that policy makers understand the forces at work, for otherwise there will be a temptation to apply quick fixes, such as protectionism, that won't restore employment, because they do not address the underlying problems. The real solutions--stimulating domestic demand, cutting the budget deficit and pushing countries with artificially cheap currencies to let them appreciate against the dollar--are harder to implement but more likely to boost employment.
This is an analysis that is clueless since the writer refuses to look at the history of all industrial imperial powers. Why is domestic demand "weak"? Isn't this connected with the threat of jobs being sent overseas to other industrial empires? So worker's wages fall and demand falls so they cut back more? Isn't this why all industrial empires struggle with depressions when they hit the Hubbert Industrial Peak? The one caused by Britain was a doozy. It took down the entire planet.

Ours will too.

Next, the "artificially cheap currencies" has been a favorite hobby horse of mine. I strive daily to picture cartoons to illustrate this process. As we begin to slide down from our industrial peak, all our competitors have to keep our costs high so they offer us loans so we can drop prices but then when we do drop prices, they simply change the exchange rate to keep ahead of us, forcing us to inflate our currency to make their loans cheaper.

See? Heh. This month illustrates this process well. Bush got Greenspan to create $60 billion this week out of nothing so he could pay the Japanese and Chinese. This extra money boosted the stock market and banks because they get to process the loot before the tainted money hits the overseas banks. We figure, if we keep doing this, we can eventually inflate the currency by around $600 billion a year and thus live like kings while our base rots away.

Problem is, the oil/food exporters won't let us do this trick. We destroy the value of the dollar, they raise prices which is why food and fuel have gone up so much.

Understanding why all Empires behave this way is important. Today, we teeter on the edge of WWIII thanks to the drop in American manufacturing. We can't make only bombs and tanks and keep going in a peaceful manner. Something bad lurks here. The inability to armor our troops while spending a quarter trillion on a peasant insurgency is a clue that something is very sick in the depths of American manufacturing.
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Previous Similar Articles
Pundits Think 2006 Will Be OK
Market Analysts Want American Jobs Sent Overseas
NYT Can't Puzzle Out Why Japan is Flourishing While We Are Collapsing
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