This week, in the wake of further falls on the world markets, U.S. President George W. Bush announced that he is prepared to push through yet another "stimulus package" on top of the $195 billion already put forward.
Meanwhile, murky Chinese and Arabic state-backed funds are investing tens of billions of dollars into leading Western multinational banking institutions like Citicorp and Merrill Lynch, with others soon to follow.
This is exactly the wrong policy at the wrong time. The free market should be allowed to resolve and harmonize the distortions in whatever way it sees fit. State intervention to shore up banks and put money in the citizens' pockets will only reduce competitiveness and create a cycle of dependency. Bush's decision to use socialism to "cure" the free market is yet another indication of how far America is declining, and how little it has come to terms with this decline.
For several years now, America has been suffering from a "hyperpower complex," in which it still likes to act is if it is the world's only superpower, and can dictate terms to anyone. In reality, America's geopolitical power has suffered one of the most rapid declines since the collapse of the Soviet Union. Who would have thought that a few thousand poorly-armed insurgents in a pair of backwards nations, Iraq and Afghanistan, could defeat superior American forces, and at the same time bankrupt the empire?
In retrospect, it's easy to see why this happened. A combination of imperial overreach and state-interventionism is exactly what doomed the Soviet Union, as well as Great Britain. Sadly, America is making the same mistake. It cannot admit that it has lost the war in Iraq, and in fact has embarked on a bizarre self-esteem campaign to convince itself that its so-called "surge" has actually worked, and the war now is won. It's like watching a terminally ill man making plans to take up hang gliding as soon as he's up and out of the intensive care unit.
Indeed, America today reminds one of the tragic finale in Of Mice And Men, with George Bush as Lenny pointing across the ocean, dreaming of his plans to build a series of democracy farms as far as the eye can see, while his friend George, played by Adam Smith, holds up an old musket-pistol to Bush's head, and, with a heavy heart, fires a giant musketball of market economics reality into Bush's uncompetitive state-interventionist brain.
Today, Americans are too misguided to understand that even if hundreds of billions of dollars disappear in the credit crisis, or the American banking system collapses, or they and hundreds of thousands of American families lose their homes to the waves of foreclosures--that these are not necessarily bad things. It's like ripping off a bandage, I like to say. So if you lose your house, your job, your kids, your future, it's actually just like ripping off a bandage. Really, it's for your own good. How hard is it to understand that?
Hard, apparently. That is why I believe that the world's
Ascending Powers (APs), namely China, Russia, and India, should demand that the United States halt its state intervention into its failed banks and let the market sort it out. Because nothing sorts out economic distortions better than the free market.
Furthermore, American markets must be pried open to allow Chinese, Russian and Indian banks to move in and snap up the collapsing American banks at firesale prices. True, old nationalist feelings will stir in the American heartland, and Americans will not like watching their once-prized assets sold off to foreigners for cheap, but Americans must be made to understand that they have no other choice. Their finances are in a mess and no amount of socialism can help. They must sell everything off now, quickly, and cheaply, to those who understand how to compete in the 21st century market. Fat is everywhere, and here are just a few suggestions: America could sell NASA to the Chinese and raise a few hundred million dollars, the school system to Russia for perhaps half that, and the Environmental Protection Agency to India, including the parks and recreation services, all legacies of socialism, in return for allowing India to bury its toxic waste in America's parklands. If America wants to survive in the new millennium, it will have to undergo a period of pain. Since each American is less and less valuable on a per-capita basis, it only makes sense that toxic waste should be increasingly directed to American territory.
The free market teaches us to be fiscally responsible and competitive in a fair and transparent manner, and when we aren't, it punishes us. America is being irresponsible by pretending it is still a hyperpower; the laws of the free market responded with an insurgency whose wage costs vastly undercut the bloated American soldiers' costs. The market beat America's illusions. This was the genius of free markets at work.
Likewise, America today is propping up an outmoded banking sector which cannot compete with the Chinese or Russian banks. The free market is pounding America's uncompetitive banking sector with bullets of market reality. This will continue. And America will lose this war as well.
To change America's behavior, we in Russia, along with our Chinese and Indian peers, must offer them carrots and sticks. If they slash government spending on welfare programs and unnecessary military costs, cut subsidies to the banking sector, and privatize the Grand Canyon, then our countries should reward them by extending restructuring loans to Citibank and other institutions, provided that those loans are converted into cheaply-priced shares, and that eventually, America's streets will be lined with banks whose names are announced in Cyrillic, Sanskrit and Kanji. However, if Bush continues to defy the free market, we must cut off America's credit dependency and push their system to fail. It's for their own good.
Eduard Lukasovich is the Central American correspondent for United Russia magazine. He contributed this comment to The eXile.