Bush is the master of empty symbolism: the Mars mission is becoming symbolic of large promises backed by empty actions. The "No Child Left Behind" act, with its unfunded mandates and absurd qualifications is a more bread and butter example. The new, Helsinki-lite proposal on the Middle East is a fateful example. Having failed in the "Plan A" of simply taking the oil and running, they want to act as if the United States has the leverage and the power to move forward in pressuring the Middle East to be more like the US.
Since December Bopnews.com has been running a series, American Thermidor which details why the idea - of greater democratization of the Middle East, is on the minds of policy elites. The first part American Thermidor detailed how Americas "Energy Deficit" leads to an "Investment Deficit" - as the middle east becomes a giant money sink which returns to the US by buying assets. "Selling Paper to Buy Oil". The next two parts detail how America went from Liberalism to a neo-conservative regime: because the energy deficit created a bottleneck in the economy, and the middle class went to war with itself over how to split the limited access to energy.
So why does this link up with the Bush plan? Read on...
In order to put pressure, one must have leverage. In the 1950's the US could make and unmake middle eastern states because we had economic, political and military leverage. Our system was stable, theirs was not, our military was overwhelmingly powerful, and we, not they, had the economic leverage. The West owned every substantial piece of capital in the Middle East.
Bush wants to pressure the middle east to be more Democratic and to begin reforms, particularly in the area of women's rights. This is the road that has been talked about by policy elites for a very long time, for a simple reason.
Right now, the rulers of the middle east, since they share the benefits with a very small population, have a great deal of free cash flow - they use it to buy American assets. This simple fact has distorted the American economic system: in order to keep the middle east from controlling the US, the US has had to - bluntly - create more and more economic inequality here, and sink more and more of our savings into stocks. This has had the following results:
- Disparities of wealth: The rich control more and more.
- Disparities of power: most small investors have no control over their assets, In effect 20% of the wealth controls 100% of the power in corporate America. This lead to scandals as those who had effective control of corporations voted themselves huge raises, to be paid by investors.
- Disparities of information: as what the American public is told less and less resembles the basic problems that everyone knows exist in the world of policy, the less what happens makes sense. This means the American electorate is not able to make informed judgements, because they have not been informed of what they are judging.
The road of democratizing and consumerizing the Middle East is necessary - because in a consumer economy, the money currently flowing into the US as buying of assets, will be channeled back into development. The oilarchies will no longer have the free cash flow - they will be pumping money into internal growth. As for example, China is.
However, this is the catch 22: our current economic system is predicated on a massive investment bubble. This investment bubble would pop without the influx of cash from outside - we would go down to Dow 5000 or so if P/E ratios were to return to historical norms. This would lead to a painful correction of the economic landscape, one that cannot occur without political upheaval.
The Bush plan is simple: make the poor pay. Slash US wages with devaluation, and this will allow the prices of US made goods to drop low enough that, if, and this is a huge if, the Middle East consumerizes, they could buy from us. The Middle Class in the US would be, effectively debt serfs, while the ultra rich would retain their leverage.
This plan will work no better than Plan A of just invade and take the oil: because the very devaluation of the US dollar that makes it possible gives the oilarchs of the middle east all of the leverage economically - their oil is more valuable, in dollars, every day. By keeping the nominal price of oil low, the US continues to create incentives for economically unsustainable consumption of oil. The famous Hubbert Peak is now on everyone's lips, simply because we have reached it.
The answer, and this is why every major Democratic candidate has an energy policy which reads as far more radical than the rest of their platforms - is some form of changing of the energy consumption profile of the US economy. An end to SUVs. Don't expect to hear that admist Kerry's call for energy independence or Clark's 100 year vision - and yet that, among other steps - is essential.
But what is not in the cards is exactly what is required.
And what is this? Keep reading the series and find out.