The Transformation of America: Lesson for the Rebirth of Russia, Part III

Liberal monetarism in action

After the elimination of the Soviet Union as its global competitor, the American liberal elite spoke of globalization and decided to establish a free market economic zone in all of North America, concluding a trilateral agreement in free trade between Mexico, the U.S. and Canada (NAFTA) in 1994. As a result a trade union was formed, with an end goal of establishing a unified economic space and the removal of customs barriers to allow free movement of cargo, goods and people. After that, millions of migrants and illegals surged into the U.S. Who needs an America that has had an avalanche of Mexican immigrants gush into it?

The real beneficiaries of this were the financial and business communities, whose interests are exactly the same as those of America’s liberal elite, in both their cynical understanding and in complete correlation with liberal principles of the free market. They say that to increase one’s profits requires only two things: minimizing the cost of labor and maximizing demand. Immigrants from the south fulfill both the one and the other. The growth of the poor and uneducated population of immigrants from the south leads, on the one hand, to a lower cost for labor. On the other hand, it leads to a higher market demand for housing and services, and that means a higher profit for those who live at the expense of that wage labor, extending credit for a loan percentage, and receiving dividends from their investments.

The American liberal elite call themselves “progressives,” saying that they were able to rise above such a supposedly hopelessly outdated concept as national patriotism. They say that they feel equally good toward all inhabitants of the Earth, and that the very difference between such concepts as “legal citizen of the country” and “illegal immigrant” has lost all higher meaning. In such a situation, one must wonder: how could anyone who has no particular love for his country or his countrymen, love anyone or anything? It is remarkable that none of these “progressive” liberals want to live in areas populated by immigrants and illegals. They prefer instead to live in the fashionable areas, with reliable private security.

The language that the immigrants speak, their foreign culture, and the gradual decline of the American standard of living to the level of third-world countries, does not concern the American business community in the least, because their profits rise thanks to exactly that process. The import of unqualified immigrants can be fully used in the service sector, paying them many times less than its own citizens, who are used to a much higher standard of living.

From the point of view of the liberal elite, that is a completely logical approach, because they themselves, in the pursuit of excess profits since the 1980s, exported the basic manufacturing industries of the U.S. to the countries of the Pacific basin, limiting the American labor market to the basic service sector, which does not need a highly qualified workforce. It turns out that since the beginning of the 1980s, the middle class has been cut off from the opportunity to have skilled, highly paid work in industry. And since the beginning of the 1990s, in addition to that, they have begun to be pushed out of the service sector with the help of the low-paid immigrants.

In 1995 the US joined the WTO. For the American middle class, the cumulative effect of America’s entry into the WTO turned out to be very similar to what resulted from America’s entry into the trade and customs union with Mexico. First of all, millions of jobs were lost, along with tens of thousands of small businesses, which are the main employers in America. These companies basically could not compete with the manufacturers of analogous products in Southeast Asia or Latin America, where workers have lower pay for their labor. Paradoxically, among those who were most affected by the WTO were computer and other highly technical companies at the lower and middle levels. This was because after the removal or lowering of customs tariffs, manufacturers of computer components from China and Taiwan began to offer their products in the U.S. at much lower prices than local suppliers, who could do nothing other than go out of business. And why bring components from the ends of the earth and the seven seas to America, if it is possible to build their products on site? Because now on almost any American high-tech product you read: “Developed in the USA,” and then, “Assembled Someplace Else.” That is, for the whole cycle of manufacture and assembly, American-owned companies pay salaries not to their own countrymen, but to workers and engineers somewhere in Brazil, India, China or Taiwan.

A similar approach has spread to many other industries.

By personal experience, I can say that if in the mid-1990s, surely half the goods in American stores had the “Made in USA” label, then in just 10 years, practically all, with rare exceptions, were made in China, Taiwan or somewhere else.

With the development of Internet communications, the next step was that many American companies began to order the engineering development of many products or the creation of computer software in India and China, because there they can do it at the same quality and on time, but much more cheaply, and with the same devastating effect on the American labor market as was the case with the manufacture of components and the finished products made from them. Moreover, such a scheme of development and manufacture enables a continuous outflow of technology to the countries of origin. In large part, this explains how America has lost its formerly undisputed scientific and technological leadership during its membership in the WTO, while India and China are rapidly closing the technological gap with the U.S.

Progressive de-industrialization, the service sector relying more and more on low-paid immigrant labor, the impoverishment and reduction of the middle class which was once the backbone of the US — this is the American “post-industrial” economy today. I remember well, how in the 1990s the liberals told Americans about the benefits of establishing an economic union with Mexico, about the benefits of membership in the WTO, and then relocated industries to Asia and Latin America. In the 2000s, liberals described fabulous prospects of a new, globalized economy, based on Internet technology, and then relocated computer and engineering projects to India and China.

Ruins

The consequences of liberal economic policies are well reflected in the character of the growth of the U.S. national debt. The national debt of America over the period from 1945 to 1965 did not exceed $250 billion. From the beginning of the liberal social transformation, the national debt began to grow, and reached $1 trillion by 1980. But when the liberalization of the economy began in the 1980s, and then it was globalized in the 1990s, the national debt rose exponentially, and has now reached the astronomical height of $15 trillion. In continuing the policies of liberal monetarism, the point of which is privatization of profits and socialization of liabilities, there is just one question: when will this financial pyramid collapse? The consequences of its destruction will be truly catastrophic for America and very serious for the rest of the world.

Factually, the real conflict here is between the American middle class and the liberal elite. This elite is loyal only to money, banking interests and the transnational corporations that they own. They are not interested any further in the welfare of the American middle class. They benefit from cheap labor forces from Mexico and Central America, even though that is turning American cities into Bantustans*, organized crime is growing, hospitals and jails are over-filled with immigrants who don’t speak English and have a hostile attitude toward the native-born population. This does not worry the liberal elite, because they live in gated communities, their children attend expensive private schools, and they completely isolate themselves from that multicultural society that they themselves produced with their policies of globalization and the export of cheap labor. For the liberal elite, it became all about the place where they could make money. They no longer consider the U.S. their home. The liberal elite are cosmopolitan, they have mastered the whole world and when some actually destructive economic crisis occurs, and then inter-ethnic strife begins, they will simply move to one of their cozy sanctuaries to wait out the storm. When American leaders speak of “American interests,” that is nothing more than a cover for certain group ambitions of those who have full financial and economic power, and who have nothing in common with the American people or their interests.

The liberalization of the economy, its globalization, entry into NAFTA and the WTO, turned out to be very beneficial for the financial and business elite of America — no doubt because it radically reduced their economic costs and just as radically increased their profits. But in the process of their own enrichment, the liberals have destroyed the economic base of the middle class of America, and have almost turned the U.S. into a third-world country, flooding it with tens of millions of unassimilated immigrants and laying the foundation for future bloody inter-ethnic conflicts.

*Translator’s note: “Bantustans” refers to the black African homelands set up by the ruling white South Africans during Apartheid.

Editor’s note: This is the final piece in a three-part translation of Roman Jits’ “The Transformation of America: Lesson for the Rebirth of Russia.”