Thursday, October 30, 2014

The Medicine of the Trans-Pacific Partnership as Bitter as Ever

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The Trans-Pacific Partnership is as dangerous as ever. Denying access to medicines, increased surveillance of Internet usage and mandatory patents at the behest of multi-national corporations are some of the corporate goodies stashed in the TPP’s intellectual property chapter, revealed by WikiLeaks this month. Journalism could even be criminalized.
The more we know about the TPP, the worse it gets, which is why the governments of the 12 countries involved, led by the Obama administration, continue to negotiate in unprecedented secrecy. The latest text of the TPP’s intellectual property chapter shows very little change from an earlier draft also published by WikiLeaks. In a press release accompanying this month’s publication of the revised text, WikiLeaks says:
“[T]here are significant industry-favouring additions within the areas of pharmaceuticals and patents. These additions are likely to affect access to important medicines such as cancer drugs and will also weaken the requirements needed to patent genes in plants, which will impact small farmers and boost the dominance of large agricultural corporations like Monsanto.”
“A rule [would] require the patenting of plant-related inventions, such as the genes inserted into genetically modified plants, putting farmers in developing countries at the mercy of the agriculture industry, including seed manufacturers such as Monsanto, and threatening food security in these countries more broadly.”
Monsanto, already attempting to gain a stranglehold over the world’s food supply, is hardly in need of yet more favorable treatment. Proprietary seeds and genetically modified organisms are Monsanto’s routes to control what you eat and what farmers grow. Once under contract, farmers are required to buy new genetically engineered seeds from the company every year and the Monsanto herbicide to which the seed has been engineered to be resistant.
Stealth ‘fast-track’ process needed to sneak TPP through Congress
Concomitant to the secrecy shrouding the TPP is the stealth needed to pass the “free trade” treaty. The Obama administration is seeking to be given “fast-track” authority by Congress. Under the fast-track process, Congress cedes its right to make any changes, limits its time to debate, and must schedule a straight yes-or-no vote (no amendments allowed) in a short period of time. Some of the worst “free trade” deals have been approved in this manner, and the importance of fast-track is shown in that the last U.S. trade pact approved, with South Korea, was approved in 2007 — literally one minutebefore fast-track authority expired!
A fast-track bill, known as Camp-Baucus for its two sponsors, was essentially dead on arrival early this year due to widespread opposition in Congress, mostly by Democrats but also some Republicans. That this arose was because of organized activist work by groups across the United States. But Democratic Senator Ron Wyden, last April, signaled his intention to introduce a new fast-track bill, which he rebranded “smart track.” U.S. activists widely speculate that either Senator Wyden’s thinly disguised “smart track” bill or a more openly fast-track bill, perhaps written by Republicans in the House of Representatives, will be introduced in Congress following the November election with the intention of ramming it through a lame-duck session.
U.S. activists for the past year and a half have focused on stopping fast-track in Congress because it will be virtually impossible to pass the TPP otherwise. Other countries have signaled their reluctance to agree to a final TPP text unless Congress grants the Obama administration fast-track authority. Without such authority, Congress would retain the right to make changes to an agreed-upon treaty, potentially unraveling any deal. The Canadian government, in late September, made this reluctance explicit.
Washington Trade Daily recently reported that the Canadian ambassador to the U.S., Gary Doer, said Canada and other negotiating countries won’t conclude negotiations until the Obama administration has the “political muscle” of trade-promotion authority (the formal name for fast-track). Thus, activists advocate no lessening of vigilance against new attempts to introduce fast-track legislation. A Week of Action Against Fast Track is being organized for November 8 to 14 in the U.S. In Australia, a series of rallies opposing the TPP are taking place this week in Sydney and Canberra.
These efforts come against a renewed push for a completed deal; negotiators are meeting this week, to be immediately followed on October 25 by a ministerial-level meeting in Sydney.
Criminalizing your right to know
There is much to oppose in the Trans-Pacific Partnership itself. A trade-secrets provision in the leaked intellectual property chapter is written in a way that makes it possible for reporting the contents of a future trade deal to be prosecuted. The article in questionstates:
“In the course of ensuring effective protection against unfair competition … each Party shall ensure that natural and legal persons have the legal means to prevent trade secrets lawfully in their control from being disclosed to, acquired by, or used by others (including state commercial enterprises) without their consent in a manner contrary to honest commercial practices.”
Criminal penalties would be mandatory for:
“the unauthorized, willful access to a trade secret held in a computer system; the unauthorized, willful misappropriation of a trade secret, including by means of a computer system; or the fraudulent (or unauthorized) disclosure of a trade secret, including by means of a computer system.”
WikiLeaks’ publication of this text would be a criminal matter under this provision. This provision would make it mandatory for signatory governments to enact strict laws protecting undefined “trade secrets.” The text of the TPP itself is classified as a secret! Legislators and the public are excluded from seeing the text. In the United States, the only people other than negotiators to have access to the text are 605 “advisers,” who are almost all executives of multi-national corporations or corporate lobbyists.
The Age newspaper of Melbourne summarizes the threat to journalism this way:
“The leaked treaty text shows that in an effort to deal with ‘unfair competition,’ largely from Chinese industrial espionage, the United States has pushed ahead with proposals to criminalise disclosure of trade secrets across the Pacific Rim. The draft text provides that TPP countries will introduce criminal penalties for unauthorised access to, misappropriation or disclosure of trade secrets, defined as information that has commercial value because it is secret, by any person using a computer system.  …
There are no public interest or free speech exemptions. Criminalisation of disclosure would apply to journalists working for commercial media organisations or wherever the leak was considered harmful to the ‘economic interests’ of any TPP country.”
Barriers to cheaper generic medications
Other rules in the TPP intellectual property text would raise barriers to generic medications becoming available and mandating that the terms of patents be extended on demand by patent holders. The United States and Japan even propose language that would require intellectual property enforcement to be elevated above any other legal consideration! The U.S. is also seeking the criminalization of copyright infringement, even in cases where there is no attempt to gain financially, such as a fan posting a work, and would also mandate that Internet service providers remove content upon a corporation’s demand to avoid legal penalties.
The linchpin to enforcement of draconian rules — the worst of which are put forth by the United States with Japan often seconding — is the “investor-state dispute mechanism.” That is a requirement that governments submit to binding arbitration in secret tribunals when an “investor” wants a law changed; the judges in these tribunals are corporate lawyers.
The dispute mechanism is not directly mentioned in the intellectual property chapter, but the one article that purports to uphold national sovereignty is contradicted by another article that mandates that multi-national corporations be given the same rights as national corporations. That clause, standard in “free trade” agreements, is a battering ram used by the secret tribunals to order the withdrawal of laws safeguarding environmental, safety, health or labor standards. These rulings, in turn, become precedents that are used to hand down future harsher decisions.
The Trans-Pacific Partnership, however, is far from the only danger to working people. There is also the Transatlantic Trade and Investment Partnership between the U.S. and the E.U.; the Trade In Services Agreement that would eliminate the ability of governments to regulate the financial industry (50 countries are in on this one); and the Canada-European Union Comprehensive Economic and Trade Agreement. Each of these are designed to elevate corporations to the level of a country, although in practice, because of tribunal precedents, they would elevate corporations above national governments.
“Free trade” agreements have little to do with trade, and much to do with imposing the domination of capital in as many spheres of life as possible. They are massive failures for working people in all countries. They offer, and can offer, nothing but a race to the bottom. Attempting to reform a race to the bottom is a fool’s errand. The TPP and its equally vile cousins must be defeated, and a complete re-conceptualization of trade and who should benefit from trade, substituted. That in turn requires directly challenging prevailing economic systems, otherwise we will be shoveling against the tide.

Rise in US corporate profits fueled by fall in real wages

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Despite the slump in Europe and Latin America and relatively low growth in the US and China, several US-based multinational corporations are announcing better-than-expected profits for the third quarter, particularly from their US operations. While a portion of the earnings came from a modest uptick in sales, the profits were chiefly attributable to continued cost-cutting, falling real wages and the ever-higher productivity being sweated out of workers.
Major manufacturers with third quarter profits beating Wall Street expectations included: General Electric (up 11 percent to $3.5 billion), Boeing (up 13 percent to $2.4 billion), General Motors (up 50 percent to $1.47 billion), Caterpillar (up six percent to $1.02 billion), 3M (a six percent rise to $1.3 billion) and steelmaker Nucor (up 66 percent to $245 million).
Several US airlines also posted large third-quarter profits. United Airlines saw its most profitable quarter in history, earning $1.1 billion, or more than double the same period last year. The new American Airlines, which was formed through the December merger of US Airways and AMR Corp., reported a profit of $1.2 billion, compared with a year-earlier profit of $771 million. Southwest Airlines and JetBlue Airways also posted record profits for the quarter.
Falling oil prices contributed to higher profits in the airline industry and helped boost the sales of highly profitable pickup trucks and SUVs made by GM and other automakers. However, major manufacturers such as Caterpillar, GE and US Steel have depended on the oil and gas boom for a large portion of their profits, and any decline in energy costs threatens their bottom line.
Analysts are pointing to the anemic growth in the US as the supposed shining light in the world economy. In fact, the corporations have exploited the vast reserve army of unemployed workers to fill many of their positions with part-time and contract laborers earning lower wages and few if any benefits while lacking any semblance of job security.
In this corporate America has enjoyed the full backing of the Obama administration and both big business parties, which have slashed food stamps and long-term unemployment benefits. The White House, which orchestrated the slashing of wages in the auto industry restructuring of 2009, has made the lowering of living standards for US workers the centerpiece of its so-called revival of American manufacturing.
For their part, US trade unions such as the United Auto Workers have functioned as junior partners in the impoverishment and exploitation of the working class, suppressing any opposition to the attack on living standards.
Real hourly wages declined for almost every segment of the US workforce in the first half of 2014, according to a recent report by the Economic Policy Institute. This includes workers with no high school degree (-0.6 percent), with just a high school degree (-1.1 percent), with some college (-1.0 percent), with a college degree (-1.6 percent), and with an advanced degree, too (-2.7 percent).
This follows a consistent pattern since the crash of 2008. From the first half of 2007 to the first half of this year real wages declined 4.9 percent for workers with a high school degree and 2.5 percent for workers with a college degree.
Little if any of the profits being generated by major manufacturers will be reinvested in new plants and the hiring of additional workers, let alone used to improve wages and benefits. On the contrary, US corporations, which are sitting on an estimated cash hoard of $1.5 trillion, are using a large portion of their earnings to carry out stock buybacks in order to enrich their shareholders.
In a conference call Wednesday, Boeing CEO Jim McNerney boasted that the company’s 19 percent increase in core earnings per share “has allowed us to continue returning cash to our shareholders through our strong dividend and share repurchase program.” This has directly benefited McNerney, who pocketed $23.2 million last year, mostly from gains in restricted shares and stock options.
After threatening to pull production of its new 777x planes from the Seattle area and ship it to a low-wage state, Boeing executives, with the backing of the International Association of Machinists (IAM), forced through an eight-year concessions contract in January 2014. The sellout deal, which was first rejected by the 25,000 workers it covered, slashed retirement benefits, reduced health care benefits in accordance with Obamacare, and limited wage increases to one percent every other year. It also barred workers from striking until 2024.
McNerney—who would “earn” a quarter of a million a month under a future retirement package worth more than $40 million—has overseen the destruction of company-paid defined benefit pensions for Boeing workers.
Announcing Caterpillar’s third quarter profits, CEO Doug Oberhelman (total 2013 compensation of $14,989,569) said, “The fact that we continue to raise our profit per share outlook on relatively flat sales is a testament to our diverse portfolio of businesses, disciplined cost control and operational execution.” Shares of the giant earthmoving equipment manufacturer jumped nearly five percent after the announcement and are up 13 percent over the past 12 months.
Since taking the helm at Caterpillar in 2010, Oberhelman’s “disciplined cost control” has involved a relentless campaign to slash jobs and drive down workers’ wages and benefits. “I tell my people,” the executive said in an interview with Businessweek last year, “we can never make enough profits.”
In 2012, Caterpillar locked out 450 workers at its locomotive factory in London, Ontario after they refused to take a 50 percent pay cut. It then shut the plant and shipped production to Muncie, Indiana, where workers earn $12.50 an hour, or half the wages of their Canadian counter-parts. The same year, relying on the betrayal of the IAM and United Auto Workers union, the company imposed deep concessions on workers after a 15-week strike in Joliet, Illinois, followed by similar givebacks on workers at the CAT plant in South Milwaukee, Wisconsin.
By slashing wages and shifting production to low-wage countries, Caterpillar boosted its profits from $12,000 per employee in 2007 to a staggering $45,000 per employee by 2012. Meanwhile, the average compensation for top executives doubled from $5.2 million in 2008 to $10.4 million in 2012.
With the slump continuing in Europe and Latin America, and demand for new equipment falling in China, a new global scramble for market share and profits is on the horizon, which will lead to even deeper attacks on the working class. This is already working its way throughout the global auto industry.
While losing money in Europe and spending about $700 million on repairing the defective vehicles it has recalled, GM chiefly relied on its North America operations last quarter, which generated an operating profit of $2.5 billion.
The company is slashing thousands of jobs in Europe and has recently announced plans to offer buyouts to 400 workers at its St. Petersburg, Russia plant. Reductions are also planned for South America. In the US, however, the Detroit automakers are announcing new hiring, including 850 workers that will be added at Ford’s Dearborn, Michigan pickup truck assembly plant.
As part of the restructuring of the auto industry by the Obama administration, the United Auto Workers agreed to the halving of wages for the next generation of factory workers. In recent months, the UAW has boasted that wage cutting in the US has lured GM and other companies to relocate their operations from low-wage countries, like Mexico and China, to the United States, the new haven for cheap labor.

US and China clash over infrastructure bank

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In a sign of deepening tensions between the world’s largest and second largest economies, the United States has made clear its opposition to a $50 billion Asian infrastructure bank being established by China.
According to a report published in the Australian Financial Review (AFR) on Friday, US Secretary of State John Kerry personally asked Australian Prime Minister Tony Abbott to keep out of the bank during a meeting in Jakarta last Monday following the inauguration of Indonesian President Joko Widodo. US President Obama may also have raised the issue in a telephone conversation with Abbott on Wednesday. The AFR said it was “unclear” whether that had taken place.
Last Friday, China and 20 other countries signed a memorandum of understanding in Beijing to establish the Asian Infrastructure Investment Bank (AIIB). Besides Australia, the other notable absentees from the signing ceremony were Japan, South Korea and Indonesia. Among those present were India, Malaysia, Thailand and the Philippines.
The official position of the United States is that it is not opposed in principle to the idea of establishing a bank to fund infrastructure projects in Asia but has “concerns about the nature of the AIIB proposal as it currently stands.”
These official reservations are being taken with a large grain of salt. It is widely acknowledged that the real reason for US objections is that the new bank could cut across the activities of the World Bank and the Asia Development Bank where the US and Japan exercise decisive control.
The US and Japan fear that the AIIB could enhance Chinese economic influence throughout the region. In China, the bank, which has been initiated by President Xi Jinping, is seen as a counterweight to the existing financial institutions in which China has sought unsuccessfully to obtain greater influence.
Chinese state-run media gave prominent coverage to the signing ceremony but noted the absence of Australia and other regional powers. The official position is that while they have not signed on to the founding, they are free to join at a later stage.
The lead story in the China Daily declared that “the absence of some major economies underscores the difficulty China faces as an emerging power in making global governance initiatives.”
The New York Times reported that China views the new bank as “a way to increase its influence in the region after years of fruitless lobbying for more say in other multinational lending organizations.”
Chinese authorities are hoping that countries eager to take advantage of the economic opportunities opened up by AIIB projects will respond in spite of US objections.
It appears there were differences of opinion within the Australian government with Treasurer Joe Hockey and Trade Minister Andrew Robb in favour of participating. Last week, while in Beijing, Hockey said that Australia had “yet to decide” on the issue.
Foreign Minister Julie Bishop has toed closer to the US line saying that there were a “number of fundamental principles” that had to be met and the final call would be made by the prime minister.
The South Korean government, which, together with Australia, is one of the closest military allies of the US in the region, also appears to be conflicted on the issue. At first it was believed it would sign up to the memorandum of understanding but then decided not to take part.
According to a South Korean diplomatic source cited in the Seoul-based JoongAng Daily: “While Korea has been dropped from the list of founding members of the AIIB this time around, it is still in a deep dilemma on what sort of strategic choices it has to make as China challenges the US-led international order.”
These comments make clear that far more than the protocols regarding the making of investment loans are at stake and that the US regards the Chinese initiative as a challenge to its financial dominance. This is not a new position. In 1998, following the Asian financial crisis, the US scuttled a proposal by Japan to set up a $100 billion fund, outside the framework of the International Monetary Fund, to help those countries facing financial problems. The proposal was regarded as a challenge to US interests.
However, US opposition to the new China-backed bank is drawing fire from a number of quarters. Writing in the AFR on September 22, Peter Drysdale, a long-time commentator on economic issues in Asia and now professor of economics in the Crawford School of Public Policy at the Australian National University, pointed out that the Chinese could undertake infrastructure financing unilaterally but had chosen to “offer multilateral partnership in this initiative.”
He dismissed the claim the new bank would lower international standards as “nonsense” and said: “It should take no more than a nanosecond to conclude that countries such as Australia, Korea, Japan and the United States should partner this enterprise.”
A similar view was expressed in an editorial published in the Guardian today.
“It is an exaggeration to talk of the pace of reform at the World Bank and the International Monetary Fund, for there has been almost none to these, the so-called ‘Washington institutions’ that, together with the US Treasury, have both sustained and constrained the world economy since 1945. How to reflect the changing balance of economic power has been endlessly discussed but rarely implemented.”
The editorial noted that “strategically” the US could not keep on shoring up an obsolete economic order in Asia. Unlike some other aspects of Chinese policy, the AIIB proposal should be seen within the context of China’s “peaceful rise.” “This is a case for accommodation, not confrontation,” it concluded.
However such views, which are based on a conception of economic rationality, ignore geo-political considerations. The United States, under its anti-China “pivot to Asia,” regards any proposal that could lead to the expansion of Chinese influence as inimical to its objectives which centre on maintaining domination of the region.

50 Percent Of American Workers Make Less Than 28,031 Dollars A Year

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The Social Security Administration has just released wage statistics for 2013, and the numbers are startling.  Last year, 50 percent of all American workers made less than $28,031, and 39 percent of all American workers made less than $20,000.  If you worked a full-time job at $10 an hour all year long with two weeks off, you would make $20,000.  So the fact that 39 percent of all workers made less than that amount is rather telling.  This is more evidence of the declining quality of the jobs in this country.  In many homes in America today, both parents are working multiple jobs in a desperate attempt to make ends meet. Our paychecks are stagnant while the cost of living just continues to soar.  And the jobs that are being added to the economy pay a lot less than the jobs lost in the last recession.  In fact, it has been estimated that the jobs that have been created since the last recession pay an average of 23 percent less than the jobs that were lost.  We are witnessing the slow-motion destruction of the middle class, and very few of our leaders seem to care.
The "average" yearly wage in America last year was just $43,041.  But after accounting for inflation, that was actually worse than the year before...
American paychecks shrank last year, just-released data show, further eroding the public’s purchasing power, which is so vital to economic growth.
Average pay for 2013 was $43,041 — down $79 from the previous year when measured in 2013 dollars. Worse, average pay fell $508 below the 2007 level, my analysis of the new Social Security Administration data shows.
Flat or declining average pay is a major reason so many Americans feel that the Great Recession never ended for them. A severe job shortage compounds that misery not just for workers but also for businesses trying to profit from selling goods and services.
Average pay declined in 59 of the 60 levels of worker pay the government reports each October.
And please keep in mind that "average pay" is really skewed by the millionaires and billionaires at the top end of the spectrum.
Median pay in 2013 was just $28,031.02.  That means that 50 percent of American workers made less than that number, and 50 percent of American workers made more than that number.
Here are some more numbers from the report that the Social Security Administration just released...
-39 percent of American workers made less than $20,000 last year.
-52 percent of American workers made less than $30,000 last year.
-63 percent of American workers made less than $40,000 last year.
-72 percent of American workers made less than $50,000 last year.
I don't know about you, but those numbers are deeply troubling to me.
It has been estimated that it takes approximately $50,000 a year to support a middle class lifestyle for a family of four, and so the fact that 72 percent of all workers make less than that amount shows how difficult it is for families that try to get by with just a single breadwinner.
The way that our economy is structured now, both parents usually have to work as hard as they can just to pay the bills.
But there was one group of Americans that did see their incomes actually increase last year.
Those making over 50 million dollars had their pay increase by an average of $12.8 million in 2013.
For everyone else, the news was not good.
And of course this is a trend that has been going on for a long time.
Posted below is a chart that comes from the Federal Reserve.  It shows how real median household income in the United States has declined since the year 2000...
Real Median Household Income 2014
Meanwhile, the cost of living has continued to rise at a steady pace.
Needless to say, this is putting a tremendous squeeze on the middle class.  With each passing day, more Americans are losing their spots in the middle class and this has pushed government dependence to an all-time high.  According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month.  This is completely and totally unsustainable, but our long-term economic problems just keep getting worse.
Our politicians have stood by as millions upon millions of good paying jobs have been shipped out of the country.  Millions of other middle class jobs have been lost to technology.  This has resulted in intense competition for the middle class jobs that remain.
And at this point we are even losing lots of lower paying retail jobs.  For example, it is being reported that Sears plans to close 110 more stores and lay off more than 6,000 workers.  Sears says that the report "isn't accurate", but it isn't denying that stores will be closed either...
In an email to USA Today, Sears spokesman Howard Riefs said the store count and closures "isn't accurate,'' but did not provide store closures or layoff numbers.
"As we stated in our (second quarter earnings report), we disclosed that we would be closing unprofitable stores as leases expire and in some cases will accelerate closings when it is economically prudent. And that we would consider closing additional stores during the remainder of the year,'' Riefs said. "Make no mistake, we believe the store will continue to play an integral role in our transformation, however, if a store is not generating a profit, it is straightforward that the store should be considered for closure."
No matter how many stores Sears does end up closing over the next few months, the truth is that our economy is a complete and total mess at this point.
Our politicians and the mainstream media are trying to put a happy face on everything, but the cold, hard numbers prove that we are not anywhere close to where we were prior to the last recession.
Because it is so difficult to find a good job in America today, I often recommend to people that they should consider starting their own businesses.
But thanks to the bureaucratic control freaks in the Obama administration and in our state governments, small business ownership in America todayis at an all-time low.  It is almost as if they don't want the "little guy" to win.  Every avenue of prosperity for the middle class is under assault, and there does not appear to be much hope that this will change any time soon.
And the truly frightening thing is that this is about as good as things are going to get for the middle class.  We are rapidly approaching the next major wave of our long-term economic decline, but that is a topic for a future article.

Peak Empire, Take Two

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Based on the lessons of history, all empires collapse eventually; thus, the probability that the US empire will collapse can be set at 100% with a great deal of confidence. The question is, When? (Everyone keeps asking that annoying question.) 

Of course, all you have to do is leave the US, go some place that isn't plugged into the US economy in non-optional ways, and you won’t have to worry about this question too much. Some people have made guesses but, as far as I can tell, no one has come up with viable methodology for calculating the date. In order to provide a remedy for this serious shortcoming in collapse theory, I once tried to outline a method for figuring it out in an article titled “Peak Empire,” which was based on Joseph Tainter’s theory of diminishing returns on complexity—or diminishing returns on empire. It’s a perfect problem for differential calculus, and all those microeconomics students who are busy calculating marginal cost vs. marginal revenue, so that they can look for work in the soon-to-be-defunct shale gas industry, might take it up, to put their math talents to better use. In the meantime, here is an update, and a revised estimate.

US Empire of Bases

Just to review, as the brilliant analyst Chalmers Johnson explained, the US is an “empire of bases,” not an empire of colonies. It is not considered politically correct to annex other countries anymore. Witness the reaction to Russia taking back Crimea, even though its population has a right to self-determination, and voted 98% in favor of the idea. But, had things turned out differently, putting a NATO base in Crimea would have been just fine. Still, there are quite a few US “territories” (read “colonies”) listed in the Pentagon Base Structure report, including American Samoa, Guam, Johnston Atoll, Marshall Islands, Northern Mariana Islands, Puerto Rico, US Virgin Islands and Wake Islands. We should probably include Hawaii, since in 1993 the US Congress “apologized” to Hawaii for kidnapping the Queen and illegally annexing the territory. They are not giving it back, mind you, but they don't mind saying we’re sorry, because they stole it fair and square. The same could be said for Texas, California—the whole bloody continent for that matter. But they don’t do that sort of thing any more—not too much. Sure, the US stole Kosovo from Serbia just to set up a huge NATO base there, but in general there has been a shift to controlling other countries through economic institutions—like the IMF, the WTO, and the World Bank. There has also been plenty of political subterfuge, assassinations and coups d’├ętats, as explained by John Perkins in Confessions of an Economics Hit Man, or in Michael Hudson’s work. William Blum writes: “Since the end of the Second World War, the United States of America has…

1. Attempted to overthrow more than 50 governments, most of which were democratically elected.

2. Attempted to suppress a populist or nationalist movement in 20 countries.

3. Grossly interfered in democratic elections in at least 30 countries.

4. Dropped bombs on the people of more than 30 countries.

5. Attempted to assassinate more than 50 foreign leaders.”

Only a few of these actions—such as Iran in 1953, Guatemala in 1954, Nicaragua in the 1980’s, Ukraine 2014, etc.—are well known in the US. Now here is the key point: all of this “democracy-building” requires the US to have plenty of foreign military bases. Much of the military is outsourced, so there is no need for consent of the governed any more—just their tax money. Marching in the streets in protest is a complete waste of time. Millions of people marched against the Iraq War in 2003. Did it make any difference? Secretary of State Alexander Haig remarked during a peace march in the 1980’s: “Let them protest all they want as long as they pay their taxes”; Kissinger explained that “Soldiers are dumb, stupid animals for the conduct of foreign policy”; and CIA director William Casey made sure the US public remains completely in the dark with his famous dictum, “We'll know our disinformation program is complete when everything the American public believes is false.” (This is from his first staff meeting in 1981; it’s not a secret.) The US is completely open about its desire to subjugate the entire world—if this weren't already obvious from its behavior.

Pentagon Base Structure Report

And so, maintaining US hegemony requires an empire of bases. How many bases? Every year the Pentagon publishes a “Base Structure Report,” which lists all the property of the military including land, buildings and other infrastructure. The latest Pentagon Base Structure report lists 4169 domestic military bases, 110 in US territories, and 576 in foreign countries, for a total of 4855. But it turns out to leave out a lot: Nick Turse of TomDispatch calculated that in 2011 the number of foreign military bases was closer to 1075.  But even though a lot is left out of the Pentagon report, it is still a good data source for us to use because, for the purpose of calculating our estimate, all we are interested in is trends, not absolute numbers. Trends require that data from year to year be reported consistently, and the Pentagon appears to be very consistent in what it reports and what it keeps secret from one year to the next. So this is a very good source by which to measure trends.

Since the US public is completely in the dark, zombified and terrified by the mass media and traumatized by psy-ops like 9/11, the empire will have to collapse on its own, without their help. I’m sorry to say this, but the American sheeple are not going to rise up and help it collapse. But when will it collapse on its own? Do we all want to know when? Ok, here goes...

Peak Empire



Total US Military acreage peaked in 2007 at 32,408,262 acres, and has been declining ever since, including a precipitous drop in 2014.  This curve of military acreage follows peak oil and peak empire theory generally quite well. I haven’t done the curve-fitting exercise, but it looks a bit like a Hubbert curve from peak oil theory. The important point is, according to total acreage the US empire has already peaked and is in decline. Note that global conventional crude oil production peaked at around the same time; you may consider that a pure coincidence if you wish.



Looking at the data from 2003-2014, we see shows a bit more detail, including a sharp downturn in 2014. The drop in total bases in 2006 and 2007 seems like a bit of an anomaly, but the trend in acreage follows the peak theory.

What is even more noteworthy is the decline in foreign military bases and acreage. The US may still have control of its domestic and territorial bases, but it has suffered huge losses of foreign military bases and acreage. Since reaching “peak foreign military bases” in 2004, the US now has just 64% of them—a loss of over a third in a decade! In the case of acreage the US retains 69% of its peak acreage in 2006, so it has lost 31% of its foreign military acreage—also close to a third. If you want to guess at what's behind these numbers, you might want to look at them as the fallout from disastrous US foreign policy, as described by Dmitry in his article, “How to start a war and lose an empire.” Perhaps the people to whom we are bringing “freedom and democracy” are getting sick of being occupied and murdered? But, whatever the explanation, the trend is unmistakable.

But we still haven’t addressed Tainter's central thesis of diminishing returns on empire.  Ok, let's do that next next.


I previously showed military acreage divided by military spending declining since 1991 in constant 2008 dollars.

Bringing this up to date in constant 2014 dollars, we see that return on spending leveled off in 2010, but in 2014 the trend of decreasing returns on spending has resumed.



At the same time, US Government debt, which fuels much of this military spending, continues to climb at a steady rate, and the military acreage/debt ratio shows negative returns on debt. That is, the empire is getting negative returns in military acreage from increasing its debt burden. In their prime, empires are massively profitable ventures. But when the returns on government spending, debt and military spending all turn negative—that is when we enter the realm of diminishing returns on empire—that, according to Tainter's theory, sets them on a trajectory that leads directly to collapse.

The collapse does not have to be precipitous. It could be gradual, theoretically. But the US economy is fragile: it depends on international finance to continue rolling over existing debt while taking on ever more debt. This amounts to depending on the kindness of strangers—who aren't in a particularly kind mood. To wit: numerous countries, with Russia, China, India, Brazil and South Africa leading the way, are entering into bilateral currency agreements to avoid using the US dollar and, in so doing, to avoid having to pay tribute to the US. Just like Rome, the US empire is being attacked all over the world by “barbarians,” except the modern barbarians are armed with internet servers, laptops and smartphones. And just like Rome, the empire is busy spending billions on defending its fringes while allowing everything on the home front to fall apart from malign neglect.

Meanwhile, the US has been struggling to avoid a financial panic through lies and distortions. The US Federal Reserve has been printing $1 trillion a year just to keep US banks solvent, while selling naked shorts on gold in order to suppress the price of gold and to protect the value of the US dollar by (see Paul Craig Roberts for evidence). In truth, US employment has not recovered since the financial panic and crash of 2008, and wages have actually gone down since then, but the US government publishes bogus economic data to cover this up (See John Williams' Shadow Stats for details). Meanwhile, there are signs that the militarized police state is getting ready to face open rebellion.

Two paths down

As we have shown, return on investment in empire has turned negative: the empire has to go further and further into debt just to continue shrinking its foreign presence by a third from its peak every decade. There are two ways out of this situation: quick and painful, or slow and even more painful.

The quick one is for the US to recognize the situation, cut its losses and abandon the project of empire, like the USSR did in 1989/90. But it must be understood that the threat of military action is what keeps countries around the world in line, forcing them to soak up US debt. Without this discipline, further money-printing will trigger hyperinflation, the financial house of cards on which the spending ability of the US government now rests will promptly pancake, and the US economy will shut down, just like in the USSR in the early 1990s.

The other option is the more likely one, since it doesn't require making any large course adjustments, which are unlikely in any case. (You see, even in its dying days the USSR had slightly better leadership than the USSA currently does, which was actually capable of making major decisions.) This option is to simply keep smiling and waving and borrowing and spending until the empire is all gone. This will take no more than two decades at the current rate. Note that this forecast is based on a straight-line projection that doesn't take into account any of the positive feedbacks that may hurry the process along. One positive feedback is that a smaller empire means more countries around the world thumbing their noses at the US, escaping from dollar hegemony, and making it harder for the US to continue sinking into debt at an ever faster rate. These positive feedbacks are likely to be highly nonlinear, and this makes their effect difficult to estimate.

But a moment may arrive well before empire is all gone when the suspension of disbelief that is required to keep US government finances from cratering ceases to be achievable—regardless of the level of propaganda, market distortion, or US officials smiling, waving and lying in front of television cameras. Thus, we have two estimates. The first estimate is objective and based on US government's own data: two decades or less. But we also have room for an estimate that is subjective yet bracketed: anywhere between later today and two decades (or less) from now.

Based on these estimates, you can be as objective or subjective as you like, but if you are “long empire,” holding dollar-denominated assets and such, and if your horizon extends beyond 2034 (or less), then there is a reasonably high likelihood that you are just being silly. Likewise, if you think that NATO will come to your defense more than a decade from now, you should start reconsidering your security arrangements now, because NATO will cease to be functional on the same time scale as the US empire. Some time ago Pres. Obama issued what for him sounded like a pretty good order: “Don't do stupid stuff.” You should probably try to follow this order too, and I am here to try to help you do so.