$30 Trillion Debt Gimmick

 

Japanese company replaces office workers with artificial intelligence

Justin McCurry in The Guardian

A future in which human workers are replaced by machines is about to become a reality at an insurance firm in Japan, where more than 30 employees are being laid off and replaced with an artificial intelligence system that can calculate payouts to policyholders.

Fukoku Mutual Life Insurance believes it will increase productivity by 30% and see a return on its investment in less than two years. The firm said it would save about 140m yen (£1m) a year after the 200m yen (£1.4m) AI system is installed this month. Maintaining it will cost about 15m yen (£100k) a year.

The move is unlikely to be welcomed, however, by 34 employees who will be made redundant by the end of March.

The system is based on IBM’s Watson Explorer, which, according to the tech firm, possesses “cognitive technology that can think like a human”, enabling it to “analyse and interpret all of your data, including unstructured text, images, audio and video”.

The technology will be able to read tens of thousands of medical certificates and factor in the length of hospital stays, medical histories and any surgical procedures before calculating payouts, according to the Mainichi Shimbun.

While the use of AI will drastically reduce the time needed to calculate Fukoku Mutual’s payouts – which reportedly totalled 132,000 during the current financial year – the sums will not be paid until they have been approved by a member of staff, the newspaper said.

Japan’s shrinking, ageing population, coupled with its prowess in robot technology, makes it a prime testing ground for AI.

According to a 2015 report by the Nomura Research Institute, nearly half of all jobs in Japan could be performed by robots by 2035.

Dai-Ichi Life Insurance has already introduced a Watson-based system to assess payments - although it has not cut staff numbers - and Japan Post Insurance is interested in introducing a similar setup, the Mainichi said.

AI could soon be playing a role in the country’s politics. Next month, the economy, trade and industry ministry will introduce AI on a trial basis to help civil servants draft answers for ministers during cabinet meetings and parliamentary sessions.

The ministry hopes AI will help reduce the punishingly long hours bureaucrats spend preparing written answers for ministers.

If the experiment is a success, it could be adopted by other government agencies, according the Jiji news agency.

If, for example a question is asked about energy-saving policies, the AI system will provide civil servants with the relevant data and a list of pertinent debating points based on past answers to similar questions.

The march of Japan’s AI robots hasn’t been entirely glitch-free, however. At the end of last year a team of researchers abandoned an attempt to develop a robot intelligent enough to pass the entrance exam for the prestigious Tokyo University.

“AI is not good at answering the type of questions that require an ability to grasp meanings across a broad spectrum,” Noriko Arai, a professor at the National Institute of Informatics, told Kyodo news agency.

Inflation falls to 0%: what does it mean for the UK economy?

With average earnings growing by just under 2%, living standards should rise and interest rates should remain low but it’s not all good news

Larry Elliott in The Guardian

Britain is within a month of a period of deflation. When the figures for March come out next month lower energy bills mean that the cost of living will be lower than it was a year earlier.

These are uncharted waters for the UK, at least in the modern era. There have been times when inflation has turned negative but they have been few and far between since the second world war, and there have been none since the move to the consumer prices index as the preferred yardstick.

The general assumption is that this is good news, for two reasons. The first is that the fall in inflation boosts living standards, because wages are rising faster than prices. Wages have risen extremely slowly since the recession of 2008-09 and even against a backdrop of falling unemployment are currently only going up by 1.6% a year.

But the sharp drop in oil prices in the second half of 2014 has pushed inflation lower and meant those modest wage increases now stretch further. This is clearly welcome news for the government, eager to fend off Labour’s accusation that the coalition has presided over a cost-of-living crisis. The opposition will say that the recent increase in living standards does not make up for the earlier falls.

The second boost to consumers comes from the outlook for interest rates. It will come as no surprise to the Bank of England that inflation now stands at zero, and the Bank’s governor, Mark Carney, has said it would be “foolish” to cut the cost of borrowing in response to what is thought to be a temporary fall in commodity prices.

That said, the Bank is not going to be in a hurry to raise rates either. All nine members of the Bank’s monetary policy committee are in favour of official interest rates remaining at 0.5%, which is where they have been since early 2009. They look like remaining there for the rest of this year, and one MPC member – Andy Haldane, the Bank’s chief economist – says he can contemplate voting to cut borrowing costs.

That’s because there’s a potential dark side to the fall in inflation, namely the risk that it becomes a permanent feature of the economic landscape. The reason the majority of economists view February’s zero inflation as benign is because they think lower unemployment will put upward pressure on wage settlements. Higher pay deals will start to push up inflation at a time when last year’s drop in oil prices starts to unwind. There is, on this view, little prospect of deflation becoming embedded, as it did in Japan.

This, though, assumes that wage settlements are not dragged lower by the drop in inflation. The fact that average earnings are growing at an annual rate of below 2% even after two years of a relatively robust period of growth is indicative of a labour market where employers are able to secure workers cheaply. They may be tempted to be even less generous once inflation goes negative.

The silent military coup that took over Washington

This time it's Syria, last time it was Iraq. Obama chose to accept the entire Pentagon of the Bush era: its wars and war crimes

• 
• • John Pilger
  • The Guardian, Tuesday 10 September 2013 19.15 BST

Children, many of whose deformities are believed to be the results of the chemical dioxin that the US used in the Vietnam war, play outside a hospital in Ho Chi Minh City. Photograph: Paula Bronstein/Getty Images

On my wall is the Daily Express front page of September 5 1945 and the words: "I write this as a warning to the world." So began Wilfred Burchett's report from Hiroshima. It was the scoop of the century. For his lone, perilous journey that defied the US occupation authorities, Burchett was pilloried, not least by his embedded colleagues. He warned that an act of premeditated mass murder on an epic scale had launched a new era of terror.

Almost every day now, he is vindicated. The intrinsic criminality of the atomic bombing is borne out in the US National Archives and by the subsequent decades of militarism camouflaged as democracy. The Syria psychodrama exemplifies this. Yet again we are held hostage by the prospect of a terrorism whose nature and history even the most liberal critics still deny. The great unmentionable is that humanity's most dangerous enemy resides across the Atlantic.

John Kerry's farce and Barack Obama's pirouettes are temporary. Russia's peace deal over chemical weapons will, in time, be treated with the contempt that all militarists reserve for diplomacy. With al-Qaida now among its allies, and US-armed coupmasters secure in Cairo, the US intends to crush the last independent states in the Middle East: Syria first, then Iran. "This operation [in Syria]," said the former French foreign minister Roland Dumas in June, "goes way back. It was prepared, pre-conceived and planned."

When the public is "psychologically scarred", as the Channel 4 reporter Jonathan Rugman described the British people's overwhelming hostility to an attack on Syria, suppressing the truth is made urgent. Whether or not Bashar al-Assad or the "rebels"used gas in the suburbs of Damascus, it is the US, not Syria, that is the world's most prolific user of these terrible weapons.

In 1970 the Senate reported: "The US has dumped on Vietnam a quantity of toxic chemical (dioxin) amounting to six pounds per head of population." This was Operation Hades, later renamed the friendlier Operation Ranch Hand – the source of what Vietnamese doctors call a "cycle of foetal catastrophe". I have seen generations of children with their familiar, monstrous deformities. John Kerry, with his own blood-soaked war record, will remember them. I have seen them in Iraq too, where the US used depleted uranium and white phosphorus, as did the Israelis in Gaza. No Obama "red line" for them. No showdown psychodrama for them.

The sterile repetitive debate about whether "we" should "take action" against selected dictators (ie cheer on the US and its acolytes in yet another aerial killing spree) is part of our brainwashing. Richard Falk, professor emeritus of international law and UN special rapporteur on Palestine, describes it as "a self-righteous, one-way, legal/moral screen [with] positive images of western values and innocence portrayed as threatened, validating a campaign of unrestricted political violence". This "is so widely accepted as to be virtually unchallengeable".

It is the biggest lie: the product of "liberal realists" in Anglo-American politics, scholarship and media who ordain themselves as the world's crisis managers, rather than the cause of a crisis. Stripping humanity from the study of nations and congealing it with jargon that serves western power designs, they mark "failed", "rogue" or "evil" states for "humanitarian intervention".

An attack on Syria or Iran or any other US "demon" would draw on a fashionable variant, "Responsibility to Protect", or R2P – whose lectern-trotting zealot is the former Australian foreign minister Gareth Evans, co-chair of a "global centre" based in New York. Evans and his generously funded lobbyists play a vital propaganda role in urging the "international community" to attack countries where "the security council rejects a proposal or fails to deal with it in a reasonable time".

Evans has form. He appeared in my 1994 film Death of a Nation, which revealed the scale of genocide in East Timor. Canberra's smiling man is raising his champagne glass in a toast to his Indonesian equivalent as they fly over East Timor in an Australian aircraft, having signed a treaty to pirate the oil and gas of the stricken country where the tyrant Suharto killed or starved a third of the population.

Under the "weak" Obama, militarism has risen perhaps as never before. With not a single tank on the White House lawn, a military coup has taken place in Washington. In 2008, while his liberal devotees dried their eyes, Obama accepted the entire Pentagon of his predecessor, George Bush: its wars and war crimes. As the constitution is replaced by an emerging police state, those who destroyed Iraq with shock and awe, piled up the rubble in Afghanistan and reduced Libya to a Hobbesian nightmare, are ascendant across the US administration. Behind their beribboned facade, more former US soldiers are killing themselves than are dying on battlefields. Last year 6,500 veterans took their own lives. Put out more flags.

The historian Norman Pollack calls this "liberal fascism": "For goose-steppers substitute the seemingly more innocuous militarisation of the total culture. And for the bombastic leader, we have the reformer manqué, blithely at work, planning and executing assassination, smiling all the while." Every Tuesday the "humanitarian" Obama personally oversees a worldwide terror network of drones that "bugsplat" people, their rescuers and mourners. In the west's comfort zones, the first black leader of the land of slavery still feels good, as if his very existence represents a social advance, regardless of his trail of blood. This obeisance to a symbol has all but destroyed the US anti-war movement – Obama's singular achievement.

In Britain, the distractions of the fakery of image and identity politics have not quite succeeded. A stirring has begun, though people of conscience should hurry. The judges at Nuremberg were succinct: "Individual citizens have the duty to violate domestic laws to prevent crimes against peace and humanity." The ordinary people of Syria, and countless others, and our own self-respect, deserve nothing less now.

George Osborne's description of the economy is near-Orwellian

The fact that even Labour accepts the UK is 'on the mend' shows how low our expectations of economic performance are

• 
• • Ha-Joon Chang
  • The Guardian, Friday 26 July 2013 20.01 BST

George Osborne this week. 'The UK's economic performance since the start of the coalition government … has been so poor that Thursday's announcement of 0.6% growth … was greeted with a collective sigh of relief.' Photograph: Christopher Thomond

If all else fails, they say, you can always lower your standards. This is what we have become used to doing in relation to the UK economy. The UK's economic performance since the start of the coalition government in May 2010 has been so poor that Thursday's announcement of 0.6% growth in the second quarter of 2013 was greeted with a collective sigh of relief.

Having declared the UK economy to be "on the mend" on the strength of this growth figure, George Osborne is said to have regained his swagger. Even the opposition grudgingly acknowledged that the latest figures were good enough news, although it was quick to add that the benefits of the recovery have been almost exclusively concentrated at the top.

But even the opposition's interpretation may be too charitable. Including the last quarter, the UK economy has grown by just 2.1% during the 12 quarters since the current government came to power. This compares very poorly with the 2% growth that the economy had managed in just four quarters between the third quarter of 2009 and the second quarter of 2010. The coalition blames this poor performance on the eurozone crisis. But this argument is not very persuasive when output has more than recovered to pre-crisis level in many eurozone countries, including France and Germany, while UK output is still 3.3% less than what it was at the beginning of 2008.

It gets worse. During the past five years, the UK's population has grown by 3%. This means that, on a per capita basis, the country's income is 6.3%, not just 3.3%, less today than it was five years go. This performance is far worse than what Japan managed during its infamous "lost decade" of the 90s. At the end of that period, Japan had a per capita income 10% higher than at the start.

If the UK is to match this performance during what looks certain to be its own "lost decade", it will have to grow at the rate of 3.9% every year for the next five years (or 3.3% in per capita terms, assuming that the past five years' population growth rate of 0.6% per year continues). Even the most optimistic cheerleaders for the coalition government are not talking such numbers.

Thus seen, describing the UK economy as being "on the mend" is a near-Orwellian redefinition of economic recovery. The fact that most people accept that description, even if with reservations about the uneven distribution of its benefits, shows how low the standard of performance we expect of the UK economy has become.

But even applying this low standard, it is not clear whether we can expect a sustained recovery in the coming years. There are at least two factors that can derail the recovery process, especially given that it is so feeble. The first is the likely evolution of the global economy. The eurozone may be dragging itself out of a recession, but things can turn for the worse at any moment. Especially given the severity of austerity in countries such as Greece, Spain and Portugal, the policy's continuation may result in another bout of political unrest, negatively affecting the economy.

Thanks to its avoidance of the worst form of austerity policy, the US economy has recovered from the 2008 crisis more strongly than the European countries. But with another federal debt ceiling negotiation looming later in the year, it is possible that the US recovery will be set back by another round of budget cuts. The Chinese economy has visibly slowed down. And the Chinese government seems determined to keep it that way for a while. Concerned with financial stability, it has clamped down on credit expansion. Worried about seething public anger against government corruption and extravagance, it has imposed a ban on "wasteful" government spending (lavish buildings, banquets, and foreign trips). These are all good policies in the long run, but they will dampen Chinese demand in the immediate future.

The other two biggest "emerging" economies, Brazil (second largest) and India (third), have both seriously slowed down in the last couple of years. India's growth rate fell from 10.5% in 2010 to 6.3% in 2011, and then to 3.2% in 2012. The equivalent figures for Brazil were 7.5%, 2.7%, and 0.9%. Both these economies suffer from high inequality and social tensions, as shown by the recent protests in Brazil and the resurgence of Maoist guerillas called the Naxalites in the eastern part of India. Therefore there is always a possibility that political unrest may dampen these economies even further.

These global factors are, of course, beyond the UK's control, but there is another factor at least partially within its control that may derail the recovery. It is the asset bubbles that have developed in the stock market and the property market, fuelled by cheap credit (sounds familiar?).

Share prices have reached levels that simply cannot be justified by the state of the economy. In May 2013, the FTSE 100 share price index surpassed the pre-crisis peak of June 2007, although it has come down a bit since then. Given that the pre-crisis peak was supported by a buoyant (albeit unsustainable) economy, current share prices, which have no such support, can only be described as an even bigger asset bubble.

Although the rest of the country is still experiencing a stagnant housing market, property markets in London and the south-east are beginning to look inflated, given the state of the economy. And the government is stoking this property bubble with the Help to Buy scheme.

These asset bubbles have provided important sources of demand in the UK economy in the past few years. But the trouble is that they are quite shaky even for asset bubbles, for they are only sustained by historically low interest rates and the massive indirect subsidies given to banks through the so-called quantitative easing scheme.

The fragile nature of these bubbles is revealed by the nervousness with which financial market participants react to pronouncements by central bankers. They know that the current price levels are viable only with QE, so they are readying themselves to jump as soon as there is a sign that it may come to an end. When the asset bubbles deflate, there is likely to be a serious fall in demand that will derail the recovery.

In the past few years the UK should have found a way to stage a recovery without having to rely on state-sponsored asset bubbles. As it hasn't even tried, it is facing the prospect of having a "lost decade" that is even more "lost" than the original one in Japan. 

Schumpeter's long revenge

By Chan Akya in Asia Times Online

News about major retail chains such as HMV and Blockbuster closing shop inevitably attract greater than usual attention because they sell media content and therefore operate on the edge of the world of entertainment. That said, the demise was fairly obvious to anyone who had read their balance sheets, which have been decimated by technological changes led essentially by Apple but more generically by the broader applications of the Internet and improved hardware. 

Selling and renting films respectively, HMV and Blockbuster were a key part of all retail malls and "high" streets in the UK with similar brands in other countries including in Hong Kong and Singapore. The advent of amazon.com was the first shot across their bows; one that both chains failed to heed. As the business of selling books through bookstores evaporated in the late '90s, the retail chains selling and renting movies and music failed to make the connection between the physical world and the augmented reality shopping of the Internet. 

The process was to accelerate with improved software - Apple's iTunes comes to mind - even as hardware continued to provide an underwhelming experience. The inability to bridge the quality gaps in films and music (or else apply them to an environment where more people were using crummy mobile devices for enjoying the same) simply meant that all competition ended up being about price. This was the wrong battleground and, much like Napoleon's forces marooned in the harsh Russian winter 200 years ago, the retail chains were destroyed. 

Oddly enough, HMV also played a small part in the global financial crisis; one of the largest lawsuits from that era pertained to Guy Hands' private equity firm Terra Firm filing suit for misrepresentations against its banker, Citibank, over its purchase of EMI from which HMV had been spun off to a separate listing in 1998. 

Although the suit was pretty quickly dismissed, opportunities for mirth abounded from the materials provided as part of the proceedings. Such large leveraged buyouts generated billions in loans that were purchased by collateralized loan obligation vehicles, which in turn were partly funded by the shadow banking system that helped to fell the global economy in 2007-08. 

In any event, the various reorganization plans filed by HMV management provided fodder for private equity firms on its own; in parallel, Blockbuster went through its own interaction with the forces of competition. While the global business of Blockbuster went into administration in 2010, the company continued to operate in many parts of the world. Last week's closure of the UK business is a continuation of the global process. 

The circle of stupidity

On the other end of the scale from market forces is the circle of stupidity that underpins global monetary policy today. 

An industrial version of the HMV/ Blockbuster process of creative destruction is Japan, an article about which I wrote late last year, touching upon the effects of competitive landscape changes ushered in by the pincer grip of South Korea and China at the branded and generic ends of manufacturing respectively; even as sclerotic politics and inane monetary policies end up accelerating the decline. (See The end of Japan as we know it, Asia Times Online, November 27, 2012). 

Following the elections, Japan's monetary policy impetus has moved into aggressive easing as the government and the Bank of Japan attempt to push the yen sharply lower by easing quantitative policy and accelerating the purchase of bonds issued by the US and European governments (the Italians and the Spanish sent a couple of "thank you" notes to the new government, presumably). 

Meanwhile, other Asian countries - primarily Korea and China - are increasing their own purchase of Japanese government bonds to offset the effect of a falling yen on their own currencies. And all along, Federal Reserve chairman Ben Bernanke and European Central Bank president Mario Draghi are cheerfully printing money by the trillions to support yawning fiscal deficits and to keep their currencies from rising. 

Think of the average pensioner anywhere in the Group of Eight leading industrialized nations and the picture is downright depressing. With regular income from bonds and bank accounts whittled down to barely nothing, they are being forced to take on financial risks by purchasing "high dividend" stocks or worse, corporate bonds. These are not folks who are equipped to analyze such risks, let alone manage them. 

Businesses go bust when they run out of liquidity, not when they run out of "capital" or any such esoteric concept. Granted that HMV and Blockbuster were so bad that not even all the money sloshing around the global financial system could save them, but that also raises the question of how many companies and governments survive today because of the excess money sloshing around. 

At the very least, we know that interest rates and risk premia are severely depressed in G-8 countries and, as a result, across much of the financial world. There are countries that would be considered borderline default where government bond spreads are trading well under 5%, an anomaly that makes no sense irrespective of the "base" funding rate. Similarly, equity markets are getting record inflows at a time when valuations aren't exactly cheap anywhere in the world. 

Such conditions are usually spelt b-u-b-b-l-e; and I entirely hold Bernanke, Draghi and their kin responsible for this state of affairs. There will be time of reckoning later, but for now we will have to live with all the Keynesian rationalization. 

Why is Schumpeter important

One of the key defenses used by those seeking to broaden the ambit of monetary policy whilst emptying government coffers is that corporate closures are bad form and cause disruptions for employees and other stakeholders alike. This is indeed true over the short term, but over the longer term the truth is perhaps in the opposite direction and in line with the views of Austrian economist Joseph Schumpeter on "creative destruction". 

Systems that weed out inefficient capital users end up deploying funds to more deserving users thereby reducing the overall risk of the system and increasing the gap between risky and less risky ventures; this extra compensation therefore ends up attracting more robust capital - and perhaps more appropriate capital for risky ventures. 

In contrast to this, folk who lend money to French companies - typically only other French folk - see their risk analysis dulled by constant government intervention and corporate subsidies (internally) to their worst divisions. When the car firm Peugeot decided to shutter some plants and fire workers recently, the howls of protest were loudest from the country's socialist government, which may however not have quite realized that by denying the company such internal efficiencies they inevitably put the firm at a longer-term disadvantage that increases the chances of a comprehensive collapse at a later date. 

Investors in such countries will also be confused as to the correct risk premium for a loss-making company compared to that for a profitable company; because debt is about getting one's funds back, the question becomes academic if loss-makers are routinely bailed out. This dulls the calculation of risk, inevitably driving inappropriate funds - pension funds and the like - towards risky assets. 

That is the reason why the HMV and Blockbuster stories are important. By providing a timely reminder that bad businesses will not survive even the easiest of monetary conditions, they have served to remind all of us of events likely to unfold when the price of money starts adjusting towards more appropriate levels.

'Old people should hurry up and die', says Japan deputy leader

Taro Aso, Japan's deputy prime minister, has been forced to pedal back from a suggestion that old people should "hurry up and die" to save the state the cost of providing them with medical care.


Mr Aso, who has a reputation for speaking indelicately, was commenting at a meeting of the National Council on Social Security Reforms on Monday on the heavy burden imposed on the nation's finances by prolonging patients' lives with treatment.



Describing patients with serious illnesses as "tube persons," Mr Aso, who is 72, said they should be "allowed to die quickly" if they want to, Kyodo News reported.



"Heaven forbid I should be kept alive if I want to die," he said. "You cannot sleep well when you think it's all paid by the government. This won't be solved unless you let them hurry up and die."



Mr Aso later issued a statement retracting some of his remarks and admitting it had been "inappropriate" to make such comments in public.



Mr Aso became renown for his asides during a brief stint as prime minister in 2009, during which he told a group of university students that young people should not get married because they are too poor and are therefore not worthy of respect from a life partner.

 That insight was followed by the declaration that followers of the world's religions should learn from Japan's work ethic.


"To work is good. That is a completely different way of thinking to the Old Testament," Mr Aso said in January 2009. "We should share that philosophy with many other nations."



Three months previously, he offended doctors by saying many of their number "lack common sense." The same day, he upset parents at a kindergarten by informing them that parents are often the ones that need to be disciplined, not their children.



Mr Aso also managed to offend the Democratic Party of Japan by comparing it with the Nazi Party, people with Alzheimer's disease and China, which he described as "a significant threat."

The rebirth of Japan

What's the story of the next decade?

The country's urge to reset its business culture is a lesson to Britain in finding the way back to prosperity

• 
• • Will Hutton
  • The Observer, Sunday 1 April 2012 
  • 
    

In some fields Japan is years ahead of the rest of the world. Photograph: Gina Calvi/Alamy

It is a small thing, but it says a lot about the country. At Tokyo's Narita airport, when you take off your shoes at the security screening check, the guard hands you a pair of leather slippers. The message is obvious: this airport cares for your wellbeing and recognises your need.

In Japan, taxi doors swing open automatically; toilet seats are electronically warmed and cleaned; and the extraordinary variety of food is presented exquisitely. There is a passion for satiating every imaginable human want and a joy in embracing the science, technology and innovation that might help deliver just that.

For 40 years, between 1950 and 1990, this passion was a key ingredient driving one of the most remarkable periods of growth in economic history. But for the past 20 years, Japan has been stricken by stagnation. In the late 1980s-90s, it suffered a financial crisis nearly as severe as our own. The economic model – the Ministry of International Trade and Industry guiding Japanese companies; the keiretsu networks of loosely conglomerated firms and associated banks; the great global brands – suffered an implosion.

Yet this remains a $5trn economy, the third largest on the planet. The Japanese themselves are desperate to recover the elixir of growth, and understand that economic conservatism – in Japan just as in Britain – leads to disappointment and heartbreak.

In 2009, the Democratic party of Japan was elected by a landslide, pledging a root and branch reform of every bureaucratic, corporatist and anti-democratic element in Japan's broken system. It also pledged to recast economic policy to serve the people. Despite some epic mistakes, notably its handling of the Fukushima nuclear disaster, it still holds an opinion poll lead over its rival, the Liberal Democratic party (LDP).

However, forces within the government are very much open to pondering where it should go next. Ten days ago, I was invited by the DPJ government to go to Tokyo to contribute to this ongoing conversation.

Cabinet members wanted to discuss what a 21st-century social contract might look like, respecting both necessary labour market flexibility and security. They wanted to understand the contribution that open innovation ecosystems and an entrepreneurial state can play in driving forward innovation and investment. Above all, they asked: how could Japan reinvent its stakeholder capitalism of the second half of the 20th century so that it was more democratic? And they thought there might be something in my ideas rehearsed in the books The State We're In and Them and Us. In short, how could Japan do good capitalism?

It is the question – not only in Japan but, I would argue, in Britain. In Japan the devastating earthquake in Tohoku 12 months ago has made it even more acute. Three hundred and forty thousand people are still without homes. At least 19,000 died. And the nuclear power station at Fukushima very nearly suffered a meltdown.

At the time of the crisis, Japan hoped that, with the DPJ in power, there would be a decisive change from the way such matters had been handled in the past – obfuscation, delay, inactivity and anxiety to protect corporate interests. Yet the new government bounced off the secrecy of Tokyo Electric Power Company, the bureaucratic ministries, a muzzled media and the enveloping tentacles of the employers' organisation, the Keidanren, as if nothing had changed. Prime Minster Kan became party to delivering inadequate and late information via the impenetrable state and corporate networks; many Japanese became devotees of BBC World News as the only purveyor of truth. Kan was forced to resign last summer.

But the Japanese electorate is not ready to return to the status quo. They know they need nuclear power which just 12 months ago provided more than a third of their electricity needs; but as power stations are being closed down for safety inspections local communities are vetoing their reopening. In May, the last nuclear power station operating will also be mothballed.

The terms for their restarting are tough. Local communities, fired up by a new citizen activism, want effective oversight, transparency of information and commitments to meet international safety standards. It is Japanese good capitalism, driven by citizen demands from below.

Faced with this new phenomenon, the LDP is at a loss, while the DPJ itself seems to be re-gathering its conviction that its reform agenda is the only way forward. At an open meeting in the Japanese parliament, I was struck by the interest DPJ MPs showed in discussing innovative ways of kickstarting credit flows – as anathema to the Bank of Japan and Ministry of Finance as they are to the Bank of England and Treasury.

The Bank of Japan has just expanded a version of the Bank of England's quantitative easing programme; but abstains from the activism it used to show in the great days of Japan's growth. The conclusions are obvious. Japan's financial system is broken; an activist state has to restart bank lending by assuming some of the risk – just as it must in Britain.

If Japan could reset its macroeconomic policy, there is an enormous pool of dynamic hi-tech medium-sized firms that could immediately grow very fast. Consultant Gerhard Fasol argues that in areas like LED lighting or mobile phone payment systems, Japan is 10 years ahead of the rest of the world. The Fujitsus and Toshibas of tomorrow are in the wings. What Japan needs is for the increasingly sclerotic giants to be challenged by these many insurgents, who need new institutions to support their ambitions to go global. A new entrepreneurial, accountable state could drive a second phase of powerful Japanese growth.

These debates are foreign to our primitive business culture, which undervalues service and innovation and scarcely thinks about a more productive capitalism. There is a long list of British companies that have tried to break into Japan's market and failed. Observers say the common theme is wholesale insensitivity to the need for service and innovation, the precondition for any success in Japan.

Britain and Japan are two island economies, both mired in private debt with stricken financial systems. Although Japan has a long way to go, it is becoming obvious, confirmed by last week's British budget, which of the two countries is most likely to create the 21st-century framework for growth and prosperity. The Asian story of the next decade will be Japan's renaissance and China's relapse.

'Losing' the world: American decline in perspective, part 1

US foreign policy 'experts' only ever provide an echo chamber for American imperial power. A longer, broader view is necessary

• 
• • Noam Chomsky for TomDispatch, part of the Guardian Comment Network
  • guardian.co.uk, Tuesday 14 February 2012

Significant anniversaries are solemnly commemorated – Japan's attack on the US naval base at Pearl Harbor, for example. Others are ignored, and we can often learn valuable lessons from them about what is likely to lie ahead. Right now, in fact.

At the moment, we are failing to commemorate the 50th anniversary of President John F Kennedy's decision to launch the most destructive and murderous act of aggression of the post-second world war period: the invasion of South Vietnam, later all of Indochina, leaving millions dead and four countries devastated, with casualties still mounting from the long-term effects of drenching South Vietnam with some of the most lethal carcinogens known, undertaken to destroy ground cover and food crops.
The prime target was South Vietnam. The aggression later spread to the North, then to the remote peasant society of northern Laos, and finally to rural Cambodia, which was bombed at the stunning level of all allied air operations in the Pacific region during second world war, including the two atom bombs dropped on Hiroshima and Nagasaki. In this, Henry Kissinger's orders were being carried out – "anything that flies on anything that moves" – a call for genocide that is rare in the historical record. Little of this is remembered. Most was scarcely known beyond narrow circles of activists.
When the invasion was launched 50 years ago, concern was so slight that there were few efforts at justification, hardly more than the president's impassioned plea that "we are opposed around the world by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence", and if the conspiracy achieves its ends in Laos and Vietnam, "the gates will be opened wide."

Elsewhere, he warned further that "the complacent, the self-indulgent, the soft societies are about to be swept away with the debris of history [and] only the strong … can possibly survive," in this case reflecting on the failure of US aggression and terror to crush Cuban independence.

By the time protest began to mount half a dozen years later, the respected Vietnam specialist and military historian Bernard Fall, no dove, forecast that "Vietnam as a cultural and historic entity … is threatened with extinction … [as] … the countryside literally dies under the blows of the largest military machine ever unleashed on an area of this size." He was again referring to South Vietnam.
When the war ended eight horrendous years later, mainstream opinion was divided between those who described the war as a "noble cause" that could have been won with more dedication, and at the opposite extreme, the critics, to whom it was "a mistake" that proved too costly. By 1977, President Carter aroused little notice when he explained that we owe Vietnam "no debt" because "the destruction was mutual."

There are important lessons in all this for today, even apart from another reminder that only the weak and defeated are called to account for their crimes. One lesson is that to understand what is happening, we should attend not only to critical events of the real world, often dismissed from history, but also to what leaders and elite opinion believe, however tinged with fantasy. Another lesson is that alongside the flights of fancy concocted to terrify and mobilize the public (and perhaps believed by some who are trapped in their own rhetoric), there is also geo-strategic planning based on principles that are rational and stable over long periods because they are rooted in stable institutions and their concerns. That is true in the case of Vietnam, as well. I will return to that, only stressing here that the persistent factors in state action are generally well concealed.

The Iraq war is an instructive case. It was marketed to a terrified public on the usual grounds of self-defense against an awesome threat to survival: the "single question", George W Bush and Tony Blair declared, was whether Saddam Hussein would end his programs of developing weapons of mass destruction. When the single question received the wrong answer, government rhetoric shifted effortlessly to our "yearning for democracy", and educated opinion duly followed course; all routine.
Later, as the scale of the US defeat in Iraq was becoming difficult to suppress, the government quietly conceded what had been clear all along. In 2007-2008, the administration officially announced that a final settlement must grant the US military bases and the right of combat operations, and must privilege US investors in the rich energy system – demands later reluctantly abandoned in the face of Iraqi resistance. And all well kept from the general population.

Gauging American decline

With such lessons in mind, it is useful to look at what is highlighted in the major journals of policy and opinion today. Let us keep to the most prestigious of the establishment journals, Foreign Affairs. The headline blaring on the cover of the December 2011 issue reads in bold face: "Is America Over?"
The title article calls for "retrenchment" in the "humanitarian missions" abroad that are consuming the country's wealth, so as to arrest the American decline that is a major theme of international affairs discourse, usually accompanied by the corollary that power is shifting to the East, to China and (maybe) India.

The lead articles are on Israel-Palestine. The first, by two high Israeli officials, is entitled "The Problem is Palestinian Rejection": the conflict cannot be resolved because Palestinians refuse to recognize Israel as a Jewish state – thereby conforming to standard diplomatic practice: states are recognized, but not privileged sectors within them. The demand is hardly more than a new device to deter the threat of political settlement that would undermine Israel's expansionist goals.
The opposing position, defended by an American professor, is entitled "The Problem Is the Occupation." The subtitle reads "How the Occupation is Destroying the Nation." Which nation? Israel, of course. The paired articles appear under the heading "Israel under Siege".
The January 2012 issue features yet another call to bomb Iran now, before it is too late. Warning of "the dangers of deterrence", the author suggests that:

"[S]keptics of military action fail to appreciate the true danger that a nuclear-armed Iran would pose to US interests in the Middle East and beyond. And their grim forecasts assume that the cure would be worse than the disease – that is, that the consequences of a US assault on Iran would be as bad as or worse than those of Iran achieving its nuclear ambitions. But that is a faulty assumption. The truth is that a military strike intended to destroy Iran's nuclear program, if managed carefully, could spare the region and the world a very real threat and dramatically improve the long-term national security of the United States."

Others argue that the costs would be too high, and at the extremes, some even point out that an attack would violate international law – as does the stand of the moderates, who regularly deliver threats of violence, in violation of the UN Charter.

Let us review these dominant concerns in turn.

American decline is real, though the apocalyptic vision reflects the familiar ruling-class perception that anything short of total control amounts to total disaster. Despite the piteous laments, the US remains the world dominant power by a large margin, and no competitor is in sight, not only in the military dimension, in which, of course, the US reigns supreme.

China and India have recorded rapid (though highly inegalitarian) growth, but remain very poor countries, with enormous internal problems not faced by the West. China is the world's major manufacturing center, but largely as an assembly plant for the advanced industrial powers on its periphery and for western multinationals. That is likely to change over time. Manufacturing regularly provides the basis for innovation, often breakthroughs, as is now sometimes happening in China. One example that has impressed western specialists is China's takeover of the growing global solar panel market, not on the basis of cheap labor, but by coordinated planning and, increasingly, innovation.
But the problems China faces are serious. Some are demographic, reviewed in Science, the leading US science weekly. The study shows that mortality sharply decreased in China during the Maoist years, "mainly a result of economic development and improvements in education and health services, especially the public hygiene movement that resulted in a sharp drop in mortality from infectious diseases." This progress ended with the initiation of the capitalist reforms 30 years ago, and the death rate has since increased.

Furthermore, China's recent economic growth has relied substantially on a "demographic bonus", a very large working-age population. "But the window for harvesting this bonus may close soon," with a "profound impact on development": "Excess cheap labor supply, which is one of the major factors driving China's economic miracle, will no longer be available."

Demography is only one of many serious problems ahead. For India, the problems are far more severe.

Not all prominent voices foresee American decline. Among international media, there is none more serious and responsible than the London Financial Times. It recently devoted a full page to the optimistic expectation that new technology for extracting North American fossil fuels might allow the US to become energy-independent, hence to retain its global hegemony for a century. There is no mention of the kind of world the US would rule in this happy event, but not for lack of evidence.

At about the same time, the International Energy Agency reported that, with rapidly increasing carbon emissions from fossil fuel use, the limit of safety will be reached by 2017, if the world continues on its present course. "The door is closing," the IEA chief economist said, and very soon it "will be closed forever".

Shortly before the US Department of Energy reported the most recent carbon dioxide emissions figures, which "jumped by the biggest amount on record" to a level higher than the worst-case scenario anticipated by the International Panel on Climate Change (IPCC). That came as no surprise to many scientists, including the MIT program on climate change, which for years has warned that the IPCC predictions are too conservative.

Such critics of the IPCC predictions receive virtually no public attention, unlike the fringe of denialists who are supported by the corporate sector, along with huge propaganda campaigns that have driven Americans off the international spectrum in dismissal of the threats. Business support also translates directly to political power. Denialism is part of the catechism that must be intoned by Republican candidates in the farcical election campaign now in progress, and in Congress, they are powerful enough to abort even efforts to inquire into the effects of global warming, let alone do anything serious about it.

In brief, American decline can perhaps be stemmed if we abandon hope for decent survival – prospects that are all too real, given the balance of forces in the world.

'Losing' China and Vietnam

Putting such unpleasant thoughts aside, a close look at American decline shows that China indeed plays a large role, as it has for 60 years. The decline that now elicits such concern is not a recent phenomenon. It traces back to the end of the second world war, when the US had half the world's wealth and incomparable security and global reach. Planners were naturally well aware of the enormous disparity of power, and intended to keep it that way.

The basic viewpoint was outlined with admirable frankness in a major state paper of 1948 (PPS 23). The author was one of the architects of the "new world order" of the day, the chair of the State Department policy planning staff, the respected statesman and scholar George Kennan, a moderate dove within the planning spectrum. He observed that the central policy goal was to maintain the "position of disparity" that separated our enormous wealth from the poverty of others. To achieve that goal, he advised, "We should cease to talk about vague and … unreal objectives such as human rights, the raising of the living standards, and democratization," and must "deal in straight power concepts", not "hampered by idealistic slogans" about "altruism and world-benefaction."

Kennan was referring specifically to Asia, but the observations generalize, with exceptions, for participants in the US-run global system. It was well understood that the "idealistic slogans" were to be displayed prominently when addressing others, including the intellectual classes, who were expected to promulgate them.

The plans that Kennan helped formulate and implement took for granted that the US would control the western hemisphere, the Far East, the former British empire (including the incomparable energy resources of the Middle East), and as much of Eurasia as possible, crucially its commercial and industrial centers. These were not unrealistic objectives, given the distribution of power. But decline set in at once.

In 1949, China declared independence, an event known in Western discourse as "the loss of China" – in the US, with bitter recriminations and conflict over who was responsible for that loss. The terminology is revealing. It is only possible to lose something that one owns. The tacit assumption was that the US owned China, by right, along with most of the rest of the world, much as postwar planners assumed.

The "loss of China" was the first major step in "America's decline". It had major policy consequences. One was the immediate decision to support France's effort to reconquer its former colony of Indochina, so that it, too, would not be "lost".

Indochina itself was not a major concern, despite claims about its rich resources by President Eisenhower and others. Rather, the concern was the "domino theory", which is often ridiculed when dominoes don't fall, but remains a leading principle of policy because it is quite rational. To adopt Henry Kissinger's version, a region that falls out of control can become a "virus" that will "spread contagion", inducing others to follow the same path.

In the case of Vietnam, the concern was that the virus of independent development might infect Indonesia, which really does have rich resources. And that might lead Japan – the "superdomino" as it was called by the prominent Asia historian John Dower – to "accommodate" to an independent Asia as its technological and industrial center in a system that would escape the reach of US power. That would mean, in effect, that the US had lost the Pacific phase of the second world war, fought to prevent Japan's attempt to establish such a new order in Asia.

The way to deal with such a problem is clear: destroy the virus and "inoculate" those who might be infected. In the Vietnam case, the rational choice was to destroy any hope of successful independent development and to impose brutal dictatorships in the surrounding regions. Those tasks were successfully carried out – though history has its own cunning, and something similar to what was feared has since been developing in East Asia, much to Washington's dismay.

The most important victory of the Indochina wars was in 1965, when a US-backed military coup in Indonesia led by General Suharto carried out massive crimes that were compared by the CIA to those of Hitler, Stalin, and Mao. The "staggering mass slaughter", as the New York Times described it, was reported accurately across the mainstream, and with unrestrained euphoria.

It was "a gleam of light in Asia", as the noted liberal commentator James Reston wrote in the Times. The coup ended the threat of democracy by demolishing the mass-based political party of the poor, established a dictatorship that went on to compile one of the worst human rights records in the world, and threw the riches of the country open to western investors. Small wonder that, after many other horrors, including the near-genocidal invasion of East Timor, Suharto was welcomed by the Clinton administration in 1995 as "our kind of guy".

Years after the great events of 1965, Kennedy-Johnson national security adviser McGeorge Bundy reflected that it would have been wise to end the Vietnam war at that time, with the "virus" virtually destroyed and the primary domino solidly in place, buttressed by other US-backed dictatorships throughout the region.

Similar procedures have been routinely followed elsewhere. Kissinger was referring specifically to the threat of socialist democracy in Chile. That threat was ended on another forgotten date, what Latin Americans call "the first 9/11", which in violence and bitter effects far exceeded the 9/11 commemorated in the west. A vicious dictatorship was imposed in Chile, one part of a plague of brutal repression that spread through Latin America, reaching Central America under Reagan. Viruses have aroused deep concern elsewhere as well, including the Middle East, where the threat of secular nationalism has often concerned British and US planners, inducing them to support radical Islamic fundamentalism to counter it.

The concentration of wealth and American decline

Despite such victories, American decline continued. By 1970, US share of world wealth had dropped to about 25%, roughly where it remains, still colossal but far below the end of the second world war. By then, the industrial world was "tripolar": US-based North America, German-based Europe, and East Asia, already the most dynamic industrial region, at the time Japan-based, but by now including the former Japanese colonies Taiwan and South Korea, and, more recently, China.

At about that time, American decline entered a new phase: conscious self-inflicted decline. From the 1970s, there has been a significant change in the US economy, as planners, private and state, shifted it toward financialization and the offshoring of production, driven in part by the declining rate of profit in domestic manufacturing. These decisions initiated a vicious cycle in which wealth became highly concentrated (dramatically so in the top 0.1% of the population), yielding concentration of political power, hence legislation to carry the cycle further: taxation and other fiscal policies, deregulation, changes in the rules of corporate governance allowing huge gains for executives, and so on.

Meanwhile, for the majority, real wages largely stagnated, and people were able to get by only by sharply increased workloads (far beyond Europe), unsustainable debt, and repeated bubbles since the Reagan years, creating paper wealth that inevitably disappeared when they burst (and the perpetrators were bailed out by the taxpayer). In parallel, the political system has been increasingly shredded as both parties are driven deeper into corporate pockets with the escalating cost of elections – the Republicans to the level of farce, the Democrats (now largely the former "moderate Republicans") not far behind.

A recent study by the Economic Policy Institute, which has been the major source of reputable data on these developments for years, is entitled Failure by Design. The phrase "by design" is accurate. Other choices were certainly possible. And as the study points out, the "failure" is class-based. There is no failure for the designers. Far from it. Rather, the policies are a failure for the large majority, the 99% in the imagery of the Occupy movements – and for the country, which has declined and will continue to do so under these policies.

One factor is the offshoring of manufacturing. As the solar panel example mentioned earlier illustrates, manufacturing capacity provides the basis and stimulus for innovation leading to higher stages of sophistication in production, design, and invention. That, too, is being outsourced, not a problem for the "money mandarins" who increasingly design policy, but a serious problem for working people and the middle classes, and a real disaster for the most oppressed, African Americans, who have never escaped the legacy of slavery and its ugly aftermath, and whose meager wealth virtually disappeared after the collapse of the housing bubble in 2008, setting off the most recent financial crisis, the worst so far.

American Decline in Perspective, Part 2
By Noam Chomsky

In the years of conscious, self-inflicted decline at home, “losses” continued to mount elsewhere.  In the past decade, for the first time in 500 years, South America has taken successful steps to free itself from western domination, another serious loss. The region has moved towards integration, and has begun to address some of the terrible internal problems of societies ruled by mostly Europeanized elites, tiny islands of extreme wealth in a sea of misery.  They have also rid themselves of all U.S. military bases and of IMF controls.  A newly formed organization, CELAC, includes all countries of the hemisphere apart from the U.S. and Canada.  If it actually functions, that would be another step in American decline, in this case in what has always been regarded as “the backyard.”

Even more serious would be the loss of the MENA countries -- Middle East/North Africa -- which have been regarded by planners since the 1940s as “a stupendous source of strategic power, and one of the greatest material prizes in world history.” Control of MENA energy reserves would yield “substantial control of the world,” in the words of the influential Roosevelt advisor A.A. Berle.
To be sure, if the projections of a century of U.S. energy independence based on North American energy resources turn out to be realistic, the significance of controlling MENA would decline somewhat, though probably not by much: the main concern has always been control more than access.  However, the likely consequences to the planet’s equilibrium are so ominous that discussion may be largely an academic exercise.

The Arab Spring, another development of historic importance, might portend at least a partial “loss” of MENA.  The US and its allies have tried hard to prevent that outcome -- so far, with considerable success.  Their policy towards the popular uprisings has kept closely to the standard guidelines: support the forces most amenable to U.S. influence and control.

Favored dictators are supported as long as they can maintain control (as in the major oil states).  When that is no longer possible, then discard them and try to restore the old regime as fully as possible (as in Tunisia and Egypt).  The general pattern is familiar: Somoza, Marcos, Duvalier, Mobutu, Suharto, and many others.  In one case, Libya, the three traditional imperial powers intervened by force to participate in a rebellion to overthrow a mercurial and unreliable dictator, opening the way, it is expected, to more efficient control over Libya’s rich resources (oil primarily, but also water, of particular interest to French corporations), to a possible base for the U.S. Africa Command (so far restricted to Germany), and to the reversal of growing Chinese penetration.  As far as policy goes, there have been few surprises.

Crucially, it is important to reduce the threat of functioning democracy, in which popular opinion will significantly influence policy.  That again is routine, and quite understandable.  A look at the studies of public opinion undertaken by U.S. polling agencies in the MENA countries easily explains the western fear of authentic democracy, in which public opinion will significantly influence policy.

Israel and the Republican Party

Similar considerations carry over directly to the second major concern addressed in the issue of Foreign Affairs cited in part one of this piece: the Israel-Palestine conflict.   Fear of democracy could hardly be more clearly exhibited than in this case.  In January 2006, an election took place in Palestine, pronounced free and fair by international monitors. 

The instant reaction of the U.S. (and of course Israel), with Europe following along politely, was to impose harsh penalties on Palestinians for voting the wrong way.
That is no innovation.  It is quite in accord with the general and unsurprising principle recognized by mainstream scholarship: the U.S. supports democracy if, and only if, the outcomes accord with its strategic and economic objectives, the rueful conclusion of neo-Reaganite Thomas Carothers, the most careful and respected scholarly analyst of “democracy promotion” initiatives.

More broadly, for 35 years the U.S. has led the rejectionist camp on Israel-Palestine, blocking an international consensus calling for a political settlement in terms too well known to require repetition.  The western mantra is that Israel seeks negotiations without preconditions, while the Palestinians refuse.  The opposite is more accurate.  The U.S. and Israel demand strict preconditions, which are, furthermore, designed to ensure that negotiations will lead either to Palestinian capitulation on crucial issues, or nowhere.

The first precondition is that the negotiations must be supervised by Washington, which makes about as much sense as demanding that Iran supervise the negotiation of Sunni-Shia conflicts in Iraq.  Serious negotiations would have to be under the auspices of some neutral party, preferably one that commands some international respect, perhaps Brazil.  The negotiations would seek to resolve the conflicts between the two antagonists: the U.S.-Israel on one side, most of the world on the other.

The second precondition is that Israel must be free to expand its illegal settlements in the West Bank.  Theoretically, the U.S. opposes these actions, but with a very light tap on the wrist, while continuing to provide economic, diplomatic, and military support.  When the U.S. does have some limited objections, it very easily bars the actions, as in the case of the E-1 project linking Greater Jerusalem to the town of Ma’aleh Adumim, virtually bisecting the West Bank, a very high priority for Israeli planners (across the spectrum), but raising some objections in Washington, so that Israel has had to resort to devious measures to chip away at the project.

The pretense of opposition reached the level of farce last February when Obama vetoed a Security Council resolution calling for implementation of official U.S. policy (also adding the uncontroversial observation that the settlements themselves are illegal, quite apart from expansion).  Since that time there has been little talk about ending settlement expansion, which continues, with studied provocation.

Thus, as Israeli and Palestinian representatives prepared to meet in Jordan in January 2011, Israel announced new construction in Pisgat Ze’ev and Har Homa, West Bank areas that it has declared to be within the greatly expanded area of Jerusalem, annexed, settled, and constructed as Israel’s capital, all in violation of direct Security Council orders.  Other moves carry forward the grander design of separating whatever West Bank enclaves will be left to Palestinian administration from the cultural, commercial, political center of Palestinian life in the former Jerusalem.

It is understandable that Palestinian rights should be marginalized in U.S. policy and discourse.  Palestinians have no wealth or power.  They offer virtually nothing to U.S. policy concerns; in fact, they have negative value, as a nuisance that stirs up “the Arab street.”

Israel, in contrast, is a valuable ally.  It is a rich society with a sophisticated, largely militarized high-tech industry.  For decades, it has been a highly valued military and strategic ally, particularly since 1967, when it performed a great service to the U.S. and its Saudi ally by destroying the Nasserite “virus,” establishing the “special relationship” with Washington in the form that has persisted since.  It is also a growing center for U.S. high-tech investment.  In fact, high tech and particularly military industries in the two countries are closely linked.

Apart from such elementary considerations of great power politics as these, there are cultural factors that should not be ignored.  Christian Zionism in Britain and the U.S. long preceded Jewish Zionism, and has been a significant elite phenomenon with clear policy implications (including the Balfour Declaration, which drew from it).  When General Allenby conquered Jerusalem during World War I, he was hailed in the American press as Richard the Lion-Hearted, who had at last won the Crusades and driven the pagans out of the Holy Land.

The next step was for the Chosen People to return to the land promised to them by the Lord.  Articulating a common elite view, President Franklin Roosevelt’s Secretary of the Interior Harold Ickes described Jewish colonization of Palestine as an achievement “without comparison in the history of the human race.” Such attitudes find their place easily within the Providentialist doctrines that have been a strong element in popular and elite culture since the country’s origins: the belief that God has a plan for the world and the U.S. is carrying it forward under divine guidance, as articulated by a long list of leading figures.

Moreover, evangelical Christianity is a major popular force in the U.S.  Further toward the extremes, End Times evangelical Christianity also has enormous popular outreach, invigorated by the establishment of Israel in 1948, revitalized even more by the conquest of the rest of Palestine in 1967 -- all signs that End Times and the Second Coming are approaching.

These forces have become particularly significant since the Reagan years, as the Republicans have abandoned the pretense of being a political party in the traditional sense, while devoting themselves in virtual lockstep uniformity to servicing a tiny percentage of the super-rich and the corporate sector.  However, the small constituency that is primarily served by the reconstructed party cannot provide votes, so they have to turn elsewhere.

The only choice is to mobilize tendencies that have always been present, though rarely as an organized political force: primarily nativists trembling in fear and hatred, and religious elements that are extremists by international standards but not in the U.S.  One outcome is reverence for alleged Biblical prophecies, hence not only support for Israel and its conquests and expansion, but passionate love for Israel, another core part of the catechism that must be intoned by Republican candidates -- with Democrats, again, not too far behind.

These factors aside, it should not be forgotten that the “Anglosphere” -- Britain and its offshoots -- consists of settler-colonial societies, which rose on the ashes of indigenous populations, suppressed or virtually exterminated.  Past practices must have been basically correct, in the U.S. case even ordained by Divine Providence.  Accordingly there is often an intuitive sympathy for the children of Israel when they follow a similar course.  But primarily, geostrategic and economic interests prevail, and policy is not graven in stone.

The Iranian “Threat” and the Nuclear Issue

Let us turn finally to the third of the leading issues addressed in the establishment journals cited earlier, the “threat of Iran.” Among elites and the political class this is generally taken to be the primary threat to world order -- though not among populations.  In Europe, polls show that Israel is regarded as the leading threat to peace.  In the MENA countries, that status is shared with the U.S., to the extent that in Egypt, on the eve of the Tahrir Square uprising, 80% felt that the region would be more secure if Iran had nuclear weapons.  The same polls found that only 10% regard Iran as a threat -- unlike the ruling dictators, who have their own concerns.

In the United States, before the massive propaganda campaigns of the past few years, a majority of the population agreed with most of the world that, as a signatory of the Non-Proliferation Treaty, Iran has a right to carry out uranium enrichment.  And even today, a large majority favors peaceful means for dealing with Iran.  There is even strong opposition to military engagement if Iran and Israel are at war.  Only a quarter regard Iran as an important concern for the U.S. altogether.  But it is not unusual for there to be a gap, often a chasm, dividing public opinion and policy.

Why exactly is Iran regarded as such a colossal threat? The question is rarely discussed, but it is not hard to find a serious answer -- though not, as usual, in the fevered pronouncements.  The most authoritative answer is provided by the Pentagon and the intelligence services in their regular reports to Congress on global security.  They report that Iran does not pose a military threat.  Its military spending is very low even by the standards of the region, minuscule of course in comparison with the U.S.

Iran has little capacity to deploy force.  Its strategic doctrines are defensive, designed to deter invasion long enough for diplomacy to set it.  If Iran is developing nuclear weapons capability, they report, that would be part of its deterrence strategy.  No serious analyst believes that the ruling clerics are eager to see their country and possessions vaporized, the immediate consequence of their coming even close to initiating a nuclear war.  And it is hardly necessary to spell out the reasons why any Iranian leadership would be concerned with deterrence, under existing circumstances.

The regime is doubtless a serious threat to much of its own population -- and regrettably, is hardly unique on that score.  But the primary threat to the U.S. and Israel is that Iran might deter their free exercise of violence.  A further threat is that the Iranians clearly seek to extend their influence to neighboring Iraq and Afghanistan, and beyond as well.  Those “illegitimate” acts are called “destabilizing” (or worse).  In contrast, forceful imposition of U.S. influence halfway around the world contributes to “stability” and order, in accord with traditional doctrine about who owns the world.

It makes very good sense to try to prevent Iran from joining the nuclear weapons states, including the three that have refused to sign the Non-Proliferation Treaty -- Israel, India, and Pakistan, all of which have been assisted in developing nuclear weapons by the U.S., and are still being assisted by them.  It is not impossible to approach that goal by peaceful diplomatic means.  One approach, which enjoys overwhelming international support, is to undertake meaningful steps towards establishing a nuclear weapons-free zone in the Middle East, including Iran and Israel (and applying as well to U.S. forces deployed there), better still extending to South Asia.

Support for such efforts is so strong that the Obama administration has been compelled to formally agree, but with reservations: crucially, that Israel’s nuclear program must not be placed under the auspices of the International Atomic Energy Association, and that no state (meaning the U.S.) should be required to release information about “Israeli nuclear facilities and activities, including information pertaining to previous nuclear transfers to Israel.” Obama also accepts Israel’s position that any such proposal must be conditional on a comprehensive peace settlement, which the U.S. and Israel can continue to delay indefinitely.

This survey comes nowhere near being exhaustive, needless to say. Among major topics not addressed is the shift of U.S. military policy towards the Asia-Pacific region, with new additions to the huge military base system underway right now, in Jeju Island off South Korea and Northwest Australia, all elements of the policy of “containment of China.” Closely related is the issue of U.S. bases in Okinawa, bitterly opposed by the population for many years, and a continual crisis in U.S.-Tokyo-Okinawa relations.
Revealing how little fundamental assumptions have changed, U.S. strategic analysts describe the result of China’s military programs as a “classic 'security dilemma,' whereby military programs and national strategies deemed defensive by their planners are viewed as threatening by the other side,” writes Paul Godwin of the Foreign Policy Research Institute.  The security dilemma arises over control of the seas off China’s coasts.  The U.S. regards its policies of controlling these waters as “defensive,” while China regards them as threatening; correspondingly, China regards its actions in nearby areas as “defensive” while the U.S. regards them as threatening.   No such debate is even imaginable concerning U.S. coastal waters.  This “classic security dilemma” makes sense, again, on the assumption that the U.S. has a right to control most of the world, and that U.S. security requires something approaching absolute global control.
While the principles of imperial domination have undergone little change, the capacity to implement them has markedly declined as power has become more broadly distributed in a diversifying world.  Consequences are many.  It is, however, very important to bear in mind that -- unfortunately -- none lifts the two dark clouds that hover over all consideration of global order: nuclear war and environmental catastrophe, both literally threatening the decent survival of the species.
Quite the contrary. Both threats are ominous, and increasing