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Leveraged Out

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Headlined to H3 2/17/09

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The United States has no room to negotiate at the international table.  We used to command the lion's share, now we are relegated to taking what it given to us.  The reason for this is quite simple: leverage.

When the modern international system was set up, the United States was not just a superpower, it was a hyperpower.  The Soviet Union had literally removed nearly half of the world from the international arena--they had their own--and of the remnants the United States was supremely dominant.  After the Second World War the United States was the world's leading creditor and manufacturer.  We had the world's highest living standard, the best educational system and a centralized infrastructure which quietly developed during the Great Depression. 

We were able to use these factors as leverage when dealing internationally.  We joined a "free trade"- regime--the WTO--which benefited our producers, and we broke down trade barriers so we had markets for our goods.  Much to our surprise other countries began to rebuild themselves in our previous protectionist image.  These upstarts eventually began using the so-called "free trade" system against us, using weak currencies and suppressed wages to undermine their American competition. 

The situation today is the net result of decades of this reversal.  The United States no longer has the highest standard of living, nor do we have the highest household income.  Americans have no disposable income anymore, and are forced to live off credit and debt to survive.  Education in the United States has tanked, and our students are now among the least prepared students in the developed world.  The strong infrastructure we developed during the 1930s-1950s has crumbled and our system is no longer streamlined for the benefit of the country as a whole.

Instead of dictating policy, the United States must now follow the leader.  Our economic and political system is crafted to the interests of foreign parties.  We are now the world's largest accumulator of debt obligations.  We now consume mostly foreign-made products.  Our companies are now being picked off one by one.  Entire industries are now owned by foreign conglomerates and business cartels.

We have witnessed as our fortune was turned completely on its head.  At the same time our political leadership has refused to take a stand against the process.  They not only lack the will, they in many ways lack the ability.  The interconnectedness of our international system means any decision made in the United States can come under pressure from almost any other country.  If that pressure comes from Japan, China or Europe it can work to effectively change our policy position completely on major issues.  Our dependence on other countries has even exposed the American people to the whims of nations that produce only one thing--oil.

The United States no longer has the "independence"- which once made it great.  We are now part of an international machine, and that machine is quickly undercutting all of the advances and progress we had benefited from for generations.

 

http://www.economyincrisis.org/

Craig Harrington is pursuing a degree in History and Political Science at The Ohio State University. He is also a journalist for EconomyInCrisis.org.
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But at least you have moral suasion. Oh sorry I fo... by Archie on Tuesday, Feb 17, 2009 at 8:24:35 PM
"The United States no longer has the "in... by William Whitten on Wednesday, Feb 18, 2009 at 12:33:39 PM