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The Toronto Star

US Is Now Reaping the Whirlwind

Greed, war, partisanship and economic disparity will hinder America's future prosperity

William Dimma

In the rose-coloured and relentlessly upbeat years that preceded the nearly unprecedented meltdown that surfaced first in the U.S. in the early autumn of 2007, its citizens experienced a sense of seemingly permanent euphoria. The earlier demise of Soviet communism ("the end of history") signalled the apparent triumph of the distinctively American brand of free enterprise. Subsequent economic growth, despite a corrective tweak now and then, seemed to confirm it.Reaping_the_whirlwind_com.jpg

In retrospect, those golden years may have been the modern-day equivalent of what nearly 150 years earlier and just before the end of the Battle of Gettysburg and its defining moment, Pickett's Charge, became known wistfully as the High Water Mark of the Confederacy. Will those several buoyant years prior to 2007 be commemorated by historians as the High Water Mark of the Great Republic?

The U.S. has been in many tough spots over the years and has almost always emerged from them with colours flying. Never underestimate the resilience and the resolve of Americans as individuals and America as a polity. And yet ...

Based on an average annual inflation rate of 3 per cent, the per capita cost of the U.S. federal government has risen in a century by nearly 55 times.

Consider health care alone. In 2009, this constituted 18 per cent of GNP and is continuing to rise with no resolution to date on what to do about it. And up to 50 million Americans were still uninsured before the latest planned reforms. Best estimates are that absolute health-care costs will double over the next decade to unsustainable levels without yet any credible plan to restrain this massive increase.

Then there's the U.S. military. The sum of the U.S. national defence budget plus the so-called war supplement (Iraq plus Afghanistan) is running at about $700 billion annually. This constitutes close to 45 per cent of world military spending.

Well beyond sobering fiscal realities are several sociological and cultural phenomena, some historically based, some more recent in origin. They reinforce the view that the U.S. future is likely to be more restrained, less triumphalist.

Consider the U.S. political structure. It was designed, among other objectives, to ensure that the centralized power of the classic British model of government would be resolutely minimized. The great majority of the Founding Fathers were committed to divided power, balanced across the original 13 states and four branches of federal government: one executive, two legislative, one judicial.


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More than two centuries later, what has evolved is a political culture in which these branches compete for power more and more counterproductively, mischievously, even viciously. Far too often this leads to collective stalemate and impotence, ineffectual compromises, massive frustration, deep animosities and a "pox on both their houses" sentiment increasingly felt by mainstream America.

Those fervent constitutionalists, mostly at the far right end of the political spectrum, who defend to the death (occasionally literally) every clause, sentence, comma and nuance of the U.S. Constitution, ignore a plain reality. The 39 Founding Fathers, those dedicated, far-sighted, patriotic gentlemen who signed it in 1789, could never have anticipated the enormous changes that have indelibly altered the world and America over the subsequent 220 years.

Process aside, there is the daunting reality that each of the two mainstream parties has a profoundly different view of the world. At the most visceral level, too many Republicans look backward to the good old days that weren't as good as nostalgia remembers. Too many Democrats look forward to the good new days that likely won't be as good as promised.

A special case of looking backward more than forward is religious fanaticism. In a society where, formally and structurally, church and state are separated, religious zealotry and extremism shouldn't count for much. But they do. On issues like birth control, abortion, gay rights, what's taught in schools, they count for a great deal.

Then there's the growing economic disparity between those at the top and the bottom of the income scale, without even considering the unemployed and partially employed. Changes over the past half-century have been widely publicized. In 1960, the annual compensation of an S&P500 company CEO in the U.S. was 40 times that of the same company's lowest-paid, full-time employee. Over the next several decades, this ratio rose dramatically. By 2006, it was a rather astonishing 450.

The U.S. has carried this disparity much further than other nations. This is captured in a recent news report that the head of the world's largest bank, China's ICBC, earned the equivalent of $234,700 U.S. in 2008. In that same year, the head of the world's fourth-largest bank, JP Morgan Chase of the U.S., earned $19.6 million. Some argue heatedly that this is simply a free market at work. Others believe as strongly that it's greed run amok.

Although Canada is not totally immune, the U.S. has been infected far more virulently and for longer. The resulting dissatisfaction south of our border is widespread and growing. Potentially, it is another serious weakening of the ethos that has supported and strengthened U.S. global hegemony. All of which provides no comfort to anyone except the many enemies of the U.S.

Once upon a time, General Motors was the largest and most successful corporation in the world. Later, when it faltered, a perceptive explanation was that it was "a victim of past success." This expresses both a regret and a judgment. I wish fervently and not at all hypocritically that this same judgment was less applicable than I fear it is to the U.S. as we begin the second decade of the third millennium.

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William A. Dimma is a former dean of York University's business school and a former corporate executive.

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