STAFF NEWS & ANALYSIS
U.S. Power and Influence Will Decline in Future
By - November 21, 2008

A government report released Thursday paints an alarming picture of an unstable future for international relations defined by waning American influence, a fragmentation of political power and intensifying struggles for increasingly scarce natural resources. The report aims to better inform policymakers, starting with the administration of President-elect Barack Obama.The report, "Global Trends 2025: A Transformed World," was drafted by the National Intelligence Council to better inform U.S. policymakers — starting with the incoming administration of President-elect Barack Obama — about the factors most likely to shape major international trends and conflicts through the year 2025. "Although the United States is likely to remain the single most powerful actor, the United States' relative strength — even in the military realm — will decline and U.S. leverage will become more constrained," says the report, which is the fourth in a series from the Intelligence Council. The report argues that the "international system — as constructed following the second World War — will be almost unrecognizable by 2025 owing to the rise of emerging powers, a globalizing economy, an historic transfer of relative wealth and economic power from West to East, and the growing influence of nonstate actors. – CNN

Dominant Social Theme: A terrible thing is happening as US power diminishes.

Free-Market Analysis: Let's see. The United States will be less powerful in the 21st century than in the 20th. The report apparently paints this as a very bad thing. But one can argue that the 20th century was not exactly a great time. The 20th century saw two world wars, a depression, a string of regional wars, a seemingly endless cold war and ongoing, repetitive mass starvations and sicknesses in Africa and other impoverished areas of the world. The post-war system included, eventually, an abrogation of the remaining gold linkage to money, a United Nations grown increasingly corrupt, an International Monetary Fund that most nations fear borrowing from and an intricate and powerful central banking apparatus around the world that is even today showing its total lack of ability to ameliorate yet another oncoming global depression.

Using fiat-money capitalism, the United States bestrode the world like a colossus, sending its military far and wide, destabilizing countries in South America and the Middle East and exporting inflation via non-gold-backed Treasurys that first Japan and then China purchased in the hundreds of billions. All those funds flowing back to the United States bought neither security nor wealth for America but merely increased the state apparatus. Today the United States is engaged in wars on at least two-and-a-half fronts, has a vast and failing public school network, three separate tiers of taxation in many localities, a crumbling infrastructure and an economy that has been regularly shedding businesses and opportunity for the past 50 years.

The report makes other points of a surprising nature:

The report predicts that, the recent economic downturn aside, "unprecedented global economic growth" will mean that the demand for basic resources such as food, water and oil "will outstrip easily available supplies" over the next decade. As an estimated 1.2 billion people are added to the world population over the next 20 years, the demand for food will rise by 50 percent, the report projects. The lack of access to stable water supplies will also worsen due to rapid global urbanization, it says. Further complicating matters is the fact that while demand for energy is projected to rise, oil and gas production will continue to be "concentrated in unstable areas," it says. The world in 2025 is therefore likely to find itself in the midst of a "fundamental energy transition away from oil toward natural gas, coal and other alternatives." Such a transformation, however, may not stave off armed conflict driven largely by the struggle for scarce resources, the report says. While conflicts are still most likely to "revolve around trade, investments, and technological innovation and acquisition," the report states that "we cannot rule out a 19th century-like scenario of arms races, territorial expansion, and military rivalries." Terrorism is also expected to remain a major issue through 2025, though its appeal could be significantly reduced if economic and political liberalization accelerates in the Middle East.

Did the United States power and prestige create a global paradise? We must have missed it. And now we learn that the world will be rapidly destabilized further as US power shrinks and wars for scarce resources increase.

Of course it is all very Malthusian and very wrong.

Thomas Malthus was a classical economist who looked at food production and birth trends several hundred years ago and predicted that England was on the verge of starvation. Of course no one starved because people, faced with a shortage of food, took HUMAN ACTION to prevent it. The arguments used in these predictions are those that were used just recently to predict the imminent shortage of oil – Peak Oil – which is proving as transitory as these predictions will be, no doubt.

They are issued by something called the National Intelligence Council, which turns out to be an official think tank that is charged with providing basic intelligence information to the US government. Here's a description according to Wikipedia:

The National Intelligence Council (NIC) is the center for midterm and long-term strategic thinking within the United States Intelligence Community (IC). It was formed in 1979. According to its official website. … The NIC's goal is to provide policymakers with the best information: unvarnished, unbiased and without regard to whether the analytic judgments conform to current U.S. policy. One of the NICs most important analytical projects is a Global Briefing. Produced every five years, the Global Briefing assesses critical drivers and scenarios for future global outcomes over a 15 year time horizon. The Global Briefing provides a basis for long-range strategic policy assessment for the White House and the intelligence community. The NICs most recent Global Briefing, "Global Trends 2025: A Transformed World" was released towards the end of 2008.

Gee, these are obviously some of the smartest people in the world. So why is it they apparently never heard of Malthus? They don't seem to know anything about marginal utility, about neo-classical economics and how free-market economics shows us definitively that projecting a trend to its logical conclusion almost always provides you with 100 percent wrong answers. The Western world and its private enterprise is the product of hundreds of years of advancement in terms of understanding the way the world really works. But this report, authored by the NIS, is a perfectly conceived document for those who believe in the kind of classical economic analysis that went out of style some 150 years ago.

After Thoughts

One can be almost assured that the trends in this report will only be realized if the free-market is stifled and if Western military power does not give the world the ability to act on the entrepreneurial instincts of its citizens. The 20th century indeed saw situations where the projection of military and economic power by the United States did indeed stifle the ability of indigenous populations to create better living conditions. In that regard, the diminishment of US power may be seen as a good thing so long as the marketplace itself fills the vacuum. Ideally, the marketplace would include a return to gold and silver money which would preclude further agonizing inflations and deflations – and would stabilize economies without the projection of central banking money power. Perhaps, therefore, the NIS will see fit to do a study on central banking and fiat money versus honest money. The results would be eye opening, and hopefully would get the same kind of press as the current report.

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