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Date: 2022-07-01 Page is: DBtxt001.php txt00020429

The United States
The State of the USA

How Much of a Failed State is America? ... What “Structural Transformation” Really Means, and Why It Matters


Peter Burgess
Original article:
How Much of a Failed State is America? ... What “Structural Transformation” Really Means, and Why It Matters Image Credit: Andrew Pearson Just how much of a failed state is America?

About a decade ago, I predicted that America was becoming a failed state. Sadly, I wasn’t wrong. Today Americans live in a modern-day dystopia — a place of mass shootings, medical bankruptcy, endemic poverty, one side of politics gone overtly fascist, and all that’s just for starters.

You’ll hear, at long last, in belated response, talk, finally, of “transformation.” Especially “structural transformation.” I bet, though, that most Americans have no idea what that big phrase means. They just know it sounds good…because it means…sweeping change…of some sort. But it means, or should mean, anyways, something more precise that that — and you need to start understanding it with ruthless precision and total clarity, if you really want to think well about America’s grim plight today.

I think that these days, amidst all this excited, casual talk of transformation, there is a severe lack of understanding about what structural change really is, what it means, what it consists of.

America needs three kinds of structural transformation: economic, social, and political. Let’s go through each one, and I’ll show what you what they mean, and how they’re linked, so that you really get what they are.

America’s a society which has failed economically. The average American has the lowest living standards in the rich world by a very, very long way — less life expectancy, money, happiness, trust, belonging. All these things have imploded in America precisely because life is a brutal, bitter battle for a tiny share of the basics of life, which are kept in artificial scarcity, precisely so that people have to compete endlessly for them.

That bizarre social contract — or lack of one, more accurately — represents a completely failed economy, structurally. When we think about the “structure” of an economy, we mean the composition of it, what percent of what kinds of investment or consumption makes it up — just like the structure, say, of a glacier, or forest, composed of different kinds of ice or trees. America ended up a failed state because it tried a bizarre experiment that any sensible mind would have said — and plenty — did was doomed to fail. It tried to cut public investment to the bone, and then beyond that. “Big government” was deemed the enemy — of everything, from “the family” to virtue to prosperity.

The result was that America ended up with a totally unique economic structure — it invested the lowest possible socially in public goods. Americans call that “government spending,” but of course to put money into things like healthcare and retirement isn’t throwing it away, it’s investing it. Every other rich country’s economic structure looks like this: about half public investment, and half private. The private investment takes care of the luxuries — and the public investment the necessities.

In places like Europe and Canada, this economic structure has led to the world’s most sophisticated and advanced social contract, which define what a modern society is. Investing half of the economy in public goods, over decades, led to things like high speed rail and cutting edge healthcare and universal higher education and childcare and parental leave and decent working weeks. America ended up with gaping, massive deficits of all these things, never developing them, precisely because its economic structure was totally different.

Instead of splitting the economy 50/50 — you can think of that as, say, 50% capitalism and 50% socialism if you like — America went all in on predatory capitalism. It said the “free market” was going to provide everything — so society didn’t need to invest in anything. As a result, its economic structure ended up being just 20% public, and 80% private.

Even that official figure understates the problem. America’s defense spending is easily something like 5% of GDP — which means that just an astonishingly tiny 15% of America’s economy is invested in the things that people need, whether education, retirement or healthcare. When you understand that, it’s not so hard to see why Americans don’t have all those things, which are considered basic human rights in Europe and Canada — society doesn’t invest almost anything in them. Just 15 cents of every dollar are put back in basic public goods in America, whereas in Europe and Canada, it’s half of every dollar or euro.

Now let’s come to back to this big phrase — “economic structural transformation.” What does it mean? It means that America’s economy needs to change totally radically structurally — the 15 cents of every dollar that are invested in basics like retirement, healthcare, education, and so on, need to rise dramatically, to 50. The composition of America’s economy needs total, sweeping change, from a tiny, tiny 15 percent public investment, which can’t provide people with much of anything, and has resulted in America being a dystopian failed state where people just die without healthcare or stay in debt their whole lives for an education, to more than triple that — 50 percent.

That’s change on the level that, say, the Soviet economy needed — which is the only parallel, really, in modern history, for how big this problem really is. That’s how much of a failed state America is, economically — it’s public investment needs to triple.

Now, you might think to yourself, a little miffed, “But that’s what Biden and the Dems are doing!!” You’d be wrong. I don’t say this to be mean or negative or a jerk, but so you really understand the stakes here. Economic structural transformation doesn’t mean what the Dems are doing. They’re planning a set of short-term fixes, spending increases that last seven or eight years. That’s what the New Deal was. And that’s not enough. Because it’s not a permanent change.

Yes, it’s better than nothing. But a temporary fix is not structural change. Structural change is just what it sounds like — a permanent transformation to the composition of the economy. It isn’t a temporary boost here and there. America’s problems are at Soviet levels now, they’ve been allowed to fester so long. Think about it this way. If America’s level of public investment had grown just one percent a year since 1976, it would be like Canada or Europe today. It wouldn’t be a failed state — but a modern society where people had generous levels of healthcare, retirement, education, income, and so on. But that never happened. Even that level of minor change was too much.

The difference between temporary fixes and real permanent change is everything, for a society. Added up over time, even tiny amounts like 1% a year make huge, huge differences in outcomes — in this case, America could have been like Canada or Europe, but ended up a failed state, because it wouldn’t even invest that much permanently in itself, its people, its future.

That brings me to the second kind of structural change that America needs — and you need to understand clearly and well. Social structural change. What do we mean by a society’s “structures”? Generally, things like: how many people are working class, how many middle class, and how many rich. The thinking goes like this: a society needs a stable middle class to be and stay a modern democracy. If a middle class begins to vanish — then political chaos is sure to follow social structural collapse.

What did America’s failure to become a modern economy — remember, investing just 15 cents of every dollar in itself, versus 50 cents or euros in Canada or Europe — mean socially? It meant that the middle class imploded. When I say imploded, I’m not kidding. America’s middle class was, in the 1960s and 70s, the envy of the world. It was stable, prosperous, and so assured that people simply took being part of it for granted. But by 2010, something dark and disturbing had happened: the middle class had crossed a fatal threshold. For the first time in American history, it had become a minority.

That should never happen in any society. For a middle class to implode like that — become a minority in the span of less than one human lifetime — is a measure of catastrophe on, again, a Soviet level. And yet in America, this development went almost unseen. But it was felt, in the pain and suffering of millions of average households — who found themselves in sudden, rapid, freefall. American life was starting to become unliveable. The dream had died. Why? Remember America’s experiment? We’re going to invest 15 cents of every dollar — not 50, like Europe and Canada — because the free market will provide everything? The free market was to give Americans all that Europeans and Canadians received as basic human rights from their public institutions — healthcare, retirement, childcare, education, an income, and so on. But the free market did, well, what it was always going to do. Huge monopolies were built — that charged Americans eye-watering prices for the basics of life.

These prices were — and are — so insane that if you tell, say, Canadians and Europeans about them, they simply can’t process it. And yet they’re true. Americans do have to pay, say, half the average income for insulin, or the price of a house for an operation, or give their life savings away to educate a kid or deal with an emergency.

The result is that the average America grew suddenly, massively poorer. Poor in real terms, in hard terms, that economics statistics failed to capture well. The average American was now a debtor. Life consisted of a series of unpayable debts. “Lunch debt” became “student debt” became “medical debt” became a “reverse mortgage” to pay it all off — and at the end of a life, you were left with nothing, so who could retire?

The structure of American society was becoming remarkably Soviet. It now consisted of one giant underclass — even if middle class Americans kept up appearances, desperately, driving themselves into more debt — and a tiny number of super-rich and their lieutenants. Bezos and Zuck and Musk walked away with hundreds of billions — enough to pay off almost the entire student debt, while the average person couldn’t make ends meet.

America’s social structure had collapsed — from the one of a healthy society, a broad middle, a small, shrinking number of poor, and a small number of rich, and almost no super-rich, to something resembling a feudal society: a caste of super-rich effectively owned the average person, with debt, who was now poor, and beneath that average person lay a stratum of even more distressed people exploited to the bone.

That social structure — feudal, not modern — is severely unhealthy for a society. It’s like your bones turning brittle. Because, remember, the theory goes like this: when social structures collapse, political chaos follows. Usually the political chaos of fascism. People who are downwardly mobile don’t often have progressive revolutions — they lash out in despair and rage at those even more powerless than them, punching downwards. Bang! Fascism is born. That’s what happened in America from almost the precise moment its middle class became a minority in 2010 — fascist currents surged, and by 2016, Trump was President. The theory was right — social structural collapse doeslead to political ruin.

Now let’s come back to Biden and the Dems. Do they have a plan — a serious one — to restore America to a healthy social structure again? Yes, they have this spending plan and that one — but as we’ve discussed, they’re temporary fixes.

For America to be a modern society, it needs to be anchored in a stable, secure middle class. And that, in turn, needs the first kind of transformation we discussed: economic structural transformation. Invest more than 15 cents of every dollar in basic like healthcare, retirement, education, childcare, and so on — triple it to around 50 cents or euros, like Canada or Europe do — and then you get a stable, secure middle class again, just like Canada and Europe have. With that stability and security come trust, community, friendship, and warmth again — because people aren’t living lives of brutal competition, and the despair, loneliness, panic, and rage constantly living by a thread produces.

Do you see how these two forms of structural transformation are linked? Good. Now you know what this big phrase really means. How close are the Dems to it? Are they getting there? Will they? Now that you know — you tell me.

April 2021
Eudaimonia and Co
Eudaimonia & Co

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umair haque WRITTEN BY umair haque Following vampire. Eudaimonia and Co Eudaimonia and Co Following Eudaimonia & Co More From Medium More from Eudaimonia and Co America’s Such a Failed State, Even a New Deal Won’t Fix It umair haque in Eudaimonia and Co Apr 4 · 8 min read 2.6K More from Eudaimonia and Co It’s Not You. It’s a Failed Economy. umair haque in Eudaimonia and Co Apr 8 · 10 min read 1.7K More from Eudaimonia and Co How Britain is Destroying Itself umair haque in Eudaimonia and Co Mar 29 · 11 min read 2.3K Learn more. Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more Make Medium yours. Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore Share your thinking. If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium About Help Legal
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