Are We A Banana Republic Yet?

November 19, 2008 – Here in the U.S. we like to make fun of other countries by calling them “banana republics,” but maybe we should have a good long look in the mirror. All we’re missing is the bananas.

By The Cerebral Aesthetic Vagabond

Wikipedia describes a “Banana Republic” as:

Frequently the subject of mockery and humour, and usually presided over by a dictatorial military junta that exaggerates its own power and importance—"the epaulettes of a banana republic generalissimo" are proverbially of considerable size, usually portrayed in satire with a pair of mops—a banana republic also typically has large wealth inequities, poor infrastructure, poor schools, a "backward" economy, low capital spending, a reliance on foreign capital and money printing, budget deficits, and a weakening currency. Banana republics are typically also highly prone to revolutions and coups.
...
In modern usage the term has come to be used to describe a generally unstable or "backward" dictatorial regime, especially one where elections are often fraudulent and corruption is rife. By extension, the word is occasionally applied to governments where a strong leader hands out appointments and advantages to friends and supporters, without much consideration for the law. A banana republic can also be used to describe a country where a large part of its economy and politics are controlled by foreign powers or even corporations, e.g. the United States.

Presided over by a dictatorial military junta that exaggerates its own power and importance – military influence pervades American life. Have you ever heard the phrase, “Support our troops”? Notice how candidates for president dwell on their ability to be a good “commander in chief,” as if running the military was the most important function of government? Notice how the CIA director is always seen wearing his military uniform, festooned with all his medals and ribbons, the modern equivalent of epaulets?

Large wealth inequities – need I say more? The wealth inequities in the U.S. have been growing ever wider for three decades, resulting in an absurd gulf today.

Poor infrastructure – according to the American Society of Civil Engineers, America’s infrastructure received an overall grade of ‘D’ in 2005, the last year such a report card was issued. Its report card summary said:

Congested highways, overflowing sewers and corroding bridges are constant reminders of the looming crisis that jeopardizes our nation's prosperity and our quality of life. With new grades for the first time since 2001, our nation's infrastructure has shown little to no improvement since receiving a collective D+ in 2001, with some areas sliding toward failing grades.

The ASCE estimates the cost to repair all of our nation’s infrastructure at $1.6 trillion, a substantial sum. Yet, it’s less than what the government has lavished on the financial system in just the last few months! And it’s less than it will ultimately spend on the pointless wars in Iraq and Afghanistan – by its own admission the government has already spent on those wars more than half the amount required to rebuild America’s infrastructure. And whereas spending money on banks and wars is a total loss, spending it on domestic infrastructure improvements would have provided meaningful jobs and long term benefits to our quality of life.

Poor schools – need I even comment on this one? U.S. students chronically rank 20th or worse in global math, science and geography comparisons against foreign students. High school dropout rates in some U.S. cities exceed 50%. Illiteracy rates in some cities are as high as that of “third world” countries. I believe China and India combined educate more scientists and engineers today than the U.S. I wonder where tomorrow’s innovations will come from? Collectively, it’s as if we have thrown up our hands in despair and embraced ignorance and anti-intellectualism.

A "backward" economy – the U.S. economy is certainly backward in the sense that it’s a reverse-Robin Hood economy: it transfers wealth from the poor to the rich. The U.S. “invests” money in unproductive ventures, while closing down its productive factories, seemingly going out of its way to cripple its economic future. Instead of promoting saving, it promotes spending. Instead of production, consumption. Instead of exports, imports. In every sense, ours is a “backward” economy.

Low capital spending – part and parcel with closing down factories is low capital spending. Capital spending in the U.S. – at least on productive assets – has been declining for decades. Probably the greatest recent capital expenditure fiesta occurred during the dot-com bubble, when companies were buying computer, networking and communication equipment like hotcakes. Of course, we all know how well that phony bubble worked out.

A reliance on foreign capital and money printing – for people who have been paying attention to the U.S. budget issues, this is a no-brainer. The U.S. borrows around $2 billion a day just to stay afloat, most of it from foreign countries. Thanks to all the misguided financial bailout activity today, the annual budget deficit threatens to exceed $1 trillion dollars soon, which will have to be financed largely by foreign countries, if they are willing. And where is the $2 trillion – or whatever amount it is – that the government has already dumped down the financial sewer going to come from? The government denies that it’s “printing money,” but I have my doubts. And if the foreign countries don’t come through with more loans, the government will have no alternative but to “print money.” All that largesse has to come from somewhere.

Budget deficits – can anyone recall when the U.S. didn’t have a budget deficit? As this chart shows, the U.S. budget has hardly ever seen anything but a deficit. The last “surplus” occurred during President Clinton’s term, but I suspect that was little more than a “smoke and mirrors” surplus. After all, during Clinton’s term the national debt still increased by $1.4 trillion (source: http://www.whitehouse.gov/omb/budget/fy2007/pdf/hist.pdf).

U.S. Budget Deficit, 1901–2006
U.S. Budget Deficit, 1901–2006 (source: Wikipedia)

A weakening currency – the U.S. dollar has been weakening for years, actually decades. It has been estimated by many people that the U.S. dollar has lost 95% of its value since the formation of the Federal Reserve System in 1913. And despite the recent deleveraging-induced boost in the value of the U.S. dollar, which will probably be temporary, it is still down about 30% in value compared to the Euro since around the year 2000. Long term, what with all this bailout activity, the U.S. dollar will surely lose considerably more value.

Prone to revolutions and coups – well, we haven’t had a revolution in this country for a couple of centuries, but many would say we just had a coup, perpetrated by Wall Street banksters. In fact, some would say we also had a coup in the year 2000, when the Supreme Court selected our president. Thank goodness our president-elect is “prepared to really take power and begin to rule day one.” Presidents govern; dictators rule. Let’s hope our new one at least wears a velvet glove over his iron fist.

One where elections are often fraudulent and corruption is rife – since about the year 2000, elections in the U.S. have been notoriously corrupt. Seizing upon the snafu involving “hanging chads,” our rulers introduced electronic voting machines that are easily tampered with and leave no permanent record of one’s vote! Banana republic dictators the world over must be kicking themselves for not thinking of that one.

A strong leader hands out appointments and advantages to friends and supporters, without much consideration for the law – gee, huge “no-bid” contracts to politically-connected contractors and mercenaries leaps to mind.

A country where a large part of its economy and politics are controlled by foreign powers or even corporations – that the U.S. is controlled by corporations is obvious to even the most servile participants in its economy. What many people have yet to realize is that increasingly, more and more pieces of our economy and political system are being controlled by foreign powers. Infrastructure, sometimes taxpayer-financed infrastructure, is being sold to foreign companies, which operate them for profit – theirs, not ours. In addition, it’s been suggested that some of the recent financial bailout activity was initiated at the behest of – or in response to threats from – foreign powers. In addition, some of the bailout money – our tax money – is going to foreign firms!

My Two Cents

I might add that our politicians show utter disdain for their own laws, including the highest law of the land, the Constitution. When the laws prove inconvenient, the politicians simply ignore them or capriciously change them, such as when the Treasury Department published a select list of financial firms whose stocks were protected from naked short selling. (Never mind that naked short selling is supposed to be illegal anyway. The publication of the list merely confirmed that such illegal activity was tacitly condoned while protecting a select group of insider firms.) Should someone get “caught” flagrantly breaking the law, they are not punished. Their crime is “spun” by the corporate media and quickly forgotten. However, should someone, such as Mark Cuban, challenge the status quo, then “crimes” are hastily invented and the media machine is cranked up to swiftly induce guilt.

And don’t forget about the show trials, I mean, military tribunals in Guantanamo; and the prison-industrial gulag here in the U.S.; and the increasingly suffocating police state, complete with paid informants; and the ossified politburo we call “Congress.” But I think I’m getting my political metaphors mixed up, as these are more Stalinesque than banana republic.

Conclusion

This post was meant to poke lighthearted fun at the U.S., but after writing it I’m not so sure it’s funny anymore. While the above evidence may appear to the untrained eye as proof positive that the U.S. is, indeed, a banana republic, it is not, for the simple reason that it has no bananas.

Update – 2 March 2009

Whew! Paul Craig Roberts, former assistant Treasury secretary under Reagan, and a genuine patriot thinks we won’t be a banana republic until 2012, when he asks, “A Banana Republic By 2012?” Of course, he gives himself an out by concluding with the caveat,

The US might not even make it to 2012 before it is a banana republic.

I heartily agree!

Update – 28 March 2009

The recognition that the U.S. is a banana republic is becoming palpable, especially among foreigners. This blog post cites two IMF officials, of all people, who unequivocally declare that the U.S. is, indeed, a banana republic. I find this quotation particularly appropriate, and an echo of what I have been asserting for years:

But there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

That succinctly sums up the present situation here in the U.S.

The End