Paul Frijters argues that the world’s billionaires hold sway over governments and some are at the point of lashing out.
Global trade has greatly contributed to prosperity and peace since WWII. When people and countries engage in trade, they view each other as customers instead of rivals, encouraging respectful interaction.
Unfortunately, the internal dynamics of the United States, which account for about 15% of international trade, guarantee a collapse in trade. The essential problem is that the US can no longer pay for what it imports by exporting something useful. Instead, the US pays for it indirectly with printed dollars, leading to inflation both at home and abroad. The US effectively compels the rest of the world to accept these dollars through military bases and covert operations that pressure governments into using the dollar for international trade and as a means of reserve.
A bully must maintain military superiority, and that is where the US has been losing its edge.
Countries understand this and resent it, but the gun has so far spoken more loudly than the purse. The situation cannot continue, though, as the US political system has become increasingly reliant on this form of taxation, called ‘seignorage taxation,’ in recent years. The rest of the world now effectively pays the US government well over 1 trillion a year for its forced use of the US dollar, up from a few billion only a decade ago.
A bully must maintain military superiority, and that is where the US has been losing its edge: manufacturing now constitutes less than 10% of its economy, and the most cost-effective weapons now originate from Russia and China, rather than the US. Due to its military bases and substantial investments in coercive institutions (like SWIFT), the US can mask its vulnerability for a while, even boosting its military arms sales to vassal countries, but the world as a whole is taking note.
In short, the US is losing its military industrial capacity to keep the gig going. Hence de-dollarisation is gradually occurring, which will eventually accelerate the decline of US power as its government struggles to fund its expenses, leading to a collapse in the use of the US dollar. What happens next is anyone’s guess, but declining empires typically become very violent as they approach their end, and this one maintains over 800 military bases around the globe.
A significant slowdown in world trade, stemming from the internal weaknesses of the West, is on the cards.
For the world economy, this means that the US and its trading partners reliant on exporting to the US will experience a collapse in their trade as the coercion becomes unsustainable. From what can be observed at the moment, the EU is following the US down this downward spiral by replacing consumer industries with military industries to essentially engage in the same strategy as the Americans, i.e., to compel other countries to accept their debt in exchange for valuable goods and services. This approach may work temporarily, but as a bloc has emerged that cannot be intimidated (Russia/China/Iran/India), independent nations will gradually pivot toward that alternative bloc. The BRICS and the Shanghai Cooperation Organisation are somewhat weak and disorganised at present, but the alternative structures now exist for those seeking refuge.
A significant slowdown in world trade, stemming from the internal weaknesses of the West, is on the cards. It might have been postponed for a few years, but Trump’s tariffs have major countries and large international corporations seeking stability outside the US, accelerating the reckoning.
The second deep issue, which is even more pernicious and destructive than the pirate economy the US is currently operating, is that the West has become a feudal society with a few hundred billionaires who control the political landscape and have evaded the tax authorities, primarily by crafting the tax laws that benefit them. Their rise to power has been developing for a few decades but is now the fundamental reality of Western politics. The billionaires own the media, most charities, the major political parties, and so forth. They determine what is true and what is important.
The rest of us do not matter, and what we write does not matter. We only get to choose which billionaire appeals to us more: the one who makes money from climate emergencies, or the one who makes money from medical emergencies, or the one making money off war, and so forth. Most of what you read in the mainstream has followed paths laid out by billionaires, their governments, and think tanks. We minions get to choose our Lord and hope for the crumbs off his table as we speak his words.
The current educational output resembles the IQ levels of the 1950s.
The population as a whole is becoming impoverished as their governments can no longer provide quality education and welfare. This decline is partly due to dwindling tax revenues and partly because the government is now coopted into generating profits for billionaires at the expense of the population. The investments of previous generations in their own human capital are gradually diminishing as highly skilled individuals retire, being replaced by increasingly less productive youth. The current educational output resembles the IQ levels of the 1950s. We find ourselves in a downward spiral that history has witnessed before: both Athens and Rome collapsed due to oligarchs dominating at the expense of the population. It is happening again.
Extreme inequality has historically ended in wars or internal collapse. Given the decision of both the US and Europe to invest in their militaries, war is the more likely means of correction. Wars create fanaticism, with the victorious military able to truly take on the billionaires and force them back in line. This is what the Nazis did in the 1930s in Germany: even though they were put in charge by the oligarchs of that era who were avoiding the looming taxation by the communists, they had enough fanaticism and political clout to turn around and tax their sponsors. It seems we are poised to experience this again.
The smart will find ways to avoid the fallout, while the vast majority will simply suffer whatever is to come.
And, like in the 1930s, the turnaround cannot be democratic because democracy is easily derailed by media manipulation, outright bribery, or physical interference from the billionaires. The political temperature will merely continue to rise until non-democratic actors emerge to take over. A grim prospect.
What can one expect in the meantime? Reduced levels of education, health, and security for the masses. A cacophony of extremist ideologies keeps the population divided, while also gradually raising the political temperature. The smart will find ways to avoid the fallout, while the vast majority will simply suffer whatever is to come.
A few of us have focused on blueprints and plans for what would constitute effective alternative institutional arrangements once the dust settles. Some small initiatives are attempting to demonstrate what education and lifecould resemble in this context.
Troubling times lie ahead, in which no one who reads this matters in the slightest. The best you can do is look after your families and build small-scale communities to weather the coming storms. There is something to be said for migrating to places that are likely to remain fairly stable because they are out of the way and lack significant interest from the rest of the world: pleasant, middle-income places like Paraguay and New Zealand.
