Shift in world power

p>Not only is Capitalism under siege but the supremacy of the USA as dominant world power is also looking like it might be at an end soon. Why do I say that when the USA is clearly the most powerful nation in military and economic terns?

the USA has been the top world power for about 70 years. They took over from Britain just before WWII and Britain took the mantle from France in the aftermath of Napoleon and had about 130 years at the top. Before Britain there was Spain, the Habsburg Empire and the Holy Roman Empire that lasted 280 years in one form or another. The Ottoman Empire was probably in the ascendancy for 3-400 years but slightly to the side of the Habsburgs. Then you go back to Greek and Roman times. 500 years for the Roman Republic and then 400 more for the Empire is a standout in longevity as well as influence. I will avoid the eastern empires here.

The common reasons that caused each of these empires to decline and be replaced with others seem to be:

  1. A decent into decadence and hubris
  2. Abuse of economic and military power causing fragmentation of alliances
  3. A culture building that said nobody else has anything good except us

In many ways you can see this in the USA now. Since the 1980s it has been the military and economic power but has steadily lost friends internationally by creating conflicts that suit its economic interests.

It has not been fatal but the signs have been there to see. Until 11 September 2001 and the subsequent wars “on terror” the USA was able to recover international respect and maintain its place as the world leader in most areas. In the last decade, the decline politically has been matched by a decline economically. This decline started in the 1970s and re-emerged in the 1990s and again in the past 3 years. Old industry and clinging onto old ways of doing things have limited opportunities. Still, the great ecomomic wealth of the USA was there to keep things going.

With the serious weakening of the USA economy and its “moral compass” in the past few years, it looks likely that the USA will rapidly decline in importance. Instead, it will be Asia, the subcontinent and possibly even Africa that will rise to make the USA relatively less important.

It will probably take another 10-20 years but it is likely that the USA will become more insular and its “adventures” internationally will be less and less supported by Europe, an emerging Russia and China. The effects of the trillion dollar bail outs on the USA economy and the Government will limit the ability to use Aid Diplomacy.

Where will it end up? We can look to France and Britain to see that after their decline (both due to wars and overreaching their capacity to manage large empires) they have become mature and solid international citizens that use their still large economic power and more limited military power judiciously and more in tune with other countries.

Power Economics

An alternative or just a more economic choice for the long term?

An alternative or just a more economic choice for the long term?


The economics of power are not always what they seem. Here is a brief analysis of the relative economic merits of renewable energy and fuels for electricity production. The coal industry has been telling us all that renewables are not ready yet. That renewables might be ok in the future and that they are limited. The reality is quite different and the economics are starkly in favour of renewables right now, as the Stern Report clearly identified. The really expensive option is to ignore climate change and keep burning coal and other fossil fuels. Continue Reading →


Here we are at a point where it is only one or two days from a stock market crash similar to 1929. Only time can really tell us where it is going. Market sentiment seems to have taken over any underlying realities.

Australia is still looking like its fundamentals are sound but there is no escaping the affect that the USA and Europe will have on the world. Looking at a report a year ago from an ABC reporter in New York was a little scary. This reporter predicted almost exactly what is happening now. He reported that George Sorros and Warren Buffet (the most wealthy investors) felt that they could not understand the complex financial arrangements underpinning the NINJA loans and market growth in recent times.

Once again, it was not that there no warnings and that smart people were unable to work out that there was a problem. The opposite is true.

Once and for all we need to say Greed is NOT Good

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Capitalism is dead. Long live the king

The events of the past 6 weeks should mean that the world realises the near end to free market capitalism of Adam Smith etc (and perhaps expressed in its most ugly form by Gordon Gecko in the film Wall Street). I have pulled together a number of articles that I wrote in the past and put them into one post. Read or skim where you wish.

The argument given by “traditionalists” that the market is best able to decide should by now be finished. The market is clearly not able to do so in some circumstances. Markets measure specific things and they are not always the things that matter to people. We should stop asking if the common good or free markets are the choice. Economic Darwinism is a falsehood and therefore we should move on and just say we want the greater good. If that means regulation then so be it. We are not in the 19th century anymore and we can do better.

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