Dmitry Orlov on the decline of the US Empire

Peak Empire, Take Two

Dmitry Orlov

Club Orlov,

28 October, 2014

Based on the lessons of history, all empires collapse eventually; thus, the probability that the US empire will collapse can be set at 100% with a great deal of confidence. The question is, When? (Everyone keeps asking that annoying question.)

Of course, all you have to do is leave the US, go some place that isn’t plugged into the US economy in non-optional ways, and you won’t have to worry about this question too much. Some people have made guesses but, as far as I can tell, no one has come up with viable methodology for calculating the date. In order to provide a remedy for this serious shortcoming in collapse theory, I once tried to outline a method for figuring it out in an article titled “Peak Empire,” which was based on Joseph Tainter’s theory of diminishing returns on complexity—or diminishing returns on empire. It’s a perfect problem for differential calculus, and all those microeconomics students who are busy calculating marginal cost vs. marginal revenue, so that they can look for work in the soon-to-be-defunct shale gas industry, might take it up, to put their math talents to better use. In the meantime, here is an update, and a revised estimate.

US Empire of Bases

Just to review, as the brilliant analyst Chalmers Johnson explained, the US is an “empire of bases,” not an empire of colonies. It is not considered politically correct to annex other countries anymore. Witness the reaction to Russia taking back Crimea, even though its population has a right to self-determination, and voted 98% in favor of the idea. But, had things turned out differently, putting a NATO base in Crimea would have been just fine. Still, there are quite a few US “territories” (read “colonies”) listed in the Pentagon Base Structure report, including American Samoa, Guam, Johnston Atoll, Marshall Islands, Northern Mariana Islands, Puerto Rico, US Virgin Islands and Wake Islands. We should probably include Hawaii, since in 1993 the US Congress “apologized” to Hawaii for kidnapping the Queen and illegally annexing the territory. They are not giving it back, mind you, but they don’t mind saying we’re sorry, because they stole it fair and square. The same could be said for Texas, California—the whole bloody continent for that matter. But they don’t do that sort of thing any more—not too much. Sure, the US stole Kosovo from Serbia just to set up a huge NATO base there, but in general there has been a shift to controlling other countries through economic institutions—like the IMF, the WTO, and the World Bank. There has also been plenty of political subterfuge, assassinations and coups d’états, as explained by John Perkins in Confessions of an Economics Hit Man, or in Michael Hudson’s work. William Blum writes: “Since the end of the Second World War, the United States of America has…

1. Attempted to overthrow more than 50 governments, most of which were democratically elected.

2. Attempted to suppress a populist or nationalist movement in 20 countries.

3. Grossly interfered in democratic elections in at least 30 countries.

4. Dropped bombs on the people of more than 30 countries.

5. Attempted to assassinate more than 50 foreign leaders.”

Only a few of these actions—such as Iran in 1953, Guatemala in 1954, Nicaragua in the 1980’s, Ukraine 2014, etc.—are well known in the US. Now here is the key point: all of this “democracy-building” requires the US to have plenty of foreign military bases. Much of the military is outsourced, so there is no need for consent of the governed any more—just their tax money. Marching in the streets in protest is a complete waste of time. Millions of people marched against the Iraq War in 2003. Did it make any difference? Secretary of State Alexander Haig remarked during a peace march in the 1980’s: “Let them protest all they want as long as they pay their taxes”; Kissinger explained that “Soldiers are dumb, stupid animals for the conduct of foreign policy”; and CIA director William Casey made sure the US public remains completely in the dark with his famous dictum, “We’ll know our disinformation program is complete when everything the American public believes is false.” (This is from his first staff meeting in 1981; it’s not a secret.) The US is completely open about its desire to subjugate the entire world—if this weren’t already obvious from its behavior.

Pentagon Base Structure Report

And so, maintaining US hegemony requires an empire of bases. How many bases? Every year the Pentagon publishes a “Base Structure Report,” which lists all the property of the military including land, buildings and other infrastructure. The latest Pentagon Base Structure report lists 4169 domestic military bases, 110 in US territories, and 576 in foreign countries, for a total of 4855. But it turns out to leave out a lot: Nick Turse of TomDispatch calculated that in 2011 the number of foreign military bases was closer to 1075.  But even though a lot is left out of the Pentagon report, it is still a good data source for us to use because, for the purpose of calculating our estimate, all we are interested in is trends, not absolute numbers. Trends require that data from year to year be reported consistently, and the Pentagon appears to be very consistent in what it reports and what it keeps secret from one year to the next. So this is a very good source by which to measure trends.

Since the US public is completely in the dark, zombified and terrified by the mass media and traumatized by psy-ops like 9/11, the empire will have to collapse on its own, without their help. I’m sorry to say this, but the American sheeple are not going to rise up and help it collapse. But when will it collapse on its own? Do we all want to know when? Ok, here goes…

Peak Empire

Total US Military acreage peaked in 2007 at 32,408,262 acres, and has been declining ever since, including a precipitous drop in 2014. This curve of military acreage follows peak oil and peak empire theory generally quite well. I haven’t done the curve-fitting exercise, but it looks a bit like a Hubbert curve from peak oil theory. The important point is, according to total acreage the US empire has already peaked and is in decline. Note that global conventional crude oil production peaked at around the same time; you may consider that a pure coincidence if you wish.

Looking at the data from 2003-2014, we see shows a bit more detail, including a sharp downturn in 2014. The drop in total bases in 2006 and 2007 seems like a bit of an anomaly, but the trend in acreage follows the peak theory.

What is even more noteworthy is the decline in foreign military bases and acreage. The US may still have control of its domestic and territorial bases, but it has suffered huge losses of foreign military bases and acreage. Since reaching “peak foreign military bases” in 2004, the US now has just 64% of them—a loss of over a third in a decade! In the case of acreage the US retains 69% of its peak acreage in 2006, so it has lost 31% of its foreign military acreage—also close to a third. If you want to guess at what’s behind these numbers, you might want to look at them as the fallout from disastrous US foreign policy, as described by Dmitry in his article, “How to start a war and lose an empire.” Perhaps the people to whom we are bringing “freedom and democracy” are getting sick of being occupied and murdered? But, whatever the explanation, the trend is unmistakable.

But we still haven’t addressed Tainter’s central thesis of diminishing returns on empire. Ok, let’s do that next net.

I previously showed military acreage divided by military spending declining since 1991 in constant 2008 dollars.

Bringing this up to date in constant 2014 dollars, we see that return on spending leveled off in 2010, but in 2014 the trend of decreasing returns on spending has resumed.

At the same time, US Government debt, which fuels much of this military spending, continues to climb at a steady rate, and the military acreage/debt ratio shows negative returns on debt. That is, the empire is getting negative returns in military acreage from increasing its debt burden. In their prime, empires are massively profitable ventures. But when the returns on government spending, debt and military spending all turn negative—that is when we enter the realm of diminishing returns on empire—that, according to Tainter’s theory, sets them on a trajectory that leads directly to collapse.

The collapse does not have to be precipitous. It could be gradual, theoretically. But the US economy is fragile: it depends on international finance to continue rolling over existing debt while taking on ever more debt. This amounts to depending on the kindness of strangers—who aren’t in a particularly kind mood. 

To wit: numerous countries, with Russia, China, India, Brazil and South Africa leading the way, are entering into bilateral currency agreements to avoid using the US dollar and, in so doing, to avoid having to pay tribute to the US. Just like Rome, the US empire is being attacked all over the world by “barbarians,” except the modern barbarians are armed with internet servers, laptops and smartphones. And just like Rome, the empire is busy spending billions on defending its fringes while allowing everything on the home front to fall apart from malign neglect.

Meanwhile, the US has been struggling to avoid a financial panic through lies and distortions. The US Federal Reserve has been printing $1 trillion a year just to keep US banks solvent, while selling naked shorts on gold in order to suppress the price of gold and to protect the value of the US dollar by (see Paul Craig Roberts for evidence). In truth, US employment has not recovered since the financial panic and crash of 2008, and wages have actually gone down since then, but the US government publishes bogus economic data to cover this up (See John Williams’ Shadow Stats for details). Meanwhile, there are signs that the militarized police state is getting ready to face open rebellion.

Two paths down

As we have shown, return on investment in empire has turned negative: the empire has to go further and further into debt just to continue shrinking its foreign presence by a third from its peak every decade. There are two ways out of this situation: quick and painful, or slow and even more painful.

The quick one is for the US to recognize the situation, cut its losses and abandon the project of empire, like the USSR did in 1989/90. But it must be understood that the threat of military action is what keeps countries around the world in line, forcing them to soak up US debt. Without this discipline, further money-printing will trigger hyperinflation, the financial house of cards on which the spending ability of the US government now rests will promptly pancake, and the US economy will shut down, just like in the USSR in the early 1990s.

The other option is the more likely one, since it doesn’t require making any large course adjustments, which are unlikely in any case. (You see, even in its dying days the USSR had slightly better leadership than the USSA currently does, which was actually capable of making major decisions.) This option is to simply keep smiling and waving and borrowing and spending until the empire is all one. 

This will take no more than two decades at the current rate. Note that this forecast is based on a straight-line projection that doesn’t take into account any of the positive feedbacks that may hurry the process along. One positive feedback is that a smaller empire means more countries around the world thumbing their noses at the US, escaping from dollar hegemony, and making it harder for the US to continue sinking into debt at an ever faster rate. These positive feedbacks are likely to be highly nonlinear, and this makes their effect difficult to estimate.

But a moment may arrive well before empire is all gone when the suspension of disbelief that is required to keep US government finances from cratering ceases to be achievable—regardless of the level of propaganda, market distortion, or US officials smiling, waving and lying in front of television cameras. Thus, we have two estimates. The first estimate is objective and based on US government’s own data: two decades or less. But we also have room for an estimate that is subjective yet bracketed: anywhere between later today and two decades (or less) from now.

Based on these estimates, you can be as objective or subjective as you like, but if you are “long empire,” holding dollar-denominated assets and such, and if your horizon extends beyond 2034 (or less), then there is a reasonably high likelihood that you are just being silly. Likewise, if you think that NATO will come to your defense more than a decade from now, you should start reconsidering your security arrangements now, because NATO will cease to be functional on the same time scale as the US empire. Some time ago Pres. Obama issued what for him sounded like a pretty good order: “Don’t do stupid stuff.” You should probably try to follow this order too, and I am here to try to help you do so.

Dmitry Orlov is the author of the award-winning book Reinventing Collapse: The Soviet Example and American Prospects and numerous essays published on his blog, ClubOrlov.com. Born in Russia, he moved to the US while a teenager, and has traveled back repeatedly to observe the Soviet collapse during the late eighties and mid-nineties. He is an engineer who has worked in many fields, including high-energy Physics research, e-commerce and Internet security. Recently, he has been experimenting with off-grid living and renewable energy by giving up the house and the car. Instead, he has been living on a sailboat, sailing it up and down the Eastern Seaboard, and commuting by bicycle. Dmitry believes that, given appropriate technology, we can greatly reduce personal resource consumption while remaining perfectly civilized.

Source: http://cluborlov.blogspot.co.nz/2014/10/peak-empire-take-two_96.html