The Western Way – How To Build A Modern World
These days there is a lot of complication and controversy regarding the way that the US and other western powers project their economic and political systems into other lands. There is also some serious concern about the European banking system, which has presided over the greatest escalation of human endeaver that the world has ever seen but has also drawn immense criticism of late for apparent criminal mismanagement and corruption at the highest levels responsible in large part for the recent economic meltdown in 2009.
This article will take a look from a high altitude at the way the USA ‘democraforms‘ previously non-democratic, undeveloped countries. Many of the presentations that are available today on that subject are slanted in a way that either demonizes or aggrandizes the way it works, but I hope here to provide a perspective that is a little more objective. I don’t know if readers will consider this goal to have been accomplished, but I will try.
Look At The Money
First of all we have to look at money, because money is a way to gather and focus any and all resoureces into one concentrated stream for a purpose. The purpose of the west in this context, all the way back to the Enlightenment tradition, is to help move societies into an more enlightened, more rational form with advanced education and universal human rights based on the precepts of natural law. Bringing a social system up from an undeveloped into a developed state is frist and foremost and expensive proposition monetarily.
The Military Phase
In looking for underdeveloped state candidates to upgrade, the US will often prioritize nations in an area of western strategic relevance and will approach the government there with a simple quiestion. “Would you like to modernize your country?” If the target government says no, the US will consider hyping up the propaganda machine in order to garner public support for military action.
This phase of the process is pretty controversial because at times it has entailed twisting, even inventing stories to sway public opinion. Also, there are times when the west appears quite predatory and a-moral in what it portrays as truth, and in how it invades and manhandles other sovereign states. But there have been times too, when military action has been justifiably forced and more of a case for legitmacy can then be made. So rather than to be unrealistic on either side of the equation, we will here accept that different historical cases exist which may be said to characterize at times a noble motivation and at other times an ignoble motivation on the part of America.
An Ideological Justification
But there does exist a more fundamental ideological justification for war in order to force advancement along the lines of natural law. The idea that universal human rights, freedom, justice between men, the right to education, oppotunity, and a share in the wealth of the world… all of these rights are worth fighting for, not only for ourselves but also for others who can’t stand up against tyranny alone. So regardless of more mundane factors that may or may not exist in justification, the US and other European powers that share in this tradition can fall back on that over-arching ideology none-the-less, and they unashamedly do.
A Built-In Debt Factor
But one thing is pretty certain in every case. The western banking system needs new debt, and war has been the predominant method of justification for deficit spending. Whether a war is morally justified or not, national security issues are useful to get the public worked up enough to support the creation of massive amounts of new debt that are needed to finance a war. Domestic infrastructure expenditures and social entitlement programs can also be cash / debt creators, but these justifications are harder to sell to the people.
The vicious debt cycle snowballs self perpetually simply because there is always inherently more debt than there is actual cash in the system. New money has to always come into existence, and the only way to do that is through government bonds and other devices that ‘borrow’ the new cash magically into being, and always with GREATER levels of new debt at the same time. Of course the debt is going to be a larger amount than the cash in circulation because of the principal PLUS the interest due on it, and thus the connundrum.
But the system has a way of justifying all that debt. More on that later, but for now, lets just say simply that more value must created through use of all the new cash, and that value (most of it in equity) is supposed to offset the debt on the overall balance sheet.
The Initial Loan – Infrastructure
Huge capital expense during a regime changing war is just the first stage of modernizing a nation, it systems, and its people. And the war phase does not always need to happen, of course. Once there is an agreeable government in place by whatever means, infrastructure is needed. You can’t industrialize or modernize a society without roads, bridges, ports, power girds, etc… So the western banks LOAN huge sums of money to these fledgling nations in order to pay for the massive public works required. The payments on that debt are postponed, of course, becasue the undeveloped nation as it is could never service even the principle payments. So interest accrues while work begins in earnest.
But notice the important thing that just happened. The global monetary system; western European banking, was able to create new money and new debt through huge infrastructure programs. This was good for the system short term. But is new cash and new debt good for global economics long term too? Many argue emphatically NO! But lets save that question until the end.
Once the development money is available US corporations (eg: Halliburton) move in, and using that loan money, they get busy building out the needed infrastructure. It is a windfall for them, and the general consensus is that quite a bit of graft and corruption occur. But in the end, there is a servicable infrastructure and the next phase of advancement can progress. That infrastructure does exist on the books as an asset now and goes toward justification of the massive debt the country will carry. Recall too that there still has not been much in the way in payment made, and that the intrest continues to steadily mount.
Exploiting The Immature Workforce
Obviously, the workforce in a developing country is not highly educated and can warrant only a low wage. Once the infrastructure is in, US manufactures typically will build factories now in order to take advantage of these low wages. Remember too that the market relationships in these nations are not developed, so US companies have pretty much a monopolistic advantage here when it comes to natural resource exploitation and any domestic trade, or international import / export opportunity. Transactions for goods and services going into and out of the newly developing country increase in volume, and US Corporations take advantage of this situation and reap some pretty amazing profits while the developing nation is at this stage.
Shaking Off The Parasite
Gradually though, improving education and social advancement begins to drive wages upwards, and if the program works the way it should, a couple of things begin to happen. It takes a generation or two, but the entire system begins to diversify and the implanted political and socail paradigm begins to imprint. At the same time, local culture and methodologies bend and tweak in order to be something new, comforming society to the western systems, and conforming the western systems to the indigionous locale.
There is a certain impetus for exploitive US interests to prevent a nation from breaking free from control, but hopefully the subject nation begins to assert itself more autonomously and development takes on an energy of its own, plugging into other regional and global systems and graduating more and more from US control. The training wheels begin to come off and the nation starts coming into its own.
At this point, it becomes more and more difficult for overt profiteering to go on, but that is ok. There are many advantages to the mother country in having a still close, but a much less exploitive relationship, and the ability of the maturing nation to pay on its obligation is also growing with leaps and bounds. The patient banks who have floated these loans have been making money all along, but now they can just continue to lay back and take in the payments on the debt. The tax base is maturing, growing, and scaling up fast, so servicing old and new debt is not a problem for the country anymore.
The Third Foundation Stone – Equity
The western banking system is based on three main foundational cornerstones. But we only every really hear about two of them. The two we hear about are cash and debt. As we mentioned above, there is a huge and growing discrepancy between the two. On the surface of things this appears to be a looming disaster, and perhaps it is. The question we alluded to above is, how can all this disproportionate and snowballing debt be justified by the system?
In order to answer that we have to include the third facor, which is equity. In Korea, this exact process took place pretty much in the way I have described it above. Massive, unimaginable loads of US capital were spent here to establish what is now a jewel in the crown of the western nation building program. What equity exists to justify the debt that was created and still exists in imbalance on the account sheet?
Well, how much more valuable is Seoul realestate now than it was 50 years ago? Accounting for inflation, I would warrant that selling all of Seoul right now would do a lot to pay off both the principle and the debt from the whole 40 year development project and balance out the scenario pretty well. The liquidation value of real estate, businesses like Hyundai and LG, and other equity assets that have grown up around modernization process serve as equity justification for both the principle and the debt that were incurred. And we can also factor in appreciation and depreciation along with the future earning power of the country and its future tax revenue. That all has equity value to offset debt on the asset sheet.
Enlightenment or Exploitation?
So, there it is in outline form. Judge it how you will, but it is a pretty complete over-view of the rationalle behind the western democratic system of social modernization, and to careful thinkers, it is absolutely in line with the Enlightement program together with a healthy mix of good old fashioned European expoitation to keep it real. Is it a geneel scenario overall? Can it be refined, sustained, continually employed until the whole of Africa and South America becomes “enlightened” too? What then? Can the same system be adjusted to work in teraforming or colonizing the moon? Or is it just corrupt, morally bankrupt, and doomed to fail under its own illcontrived weight?