American Empire (?): The Way Forward

The great American experiment that began more than 200 years ago is looking a bit weary as 2011 draws to a (welcome) close.  As a relatively oddball group of historians who apply mathematics to history will tell you, when viewed through the lens of cliodynamics, the empire of America is already past its sell-by date.  The average lifespan of great powers over the last 3,000 years is 215 years.  It has been 223 years since the ratification of the US Constitution.  But these kinds of analyses, especially those that appeal to our preference for simple dichotomies – live or die, good or evil, rise or fall, win or lose – seldom foretell outcomes that often fall outside the boundaries defined by carefully crafted pseudoscientific models.  Clio, the muse of history for whom cliodynamics is named, would undoubtedly find such exactitude quite whimsical; a reason to pluck her lute with a wry smile.  Nevertheless, the current crisis facing the US and much of the Western world is worth considerable contemplation as the consequences of ignoring what is going on might very well end American power as we have come to know and enjoy it.

            By most accounts 2011 was a big disappointment.  Outside of giving bin Laden his due most events were forgettable and regrettable rather than notable or laudable.  The annual lists of best and worst expanded geometrically in 2011, mostly due to an increase in worsts.  The economy remained anemic, our politicians were (at best) a source of painful entertainment, and the social fabric of society was torn by the realization that the pursuit of the American dream is a rigged game: fewer will get there and the few who do will act – often aggressively – to prohibit others from joining them.  During 2011 ‘political will’ became an oxymoron, unless you count extremists in Congress who believe intransigence is virtuous.  Since the current economic crisis began in August 2007, we have made steady progress in the wrong direction.  Our economic crisis has become a political crisis and now, just in the last few months, the ‘Occupiers’ have made the case we now also have a social crisis.  Most of us watched Greece burn in civil unrest without being able to dismiss the news with our usual effete indifference; our own profligacy has made us wonder how far the pain will spread … how long before it arrives here?  Unfortunately, 2012 looks like more of the same in both Europe and the US, no real progress has been made to affect change in the legacy systems that lock us into a dangerous status quo that shows debt and entitlements overwhelming GDP.

            While recent declines in the unemployment rate have been promoted by feel-good aspirants as the beginning of a new economic day, upon closer inspection they look as phony as the smiling politician who claims he or she has our best interest at heart.  The declines ignore the fact that the chronically unemployed are no longer counted.  Nevertheless, turning the tide of expectations from negative to positive is not all bad even if delusional, and nascent evidence suggests the beginning of a decoupling of US security markets from the woes of Europe might be possible.  Meanwhile, China, which aims to diminish American power, is beginning to realize how growth presents a whole new array of economic, political, and social challenges.  However, even if these nascent indications do herald more bullish markets for US securities it is likely a temporary condition, at best a respite from the messy progression toward full globalization where no one, or two, or even a few nations predominate; and which punishes those who have forgotten the value of savings and investment.  Within two or three years our own debt issues – left to bloat – will put us in the same place as Europe and the world will begin to turn away from the dollar as the preferred reserve currency.  A post-dollar world will be devastating to Americans unless it is choreographed by the US to affect a soft landing.  However, if there is a respite in 2012 it will offer Americans one last chance to preserve the US economy and our relative position of power in the world.  The way forward is what I will characterize as a great work-around.  We must challenge legacy thinking and entrenched regimes.  We must negotiate a new narrative to assure a better future. We must find new pathways around the systems and rules that endanger our future.  Fortunately, out of inspiration or desperation, many are thinking this way and many more may join them soon.  Game changers are being actively pursued by the best and brightest among us.  Follow me.

            The biggest ‘work-around’ – already underway – emanates from beyond our shores but may make landfall in the US soon.  It is what Robert Neuwirth of the journal Foreign Policy calls “The Shadow Superpower.”  It is the $10 trillion global black market that he claims is “the world’s fastest growing economy.”  Technocrats, bureaucrats, and aspiring plutocrats take note: much of the developing world and even some of the developed world are finding ways to avoid your negligent tutelage that too often lines your pockets with wealth produced by the enterprise of others.  Neuwirth calls this “unheralded alternative economic universe … System D.”  Two years ago the Organisation of Economic Cooperation and Development revealed that “half the workers of the world – close to 1.8 billion people – were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often avoiding income taxes.”  Neuwirth suggests these enterprises are “ruled by the spirit of organized improvisation.”  As we look at the hideous leadership we have today in the US, and face the struggle of making financial ends meet, how long before the model of System D (which is not too far removed from how we currently use eBay, Craig’s List, or Etsy) becomes a prevalent modality of commerce in the US?  Although it will undoubtedly be labeled illegal by those charged with protecting the status quo, will it be considered immoral or unpatriotic?  Once a tipping point of adoption is reached and such organized improvisation becomes the norm, how would the rutty-faced enforcers employed by the Fed ever rein in such a tsunami of renewed independence and self-reliance?  Will there be a Shadow America?

            Following in the modality of organized improvisation are what have become known as flash mobs that are also spawning what I will call flash capitalism.  Neighborhood thugs who wanted to tip over a C-store to sate their appetite for Twinkies and cigarettes were the first to apply the flash mob model.  Like al-Qaeda that first demonstrated the power of asymmetric networks, flash mobs have villainous origins.  However, digital communication certainly allows spontaneous collective action and can also be used for good.  Such was the case in the revolutions in many Arab states in 2011.  It can also be used to more productive ends to both entertain and fund enterprise.  My favorite feel-good flash mob is ‘Deck the Halls’ filmed at the Carlson School of Management at the University of Minnesota.  Another more recent example of this digital collectivism that fits into the modality of organized improvisation is a new online venue to raise funding for creative projects and entrepreneurial startups called kickstart.  Tune in, hear the pitch, and decide if you want to support the venture.  Since traditional lending has dried up largely due to commercial banks finding they can make better returns by using government bailout funds to trade exotic securities to assure their year-end bonuses, kickstart has created what is in effect flash capitalism.  While fewer than half of the solicitors reach their funding goal, that is substantially higher than what traditional private capital markets achieve, which exclude most ideas and entrepreneurs without ever hearing the pitch. 

            The last idea I will share here is the biggest, most promising, most challenging, and frankly most inspiring idea I heard (and then studied) during 2011.  It is the mother of all work-arounds.  It is Jeremy Rifkin’s Third Industrial Revolution.  I first heard Rifkin’s ideas on the Diane Rehm radio show, and you can listen here.  Once you listen, you may want his book, which is available here.  Rifkin’s work-around is of the energy complex, which he persuasively argues is at the center of humankind’s future and, I would argue further is the keystone in the arch holding up America’s future as a world power.  He identifies five pillars that must be radically changed to produce a new narrative that defines our future.  The first pillar is the shift to renewable energy.  The second is essentially a re-conception of where energy comes from; in his thesis it comes from every building, which are turned into “micro-power-plants to collect renewable energies on site.”  The third pillar is on-site storage of unused or intermittent energy utilizing hydrogen technologies.  The fourth pillar is to utilize an Internet model to form smart energy networks that distribute energy in an “energy-sharing intergrid.”  Finally, the fifth pillar is the transformation of the entire transportation fleet of vehicles into “plug-in and fuel cell vehicles that can buy and sell electricity on a smart, continental, interactive power grid.”  The old energy model, which is highly centralized owing to a design that collects energy from a few places and transports it to a distant end user, is rendered obsolete once energy is collected, used, and shared from an infinite number of locations.  This changes the whole power structure of the world – both energy and political – to a lateral and highly distributed model that will create thousands of jobs and – pun intended – pulls the plug on governments and despots who control energy as an insidious form of repression.  (And yes, I include Western democracies here.)  As Rifkin points out in his book, Europe is well ahead of the US in adopting his ideas.  The EU has given them a full embrace.  But, as mentioned above, we may have a respite in the US that allows us to catch up and surpass our friends in Europe.  However, we have got to stop indulging the “drill, baby, drill” bunch and invest in the long term.  That means no pipelines from Canada, among many other things.  It means, in short, blowing up the status quo and having the confidence to form a new identity around our old values of independence, self-reliance, and innovation.

            As leadership advisor Mike Myatt recently wrote in Forbes, leadership is many things, but it is mainly pursuit.  It is the “pursuit of excellence, of elegance, of truth, of what’s next, of what if, of change, of value, of results, of relationships, of service, of knowledge, and of something bigger than themselves.”  If 2012 is anything; I hope it is the year we each start to lead-by-pursuit.  Forget the elections and other political sideshows, just lead, baby, lead!  If we do, we just might overcome the legacy systems that protect the status quo and ensure a much better future for America and the world.

Happy New Year.