"Tivo-ifies the web" Paul Kedrosky

I.O.U.S.A


This film is interesting because it has all the superficial appeal of FEBL conspiracy theory junk, but is actually pretty good. The charts are genuinely illustrative and the infomation density reasonable and logical. The premise – that debt is America’s biggest problem is plausible, and logically argued.

It took me ages to figure out what the nagging problem I have with it is, and unfortunately I can’t sum it up in a sound bite. The train of objection goes something like this:

Film says: America has culture which creates debt.
Film says: America’s debt burden will reach levels where it has no control over its destiny.
Film says: America’s creditors are not natural allies.
Film says: US creditors can dictate what America does by threatening to dump dollar.
Film says: America dumped pound to dictate what UK and France did in Suez.
Film says: America needs leadership.

The last point is the fallacy. I would argue that ironically what America actually needs is weak leadership.

Here is the problem.
Like a scientific experiment which seeks a particular outcome, there will always be a train of thought that leads, seemingly rationally to an apocalyptic scenario if you look for it.
America’s creditors will not let it run up a $50 trillion debt – the margin call will happen sooner, and may already have happened.
Decline of Empire tends to be long and drawn out, and quite often the society left is tolerable and intact.
America will likely be the cultural center of the world for a while after it has ceased to be the economic one (It will all be over before while fat lady still sings, if you like).
In other words it will be bad, but not that bad, unless…

America ends up in a large conflict.
History suggests America will go to war, jingoistically and come back capitulated. This is what happened to Europe in WW1 and WW2. This would have to be a much larger war than Iraq and Afghanistan, although if it happens, it will undoubtedly take place in the Middle East.

I would argue, that strong leadership will more likely lead America into war, what America needs is weak leadership so that it can naturally decentralize and the more successful areas survive while it transitions into a different country. America’s biggest danger is not the people or the place, but the idea.

Films like this assume that all that a country has to do is find a sustainable model of existence and everything will work out fine. Empires do not need to be sustainable – they profit from other poorer parts of the world. You cannot have the kind of lifestyle that America has and it be sustainable, it is pointless to look for it. The distribution of wealth will never be flat, but a bell curve and what will happen is that someone else will sit on the right of the bell curve.

Interestingly this implies that China will never have the kind of dominant middle class culture that America has, unless it is geographically specific, because there are too many Chinese to fit into the right hand of the bell curve.

history

5 comments on “I.O.U.S.A

  1. Christian says:

    The film’s call for fiscal responsibility is somewhat undermined by the fact that it was made by a foundation set up by The “Hon.” Peter G. Peterson, ex-Chairman and CEO of… Lehman Bros! Can someone tell me what it was that “Pete” produced to generate his own stupendous fortune? Oh wait…

  2. Paul says:

    David,

    I think you should consider a third option, that America may be capable of inventing and dominating a new model.

    The last eight years served one great purpose by teaching about a third of the country to consider the relationship between their goals, their needs, their government and their vote. If education includes the liberal arts and science, corporate power is subordinated and the church is entirely separated from state, then true democracy captures the emergent property of collective wisdom.

    Americans may not have vision, but they know it when they see it.

  3. admin says:

    I think its more likely that history repeats itself i.e. what goes up goes down, rather than creation of a new method of making things go up forever.

  4. Matt Sherman says:

    This movie is really good at scaring you. Some of the projections are absolutely bone-chilling. But it largely overstates the problem — the deficit is currently at a manageable level of 3% of GDP. And we need to run a deficit in this economic downturn to ensure we don’t have skyrocketing rates of unemployment. The flim also ignores one of the best solutions to the “problem” — health care reform. If our health care system were as efficient as other industrialized nations, and if Medicare/Medicaid were able to take advantage of these lower costs, then our deficit problem would basically disappear. Check out the Center for Economic and Policy Research, they have a nice graphic that demonstrates this well: http://www.cepr.net/calculators/iousadeficit/calc_iousa_deficit.html

  5. Bill says:

    I.O.U.S.A. is now is also available on Lycos Cinema, here: http://cinema.lycos.com/movies/iousa
    Lycos Cinema is a social video site that allows viewers to watch and chat with other viewers in real-time, so this is not only a chance to see this important movie, but also to discuss it live with other interested citizens. Check it out.

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