No. 101

The secret Illinois ingredient saves Australia

STONE the crows! The affable Obama forgot to acknowledge some very important people in his 76 Australian appearances last week – the savers of China. At the end of September, the Chinese held $1,148 bn in US Treasury securities (we kicked the tin for $13bn). [i]

It is all very well for the president to proclaim he has decided to reorient the US Asia-ward and arm-up here while cutting back on the commitments which have increased US defence spending by 15 per cent up since 2002.[ii] But, from Beijing’s perspective, it is a bit rich to be doing it while relying on borrowed money, much of it Chinese. [iii]

The wretched truth is the US is deep in debt and after a decade of battering (what with September 11, the way it took a while to win in Iraq and the state of the economy) the American people are starting to doubt they can deliver. A survey for the estimable Pew Global Attitudes research organisation has discovered the Yanks have lost their sense of superiority. Just under 50 per cent agree with the statement “Our people are not perfect, but our culture is superior to others”, done from 60 per cent in 2002.[iv]

This could be very bad for us. For all the vulgar USA!USA!-ing Americans indulge in (as opposed to the self-deprecating Aussie-Aussie-Aussie-oi-oi-oing we favour) their sense of superiority has less to do with a sense of entitlement than an obligation to assist.

Abraham Lincoln argued the Civil War was a struggle for all humanity opining: “In giving freedom to the slave, we assure freedom to the free — honorable alike in what we give, and what we preserve. We shall nobly save, or meanly lose, the last best, hope of earth.”[v]

And while the left dislike it, and the isolationist Republican right reject it, ever since President Wilson’s 14 Points and the Marshall Plan the US has defended democracy and the human rights and capitalist economies that go with it around the world.

If the people of the United States have a Carter-ish loss of confidence in their ability to stand up for democracy we will be the worse for it.

For a start it might mean we have to pay for our defence instead of free-riding in the wake of the US Pacific Fleet. Although it is hard to see how we would do it. The 12 locally constructed submarines that are the backbone of the 2009 Defence White Paper are expected to cost at least $30bn.[vi]

On top that we would need aircraft carriers and independent expeditionary capacity, plus air cover for it, to work independent of the US.[vii] Sure we went into Timor without the Marines, but it was the USN and USMC which provided the logistics.[viii]

The last thing Australia needs is for the Yanks to decide they are not up to the task of guarding democracy all over the world.

We saw what happens when the Yanks lose their nerve. In the 1970s, President Carter either identified, or more likely instigated, a crisis of confidence in America’s past and future in his famous energy crisis speech:

We always believed that we were part of a great movement of humanity itself called democracy, involved in the search for freedom, and that belief has always strengthened us in our purpose. But just as we are losing our confidence in the future, we are also beginning to close the door on our past.[ix]

Fortunately for us, President Obama is doing neither, at least when it comes to the Asia-Pacific:

From the bombing of Darwin to the liberation of Pacific islands, from the rice paddies of Southeast Asia to a cold Korean Peninsula, generations of Americans have served here, and died here – so democracies could take root; so economic miracles could lift hundreds of millions to prosperity.  Americans have bled with you for this progress, and we will not allow it – we will never allow it to be reversed, he told parliament.[x]

As to affording it – this will be trickier than it looks. The American political class is stalled in a way that anybody interested in the failure of Congress to address the divisions of the 1850s will recognise. Like the slide towards secession. Everybody recognises that the deficit must be dealt with now, but nobody quite seems to know how to do it. With a deal due on Monday night the congressional committee charged with cutting the deficit by $1.2trillion is stalled. [xi]

But never write the Yanks off. President Carter’s “moral equivalent of war” focused on energy and the power of OPEC. “Energy will be the immediate test of our ability to unite this nation, and it can also be the standard around which we rally. On the battlefield of energy we can win for our nation a new confidence, and we can seize control again of our common destiny,” he said demonstrating the tinniest of political ears [xii]

A generation on, they are winning that one. Technological developments since the 1970s mean the US now has enough natural gas for a century.[xiii] If, and admittedly it is a big if, Royal Dutch Shell has found a way to access shale oil the US will have bigger reserves than the Middle East.[xiv] And the US is exporting oil.[xv]

Sure it’s a stroke of luck, but the Yanks have a habit of making their own. Because the US has a secret political ingredient, one that gives it an edge over China. It’s something the first president from Illinois and the present one understand.

As Barack Obama put it,

History shows that, over the long run, democracy and economic growth go hand in hand. And prosperity without freedom is just another form of poverty.

“Too right!” the Crows caw.

The Crows are going to roost for a few weeks – and will return on Monday 23 January 2012

ENDNOTES


[i] US Treasury, “Major foreign holders of Treasury securities,” November 16, @ www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt recovered on November 20

[ii] Satyajit Das, “Balancing books on a precipice,” The Age, November 18

[iii] Peter Hartcher, “China can’t afford to be too gloating,” Sydney Morning Herald, August 9

[iv] Pew Research Center, “American exceptionalism subsides: the American-Western European values gap,” November 17 @ www.pewglobal.org/2011/11/17/the-american-western-european-values-gap/?src=prc-headline recovered on November 20

[v] Abraham Lincoln, “Message to Congress, December 1 1862,” www.archives.gov/legislative/features/sotu/lincoln.html recovered on November 20

[vi] Nicole Brangwin, “Budget 2010-2011, Defence: major capital equipment projects,” Parliamentary Library, @ http://www.aph.gov.au/library/pubs/rp/BudgetReview2010-11/DefenceEquipProjects.htm recovered on November 20

[vii] Department of Defence, “Defending Australia in the Asia Pacific century: Force 2030” 70 (2009) @ http://www.defence.gov.au/whitepaper/docs/defence_white_paper_2009.pdf recovered on November 20

[viii] Global Security.org “Operation stabilise: Timor crisis, American forces,” @ www.globalsecurity.org/military/ops/timor-orbat.htm recovered on November 20

[ix] Jimmy Carter, Televised address, July 15 1979 @ www.pbs.org/wgbh/americanexperience/features/primary-resources/carter-crisis/ recovered on November 20

[x] Barack Obama, “Remarks by President Obama to the Australian Parliament,” November 17,” @ www.whitehouse.gov/the-press-office/2011/11/17/remarks-president-obama-australian-parliament recovered on November 20

[xi] Naftali Bendavid and Janet Hook, “Smaller deficit deal floated,” Wall Street Journal November 19

[xii] Carter, ibid

[xiii] “We will frack you,” The Economist, November 19

[xiv] Sheila McNulty, “Shale oil boom underlines importance of innovation on another fuel,” Financial Times, October 4 2010 @ http://blogs.ft.com/energy-source/2010/10/04/shale-oil-boom-underlines-importance-of-innovations-on-another-fuel-oil-shale/#axzz1eCUscTfV recovered on November 20

[xv] Russell Gold, Chip Cummins and Liam Pleven, “Oil pipeline sale pushes up prices,” Wall Street Journal, November 17

'2012