The degrowth and stagnation of the United States and Russia, and the resilience of the European Union

In response to this tweet, collated from a collection of tweets written in response.

The referenced tweet claimed, that 'the EU [supposedly] loves degrowth'.

And my response thread:

Or living within one's means.

The degrowth paradigm is out of the window currently, as the EU has relaxed the restrictions on state aid, the famous "3% inflation-to-GDP" rule, and on individual member states taking loans (unwise), just to slow down a steep slowdown.^[1]

The United States saw peaks in the 1980s, then completely peaked in the 1990s, and much of it and its society is now going through a stagnation, in part because of off-shoring, but not only.

The USSR variously peaked in the 1970s and 1980s, until Chernobyl happened.^[2]

America has also peaked: it did in the 1960s (the space programme), was doing very well in the 1950s, and before that, it won WWII and had the capacity to underwrite the Marshall Plan to rebuild and protect Western Europe. That was huge.^[3]

Ironically, the technologies developed during WWII created new industries (computers and then space stuff, viz rockets). Having a well-regulated market economy allowed for the growth of economies of scale for these.^[4]

The off-shoring of manufacturing to a major non-democracy because of the cheap labor that it provided and subsidised, remains to this day one of the greatest sacrifices of freedom, democracy, and the rule of law.^[5]

Such off-shoring thus created a negative feedback loop of *unregulated* globalisation.

In and of itself, globalisation is a good thing, in that it variously facilitates the free movement of persons, labour, services, goods, and capital. But only when it's well-regulated.^[6]

'Regulation' here is balancing any such open market economy with counter-cyclical protections. — This means a comprehensive stability mechanism and proper social safety nets.

The European Union is the best such example of successful globalisation.

The United States is not.^[7]

Given the many policies that maintain the economic stability of the EU as a whole, and each EU member state, the European Union can in parts afford to 'degrow', as it were.

Whereas the United States, bereft of these mechanisms, and also paralysed by political bickering, cannot.^[8]

The diversity of the EU has inevitably lead to multi-track development and a variable-geometry Europe, whereby some EU economies develop faster, and some slower.

A multi-speed Europe is not really a bad thing, as this diversity contributes to the EU's resilience.^[9]

'degrowth' might happen to the EU as a whole (Brexit), and/or in some EU member states, but not because of any such planned policy, but merely due to the cyclical nature of the world economy, which does affect Europe, but to which the EU itself is reasonably resilient.^[10]

At large, the United States is capable of protecting itself and its friends and allies from foreign threats.

The EU has been able to complement this capability, but must now develop it further within the NATO framework.^[11]

In the States, care should be taken to further harden the U.S. economy and society from major shocks. The ACA is just 1 of the steps in that direction.

A Biden presidency would begin to mitigate existing inequities, and that in total should help in the recovery of the world economy.^[12]

The economy of the USSR serves as a cautionary tale of ineffectual leadership and bureaucracy ruling over a stagnant economy that is one big disaster away from a major perturbation. In 1986, that was Chernobyl. In 2005, it could have been Katrina, and it was for Bush and the GOP.^[13]

In 2020, it's the coronavirus and the ensuing economic fallout for Trump and the GOP.

Some of Democratic presidential candidate Joe Biden's proposals do have an air to them, but they are meant to prevent a major disturbance in the Force, and then to improve the economy. Green shoots and all.^[14]

Russia faces similar problems: economic stagnation, extensive political corruption, and a leadership that's mostly preoccupied with what it sees as its enemies.

Putting the dispute over Crimea aside, then the West itself is uninterested in taking any territory of Russia proper.^[15]

And it is not NATO, or the EU, or Europe, or the West that Russia should really be concerned about. But that's very much a different story.^[16]

wrt the carbon tax:

A general tax on companies emitting carbon is unwise.

But something similar to a CO₂ quota exchange with a tax on each transaction would incentivize U..S states and companies to seek clean and cleaner solutions.^[17]

For individuals, a gradual raising of the tax on petrol at the pump would incentivise people to choose petrol-saving, hybrid, or all-electric vehicles.

Also, perks to owners of all-electric vehicles: a smaller value-added tax on purchase, no car tax, and free parking nationwide.^[18]

Conclusion

The United States has degrown in terms of its economy and society. It could ill-afford to do so, and cannot afford to degrow any further.

Owing to its total top-down model of government and state planning, the Soviet Union began to stagnate during the Brezhnev era, suffered a black swan event in Chernobyl and then the 1988 Armenian earthquake, and then collapsed totally.

Russia's problems are similar: it's run by a ruthless power vertical that oversees an undiversified economy that singularly depends on the export of oil and gas.

The society in European Union is not degrowing, while the EU can afford a degrowth both economic and even territorial (Brexit), if it, or each member state finds it more feasible in the short-to-mid-term.

Long-term, the less-effective EU member states would be wise to become more effective. Greece is has already decided on a path to progressive policies, while France has chosen stagnation.