What is happening in the United States is far more serious than the shutdown of government. It underlines a fundamental weakness in the land of the stars and stripes that keeps emerging.
In the US, people in leading positions keep acting to serve their own vested interests and not those of the nation, while the rest of the country denies it is happening until it’s too late.
And in Australia we show signs of catching this US disease.
Although Wall Street slipped a little last night, US markets are treating the crisis as something that is not happening. Meanwhile the Republicans are far more concerned about their vested interests than the national and world interests.
We saw this attitude first emerge in the Enron crisis where executives and markets acted in their own vested interest irrespective of the national interest. Then eventually the whole edifice came tumbling down — with widespread consequences.
We saw Enron as a once-off, but it was not. Even as Enron was crumbing in 2001, banks and other institutions, encouraged by politicians, were lending significant sums to people who had no jobs and could not service those loans. It was an action in the vested interests of US politicians and Wall Street and, of course, not in the long-term interest of the US.
Six years after the Enron crisis, the denials via market smokescreens could not hide the mess any longer. Once again the edifice came tumbling down and the world suffered a global financial crisis.
The Iraq war was another illustration of the same linkage of vested interests and denials.
The next step in this process is more serious again, particularly for Australia. As in Enron and the sub-prime loans, the US is in denial that the planned spearhead of US air power, the Joint Strike Fighter, has deep problems and is no match for its Russian, Indian and Chinese counterparts. The defence department and the contractors are acting in their own vested interest rather than that of the nation. Like Enron and sub-prime loans, the JSF fiasco will suddenly blow up and America simply will not be able to control the skies in the event of any military action.
For Australia, the JSF denial will have enormous consequences. If Enron and the sub prime were recognised early, they could have be dealt with. That also applies to the JSF. But if the US and Australia remain in denial, then by 2015-16, it will be too late and the US will be relegated to a second-rate air power. Australia will have to re think its defence.
In the latest illustration of this linking of vested interests and national denial, the markets believe that the Republicans will come to their senses and nothing serious will happen.
Hopefully this time the markets are right. But there is a much deeper problem: the end of America’s position as the world’s leading power. At best, the US is headed for a shared relationship with China and Russia. But if the US does not recognise the consequences of acting in the interests of powerful groups and denying that deep problems exist until it is too late, then America could face something worse than shared power.