As the curtain fell on 2012, and America’s implacably inane “fiscal cliff” melodrama played out, all was symbolism and posturing. Following the last minute deal, the President led the nation in New Year’s revelry with a press conference that was a frenzied verbal caricature of the Republican opposition.

Regular readers will recall my past Jeremiads about the unfeasible condition of American public debt: an annual federal deficit of almost 10% of GDP, largely paid for through a fraudulent shell game in which the Federal Reserve purports to buy its parent’s (the U.S. Treasury) bonds by the cyber-issuance of notes, compounded by the effective bankruptcy of many states and municipalities.

This alarming state of affairs has persisted for five years, and is aggravated by the absence of any real economic recovery, and of any will in places of authority to try to come to grips with the Gordian Knot of problems that comprise this horrible mess.

And no one should imagine that this is exclusively a matter of concern to Wall Street. Those who affect an effete indifference to what is at stake here will be like the eminent writer Edmund Wilson, and the acerbic commentator H.L. Mencken in the early days of the Great depression: Wilson celebrated in print the collapse of “the awful, gigantic, fraud” of Herbert Hoover’s “American System,” while Mencken claimed to find the frequent suicides of bankers and stockbrokers humorous and a benign societal purgation.

The astute financial writer Holman W. Jenkins wrote in the Wall Street Journal on January 2 that more important than revenue increases or spending reductions or even entitlement reform is the resumption of economic growth. It is, but it won’t happen under any scenario that is plausible now.

The American public and economy was incited by the exhortations of successive presidents, and by the maintenance of unnaturally low interest rates, to spend, not invest, and to borrow to spend. Savings, and therefore investment, were effectively discouraged for decades in favor of instant gratification on holidays, consumer goods, gadgets, simple ephemeral self-indulgence or, at best, non-durable goods.

All those vital areas that require steady national investment: education, social services, health care and transport atrophied. Income disparities widened. The United States built up an annual current account deficit of $800-billion, as petroleum imports increased from 10% of the country’s needs in the Eisenhower era to 60% under George W. Bush.

Fractional drilling and other measures are now reducing American energy imports — but only for so long as the eco-terrorists don’t strangle this activity as, in their aimless zeal, they have throttled so many good things, such as the Keystone Pipeline.

A mass aversion to manufacturing and primary (extractive) industries became pandemic among the educated classes, and vast bureaucracies arose in splendid office buildings, printing stock market tickets, dispensing superfluous legal and other advice, and contributing to the velocity of money but not creating wealth.

But it has all stopped. The people have been frightened and are trying to reduce borrowing. The immigration of the high-skilled, highly motivated, easily assimilable kind of worker that built America has dried up. Now that immigration has stopped also, partly from tightening the southern border, and partly because the attractions of America are not so tempting as they were.

For years, illegal, unskilled Latin Americans did the menial work that many American citizens refused to do. The political class turned a blind eye to this inundation, as it did to all the other above-listed problems, and still does. Low-paying assembly jobs were outsourced to assist the advance of developing countries, which then dumped cheap goods in the United States.

My regular readers will have seen most of these points made before, and not only from me. But instead of just decrying this madness, perhaps because of the passing festive season, I wish to highlight two positive aspects of it. First, a penny-pinching United States is now retiring to its own shores — not entirely, but in strategic terms, quite substantially; and this is a good thing for everyone.

The United States was the indispensable country in the last phase of the First World War and in the Second World War and Cold War. But it is surplus to requirements now; it is time for the responsible leaders of revived or developing countries to organize their own regions and see to their own security.

The only world region that is seriously problematical is the Middle East, and there is no evidence that the United States now possesses, unlike some previous administrations, the slightest aptitude to achieve anything useful there, apart from dispensing anti-missile defenses to selected allies and maximum-strength weaponry to Israel.

This is not the defeat of America. It won a victory of sorts in Iraq; and whatever happens there and in Afghanistan, the United States retires with honor, even if there is ample room to question its more recent strategic judgment.

It is a familiar criterion of nations in decline that resources are transferred from projecting their influence in the world to appeasing and suborning blocs of domestic opinion. But in other respects, comparisons of America with declining Great Powers of the past are specious.

This is not Rome, with its unlimited corruption, government by despotism tempered only by assassination, and endlessly debased currency, nor Britain with its ultimately threadbare empire controlled with increasing difficulty by an exhausted and under-populated home country. The nonsense in Washington will continue, but eventually someone will seek and receive a mandate to clean house, and the genius of regeneration will recur.

The other good point is that Canada is now, for the first time in its history, receiving significantly more immigration from the United States than it is losing. There are rewards for having managed our affairs better, and having avoided federal and current account deficits.

All Canadians will wish the United States as swift a recovery as possible from its self-inflicted misfortunes. But more than anything else, Canada needs people; and as always, including up to 60,000 Empire Loyalists during and after the Revolutionary War, and an about equal number of fugitive slaves in the decades before the Civil War, Americans will be welcome and valuable in Canada.

A good deal of previously reluctant European immigration is now available to Canada also. The United States had 30 times as many people as Canada at the time of the American Revolution, and has had about nine times as many since Confederation and the Civil War. A narrowing of that ratio would alleviate traditional Canadian self-consciousness about the correlation of influence between the two countries and would be good for everyone.

National Post
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