US Secretary of State Antony Blinken, singer of cover songs in Ukraine Nazi bars and overseer of genocide, got a jump start on the Biden administration obituaries with his recent fantasy world op-ed in Foreign Affairs titled “America’s Strategy of Renewal: Rebuilding Leadership for a New World.” It was nominally about Biden, but considering the impairments of “the big guy,” Blinken was mostly congratulating himself.
National security advisor Jake Sullivan is also already being lionized by the likes of Wired:
And it’s Sullivan I’d like to focus on here. If we remember back, it wasn’t just a “tech war” he had planned; he also had grand designs to wed a rebuilding of the American middle class with the Biden foreign policy. Here’s Politico back in 2020 describing Sullivan’s philosophy:
…the strength of U.S. foreign policy and national security lies primarily in a thriving American middle class, whose prosperity is endangered by the very transnational threats the Trump administration has sought to downplay or ignore.
This was a convenient narrative for Sullivan and company because:
- It provides an easy dig at Trump.
- It shifts blame for the destruction of the middle class from American elites to nefarious foreign actors.
- It is an attempt to rebuild some modicum of social trust and patch over the country’s decay as it gears up for the plutocrats’ long war against Russia, China, Iran and anyone else under the sun that opposes US hegemony.
Did the plan really have anything to do with boosting American workers though? Or were any benefits potentially going their way simply to be the byproduct of the plutocrats’ goal to take control of clean energy technology, AI and the like from China and make sure the US is at the center of what’s commonly called “the economy of the future”?
Let’s take a closer look at Sullivan’s plans and compare them with the results. In comments last year at the Brookings Institution Sullivan laid out the tenets of this philosophy:
A modern American industrial strategy identifies specific sectors that are foundational to economic growth, strategic from a national security perspective, and where private industry on its own isn’t poised to make the investments needed to secure our national ambitions.
CHIPS and IRA
The CHIPS Act, which subsidizes semiconductor manufacturing in the US, and the Inflation Reduction Act, which includes billions for clean energy tech, have added roughly 131,100 jobs so far, according to Jack Conness who does a neat job tracking the investments. It’s not much more than a small blip on the radar:
That’s still a far cry from the 3.7 million jobs sent to China from 2001 to 2018, and there are reasons it’s unlikely those jobs will ever come back.
For one, the CHIPS push has already stalled due to a shortage of qualified workers for its domestic semiconductor industry. There’s also the issue of automation, with newer factories being heavily automated and employing a fraction of the workers that they used to.
There hasn’t been any real effort to bring back other jobs that aren’t in strategic national security fields. A 2020 Bank of America study found that it would cost American and European firms $1 trillion over five years to shift all the export-related manufacturing that is not intended for Chinese consumption out of China.
And note that’s just out of China, which doesn’t necessarily mean the production is coming home. The “friendshoring” push means moving from unfriendly China — which used to be friendly before wages got too high and production moved into strategic fields — to other currently friendly countries which also happen to be low-wage.
Companies from China are already out in front of the friendshoring trend and are increasingly setting up shop in Mexico in order to be closer to their biggest market in the US. And the reality is, it’s next to impossible to remove China from production networks anywhere in the world. From The Diplomat:
“Friend-shoring,” “nearshoring,” and newfound industrial policies in the United States (and Europe) could very well lead to the diversification of U.S. imports, lessen the perceived national security risks associated with import dependence, and provide economic benefits to ASEAN countries by shifting some manufacturing activity from China to Southeast Asia. However, these policies are unlikely to fundamentally challenge China’s central position in regional trade and production networks in the mid-term. As Apple’s struggles in diversifying the production of the iPhone show, China-centered production networks are not easy to replicate in other countries, as Chinese logistics and suppliers possess significant advantages.
The big question looming over any attempt to return manufacturing jobs to the US is whether it’s even possible under the country’s advanced-stage neoliberalism. As Micahel Hudson writes:
[The US] has built too high a rentier overhead into its economy for its labor to be able to compete internationally, given the U.S. wage-earner’s budgetary demands to pay high and rising housing and education costs, debt service and health insurance, and for privatized infrastructure services.
The Empire Consolidates
Washington is demanding more and more tribute payments from its “allies” in one form or another. As Sullivan puts it:
Meanwhile, through the U.S.-EU Trade and Technology Council, and through our trilateral coordination with Japan and Korea, we are coordinating on our industrial strategies to complement one another, and avert a race-to-the-bottom by all competing for the same targets.
The US has pressured TSMC to move some chip production out of Taiwan (just in case!), but it might also be unintentionally destroying the company which will harm its customers and suppliers, most of which are US firms.
Elsewhere, the US is cannibalizing the EU. If we remember back to the months following the passage of the Inflation Reduction Act (IRA), European officials were complaining about its $50 billion in tax credits to entice Americans to buy electric vehicles assembled in North America. To be eligible, a portion of the minerals that are used to make the batteries must come from countries that have free trade agreements with the US (the EU does not).
Well, the two sides finally came to an agreement, which EU lackeys championed as the US giving in to their principled demands. It was anything but.
US Secretary of Treasury Janet Yellen said the US would include allies like the EU, UK, and Japan despite the lack of formal free trade agreements.
“Today we agreed that we will work on critical raw materials that have been sourced or processed in the European Union and to give them access to the American market as if they were sourced in the American market.” European Commission President Ursula von der Leyen told reporters after a meeting with Biden.
Sounds great. But while Biden and von der Leyen sold this as a win for “the most comprehensive and dynamic economic relationship in the world,” the problem is that the EU has little in extraction or refining within its borders. As the European Commission notes:
The EU’s industry and economy are reliant on international markets to provide access to many important raw materials since they are produced and supplied by third countries. Although the domestic production of certain critical raw materials exists in the EU, notably hafnium, in most cases the EU is dependent on imports from non-EU countries.
The supply of many critical raw materials is highly concentrated. For example, China provides 100 % of the EU’s supply of heavy rare earth elements (REE), Turkey provides 99% of the EU’s supply of boron, and South Africa provides 71% of the EU’s needs for platinum and an even higher share of the platinum group metals iridium, rhodium, and ruthenium.
So in the end the US concession amounted to squat, and European EV battery companies continued to relocate to the US due to the US subsidies and uncompetitive EU energy costs, which the US also made sure was the case with the cutoff of Russian pipelines.
Sullivan mentions the U.S.-EU Trade and Technology Council, and while that is indeed an effort to ensure the EU complies with efforts against China, it also continues the partners abusive relationship with Washington by making it easier for US tech companies to take over Europe while officials like von der Leyen keep championing the transatlantic ties.
Is Any of it Working for the Middle Class?
While the US is finding limited success bringing strategic industry to its shores, there is little evidence that it is having much of an effect on the whole middle class side of the ledger.
Although the American middle class does not have a set definition, there is general agreement that it has been shrinking for 50 years as the share of Americans who are poor or rich increases. That being said, middle class is generally considered a comfortable standard of living and significant economic security for a sizable chunk of the population. So how’s that looking?
Here are real wages:
Not great. And there is evidence that the majority of those gains are at the bottom for the working poor. From Thomas Ferguson, Research Director at the Institute for New Economic Thinking, Professor Emeritus, University of Massachusetts, Boston; and Servaas Storm, Senior Lecturer of Economics:
We showed that claims of broad wage gains under Bidenomics were specious. The opposite, in fact, was the rule: The U.S. was plainly in the throes not of a wage-price spiral but a price-wage merry go round, with real wages for most workers falling steadily behind prices. For one set of workers only this pattern did not hold true: workers at the very bottom of the wage distribution were indeed seeing pay raises in real terms. This owed little to any policy change: It was a unique case of wages rising to subsistence levels as COVID exponentially multiplied risks of working at what had previously been relatively safe jobs and workers at the bottom of the wage distribution left their jobs.
While the Biden Administration somehow got antitrust right, any effects from the Department of Justice and Federal Trade CommissionAll the other economic news — from credit card and medical debt to homelessness and economic inequality — continue their downward spirals, and they’re still trying to sell us on Biden being FDR.
Sanders said today again that Biden is the “most progressive president since FDR.”
This is a total lie. The workers’ share of national income has plunged to its lowest level on record under the Biden administration.
Biden was a bonanza for Wall Street. pic.twitter.com/NDjrk7JUWY
— Joseph Kishore (@jkishore) October 27, 2024
As opposition to all the money flowing to Ukraine and Israel began to grow, the foreign policy for the middle class began to morph into the arsenal of democracy argument. All the money flowing to US proxies was like a US jobs program, they claimed. In October of 2023, Biden delivered an Oval Office address to promote $106 billion in “emergency” spending that included tens of billions of dollars worth of weapons for Ukraine, Israel, and Taiwan. Here’s what he said:
And when we use the money allocated by Congress, we use it to replenish our own stores… equipment that defends America and is made in America: Patriot missiles for air defense batteries made in Arizona; artillery shells manufactured in 12 states across the country — in Pennsylvania, Ohio, Texas; and so much more.
Even creatures who prefer the shadows like former Under Secretary of State and wrecker of worlds Victoria Nuland was sent in front of the cameras to try to persuade the people:
“Vemember, zee bulk of zis money goez vight back into zee economy.”
— Herr Nuland explains self-licking ice cream cone theory to CNN’s last remaining 500 subscribers.
The neocons made a stupid, clumsy play for imperial conquest over Russia, now the whole world is witnessing… pic.twitter.com/diHiE1pGhZ
— Chebureki Man (@CheburekiMan) February 25, 2024
Setting aside the obvious answer to the question of whether there are other ways for the government to provide employment rather than the purchase of bombs that rain down on women and children in Gaza, Lebanon, Syria and elsewhere, how much truth is there to Biden and Nuland’s argument?Does the US even have the capacity to act as a so-called arsenal of democracy anymore?
It would appear not. The looting and shipping of manufacturing operations overseas primarily to China isn’t something that can be corrected by flipping a switch. The skilled labor and research capacity just isn’t there.
That means the US currently relies on components made in China for aircraft carriers and submarines. It means a trillion dollars in defense spending helps enrich China – the very country which is supposedly one of the points on an axis of evil behind the increased defense spending in the first place.
It means that the Pentagon contracts General Dynamics Ordnance and Tactical Systems (a US company) to build three 155mm projectile metal parts lines in Texas, but the company needs to call in Turkish subcontractors. As the Department of Defense itself notes, the “advanced weaponry and supporting equipment necessary to dominate in modern warfare require highly sophisticated manufacturing, yet the domestic workforce has suffered for decades.”
There’s still enough weapons of death being produced so that washed up comedians and former Israeli Defense Forces volunteers can get together and sign bombs:
We must all do our part in the fight for freedom — from the workers in Scranton who make Pennsylvania the arsenal of democracy to the brave Ukrainian soldiers protecting their country.
We stand with Ukraine in their just defense of their homeland in the face of Russian… pic.twitter.com/5VnYRfQOm5
— Governor Josh Shapiro (@GovernorShapiro) September 23, 2024
While they try to highlight the supposed jobs benefits in keeping the money flowing for the plutocrats’ proxy war against a nuclear-armed power, the struggle to find workers continues. Maybe it’s a skills shortage, maybe people don’t want to make bombs, maybe they don’t want to work in a poorly ventilated factory during an ongoing pandemic, or maybe the jobs aren’t as attractive as they used to be. As Taylor Barnes points out, “…[the defense industry] dropped average salaries, and battered its unions in recent decades, meaning that, from a labor perspective, a job in the military-industrial complex just isn’t what it used to be.”
That means Sullivan failed spectacularly in what was supposedly his top goal.
There’s more. Another problem with the whole arsenal of democracy as economic policy. War might provide a temporary boost, but it doesn’t last long. It crowds out investment in other areas, and can be especially harmful for the working class in a country with as much consolidation as the US.
While Sullivan made his foreign policy for the middle class sound like it was full of big ideas, it amounted to little more than the feudal aristocracy throwing a few gold coins from the royal stage coach to starving peasants. Unsurprisingly it has done next to nothing to rebuild the collapse of social trust in the US, which was one of the goals:
We can likely look forward to some form of Sullivan’s policy surviving whoever the next president is. While Sullivan isn’t expected to stay on, Kamala says she wouldn’t change anything policy-wise from the Biden administration. Trump has already made clear that his administration wants Germany’s jobs, so there’s that. Maybe he’ll downgrade one conflict while prioritizing another or two.
Sullivan’s ideas (if genuine and not simply some domestic cover for plutocrats’ desired wars) were doomed from the start as his entire theory was built on BS. While outlets like Politico salivate over his “mea culpa” for the foreign policy establishment’s decades of errors, he was in reality doing the complete opposite.
He was the point man for rewriting history and learning nothing in an effort to ensure that nothing will change. Here’s Sullivan telling of what went wrong:
But the last few decades revealed cracks in those foundations. A shifting global economy left many working Americans and their communities behind. A financial crisis shook the middle class. A pandemic exposed the fragility of our supply chains. A changing climate threatened lives and livelihoods. Russia’s invasion of Ukraine underscored the risks of overdependence.
First, notice the lack of agency. Second, they’re not cracks in a foundation. I think a penthouse wobbling on stilts is a proper metaphor with the absence of a foundation being the result of American elites wielding a sledgehammer.
The global economy did not just shift as part of a natural process. American elites did the shifting with NAFTA and bringing China into the World Trade Organization in order to profit off of the deindustrialization of the US.
American elites “shook the middle class” when they constructed the financial house of cards that decimated the country and much of the world, and then they got bailed out.
American elites organized the supply chain to be fragile (and designed a pandemic response that whacks tens of thousands of mostly working class Americans every year).
The elites ignored climate change, are responsible for most of the emissions, and think they’ll ride it out.
And it was the elites who instigated one of their latest losing wars in Ukraine in their desire to plunder Russia and a genocide in Gaza. And the working class pays — either due to higher prices, US social policy circling the drain, or in the case of Ukrainians, Palestinians, and others, with their lives.
Refusing to acknowledge these simple facts ensures no fix and more crises to come until eventually even the stilts give way and the penthouse comes crashing down.
