The sub-title of American Theocracy is "The Peril and Politics of Radical Religion, Oil and Borrowed Money in the 21st Century," and it is more or less equally divide among these three somewhat disparate topics although they're all linked in some ways. Kevin Phillips runs down the whole history of religion in the US, and it is a fascinating account. It seems like the more radical religions have always displaced the more mainline, conservative and thoughtful religions. The Southern Baptist Convention, in particular, has taken over not only the whole south but bordering regions as well. These religions are characterized by blind faith and emotional appeal rather than thoughtful analysis. Therefore, the world's problems can be addressed not be intellectual analyses, but by gut feeling and the knowledge that God (not mere humans) always has the situation well in hand and that everything happens for the reason that God intends it to happen as prophesied in the Bible.
This particular kind of religion goes back to the post-civil war era when the notion that "the south will rise again" was kept alive in the churches. Now that the south has risen again as evidenced by the Red State take-over of the political process, southern and, therefore, American hubris exerts itself in the world as if we were God's chosen people. Taking the Bible literally, having dominion over the earth instead of husbanding the earth's resources, looking forward to Armageddon and the Rapture in which all the "true believers" will be taken up to heaven while the rest of us will be left behind to face a sorry mess, these are the articles of faith that America's dominant religion has foisted on America's dominant political party.
George W Bush, as a born-again Christian, is happy to pander to the religious right whether it is promoting a Constitutional amendment to ban gay marriage (which he knows at the outset won't pass) or ignoring environmentalist warnings about global warming. Since God's divine hand is guiding history, America's leaders need do nothing more than emphasize absolutes, authority and tradition. The fact that most of the rank and file of the religious right are disadvantaged by Republican economic policies does not seem to deter them from voting against their own economic interests as long as they have elected officials that mouth the jargon of Christian conservatism. Since most of them are not sophisticated in the economic sense but are more concerned with Nascar, professional football and shopping at Wal-Mart, they can rest assured in the knowledge that a God fearing Christian in the White House is carrying out policies that represent God's will. Certainly the repeal of Roe vs Wade is one of them.
Regarding oil policy, American reserves are on the decline while Saudi Arabia and Iraq have the world's largest and second largest proven reserves, respectively. While the US is the world's largest consumer of oil, it is becoming increasingly dependent on the middle east for its supply. In a sense OPEC has the US where it wants it: in a stranglehold. It can increase the supply. It can decrease the supply. It can make the price go up. It can make the price go down. That's what makes the invasion of Iraq so critical for US neocon and oil company interests. Iraqi oil freed from the grips of either a Saddam, who wouldn't deal with the US after the 1991 Gulf War, or an OPEC would, hopefully, represent a free market controlled by western oil companies. Well, it hasn't worked out that way so far, but that's still the ultimate goal.
The other factor driving up the price of oil is that China, developing at a rapid pace, is trading its bicycles for automobiles. China is developing a voracious apppetite for oil and other natural resources and is competing with the US for the limited supplies available. Meanwhile, such countries as Iran and Venezuela are nationalizing their oil assets joining Saudi Arabia, Mexico and others and leaving the major western oil companies such as ExxonMobil, Chevron and British Petroleum in the lurch. The net result is that the US is increasingly dependent on Saudi Arabia, the United Arab Emirates and other OPEC countries. The one ace in the hole that the US currently possesses is that, by virtue of a secret agreement with Saudi Arabia, oil must be purchased in dollars which at the present date, at least, is the world's reserve currrency. What this means is that other countries wishing to purchase oil from OPEC must keep a reserve of dollars with which to buy it. It also means that OPEC countries accumulate dollars from their sales to the US and other nations which must then be funneled back to the US by buying up US debt such as Treasury bonds or US assets such as port management companies that were to be sold to Dubai Ports until there was a huge outcry against it.
So we are dependent on the very countries where terrorism is spawned (Saudi Arabia is officially a Wahhabist Muslim country) both for our oil supply and for buying up our debt. Is it any wonder then that President Bush threatened to veto any legislation that would nix the Dubai Ports deal? As late as the 1980s, the US was a creditor nation. Since then it has run up debts to international creditors of over $4 trillion making the US the world's largest debtor nation. As long as oil continues to be priced in dollars this is not that great a concern. But, if OPEC should decide to price oil in euros as well as dollars, then nations need not keep a large dollar reserve and might increasingly make their purchases in euros or other currencies if OPEC should decide to sell oil in a number of different currencies. The petro-dollars - the accumulation of dollars by oil producing nations - would diminish and the US would have to raise interest rates, devalue the dollar or give in to inflationary pressures or all three in order to finagle its way out of a fiscal donnybrook. The spectre of such possibilities make controlling Iraqi oil as a conterweight to OPEC and China, which is cutting deals all over the world with countries basically hostile to the US, seem like a rational alternative to giving up the American way of life and debt.
Phillips' third major point is about the financialization of the US. As he says: "...Moving money around has surpassed making things as a share of the US gross domestic product." Financial services are on the rise; manufacturing is on the decline. The stock market bubble of 2000 has been replaced, by means of reducing interest rates to borrowers and "creative" financial instruments such as Adjustable Rate Loans (ARMs) and interest only mortgages, by a real estate bubble which is already on the verge of breaking. What bubble will be next to rescue the US economy? All kinds of fancy stock market derivatives and hedge funds have made the stock market subject to a bubble burst at any time, and guess who will be hurt? The 401k'ers who are hoping for a pension some day. The hedge fund guys can shift their money very quickly, and the derivatives accelerate the rises and falls much faster than an unsophisticated investor can react.
The US savings rate is now negative with consumers carrying a huge load of credit card and mortgage debt. Americans are encouraged to overconsume. Something like half of Americans are overweight and a third are obese. If Paul Volcker said it was his job as Fed chairman to "take the punch bowl away just as the party got started," now the policy seems to be to add more punch to the bowl and bring out the pork rinds and buffalo wings! Consequently, in addition to stock market and real estate bubbles, there is a credit bubble which could burst at any time. America has become a rentier culture. That is it makes more money from unearned income - capital gains on stocks, real estate, dividends and rents - than it does from manufacturing. Deindustrialization and postindustrialism have replaced manufacturing and hard work as the engine that drives the economy. The hard work, "the jobs Americans don't want to do," is done by illegal immigrants. The US trade deficit, because of imports of cheap manufactured goods from China and oil from the middle east, is in the neighborhood of $600. billion annually. Germany, Japan and Switzerland, by contrast, enjoyed huge surpluses in trade in manufactured goods and large ones in their current accounts in 2003 and 2004 all the while maintaining high workforce wages and benefits.
The Republican policy of profligate spending while lowering taxes, which started with Ronald Reagan who quintupled the National Debt and continues to the present day with George W Bush, is hastening the day when the US, already the world's largest debtor nation, will no longer be able to borrow and spend on such favorable terms as it currently enjoys. When the chickens come home to roost, and the world decides the euro or an Asian currency is a more favorable reserve than the dollar, the US will not only be the world's greatest debtor but the world's largest indentured servant.
