A road not takenA road not taken
“By around 1970 Europe and Japan had more or less recovered from the Second World War and were becoming economically competitive with the United States, which had recently wasted enormous resources in Southeast Asia. The US responded by reneging on the Bretton Woods regime: going off the gold standard, establishing the dollar as the world’s reserve currency, and turning the IMF into a global enforcer for Wall Street. Among its other benefits, this move conveniently positioned us to capture the flood of petrodollars that followed the oil price rises soon afterward. The savage Volcker interest rate hikes later in the decade further weakened the US manufacturing sector and strengthened the financial sector. The Reagan years saw American companies flee abroad in droves. The end of the Cold War presented the US with a fateful choice. We could relinquish the artificial financial advantages that kept money flowing into Wall Street even as foreign demand stagnated, American industry declined, and the American trade deficit grew. This would have meant military retrenchment and a period of economic austerity, but it would have restored our competitiveness, allowing for reindustrialization on a solid basis and with a more evenly distributed prosperity. But we didn’t.” – George Scialabba, “Socialist Register 2004″