Check out a summary of what Chinese professor Jiang Xueqin said in a 2024 video:
The Decline of Manufacturing and Rise of Financialization
From 1950 to 1980, the U.S. economy was anchored in manufacturing. Factories drove 40% of GDP profits and employed 30% of the workforce. This era birthed history’s wealthiest, most secure middle class: factory workers could own homes, support families on one income, retire comfortably, and enjoy leisure—a standard unmatched globally.
The Reagan Revolution of the 1980s ushered in neoliberalism, prioritizing free markets and deregulation. Today, financial services dominate:
- 22% of GDP (vs. manufacturing’s 10%).
- 40% of all corporate profits.
- Employing just 5% of workers, concentrated in coastal elites (e.g., Wall Street, Ivy League graduates).
This shift has profound consequences:
- Political power migrated from unions to financiers, deepening societal divisions.
- Talent diversion: Top graduates pursue finance over innovation, fueling speculation instead of productivity.
- Economic instability: Bubbles in housing, stocks, and cryptocurrencies trigger crises (e.g., 2001 dot-com crash, 2008 subprime collapse).
- Inequality: The top 1% captures disproportionate wealth, eroding social mobility and creating a “rentier economy.”
Why Financialization? The Empire Explanation
Conventional theories blame “late-stage capitalism” or neoliberalism. The deeper truth lies in America’s imperial status. After the Cold War (1991), the U.S. became history’s most powerful empire, controlling global rules to its advantage. The dollar’s hegemony—established at Bretton Woods (1944) and later backed by oil (the “petrodollar”)—funnelled global wealth into U.S. markets.
How this works:
- Countries like China produce cheap goods for U.S. consumers but lack purchasing power to buy American exports.
- They accumulate dollars, which—due to perceived safety—flow back into U.S. assets (stocks, real estate, Treasuries).
- Result: U.S. financial markets now hold 60% of global stock wealth (vs. 6% for Japan, 3% for China).
This influx created asset bubbles and a $34 trillion national debt (half owned abroad). Wall Street profits from managing this wealth, incentivizing riskier speculation to earn fees—not sustainable growth.
The Empire’s Crisis: Ukraine and the Need for War
Russia’s invasion of Ukraine is a direct challenge to U.S. dominance. If Putin succeeds, he exposes America as a “paper tiger,” shattering confidence in the dollar and the empire’s invincibility. This could trigger:
- A sovereign debt crisis if foreign investors flee.
- Collapse of the petrodollar system.
America has two theoretical solutions:
- Defeat Russia in Ukraine (failing militarily).
- Reindustrialize (blocked by political resistance, labor shortages, and Wall Street’s opposition).
Why Invade Iran? The Last Resort
With other options exhausted, war with Iran becomes politically expedient to:
- Restore military credibility: Prove U.S. invincibility after Ukraine.
- Secure oil dominance: Iran is the world’s fourth-largest oil exporter; controlling it (and adjacent Iraq) protects the petrodollar.
- Control trade chokepoints: Iran commands vital shipping lanes.
The stakes? America’s addiction to “easy money” and speculative wealth leaves no room for retreat. Imperial hubris—the inability to imagine defeat—demands a show of force. Yet losing this war would accelerate the empire’s collapse.
Conclusion: An Unsustainable Path
America’s financialized economy is incompatible with long-term stability. It fuels inequality, wastes talent on speculation, and depends on global subservience to the dollar—now under threat. War with Iran is less a choice than a symptom of imperial decline. If my predictions hold, 2024 could mark the end of the American-led order.
