"In short, there was too much democracy"

" ... Not quite four decades ago the long post-war boom began to show signs of slowing, largely brought about by inflation. It has become commonplace to blame government spending and the welfare state, but the greatest contributor to inflation in the late 1960s and early 1970s was US spending on the Vietnam War, which had created an unsustainable burden not just for the US economy but for the world. The US effectively printed money to bankroll the war; it was excessive money growth by the Federal Reserve that ignited the fires of inflation.

That was one aspect of the economic crisis of the 1970s. The other was the quadrupling of oil prices by most major oil exporters. Why did they do this? It was in protest at US policy in the Middle East. Egypt attacked Israel unexpectedly in 1973 to which US president Richard Nixon responded by providing a $US2.5billion ($A2.8billion) arms package to Israel. Saudi Arabia, ostensibly a US ally, reacted with an embargo on oil exports to the US, and most other Arab oil exporters quickly followed.

Although the embargo was lifted in 1974, the price of oil did not fall back to its earlier level, but remained at around twice its pre-1973 levels.

It was called an "energy shock" and an "energy crisis" and the world was told the good times were over. What the US did was to remake the world, and in its own image.

In 1975, a powerful organisation called the Trilateral Commission set up by US banking interests, comprising representatives of big business and government from the US, western Europe and Japan, published a report commissioned by three eminent political scientists called The Crisis of Democracy. Its key theme was democracies had become ungovernable and governments were suffering from an overload of decision-making and expectation.

In short, there was too much democracy, there was too much regulation, there was too much welfare. Government had to give way to business.

This was the thinking, helped along by radical economists such as Friedrich Hayek and Milton Friedman, that was seized on by Ronald Reagan and Margaret Thatcher and used to dismantle much of the post-war Keynesian safety net. (John Howard was a later, though no less ardent, disciple.) The object of the exercise was to create a global market, a US global market which we now call globalisation.

The role of Vietnam in this massive social engineering project is seldom mentioned, but it does highlight the US genius for turning adversity into profit. ... "

~ From US warfare is buffeting the global economy, again ~