As I blogged previously, I am intrigued by analyst Sam Vaknin's concept of a "zombie state" – one which has ceased to perform effective domestic governing functions. Vaknin, writing pre-2010, is mainly concerned about the total inability of US regulatory agencies to regulate. Paul Roberts, Reagan’s former Assistant Treasury Secretary, and other analysts allude to other serious crisis points: the loss of America’s manufacturing base, food “deserts” in inner cities, a debt crisis worse than Greece’s, the steep decline in the US dollar, massive youth unemployment, and a local government funding crisis – with dangerous cutbacks in law enforcement, street lighting and schools and potential defaults on municipal bonds.

1. The loss of America’s manufacturing base

US economists increasingly link resistant unemployment figures (in contrast to other countries, where joblessness is improving) to the loss of the US manufacturing base over the past three decades.

o       In 1965 manufacturing made up 53% of the US economy; in 2010, it comprises 11% of the economy.

o       In 1970 only 6% of US consumer goods were imported; in 2010 37% are imported.

o       Between 2000 and 2010, 40,000 plants closed (most moved overseas to reduce labor costs).

In 2011 manufacturing constitutes 80% of world trade. The US simply can’t compete in the export market with other countries where manufacturing is growing. The standard used to contrast “developed” from “developing” countries is the relative strength of their manufacturing sector. In fact the terms “developed” and “industrialized” are used interchangeably. Moreover, so long as American imports vastly exceed exports, we also have no hope of resolving the US debt crisis

2. Food deserts in inner cities and rural areas

The last supermarket chain closed in Detroit in 2007. In all, twenty-one US cities are experiencing an “urban grocery gap,” where residents have no access to fresh food – only high fat/high sugar fast and junk foods. In Climate Wars, Gwynne Dyer defines a failed state as one unable to provide food for its population.

3. The worsening debt crisis

Total US public debt: 13,858,529,371,601.09 as of 12/22/10 ($13.8 trillion)

US annual deficit as a percent of GDP: 10.6% http://www.usgovernmentspending.com/federal_deficit_chart.html#copypaste

This is 1.2% higher than the 2010 deficit/GDP ratio in Greece (9.4%).

http://www.reuters.com/article/idUSATH00580220101115

Total personal (consumer) debt is even higher, at $16.1 trillion (http://www.usdebtclock.org/)

4. The falling dollar

Largely related to increasing debt, the dollar has lost 20-30% of its value in the last decade, relative to the euro, yen, and even the lowly New Zealand dollar.

5. Massive youth unemployment

The official unemployment rate has remained at 10% over the last 12 months. However even the Department of Labor admits this number doesn’t reflect true employment, as it omits people jobless for longer than two years and “involuntary” part timers unable to get full time jobs.

Official unemployment among youth age 18-24 is 24%. No one tracks “true” unemployment among this age group. The fact that a quarter of young Americans are unemployment – and have no prospect of becoming employed – has very serious implications for the future health of the US economy.

6. Local government funding crisis

Local communities in 49 states have been cutting back street lighting and law enforcement, laying off teachers and cutting back school hours, and closing clinics and libraries owing to extreme budget difficulties (see http://www.thetotalcollapse.com/third-world-america/).

More ominously, financial analysts caution that a number of cities are at risk of defaulting on their municipal bonds (see http://www.elliottwave.com/freeupdates/archives/2010/12/22/The-Municipal-Debt-Bomb-is-Ticking-When-Will-It-Explode.aspx)

To be continued with a discussion of Vaknin’s other criteria (hostile and suspicious citizenry, pariah-state status, empire building and social fragmentation) for a semi-failed state