What really changed since 9/11

The world stopped on a morning in New York City 20 years ago. It does not matter if you were an old man or even not yet born. The world has not been the same since then and every life has been affected in the ensuing time.

There have been several defining events like 9/11 that signaled a “forever change.” The British television series Downton Abbey captures such a moment. At a garden party, Lord Grantham speaks out, “Ladies and gentlemen, I very much regret to announce that we are at war with Germany.” Nothing is the same after that. On August 4, 1914 “the world” was effectively at war.

Almost everything that happened—geo-politically, technologically, and economically—had some roots back to that date.

Remember that the “First man on the moon” event was part of the “Space Race” between the USSR and the US. A major reason that there was a USSR was because of the overthrow of Tsar Nicholas II and the Romanov family because the Imperial Russian Army suffered disastrous defeats on the Eastern Front of World War I.

So what has changed?

On October 26, 2001, the US congress passed the “Patriot Act.” The law allowed the US government to have unprecedented power in the name of national security.

The act included three main provisions: expanded surveillance abilities of law enforcement, more interagency communication to use all available resources in counterterrorism efforts, and an expanded list of activities which would qualify for terrorism charges.

In violation—at least before the law—of the US Constitution, the government had authorization for indefinite detention without trial of immigrants, and gave permission to law enforcement to search property and records without a warrant. Some provisions have been changed but the “spirit” of the Patriot Act is firmly in place.

Spoken by US politician Barry Goldwater: “Extremism in defense of liberty is no vice.” We must be extremely vigilant to ensure those liberties associated with freedom of speech are not constrained. Yet that has changed since 9/11. Remember those pictures last year of certain Filipino public officials violating Covid health protocols?

The Daily Mail: “Journalists could face up to 14 years in prison for stories embarrassing the Government under proposed changes to the UK Official Secrets Act that would treat them like foreign spies.”

However, the major transformation since 9/11 is economic. There used to be a time when governments and the politicians that run them cared about financial responsibility. While Keynesian economics calls for governments borrowing money to stimulate an economy during “bad times,” the other side was to pay back the loans during “good times.”

To recover from the economic damage caused by the 9/11 event, governments needed to borrow. Note the word “needed” in the sense that if the typhoon destroys your house or business, you need to borrow to rebuild.

But since then, fiscal restraint no longer exists.

Even in the five years after 9/11, US government debt increased by about 50 percent. However, as percentage of gross domestic product, it went from 55 percent to over 110 percent of GDP. US government spending increased by about 20 percent. In 2006, the budget deficit was 1.8 percent of GDP; currently it’s at 13 percent.

Every “crisis” since was an opportunity to borrow and spend. Currently, the total US government debt is 10 times larger than in 2001. Global government debt has soared to 356 percent of GDP from 60 percent in 2001.

Worst-case scenario? What happens if the “Third World” decides, as it did in the 1970s, to borrow the same way that the “First World” is now doing? And don’t be ignorant and say it already has. The Philippine government debt to GDP is 63 percent and the budget deficit is 7.4 percent.

E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.

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