Sinking America  

TomDispatch's latest installment from Chalmers Johnson takes a look at the slow financial suicide the United States is committing, courtesy of its addiction to a war economy that produces little of value (on a related subject at TomDispatch "Missing Voices in the Iraq Debate").

Our excessive military expenditures did not occur over just a few short years or simply because of the Bush administration's policies. They have been going on for a very long time in accordance with a superficially plausible ideology and have now become entrenched in our democratic political system where they are starting to wreak havoc. This ideology I call "military Keynesianism" -- the determination to maintain a permanent war economy and to treat military output as an ordinary economic product, even though it makes no contribution to either production or consumption.

This ideology goes back to the first years of the Cold War. During the late 1940s, the U.S. was haunted by economic anxieties. The Great Depression of the 1930s had been overcome only by the war production boom of World War II. With peace and demobilization, there was a pervasive fear that the Depression would return. During 1949, alarmed by the Soviet Union's detonation of an atomic bomb, the looming communist victory in the Chinese civil war, a domestic recession, and the lowering of the Iron Curtain around the USSR's European satellites, the U.S. sought to draft basic strategy for the emerging cold war. The result was the militaristic National Security Council Report 68 (NSC-68) drafted under the supervision of Paul Nitze, then head of the Policy Planning Staff in the State Department. Dated April 14, 1950, and signed by President Harry S. Truman on September 30, 1950, it laid out the basic public economic policies that the United States pursues to the present day.

In its conclusions, NSC-68 asserted: "One of the most significant lessons of our World War II experience was that the American economy, when it operates at a level approaching full efficiency, can provide enormous resources for purposes other than civilian consumption while simultaneously providing a high standard of living."

With this understanding, American strategists began to build up a massive munitions industry, both to counter the military might of the Soviet Union (which they consistently overstated) and also to maintain full employment as well as ward off a possible return of the Depression. The result was that, under Pentagon leadership, entire new industries were created to manufacture large aircraft, nuclear-powered submarines, nuclear warheads, intercontinental ballistic missiles, and surveillance and communications satellites. This led to what President Eisenhower warned against in his farewell address of February 6, 1961: "The conjunction of an immense military establishment and a large arms industry is new in the American experience" -- that is, the military-industrial complex.

By 1990, the value of the weapons, equipment, and factories devoted to the Department of Defense was 83% of the value of all plants and equipment in American manufacturing. From 1947 to 1990, the combined U.S. military budgets amounted to $8.7 trillion. Even though the Soviet Union no longer exists, U.S. reliance on military Keynesianism has, if anything, ratcheted up, thanks to the massive vested interests that have become entrenched around the military establishment. Over time, a commitment to both guns and butter has proven an unstable configuration. Military industries crowd out the civilian economy and lead to severe economic weaknesses. Devotion to military Keynesianism is, in fact, a form of slow economic suicide.

On May 1, 2007, the Center for Economic and Policy Research of Washington, D.C., released a study prepared by the global forecasting company Global Insight on the long-term economic impact of increased military spending. Guided by economist Dean Baker, this research showed that, after an initial demand stimulus, by about the sixth year the effect of increased military spending turns negative. Needless to say, the U.S. economy has had to cope with growing defense spending for more than 60 years. He found that, after 10 years of higher defense spending, there would be 464,000 fewer jobs than in a baseline scenario that involved lower defense spending.

Baker concluded:

"It is often believed that wars and military spending increases are good for the economy. In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment."

These are only some of the many deleterious effects of military Keynesianism.

Hollowing Out the American Economy

It was believed that the U.S. could afford both a massive military establishment and a high standard of living, and that it needed both to maintain full employment. But it did not work out that way. By the 1960s, it was becoming apparent that turning over the nation's largest manufacturing enterprises to the Department of Defense and producing goods without any investment or consumption value was starting to crowd out civilian economic activities. The historian Thomas E. Woods, Jr., observes that, during the 1950s and 1960s, between one-third and two-thirds of all American research talent was siphoned off into the military sector. It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles.

Nuclear weapons furnish a striking illustration of these anomalies. Between the 1940s and 1996, the United States spent at least $5.8 trillion on the development, testing, and construction of nuclear bombs. By 1967, the peak year of its nuclear stockpile, the United States possessed some 32,500 deliverable atomic and hydrogen bombs, none of which, thankfully, was ever used. They perfectly illustrate the Keynesian principle that the government can provide make-work jobs to keep people employed. Nuclear weapons were not just America's secret weapon, but also its secret economic weapon. As of 2006, we still had 9,960 of them. There is today no sane use for them, while the trillions spent on them could have been used to solve the problems of social security and health care, quality education and access to higher education for all, not to speak of the retention of highly skilled jobs within the American economy.

The pioneer in analyzing what has been lost as a result of military Keynesianism was the late Seymour Melman (1917-2004), a professor of industrial engineering and operations research at Columbia University. His 1970 book, Pentagon Capitalism: The Political Economy of War, was a prescient analysis of the unintended consequences of the American preoccupation with its armed forces and their weaponry since the onset of the Cold War. Melman wrote (pp. 2-3):

"From 1946 to 1969, the United States government spent over $1,000 billion on the military, more than half of this under the Kennedy and Johnson administrations -- the period during which the [Pentagon-dominated] state management was established as a formal institution. This sum of staggering size (try to visualize a billion of something) does not express the cost of the military establishment to the nation as a whole. The true cost is measured by what has been foregone, by the accumulated deterioration in many facets of life by the inability to alleviate human wretchedness of long duration."

In an important exegesis on Melman's relevance to the current American economic situation, Thomas Woods writes:

"According to the U.S. Department of Defense, during the four decades from 1947 through 1987 it used (in 1982 dollars) $7.62 trillion in capital resources. In 1985, the Department of Commerce estimated the value of the nation's plant and equipment, and infrastructure, at just over $7.29 trillion. In other words, the amount spent over that period could have doubled the American capital stock or modernized and replaced its existing stock."

The fact that we did not modernize or replace our capital assets is one of the main reasons why, by the turn of the twenty-first century, our manufacturing base had all but evaporated. Machine tools -- an industry on which Melman was an authority -- are a particularly important symptom. In November 1968, a five-year inventory disclosed (p. 186) "that 64 percent of the metalworking machine tools used in U.S. industry were ten years old or older. The age of this industrial equipment (drills, lathes, etc.) marks the United States' machine tool stock as the oldest among all major industrial nations, and it marks the continuation of a deterioration process that began with the end of the Second World War. This deterioration at the base of the industrial system certifies to the continuous debilitating and depleting effect that the military use of capital and research and development talent has had on American industry."

Nothing has been done in the period since 1968 to reverse these trends and it shows today in our massive imports of equipment -- from medical machines like proton accelerators for radiological therapy (made primarily in Belgium, Germany, and Japan) to cars and trucks.

Our short tenure as the world's "lone superpower" has come to an end. As Harvard economics professor Benjamin Friedman has written:

"Again and again it has always been the world's leading lending country that has been the premier country in terms of political influence, diplomatic influence, and cultural influence. It's no accident that we took over the role from the British at the same time that we took over… the job of being the world's leading lending country. Today we are no longer the world's leading lending country. In fact we are now the world's biggest debtor country, and we are continuing to wield influence on the basis of military prowess alone."

Some of the damage done can never be rectified. There are, however, some steps that this country urgently needs to take. These include reversing Bush's 2001 and 2003 tax cuts for the wealthy, beginning to liquidate our global empire of over 800 military bases, cutting from the defense budget all projects that bear no relationship to the national security of the United States, and ceasing to use the defense budget as a Keynesian jobs program. If we do these things we have a chance of squeaking by. If we don't, we face probable national insolvency and a long depression.

One person who seemingly couldn't be happier with a bloated war budget sucking the life out of the country is failed "Defense" Secretary Donald Rumsfeld (now back at university), who is still babbling away about his doctrine of full spectrum dominance and its application to the media and the internet. Rummy's latest demented ravings included a demand for the US to establish a propaganda ministry, apparently in the mistaken belief that the mainstream US media don't already perform this task as well as you could expect a new bureaucracy to. The Washington Independent reports:

Remember Donald Rumsfeld? He seems like a bad dream. And yet here he is, popping up in Washington to talk about how the U.S. needs a Ministry of Propaganda. Here’s what he told Sharon Weinberger of Wired’s Danger Room:

We need someone in the United States government, some entity, not like the old USIA . . . I think this agency, a new agency has to be something that would take advantage of the wonderful opportunities that exist today. There are multiple channels for information . . . The Internet is there, pods are there, talk radio is there, e-mails are there. There are all kinds of opportunities. We do not with any systematic organized way attempt to engage the battle of ideas and talk about the idea of beheading, and what’s it’s about and what it means. And talk about the fact that people are killing more Muslims than they are non-Muslims, these extremists. They’re doing it with suicide bombs and the like. We need to engage and not simply be passive and allow that battle of competition of ideas.

Uh, yeah. First, let’s just note that Rumsfeld has always preferred the idea of technology to actually, you know, learning about technology. "Pods are there"? Does he mean iPods? Podcasts? And to mention "talk radio" in the same breath as e-mail or these mysterious pods—what in the world is this septuagenarian talking about? Rumsfeld probably just learned how to program his VCR.

Second, when Rumsfeld tried a version of this in miniature in Iraq, his actual fix was comically stupid. The Pentagon hired the Lincoln Group to pull off a propaganda campaign designed at discrediting the insurgency. It amounted to planting fake news stories in the Iraqi press written by soldiers that said things like the insurgents "crawled on their bellies like dogs in the mud." For this, the Pentagon spent more than $25 million and arguably broke the law.

Finally, Rumsfeld managed to be the first secretary of defense in history not just to botch two wars, but to botch two wars simultaneously. For that, no one should ever listen to this man ever again. Whatever he says is discredited by the sheer fact that he’s the one saying it. He should be legally obligated to end of all his sentences with, "...but, on the other hand, I’m a total jackass."

Mike Treder at Responsible Nanotechnology has an interesting look at emerging economies and the end of US hegemony - noting that we are transitioning to 3 major power blocks (same as it ever was, says George Orwell), with the largest being the European Union.

A feature story on the CBS Sunday Morning program yesterday dealt with the shifting world economy and particularly with the rise of economic power in Asia.

I was struck by the juxtaposition of these two graphics:

They show GDP as a percentage of total world output. Note the dramatic reversal in just five years. How much more will it change in the next five or the next ten years?

Yesterday's New York Times Magazine includes a related article by Parag Khanna titled "Waving Goodbye to Hegemony." Khanna writes:

From Thailand to Indonesia to Korea, no country -- friend of America's or not -- wants political tension to upset economic growth. To the Western eye, it is a bizarre phenomenon: small Asian nation-states should be balancing against the rising China, but increasingly they rally toward it out of Asian cultural pride and an understanding of the historical-cultural reality of Chinese dominance.

And in the former Soviet Central Asian countries -- the so-called Stans -- China is the new heavyweight player, its manifest destiny pushing its Han pioneers westward while pulling defunct microstates like Kyrgyzstan and Tajikistan, as well as oil-rich Kazakhstan, into its orbit. The Shanghai Cooperation Organization gathers these Central Asian strongmen together with China and Russia and may eventually become the "NATO of the East."

The upshot of this changing balance is a swift reduction of U.S. strength as a global hegemon. Khanna adds:

At best, America's unipolar moment lasted through the 1990s, but that was also a decade adrift. The post-cold-war "peace dividend" was never converted into a global liberal order under American leadership.

So now, rather than bestriding the globe, we are competing -- and losing -- in a geopolitical marketplace alongside the world's other superpowers: the European Union and China. This is geopolitics in the 21st century: the new Big Three. Not Russia, an increasingly depopulated expanse run by Gazprom.gov; not an incoherent Islam embroiled in internal wars; and not India, lagging decades behind China in both development and strategic appetite. The Big Three make the rules -- their own rules -- without any one of them dominating. And the others are left to choose their suitors in this post-American world.

The more we appreciate the differences among the American, European and Chinese worldviews, the more we will see the planetary stakes of the new global game. Previous eras of balance of power have been among European powers sharing a common culture. The cold war, too, was not truly an "East-West" struggle; it remained essentially a contest over Europe. What we have today, for the first time in history, is a global, multicivilizational, multipolar battle.

According to this analysis, it seems that the next international order after U.S. unipolar power has already begun. You'll recall that we wrote about this a few months ago, and wondered:

How long will the current order last? If you accept my argument that we're living today in the fourth different period of the last 100 years, it should be obvious that this is not a permanent state.

What comes next? How can we anticipate it? How might we shape it? And how will the development of powerful new technologies, such as molecular manufacturing, fit into that big picture?

The two previous periods of international order in the 20th century lasted for 30 years and then 40 years. Now it appears that the current order may have met its demise after less than 20 years.

Assuming we've entered a new phase, as Khanna suggests, then how long will this one last? Can the Era of Global Multipolarity maintain stability for more than a decade or two?

Craig Murray notes something that has become increasingly obvious over the past 5 years - "A Different Culture".

The ever formidable Brian Barder had posted a fascinated observation on the growing weirdness of US political culture. Here is an excerpt:

It's sad because it's another example of the steadily widening gulf between the political culture in the US and that in the rest of the west, exemplified by the Iraq war (leaving aside, if possible, the UK's culpable complicity in it), the so-called "war on terror" and its implications for civil liberties, extraordinary rendition and Guantanamo Bay, the role of religion, attitudes to capital punishment and the treatment of prisoners, demonstrative patriotism, and now the role of the US sub-prime market in bringing about the impending recession which will engulf the rest of us as well as the United States. Alas, it's no longer the case that the rest of the civilised world looks to the US as its moral and political leader. And I fear that the causes of this ever-widening gulf go much deeper than just the consequences of the catastrophic presidency of G W Bush: whoever succeeds him will not be able to build a durable bridge across it. Many of us small-L liberals used to feel that we had more in common with our American cousins than with our historical enemies just across the English Channel, the French and the Germans, and even our slightly more distant historical friends, the Scandinavians and the Dutch. I don't think that's true any more.

The whole is well worth reading. Barack Obama leaves me stone cold too. I think we underestimate how different and dangerous the US now is. Last year I delivered a talk on Central Asia at the University of Michigan in Ann Arbor. As I sat preparing my lecture, I had the television on low in my hotel room because I don't like complete silence. Gradually I found myself listening intently to an evangelical preacher, telling his TV congregation that they should not worry about casualties in Iraq because the Bible showed us that there had to be a great and bloody conflict in the Middle East before the Second Coming of Christ. So the more people who died in these wars, the closer we are to Jesus.

Now that message would be acceptable to very few people in the UK - just Tony Blair and his immediate friends, really. I related this astonishing thing I had heard to some American lecturers over lunch. They told me that at least a third of their students would believe this stuff. And this was Ann Arbor, not the Deep South. It is essential that we all wake up now to the fact that the US is a deeply disturbed and psychotic society, and by far the biggest danger to world peace.

John Pilger casts a jaundiced eye over the "The danse macabre of US-style democracy". Nothing in the current slate of candidates and policies looks likely to stop the slide...

The former president of Tanzania Julius Nyerere once asked, "Why haven't we all got a vote in the US election? Surely everyone with a TV set has earned that right just for enduring the merciless bombardment every four years." Having reported four presidential election campaigns, from the Kennedys to Nixon, Carter to Reagan, with their Zeppelins of platitudes, robotic followers and rictal wives, I can sympathise. But what difference would the vote make? Of the presidential candidates I have interviewed, only George C Wallace, governor of Alabama, spoke the truth. "There's not a dime's worth of difference between the Democrats and Republicans," he said. And he was shot.

What struck me, living and working in the United States, was that presidential campaigns were a parody, entertaining and often grotesque. They are a ritual danse macabre of flags, balloons and bullshit, designed to camouflage a venal system based on money, power, human division and a culture of permanent war.

Travelling with Robert Kennedy in 1968 was eye-opening for me. To audiences of the poor, Kennedy would present himself as a saviour. The words "change" and "hope" were used relentlessly and cynically. For audiences of fearful whites, he would use racist codes, such as "law and order". With those opposed to the invasion of Vietnam, he would attack "putting American boys in the line of fire", but never say when he would withdraw them. That year (after Kennedy was assassinated), Richard Nixon used a version of the same, malleable speech to win the presidency. Thereafter, it was used successfully by Jimmy Carter, Ronald Reagan, Bill Clinton and the two Bushes. Carter promised a foreign policy based on "human rights" - and practised the very opposite. Reagan's "freedom agenda" was a bloodbath in central America. Clinton "solemnly pledged" universal health care and tore down the last safety net of the Depression.

Nothing has changed. Barack Obama is a glossy Uncle Tom who would bomb Pakistan. Hillary Clinton, another bomber, is anti-feminist. John McCain's one distinction is that he has personally bombed a country. They all believe the US is not subject to the rules of human behaviour, because it is "a city upon a hill", regardless that most of humanity sees it as a monumental bully which, since 1945, has overthrown 50 governments, many of them democracies, and bombed 30 nations, destroying millions of lives.

If you wonder why this holocaust is not an "issue" in the current campaign, you might ask the BBC, or better still Justin Webb, the BBC's North America editor. In a Radio 4 series last year, Webb displayed the kind of sycophancy that evokes the 1930s appeaser Geoffrey Dawson, then editor of the Times. Condoleezza Rice cannot be too mendacious for Webb. According to Rice, the US is "supporting the democratic aspirations of all people". For Webb, who believes American patriotism "creates a feeling of happiness and solidity", the crimes committed in the name of this patriotism, such as support for war and injustice in the Middle East for the past 25 years, and in Latin America, are irrelevant. Indeed, those who resist such an epic assault on democracy are guilty of "anti-Americanism", says Webb, apparently unaware of the totalitarian origins of this term of abuse. Journalists in Nazi Berlin would damn critics of the Reich as "anti-German".

Moreover, his treacle about the "ideals" and "core values" that make up America's sanctified "set of ideas about human conduct" denies us a true sense of the destruction of American demo cracy: the dismantling of the Bill of Rights, habeas corpus and separation of powers.