Foreign Policy and Prosperity
The current debate over raising the
United States debt ceiling is a pivotal moment in modern history. It is possible to have the economic
equivalent of World War III without a single shot being fired. To understand
why, it is necessary to have an accurate understanding of the relationship
between economics and government policy.
War may have had a positive economic impact in earlier
times when the acquisition of enemy territory and subjugation of defeated
peoples as slaves had beneficial economic value. World War I changed that equation. Modern war became total war, involving the
whole economy and eviscerated the victors as well as the defeated.
World War I was an unmitigated
disaster. Killing 1% of the world’s
population, it led to the collapse of four monarchal empires: Russia, Germany,
Turkey and the Austro-Hungarian, and their replacement by revolution and/or
dictatorships. It precipitated the
worldwide great economic depression, culminating in World War II, which killed
2% of the world’s population. Far from
making the world safe for democracy, it preserved the colonial empires of the
victors and created vassal states out of the possessions of the defeated.
World War I also turned the
United States into an international creditor.
The real meaning of World War I was that it proved that democracy is a
more effective means of organizing a society for war than monarchy or
dictatorship, but it was close.
After World War II, the
United States and the world was determined not to repeat the mistakes of World
War I. The United States was the only
nation with an intact industrial base and moved to rebuild the war torn world
while swiftly befriending its former foes.
The United States embarked on an anti-communist crusade which, in
effect, meant taking responsibility to prevent the newly independent colonies
of its allies from falling into communist hands. This became the policy of containment,
although the rhetoric was of rolling back communism.
People looking for peaceful
accommodation with the communists were wrong footed by the communist victory in
China in 1949, and the Stalin sanctioned aggression of the North Koreans in
1950. Communism looked aggressive and,
in response, the United States started supporting every anti-communist
government seeming to be under threat.
This was the period when American support for the French war in Vietnam grew.
Once Eisenhower became
president, he was concerned that the United State’s new found role as a world
power would bankrupt the country so he devised a two pronged strategy. He would use the nuclear deterrent to keep
aggressive nations in check, and unleash the CIA’s covert capabilities to
overthrow leftist governments like Mossadegh in Iran,
Arbenz in Guatemala, and Patrice Lumumba in the Congo
while trying to befriend rising nationalists like Nasser in Egypt and Diem in
Vietnam.
This policy started to
unravel when the United States found itself unable to assist the Hungarian
revolution in 1956 because the French, British and Israelis had attacked Egypt
the previous week. Eisenhower was only
able to force the French, British and Israelis to withdraw by refusing to
support the British Pound. In other
words, the British invasion of Egypt to reclaim the Suez Canal and topple Nasser
was an economic disaster for Britain’s currency.
Similarly, the dispatch of half a million combat troops to
Vietnam beginning in 1965 left the United States powerless to support the
Prague Spring in 1968 and provided cover for the Israelis to attack its Arab
neighbors in 1967 and seize the land that is the proximate cause of the Al-Queda attacks on the United States today. Just as in Vietnam, the United States is on
the wrong side of the Arab-Israeli dispute.
The Palestinian position represents core American values, while Israel
seeks recognition as a radical religious state.
President Obama, for the first time since Eisenhower, is moving American
foreign policy back toward core American values.
Unfortunately, the stolen election
of 2000 which put Bush, the loser, in the White House was not only a
contributing cause of the 9/11 attacks (Bush ran on a war platform by
criticizing Clinton’s engagement with the Middle East peace process), but it
precipitated the war in Iraq. Uniquely,
once war was declared, Bush not only refused to raise taxes to pay for it, but
continued to cut taxes. Before the
invasion of Iraq, Bush said the war would cost $50 billion. Others in the administration said the war
would pay for itself because of Iraqi oil.
Larry Summers was fired for saying the war would cost $200 billion and
Paul Wolfowitz poo-pooed
General Shinseki when he said half a million troops would be needed to pacify
the country in the wake of the invasion.
The reality is that the Iraq
war has cost $1trillion so far, with projected total costs from the Watson
Institute and Brown University put at between $3.5 trillion and $4.5 trillion
plus 125,000 civilian deaths. Just like every war in the past century, the
Iraq war has been a financial catastrophe, even if victory can be claimed. Not
only have wars become unaffordable, but even preparing for war is unaffordable.
Ronald Wright in his Massie
Lectures A Short History of Progress explains how
technology frequently perfects itself into extinction. This is especially true in military
technology, where the atomic and hydrogen bombs, useless as tactical weapons,
threaten the existence of the human race.
On the other end, automatic weapons are so efficient and have
proliferated to the degree than anyone can kill and maim dozens of people in
just a few seconds.
The Republicans have become the equivalent of economic
religious fanatics where facts have no meaning. Having driven the nation into bankruptcy
through war which they refused to finance and an unaffordable defense posture
to protect the religious state of Israel, they now want to solve the problem on
the backs of the people least able to afford it.
The debt is not the only
problem. There is the balance of
payments deficit. The two are
connected. Forty years ago, when people
were paying a tax surcharge to finance the war in Vietnam, allegedly to prevent
the spread of Chinese communism, could anyone imagine that in four decades the
United States would be dependent on borrowing from communist China to pay its
bills? This is an outrage and a scandal.
The United States is a great
nation with a great people. This problem
could be solved if only the party leaders would allow it. The truth is that the two-party system, like
the one party system in the Soviet Union, is imploding. Elections are rigged in favor of the
Republicans and Democrats. Independent
ideas are systematically excluded from the debate.
There is a sensible solution. First, the Israelis need to live up to their
agreements with the Palestinians of the past forty years and comply with the
United Nations Resolutions passed since 1948 that created Israel. It needs to come to a real accommodation to
live in peace with its neighbors. It can
not continue to make up its own rules. This will significantly reduce the
threat of terrorism and allow the world economy to operate freely and
efficiently once again without the high costs and inefficiencies of security
checks at every transaction point.
Second, put
sidewalks on both sides of every street in America. Install benches
every 500 yards and bus shelters at every bus stop. Reconfigure the public transportation system
to send buses down state and county highways, where people really need to
go. This will enable the United States
to be self-sufficient in oil within two years.
Presidents have been talking about energy independence since Nixon. (All
the other green stuff, too; like solar, wind, tidal, drilling, etc.) If people want to drive, fine. But there are millions of Americans who
already want to get out of their cars, but the two parties refuse to provide
viable infrastructure to let them do it.
Instead of liberating people, the excessive use and
reliance on motor vehicles have enslaved them.
People work to support their cars.
In a land of freedom, people need choices. To drive or to walk or to
bicycle. In the absence of the economy
to create plentiful well-paying jobs, the government needs to create an
infrastructure that enables people to live well at a reduced level of material
consumption so they can have discretionary income.
The United States is rich
enough, smart enough, and tough enough to be self supporting. The idea that the United States depends on
the savings of Chinese peasants to pay its bills is repugnant. In the past, the United States had a can-do
attitude; no problem was so big or so difficult that could not be solved by
American creativity and drive. Now, the
United States is incapable of change.
What happened?
Basically, the elections have become rigged so the United
States is another banana republic, and the lawyers, including the courts, have
abused the legal system to create a system of lawlessness where only the
wealthy have access to justice.
Contemporary disasters come, not from change, but from
refusing to innovate when circumstances have altered. An
American default will create a worldwide economic disaster equivalent to World
War III. Just as the soldiers marched
happily off to be slaughtered like cattle in World War I, heedless of the
changes in technology that had changed chivalrous combat into mechanized extermination;
the Republicans in the United States are playing economic brinksmanship in the
name of a medieval religious fundamentalism.
American soldiers are being
asked to risk their lives in wars in Iraq and Afghanistan that the Republicans
in the United States congress refuse to ask the wealthiest Americans to help
pay for. Only a fool would lend money to people that selfish.