Blowback II
This morning in Beirut, a U.S. Embassy Bullet Proof transport was blown up. In Kabul, the main hotel where Americans stay, was the target of “a commando style Suicide raid”. The NPR Reporter asked a local Beirut journalist–”Who might be responsible for the bombing of the American’s?”, the reply was “I don’t know, the Americans have so many enemies.” These young men willing to blow themselves up are responding to what has been called “the Crusade Narrative”–That America is out to control and ultimately crush Islam. The rationale elites in Beirut or Afghanistan may not believe the crusader narrative, but the alienated kid on the street does.
I told you I would try to make an argument for why we need to make a revolutionary change from the militarization of foreign policy. The first part of that argument rests on a game theory called The Free Rider Problem. The simplest definition of the free rider problem is the jerk who slips out from the restaurant before the dinner check is paid. Today, because the U.S. in the last 27 years has been willing to “pick up the check” in our role of “World Cop”, our main commercial rivals (Japan, China, Korea, India, Europe, Brazil, Mexico and Canada) are free-riders under the world defense umbrella the U.S. provides them. All this to the tune of a bit less than $1 trillion per year from U.S. taxpayers. These rivals are unburdened with the costs of keeping a huge Navy and Air Force presence in the Gulf, let alone fighting full wars in Iraq and Afghanistan. They are spending some of their wealth building state of the art digital infrastructures (we are 16th in the world in Broadband diffusion). What they don’t spend on infrastructure, they loan to us at competitive rates with gilt edged security (T-Bills), to pay for our wars. So what does this budgetary distortion do to how we spend our money as a country? Check out this budget chart:
A you can see, the military takes up so much of the discretionary budget, that all public services are reduced to small slices in comparison. So while we pay K-12 teachers at about 1.3 X the average income ($36,000/ year), the South Koreans pay the equivalent teacher 2.5X the average Korean income. And then we wonder why our 12th graders are ranked 27th in the world in math and science competency.
The Republicans pretend their are no trade-offs. The Irony of the twin poles of the Neoconservative philosophy first elucidated by Irving Kristol in The Public Interest in 1965, is that still today the fiscal insanity of the task is not generally realized. Here’s the Gospel according to Irving:
In domestic affairs the national government should shrink (by cutting taxes and business regulations)
In foreign affairs the government should grow (by becoming the world’s sole military superpower).
If insanity has been defined as the ability to hold two opposing ideas in your mind simultaneously, than this must be exhibit A. The idea that you could radically cut taxes on the wealthy while building a giant military machine is still lost to all of the Republican candidates for President (with the obvious exception of Ron Paul).
So far in this argument, I just want you to accept that at a minimum there is a reason we are called “Uncle Sucker” in some parts of the world. As I explained in yesterday’s post ,
Oil is just a fungible commodity represented by the digital marks on the computer screens of oil traders around the globe. The Chinese and Japanese, who have no investment in the Iraq Occupation that will cost America $2 trillion, buy that oil from those same traders at the same price Exxon Mobil pays. The notion that we need to hold territory to get access to oil, seems a peculiar throwback to Imperialism, in a digital age of free market oil trading.
Tomorrow I will try to sketch out why a new age of “Trading Powers” like Japan,China, and India with large diaspora populations and large net trading and current account surpluses with the U.S., could make the next era of global economic competition extremely painful for us.
I would venture to say that for large corporate conglomerates and the wealth behind them, it is irrelevant which tax payer “picks up the check” for a global oil price. It could be Chinese, European or Japanese taxpayers; it just so happens that American middle class is happy to do it and often feels good about it.
The graph you are showing on defense spending is telling. The Roman empire struggled to withdraw its armies from the fields as there was no land, no work for them. The US has been more or less in wars every decade since WWII: Korea, Vietnam, Iraq I… How much of the economy relies on us having hundreds of thousands of men in a state of war ? With all my heart I agree that we should have an economy that relies on hundreds of thousands of K-12 teachers. That transition however becomes more difficult every day as will our collective ability to address these fundamentals: US children already rank 27th globally on math and science.
“So while we pay K-12 teachers at about 1.3 X the average income ($36,000/ year)”
It is unclear from this phrasing if $36,000/year is the average income or 1.3X the average income.
Outside of that quibble, nice post!
[...] Smart, Innovative perspective on World Affairs. Hard not to like anyone who references game theory… John Taplin on the economic impact of American foreign policy. [...]
As a “free rider ” in Canada with absolutely no say in how my massive neighbour chooses to throw his weight around I bristle at the implication that Americans are fighting for me and my interests. Might I, respectfully, suggest that you look to your own political system, with legislators hooked on defense spending as a sop to their constituency and a guarantee of reelection. Get Americans back to producing real goods and services and out of the business of exporting mayhem. Don’t try to convince the world that we need to pay “our share” of a failed domestic reelection ploy that masquerades as foreign policy.
Murray-I couldn’t agree more. My theory is first you have to convince an American they are a sucker, before they will even consider another path of action.
Jon, that 4% slice for “foreign affairs”…does that include what at least used to be called “foreign aid”?
Wouldn’t it be interesting to reverse the percentages between “foreign affairs (aid)” and “national defense” for a few years? Perhaps if we helped the world rather than hammering it, we wouldn’t need to be shoving democracy down people’s throats and tamping it home with a gun barrel. Perhaps then our version of democracy might be seen in a more positive light, and the economic distortions so exploited by the religious nuts of the world (Islamic, Christian, Jewish, etc.) would fade away.
Few exploit the rage as well as our friends, the Wahabi leaders of Saudi Arabia who are having a lot of fun at our expense these days…Talk about dancing with the devil…That’s what W has been up to for the past few days…
Perhaps some of that National Defense budget could go into alternative energy research and production. It would be great to tell all the oil producers of the world to just use the stuff for lubricating the quiet running electric engines of future cars.
But the basic premise here is unfortunately true. Yes, you Canadians have unwittingly benefited from some of our ham-handed military posturing around the world. But there was a way different way to do the whole thing.
One of the big problems in scaling back is getting the political momentum for the move once it starts impacting at the local level. Look at the problems a few years ago when it was proposed to close some bases. Individual congressmen and senators were forced to defend the bases because of the sheer number of constituents dependent upon them for a livelihood. The military is important for the economies of so many states – on borrowed money or not – that it’s difficult to see many representatives voting for substantial decreases in spending even when it’s in the overall national interest.
Rachel-As you will see as the series of articles develops, where I want to end up is a place where the amount of taxes going to the Federal government (and the military) shrinks and the amount of taxes going to the states–grows. This would reduce the ability of Northrup or Lockheed to game the federal “earmarks” system.
Jon – sounds great. A return to Federalism!
You can keep the total amount of money flowing in and out of Washington the same (not that I like that) and merely change the end use from bullets and bombs to solar panels and subsidies for insulating houses. Properly managed, the public could wean itself off of the military-industrial teat and the efforts and dollars could be better spent in actually bettering our declining true retained national wealth and increasing our quality of life. It’s not about NOT spending the dough right away; it’s about spending it on stuff that makes for a better quality of life instead of paying for a culture of greed and death.
[...] Part I dealt with the cultural and security Blowback from our foreign military adventures. Part II dealt with the game theory of the Free Rider. This post will deal with the economic consequences of the extremist “laissez-faire” [...]
[...] and foreign policy challenges for the coming election. The previous installments are: Part 1, Part 2, Part 3. To those of you who expect blog entries to be short and sweet, I apologize. What I am [...]