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This is the first of a four part series that ties our current economic crisis to the thirty year buildup of defense spending since the Reagan Presidency. You can find a prologue here.

The roots of American Empire began with President Woodrow Wilson’s decision to enter World War I ”to make the world itself at last free”, which set in motion a kind of messianic foreign policy of American Exceptionalism, which echoes in the righteous speeches of President Bush today. As Henry Kissinger once observed, “It is to the drumbeat of Wilsonian idealism that American foreign policy has marched since his watershed presidency, and continues to march to this day.” Although contemporary politicians have used the shattering events of September 2001 to explain that everything has changed, their neoconservative mentors know the real story. “America did not change on September 11,” Robert Kagan wrote. “It only became more itself.” He went on to note that “over the last six decades, it is an objective fact that Americans have been expanding their power and influence in ever widening arcs.” Though historians could reach back to the British retreat from Kabul in 1882 to point to the perils of such expansive empires, the past seems to be lost to our country’s leaders. The effective result of this was a permanent militarization of American policy in a way that now puts us in peril economically and culturally.

I will argue that the real source of our problems stemmed from a document, NSC-68, which remained secret from the day it was issued by the Truman administration on April 7, 1950 up until the day that Henry Kissinger declassified it in 1975. Written by Paul Nitze for the National Security Council, it laid out in Manichean terms the coming conflict with the Soviet Union that has echoes in today’s call for a war against Islam.

The Soviet Union, unlike previous aspirants to hegemony, is animated by a new fanatic faith, anithetical to our own, and seeks to impose its absolute authority over the rest of the world…The assault on free institutions is worldwide now, and in the context of the present polarization of world power, a defeat of free institutions anywhere is a defeat everywhere.

It was one thing for President Wilson to proclaim the principles of freedom, but here in a stroke, the U.S. took upon itself the responsibility to defend “free institutions” everywhere on the globe without creating any hiearchy of American interests as to which of these “free institutions” was worth shedding our blood and treasure for. At this point in the early 50′s with troops still deployed in Germany and many more to be deployed in Korea, it was only a matter of time that the Pentagon’s desire for “global force dominance” would find the necessary funding from a fearful Congress. Almost 60 years later the result is a worldwide command structure with U.S. troops deployed on every continent.

From an economist’s point of view, having just survived a Great Depression, the notion of military spending as a boost to jobs and production was given credibility and the theory of “guns and butter” became the conventional wisdom. Especially during the boom times of the fifties the notion was that spending money on guns did not take money away from civilian infrastructure. In fact civilian infrastructure like the Interstate Highway System was justified as a civil defense system for evacuating cities in a nuclear attack. President Eisenhower, who has been called a “nuclear schizophrenic” for his role in both enabling the gigantic growth of the military industrial complex and his prescient warnings about it, knew that the notion of guns and butter was patently false as he said in his famous speech to the newspaper editors in 1953.

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals.

It is some 50 miles of concrete highway. We pay for a single fighter with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people.

This, I repeat, is the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. These plain and cruel truths define the peril and point to the hope that comes with this spring of 1953.

Even though Eisenhower ended his term by warning about the unchecked influence of the military on our democracy, it was probably too late. Military spending had come to be seen as a jobs program by every congressman and the big military contractors spread their plants into every state in order to curry influence. As we will see in the next part of this series, this could last as long as the country had a current account surplus with the rest of the world.