This is part three of a four part series that ties our current economic crisis to the thirty year buildup of defense spending since the Reagan Presidency. The earlier parts can be found here, here and here.
The neoconservative narrative on the Ronald Reagan Presidency is that he raised our military spending and sent the Soviet Union into an arms race they could not afford. On their knees economically, they were forced to give up their empire. Thus the Berlin Wall came down.
But who really brought down the Berlin Wall? I say it was not Ronald Reagan and his $800 billion military buildup, but rather a courageous Pope named John Paul II who in 1979 journeyed to his native Poland, embraced the embattled trade union leader Lech Walensa and declared,
The future of Poland will depend on how many people are mature enough to be non-conformist…There is no need to be afraid. The frontiers must be opened. There is no imperialism in the Church, only service.
Within weeks a million people were in the streets in support of Solidarity. He had given the Polish people the will and courage to be non-conformist, even at the risk of imprisonment. Long before Reagan was even in office, the Pope had created the conditions for freedom.
It is of course one of the defining articles of faith of the conservative movement that Reagan militarily spent 
the Soviets into bankruptcy. But it is a Big Lie. Today, the Russian central bank and the Central Bank of China, our other cold war foe, now control over 20% of the U.S. Treasury debt, and we control none of theirs. Exactly who spent who into bankruptcy? As if in some epic match of “rope a dope”, our rivals, freed of the military burdens of imperialism, have allowed us to spend our selves deep into debt. Worse than just government and military profligacy, the consumer also went on a binge in the Reagan Era. The easy regulatory environment of the Republicans allowed banks to market credit cards with formerly illegal usury interest rates to almost anyone. The consumer who had maintained debt levels at near 12% of assets since the 60’s suddenly went into hock. This of course meant a declining personal savings rate (below zero for the last two years), which in turn meant the U.S. Government had to call on the more than ample savings of the rest of the world to fund its debt for military expenditures. It wasn’t that there weren’t people making money during the Republican reign in the 80’s. It was just a certain class of people–the richest 0.01% (chart below).
I remember having a meeting at Drexel Burnham Lambert in 1986, soon after it had been revealed that Mike Milken’s take home pay for the year was $550 million. I was working for Merrill Lynch’s media mergers and acquisition group and Milken demanded we show up at 5:15 AM in their Beverly Hills office in a glassed walled conference room right off the trading floor. Milken has spread another $150 million around to his colleagues on the trading desk, so the sense of bonhomie and entitlement was pretty thick. They “owned” the junk bond market, but as Bob Dylan once said, “to live outside the law, you must be honest.” Milken went to jail and had to pay a huge fine, but he’s out now, still with billions in the bank.
It is not the purpose of this relatively brief summation to review the elaborate rationalizations for Reagan’s defense build-up–to critique the work of Cap Weinberger, Richard Perle or Paul Wolfowitz. Suffice to say, when Perle advocated unilaterally abrogating the 1972 ABM treaty so that we could begin building what was to become the Star Wars anti-ballistic missile system, he said he felt no reason to keep treaties with a barbaric people like the Soviets. As James Carroll writes in his classic , House of War
Perle blithely declared that the Soviet Union would willingly sacrifice twenty million of its own citizens in a nuclear war with the United States, a prediction the President had often made in after-dinner speeches as a private citizen.
Historians have since proven that many of the claims of the Reagan administration about Soviet power were constructs of the imagination with no basis in fact. But men like Perle and Wolfowitz had been schooled in the political philosophy of Leo Strauss, the spiritual father of neo-conservatism. Deception was part of their job description.
Not only did Strauss have few qualms about using deception in politics, he saw it as a necessity. While professing deep respect for American democracy, Strauss believed that societies should be hierarchical – divided between an elite who should lead, and the masses who should follow. But unlike fellow elitists like Plato, he was less concerned with the moral character of these leaders. According to Shadia Drury, who teaches politics at the University of Calgary, Strauss believed that “those who are fit to rule are those who realize there is no morality and that there is only one natural right – the right of the superior to rule over the inferior.”
What should be noted is that this philosophy of deception did not end when the Berlin Wall fell. During the Bush I Gulf War both the Pentagon and Raytheon claimed that their Patriot Missle had knocked down dozens of Iraqi Scud Missiles. This of course was not true and the Patriot was so hapless the Israelis refused to take them, even when offered at no cost. Media scholars of the Gulf War claim it was but a commercial for U.S. smart bombs and of course large contractors like Raytheon were happy to sell their wares to any country. But the tradition born of Woodrow Wilson’s Committee on Public Information, honed by the early propaganda work of Walter Lippman was alive and well. Lippmann assumed a public that “is slow to be aroused and quickly diverted . . . and is interested only when events have been melodramatized as a conflict.” Even Bill Clinton in his campaign against George Bush for President was not above using “melodramatized evil” in his campaign advertising. “Saddam Hussein still has his job. Do You?”, intoned one ad with ominous background music.
To study a new Democratic President arriving in office in 1992, at a time of peace is to reach into the core of our story. For if ever there was a time when our military commitments could have been cut back to give us a “peace dividend”, it would have been in 1993. The sad story of Clinton’s colossal failure to reign in the military is best encapsulated in an incident reported in House of War. Shortly after he had unveiled his “don’t ask, don’t tell” order on homosexuals in the military, Clinton visited the aircraft carrier USS Theodore Roosevelt.
As he was piped aboard, he passed a young sailor at the head of the gangplank. The sailor pointedly declined to salute his commander in chief. Instead of rebuking such disrespect to the office of the presidency on the spot, or afterward, Clinton let the slight pass, as if it did not matter. The President’s refusal to enforce due deference to authority was a graver offense against the military ethos than the sailor’s contemptuous act, and every member of the armed forces took note.
Whether intimidated by his own draft dodging past, or merely incapable of standing up to the generals, Clinton’s regime can be seen as an abject failure when it came to taming the military industrial complex. He took office in a recession and almost immediately had to deal with intense pressure from Congress and the military industrial complex to expand NATO. Both Reagan and Bush had made commitments to the Russians not to let the former Warsaw pact countries into NATO. As Carroll notes,
But the Pentagon had never accepted that. Getting former Warsaw Pact members into NATO, beginning with Poland, Hungary and the Czech Republic, was less a security question, now that Russia was in decline, than an economic one, for Moscow’s former satellite nations, needing an arms buildup from scratch, represented a major new market for the Pentagon’s industrial partners. That was an argument Clinton could understand, and as a politician he saw a benefit of pleasing U.S. voters with ties to Eastern Europe.
Needless to say defense contractors showered money on new Democratic committee chairmen and their allies, spending almost $50 million in one year to lobby for NATO expansion. The benefits of not crossing the military industrial complex could be shared by both political parties. And in the area of nuclear disarmament, Clinton ended up with a far worse record than either Reagan or Bush 1, under whom the nuclear arsenal had been cut in half. Under Clinton, partially because of his embrace of NATO expansion almost no cuts in nukes were made.
As our story moves towards the present, we must acknowledge one insight of the Clinton administration into the problems that will confront the Bush administration after the turn of the Millennium. Treasury Secretary Rubin was well aware that running a $3 billion per day current account deficit was unsustainable. And by a combination of raised taxes and fees along with spending cuts, he was able to bring it to a surplus in the last year of the administration. This lesson in fiscal responsibility was of course lost on the idealogical tax cutters of the Bush-Cheney administration. As we will see in the final part of the series, Eisenhower’s early warnings that “the disastrous rise of misplaced power exists and will persist” would come true in a way that perhaps only a poet of the apocalypse could have imagined. As W.B. Yeats had written in 1920,
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned.
The best lack all conviction, while the worst
Are full of passionate intensity.
18 responses so far ↓
Rachel // July 22, 2008 at 3:15 pm |
I believe Gorbachev also had a great deal to do with the wall coming down – and certainly a great deal more than Reagan. If it hadn’t been for Perestroika, the ability of people to even envisage a different future would have been much diminished. Gorbachev didn’t just allow this – he encouraged it.
Quite what he made of Reagan’s ramblings and fabrications he’s always been too polite to say.
Patrick // July 22, 2008 at 4:41 pm |
Jon,
Yet again, an excellent overview of the significant events of the Reagan, Bush, and Clinton years.
Leo Strauss has to rank as one of the most despicable intellectuals we’ve ever had the misfortune to have around. But just look at the success of his ideas, most especially during the Bush II reign. Of course, the neocons overreached and never counted on the awesome incompetence of Bush and Cheney, but Strauss’ theories seem to have worked. Obama came close to describing Strauss’s ideas in his “bittergate” speech. And it is possible that wider dissemination of Strauss’ ideas and theories, suitably framed as the elitist use of religion and fear as tools to manipulate the populace, just might open the eyes of some of our fellow citizens. I think Americans, insensitive to much, are particularly sensitive to elitist attitudes on the parts of any who would be their rulers. And the would-be rulers know it. See Bush I on pork rinds, Bush II on cutting brush and dyslexic speech patterns, “Bubba” Clinton, and Reagan homilies.
Rick Turner // July 22, 2008 at 6:09 pm |
Patrick, don’t forget “Billy Beer”…
Patrick // July 22, 2008 at 10:58 pm |
Jon,
Given the importance of the subject matter you are addressing, and the general transitory nature of blogs, I urge you to post your last installment of the current series and then let the comments percolate for a day or two, before starting new topics. Your blog posts generally stimulate a lot of discussion and interesting ideas, and I often feel shortchanged when a new topic diverts attention from the current discussion. Just a suggestion.
Patrick // July 22, 2008 at 11:01 pm |
Rick,
Billy was, of course, Jimmy’s brother. But Jimmy was a peanut farmer. I had an uncle who was a peanut farmer, and they don’t come much less elitist than old Uncle Melvin.
pond // July 23, 2008 at 5:49 am |
I agree with Rachel: whatever the Pope achieved in Poland might have been undone by tanks as in 68 or the 50s. The Soviet leaders, especially Gorbachev, were interested in peace, for whatever reason, and only pushed their empire through armed force in Afghanistan, with disastrous results both for national prestige and domestic morale.
Also Jon, to say in essence that ‘The Soviets did not spend themselves into poverty in the 1980s, because today they have surplus money,’ is so foolish I’m surprised you wrote it. What would bolster your argument would be evidence that the Soviets had 20% of US international debt in 1988, not 2008.
Alex Bowles // July 23, 2008 at 6:54 am |
Jon,
So, is this the nutshell version?
1. Empire is based on the notion that one’s own order can’t be entirely secure without the rest of the world having adopted that same order. This outlook leads to the global ambitions of every empire, and has a corresponding ideology (however vague of contradictory) that aligns the ambitions of builders with some higher order.
2. This notion is of greatest use to the military-industrial complex, as it provides a basis for extending their own range beyond direct domestic defense to regional stability, and eventually, global control.
3. Paying for this extension is enormously expensive, and – typically – beyond the range of any well-regulated domestic economy. This demands that people divert resources from the business of living (education, health care, economic infrastructure, retirement savings) and put it into (a) taxes used for military spending and (b) boom / bust economic cycles to offset these tax losses.
4. The government collecting these taxes is then responsible for filling in the gaps. The boom / bust cycles are only part of the picture. It also does so with entitlement programs that have structures indistinguishable from Ponzi schemes.
5. These schemes lead to obvious problems. The only way ‘out’ is (a) more dramatic boom / bust cycles and (b) further expansion of the military’s sphere of influence, and increasing use of that influence to control economic interests around the world, as opposed to a focus on the strictly territorial concerns that would occupy focused on domestic defense. In other words, when military ambitions are causing market forces to work against a nation, the ‘conservative’ answer is to rig the economy.
6. Like every Empire proceeding ours, we end up living Yeates. The center does not hold. Things fall apart.
My question is weather this is simply the natural order of things, like lions eating gazelle. Or is this a pattern that can be avoided?
If it is to be avoided, would a direct assault (so to speak) on the military establishment really be the best option? Or is regulation a matter of disarming the various fear-based initiatives that keep life’s big goals out on individual’s hands, and under the control of those running the various Ponzi schemes that define education, health, and retirement?
Jon Taplin // July 23, 2008 at 7:04 am |
Patrick-I agree with your thought about leaving it up for longer. I’m enjoying writing these longer think pieces and there are so many dimensions to this problem of a military dominated economy that once we lay out the problem, we should slowly attack the solution.
I’m also thinking of posting the whole piece as a stand alone that could be accessed from the top menu.
Jon Taplin // July 23, 2008 at 7:07 am |
Pond- I didn’t mean to imply that the Soviets were not a “hollowed-out empire” in 1989. What I meant was, that by giving up the arms race, they were able to develop a domestic economy that actually throws off surplus saving (now partially held in U.S. Treasuries). I will try to make that clearer.
Jon Taplin // July 23, 2008 at 7:14 am |
Alex- You expressed the sequence brilliantly. I may in fact cop some of your phrasing in the final section today (OK?).
The key going forward, is to build what the Columbia University Professor Seymour Melman called a Conversion economy, where we gradually move military industrial production to more socially productive uses. I plan to spend a good bit of time over the next few weeks talking about that.
Zhirem // July 23, 2008 at 7:42 am |
Jon,
Nice stuff here. Really liking the series to this point. One interesting comment though: The Russians were quite good at lying themselves. Both internally and externally. Case in point: when our countries had an exchange of generals, and showed each other our Cold War facilities (like NORAD, etc.), I will always remember how our military discovered that (roughly) 2 out of 3 ICBMs that Russia had, did *not* have active warheads. The missiles had everything else, but not nuclear warheads. So, our U2 and Blackbird overflights got pictures of the silos, etc.; but bought into a false narrative.
‘That the Soviet Union could destroy the world with its nuclear arsenal three times over…’ And how I remarked to myself upon learning about the headless missiles, “The Russians were quite good at playing us off against ourselves. We were so concerned about their stockpiles and arsenal, when they were roughly a third of their apparent capability, at least as far as nuclear forces were concerned (not conventional).”
Ironic, is it not?
- Zhirem
Ken Ballweg // July 23, 2008 at 9:20 am |
I still think the change from an economy that is controlled by the MIC will require enacting some major conflict of interest restraints on congress. One that is broad enough to restrict not just voting for appropriations, but also having to abstain when in positions to control votes.
Yes I’m aware of how unrealistic this in both in the wish that it would be implemented and the necessity for military appropriations to be done in small enough chunks if their to be anyone able to vote. But a boy can dream.
Alex Bowles // July 23, 2008 at 11:27 am |
Jon,
I’d be flattered. But please scan for typos first. I pressed ’submit’ before checking properly.
Azmanon // July 23, 2008 at 1:14 pm |
Talk about irony… The Pope of all people walks around saying things like, “There is no imperialism in the Church, only service.”
What greater fate have we inherited from Rome, but our perseverance for religious and military dominance in the face of all else ?
And here I would consider consumerism as a form of ‘religion’ because of the level of faith our leaders expect us to place in the all mighty economy.
dragonmage06 // July 23, 2008 at 3:08 pm |
I do agree that that was Clinton’s biggest failure in office. He had such a perfect opportunity to reign in military spending and use that for other things, but he didn’t. Your post has given me some more insight into why that was.
I think we’re so hampered by this imaginary need to spend more and more on the military against all these “threats” that we think are out there. It seems like a lack of education to me.
Rick Turner // July 23, 2008 at 3:22 pm |
The Catholic Church has used the ultimate in paranoia inducing schemes…eternal damnation for non-believers…for well over 1,500 years now. I’m giving them a pass on the first 500 years… And if their tax free real estate scams, gold chalices, and self-righteous pomp while all the while the alter boys were being buggered isn’t a form of imperialism, I don’t know what is.
The church managed to brilliantly assume the infrastructure of the Roman Empire and set up a political structure the likes of which have yet to be matched while controlling a populace through fear and taxation (yeah, it’s a tax). This is now the longest lived empire in history, though the cracks are showing and the structure is crumbling in the Old and New World. They’ve still got the Third World apparently…
Anyway, Alex’ post gets to the heart of my swords to plough share concepts. We can have not guns but a better society with energy independence AND butter.
stevew // July 23, 2008 at 4:15 pm |
Very much enjoying your series here Jon and look forward to its conclusion and a stand alone posting.
Had to grin at your quote of John Paul II from Poland in 1979:
“…. mature enough to be non-conformist”
Ten years prior to that non-conformity in America was considered immature, and very much so when we were protesting another war in Washington.
commonsguy // July 23, 2008 at 6:18 pm |
@Mr. Ballweg
Check out Change Congress (http://change-congress.org) for one potential movement to help with some of the problems you mention regarding conflict of interest.