Wednesday, June 22, 2011

Sagging Economy - Excuse to leave Afghanistan?

Sagging Economy–Excuse to leave Afghanistan?

Charles Jordan

Pres. Obama didn’t state any numbers for the games in budget dollars from his change troop withdrawal schedule, but many analysts and politicos point to money as one of the motivating influences for accelerating the drawdown timetable. (see front page New York Times June 22, 2011). The number of personnel in the armed forces per se will not be reduced, but the munitions used, the planes, helicopters, and Humvees trashed, new weapons purchased, and the transport of large numbers of people hin and yon, among others, will not have to be funded. But, “Where does the government buy these things?” You ask.

Well, I imagine that most of these purchases will be from US companies who produce most of the munitions and weapons on the world market. So what’s the diff.? If there’s no war, the money spent will be somewhat less, but, just like stopping infrastructure spending, the negative economic impact on our military/industrial complex will be substantial and not readily made up by increases in business by other companies. Military spending used to be our industrial policy and was extremely useful in generating the good life in the US for our glory years now rapidly receding into the distance. Of course, in those days we didn’t have trillions of dollars of debt generated in large part by Wall Street criminals.

Our glorified economists are in consensus about how to revive our moribund economy, but are similarly agreed that none of today’s tricks worked for FDR’s terrible depression. What did work? World War II. What worked for Louis XIV when the the nobles were after his neck for building Versailles? Burning down all the castles on the Rhine. What worked for Hitler when people’s paychecks were worth 50% less by the time they were issued ? World War II until they lost (However, Germany’s economy is doing alright today.).

It is so disheartening to hear Pres. Obama saying that we will just ask our innovators to build us a new economy out of thin air. I wish it didn’t sound like a Wall Street game, making an economy with wishes and manipulation. Granted, our innovators are pretty good at building businesses, but normally in spite of government rather than because of it, and new products and markets are fiendishly difficult to foresee and require a dollop of good luck and extraordinary timing to be successful. Success cannot be legislated. However, a good war generates targets for products and markets for the products once they exist. And the carryover of military computers and jet planes into the apres-bellum economy looks pretty good, too.

Today’s gurus are looking to energy independence as such an industrial-policy war. The product targets are windmills, better solar converters, fuel cells, etc., but the market for the power is the normal population and they have options. Hydrocarbons are just fine, thank you, and they’re cheaper and simpler. The motivation to use more expensive power for the unclear goal of energy independence is not as obvious as protecting your homeland from attack by a foreign power. Notice how developing economies like China and Spain are attacking and leading the alternative energy market because the US companies are too smart to put a lot of money into a marginal business area.

So bemoaning the loss of life, loss of money, and loss of prestige is to be compared to taking the bull by the horns and trying to impose a system of stable peace throughout the world through force, perhaps modeled on the 200 years of Pax Romana, or the hundred years of Pax Britannica. I think the economic consequences and the relatively minor loss of life in a world of 7 billion people leans toward Louis XIV’s solution. “ Apres moi, les deluges”.

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