The Military-Industrial Complex is Ruining the Economy

Discussion in 'Politics' started by poncho, Feb 15, 2010.

  1. poncho

    poncho
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    Everyone knows that the too big to fails and their dishonest and footsy-playing regulators and politicians are largely responsible for trashing the economy.​

    But the military-industrial complex shares much of the blame.​

    Nobel prize winning economist Joseph Stiglitz says that the Iraq war will cost $3-5 trillion dollars.​

    Sure, experts say that the Iraq war has increased the threat of terrorism. See this, this, this, this, this, this and this. And we launched the Iraq war based on the false linkage of Saddam and 9/11, and knowingly false claims that Saddam had WMDs. And top British officials, former CIA director George Tenet, former Treasury Secretary Paul O'Neill and many others say that the Iraq war was planned before 9/11. But this essay is about dollars and cents.​


    America is also spending a pretty penny in Afghanistan. The U.S. admits there are only a small handful of Al Qaeda in Afghanistan. As ABC notes:
    U.S. intelligence officials have concluded there are only about 100 al Qaeda fighters in the entire country.


    With 100,000 troops in Afghanistan at an estimated yearly cost of $30 billion, it means that for every one al Qaeda fighter, the U.S. will commit 1,000 troops and $300 million a year.​


    Sure, the government apparently planned the Afghanistan war before 9/11 (see this and this). And the Taliban offered to turn over Bin Laden (see this and this). And we could have easily killed Bin Laden in 2001 and again in 2007, but chose not to, even though that would have saved the U.S. hundreds of billions of dollars in costs in prosecuting the Afghanistan war. But this essay is about dollars and cents.

    Increasing the Debt Burden of a Nation Sinking In Debt

    All of the spending on unnecessary wars adds up.​

    The U.S. is adding trillions to its debt burden to finance its multiple wars in Iraq, Afghanistan, Yemen, etc.​


    Two top American economists - Carmen Reinhart and Kenneth Rogoff - show that the more indebted a country is, with a government debt/GDP ratio of 0.9, and external debt/GDP of 0.6 being critical thresholds, the more GDP growth drops materially.​

    Specifically, Reinhart and Rogoff write:

    The relationship between government debt and real GDP growth is weak for debt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent, median growth rates fall by one percent, and average growth falls considerably more. We find that the threshold for public debt is similar in advanced and emerging economies... ​




    Indeed, it should be obvious to anyone who looks at the issue that deficits do matter.


    A PhD economist told me:
    War always causes recession. Well, if it is a very short war, then it may stimulate the economy in the short-run. But if there is not a quick victory and it drags on, then wars always put the nation waging war into a recession and hurt its economy.

    You know about America's unemployment problem. You may have even heard that the U.S. may very well have suffered a permanent destruction of jobs.


    But did you know that the defense employment sector is booming?​


    As I pointed out in August, public sector spending - and mainly defense spending - has accounted for virtually all of the new job creation in the past 10 years:​








    James Madison knew and understood way way back when that "no nation could preserve it's freedom in the midst of continual warfare."​

    Yet here we are today "the present generation enlightened as we are" (a bit of Sam Adams) waging continual warfare to preserve our freedom.

    Hmmmm.

    I wonder if it will work? ​






     
    #1 poncho, Feb 15, 2010
    Last edited by a moderator: Feb 15, 2010
  2. KenH

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    An excellent post, poncho. More and more I wonder if the United States is doomed fiscally. And if we lose our fiscal power then our military power will go down with it.
     
  3. blackbird

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    #3 blackbird, Feb 16, 2010
    Last edited by a moderator: Feb 16, 2010
  4. poncho

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    It doesn't end there . . .

    The devastating numbers across-the-board on the economic front are staggering. I'll go through some of them here, many we have already become all too familiar with. We hear some of these numbers all the time, so much so that it appears as if we have already begun "to normalize the unthinkable." You may be sick of hearing them, but behind each number is an enormous amount of individual suffering, American lives and families who are struggling worse than they ever have.

    America is the richest nation in history, yet we now have the highest poverty rate in the industrialized world with an unprecedented amount of Americans living in dire straights and over 50 million citizens already living in poverty.

    The government has come up with clever ways to downplay all of these numbers, but we have over 50 million people who need to use food stamps to eat, and a stunning 50 percent of U.S. children will use food stamps to eat at some point in their childhoods. Approximately 20,000 people are added to this total every day. In 2009, one out of five U.S. households didn't have enough money to buy food. In households with children, this number rose to 24 percent, as the hunger rate among U.S. citizens has now reached an all-time high.

    We also currently have over 50 million U.S. citizens without health care. 1.4 million Americans filed for bankruptcy in 2009, a 32 percent increase from 2008. As bankruptcies continue to skyrocket, medical bankruptcies are responsible for over 60 percent of them, and over 75 percent of the medical bankruptcies filed are from people who have health care insurance. We have the most expensive health care system in the world, we are forced to pay twice as much as other countries and the overall care we get in return ranks 37th in the world.

    In total, Americans have lost $5 trillion from their pensions and savings since the economic crisis began and $13 trillion in the value of their homes. During the first full year of the crisis, workers between the age of 55 - 60, who have worked for 20 - 29 years, have lost an average of 25 percent off their 401k. "Personal debt has risen from 65 percent of income in 1980 to 125 percent today." Over five million U.S. families have already lost their homes, in total 13 million U.S. families are expected to lose their home by 2014, with 25 percent of current mortgages underwater. Deutsche Bank has an even grimmer prediction: "The percentage of 'underwater' loans may rise to 48 percent, or 25 million homes." Every day 10,000 U.S. homes enter foreclosure. Statistics show that an increasing number of these people are not finding shelter elsewhere, there are now over 3 million homeless Americans, the fastest-growing segment of the homeless population is single parents with children.

    One place more and more Americans are finding a home is in prison. With a prison population of 2.3 million people, we now have more people incarcerated than any other nation in the world - the per capita statistics are 700 per 100,000 citizens. In comparison, China has 110 per 100,000, France has 80 per 100,000, Saudi Arabia has 45 per 100,000. The prison industry is thriving and expecting major growth over the next few years. A recent report from the Hartford Advocate titled "Incarceration Nation" revealed that "a new prison opens every week somewhere in America."

    FULL ARTICLE
     
  5. poncho

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    Bumperdoodle . . .
     
  6. billwald

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    >Nobel prize winning economist Joseph Stiglitz says that the Iraq war will cost $3-5 trillion dollars.

    May be, but that is only one side of the balance sheet. A prize winning economist should know that if he wants to tell an honest story.

    If the Army burned bushels of 100 dollar bills before an iron statute of the war god then it might be proper to say that the war costs. What Stiglitz should write is the money will be transferred from people he likes to people he doesn't like.
     

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