Where did the money go?

[A timely guest post from Gary, with all the anti-Iranian sabre-rattling going on. Spurred on by its political parasitic twin Israel, Washington seems poised to shoot itself right in the wallet. I believe that's called a "beauty shot."]

The lesson that the United States desperately needs to learn is that their trillion-dollar-a-year military is nothing more than a gigantic public money sponge that provokes outrage among friends and enemies alike and puts the country in ill repute. It is useless against its enemies, because they know better than to engage it directly. It can never be used to defeat any of the major nuclear powers, because sufficient deterrence against it can be maintained for relatively little money. It can never defuse a popular insurgency, because that takes political and diplomatic finesse, not a compulsion to bomb faraway places. Political and diplomatic finesse cannot be procured, even for a trillion dollars, even in a country that believes in extreme makeovers. As Vladimir Putin put it, "If grandmother had testicles, she'd be a grandfather."

Reinventing Collapse, 2nd ed., p. 41

Military Keynesianism and America's Declining Infrastructure

In August 2007, the nation was stunned by the collapse of a major Minneapolis bridge, killing thirteen. The bridge had been rated structurally deficient by the U.S. government as far back as 1990, and it was only one of 72,868 bridges (12.1%) across the country with that rating.  They also rated 89.024 bridges (14.8%) as functionally obsolete. Here closer to my home the eighty year old Champlain Bridge, also known as the Crown Point Bridge, was closed in October 2009 due to extensive corrosion of two structural piers. At least it was condemned before it fell down.  Two years later a replacement bridge has been completed, but not without substantial inconvenience and economic loss to business and workers on both sides of the bridge.  People were forced to take a ferry during reconstruction.  The DOT states the average design life of US bridges is 50 years with an average current age of 43.  The American Society of Civil Engineers estimates that it would take nearly $930 billion to fix the country's failing bridges and roads over the next five years (www.infrastructurereportcard.org/fact-sheet/bridges).  With estimated spending of $380.5 billion, they predict a shortfall of $549.5 billion. 

Where did all the money go?  The recently deceased Chalmers Johnson called it "Military Keynesianism".  For those who don't follow arcane economics lingo, Keynes was a British economist who said that in a period of slow or declining economic growth (recession or depression), that government spending was needed to "prime the pump" of the economy.  The US recovery from the Great Depression with help from WWII military spending gave credence to this analysis.  Except now we have permanent Military Keynesianism.
 
Johnson cites an incredible statistic from the late Seymour Melman, the Columbia University advocate of military conversion, and the "peace dividend".  "By 1990, the value of the weapons, equipment, and factories devoted to the military was 83% of the value of all plants and equipment in American Manufacturing.  From 1947-1990 the combined US military budget amounted to $8.7 trillion...Military industries crowd out the civilian economy (ed-and other government spending like bridges) and lead to severe economic weakness." Consider that the US military is now spending over $1 trillion per year including all black and related expenses, which is more than the entire rest of the world combined.  The next biggest spender is China at $91.5 billion according to Chinese figures.  Johnson summarizes, "Devotion to military Keynesianism is, in fact, a form of slow economic suicide."

But isn't war good for the economy as former President George W. Bush told Argentine President Kirchner in Oliver Stone's recent movie "South of the Border?"  Johnson quotes historian Thomas Woods,  "According to the US DOD, during the four decades from 1947 through 1987 it used (in 1982 dollars)  $7.62 trillion in capital resources.  In 1985 the Dept of Commerce estimated the value of the nation's plant and equipment and infrastructure at just over $7.29 trillion.  In other words, the amount spent over that period could have doubled the American capital stock or modernized and replaced its existing stock."

Johnson cites a study by economist Dean Baker of CEPR in 2007 that concludes, "In fact most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment."  Why would this be?  Think about nuclear weapons.  The best possible use for them is not to use them at all.  At the peak the US had 32,500 nuclear weapons.  Think about the massive cost of something that then (thankfully) sits on the shelf and provides no use to anyone.

Finally Johnson quotes Harvard economics professor Benjamin Friedman, "Again and again it has always been the world's leading lending country that has been the premier country in terms of political influence, diplomatic influence, and cultural influence...we are now the world's biggest debtor country, and we are continuing to wield influence on the basis of military prowess alone."  Think about that when you pay your family's $10,000 per year contribution to the Iraq and Afghanistan wars. 

Back in the 1980's Gorbachev cut Soviet military spending, and predicted that the US would continue to spend itself into oblivion.  Who will stop the madness of military Keynesianism? Obomber or Romney? LOL. Johnson concludes, "Our short tenure as the world's "lone superpower" has come to an end."  All that's left is for the fat lady to sing, when the US goes broke.  It won't be long now.

All quotes from Dismantling the Empire, by Chalmers Johnson, Metropolitan Books/Henry Holt and Co. 2010