America - A Bankrupt Empire
Financial instability rooted in
economic 'blowback' from our disastrous foreign policy
by Justin Raimondo
www.antiwar.com/, January 25,
As the stock market gyrates, and Federal
Reserve Board meets by videoconference to inject emergency funds
into the system, Chalmers Johnson's warning that the US empire
is not sustainable - that "this is the way empires end"
- resonates rather ominously.
Johnson, whose most recent book is Nemesis:
The Last Days of the American Republic, the third volume in his
"Blowback" trilogy, argues that military expenditures
are a drain on the productive capacity of the economy, and that
the mistaken idea of what he calls "military Keynesianism"
will eventually be our economic undoing. The US economy, he avers,
has become increasingly dominated by what President Dwight Eisenhower
dubbed the "military-industrial complex." Rampant militarism
has diverted vital resources away from productive use and lines
of research, and given other countries - Japan and the EU - the
technological edge. This trend has also hollowed out our economic
base, caused a debilitating decay in the physical infrastructure,
and led to a growing debt - that is an economic time-bomb that
seems to be exploding now.
How many Americans realize the US military
budget is greater than that of the rest of the world combined?
This doesn't include our "off-budget" expenditures in
the Iraqi and Afghan theaters, which surpass the combined military
budgets of Russia and China. For the first time, the bill for
the "defense" of the United States - a task left to
the Department of Homeland Security [.pdf], not the Defense Department
- exceeds $1 trillion. And that's just what's public: the secret
"black budget" costs are unknown, and on this score
Johnson advises us to heed economist Robert Higgs, who advises
us to take any official Pentagon figures and simply double them.
Empires are expensive, and the American
version has a peculiarly altruistic twist to it, in that, as Garet
Garrett remarked, "everything goes out, and nothing comes
in." We've financed it all with deficit spending, and rather
than impose direct taxation - always a risky proposition - the
powers that be have simply set the printing presses of the Federal
Reserve on overdrive, creating a huge bubble that's about to pop.
As Johnson points out, the whole system is financed by massive
"On November 7, 2007, the U.S. Treasury
announced that the national debt had breached $9 trillion for
the first time ever. This was just five weeks after Congress raised
the so-called debt ceiling to $9.815 trillion. If you begin in
1789, at the moment the Constitution became the supreme law of
the land, the debt accumulated by the federal government did not
top $1 trillion until 1981. When George Bush became president
in January 2001, it stood at approximately $5.7 trillion. Since
then, it has increased by 45%. This huge debt can be largely explained
by our defense expenditures in comparison with the rest of the
Just as the worldwide Islamist insurgency
sparked by Al Qaeda is blowback visited on us by the exigencies
of the cold war era, so what we are experiencing, today, is economic
blowback from our reigning ideology of military Keynesianism,
which has built an economy embedded with a fatal flaw.
In the wake of World War II, the fear
of another great depression was rife, and this was a motivating
factor in the growth of the "defense" sector - neatly
rationalized, as Johnson points out, by the Pentagon's NSC-68,
a document outlining US strategic doctrine authored by Paul Nitze,
which proclaimed the cold war dogma of "guns and butter":
"One of the most significant lessons
of our World War II experience was that the American economy,
when it operates at a level approaching full efficiency, can provide
enormous resources for purposes other than civilian consumption
while simultaneously providing a high standard of living."
Except it wasn't, and isn't, so.
Public works, in the form of ever-higher
military spending, created an ever-expanding war-industry that
sucked vital resources into avenues that led to a cul de sac,
i.e. that had no productive use, such as nuclear bombs. Our mighty
nuclear arsenal, which continues to expand even after the Soviet
meltdown, represents trillions of dollars in frozen resources
which go nowhere - that is, which produce no goods, and yield
no continuing economic benefits. This has led to the fatal distortion
of the American economy, and the massive misallocation of scarce
resources: it is the root cause of the collapse of the US manufacturing
sector. As Johnson puts it:
"Over time, a commitment to both
guns and butter has proven an unstable configuration. Military
industries crowd out the civilian economy and lead to severe economic
weaknesses. Devotion to military Keynesianism is, in fact, a form
of slow economic suicide."
Not only has America fallen behind by
failing to modernize its capital assets and losing its technological
edge, it has also corrupted its own currency. By exponentially
expanding credit, the Federal Reserve is weighing down future
generations with an unprecedented albatross of debt. The sheer
weight is crushing the vitality out of the American economy, as
military development crowds other investments out of the market.
The dollar is no longer the currency of choice: the Euro has taken
its place. All that has to happen, as Johnson points out in the
video above, is for the Saudis and other oil-producers to demand
Euros instead of dollars, and we're sunk.
What is likely to stop the rise of the
American empire dead in its tracks isn't a sudden upsurge in the
antiwar movement, the election of a rational President, and/or
a sudden radical reversal by the policymaking elite after more
than half a century of folly - it's bankruptcy that will do it,
long before any of these possibilities have a chance to take shape.
Not that this is anything to anticipate
with glee: it means social and political disruption on a scale
we have scarcely experienced before in this country, perhaps even
a revolution. It surely means the end of our republican form of
government, and the institution of something less free, less secure,
less faithful to the teachings and traditions of the Founders.
It almost certainly means the end of constitutional government
in America, and the beginning of our long, slow decline - or,
perhaps, a more dramatic, meteoric descent than anyone now imagines.