Friday, February 11, 2011


This Post is best read as a complement to my immediately previous Post on the new global elite.

In that Post I noted that it was in the interest of both the Beltway (politically) and the corporations and venture-capital (profit-wise) to simultaneously pander to the giddily-proclaimed liberatory-employment demands of clients in the newly-erected groupings of Identity Politics while allowing production and investment capital to go abroad in search of more Production-friendly venues. (The Beltway collected votes from the happy client-Identities and cash from the PAC-paying Big Money interests. What was not to like?)

All true. The result being that as the US became less Production-friendly (productivity and efficiency were not only not-high on the Identity Politics list of priorities, but were usually pooh-poohed as ‘excuses’ for not giving in to their demands) the producing corporations and their investment backers literally took their business elsewhere around the planet; to the point where now many of them are not so much interested in more cheaply and efficiently producing goods for sale in the American domestic markets but rather are fascinated by the terraforming challenge of re-creating the American Dream in China and India, replete with the development of fresh and work-friendly blue-collar and middle-classes.

Now come a pair of articles, here and here both in the current issue of the verrrrrry worthwhile ‘The American Conservative’ magazine, that demonstrate in more detail how the Right, the putatively ‘business-savvy’ side of the political divide, helped destroy this country’ s economy and its productive capabilities.

I wouldn’t want it thought that our present debacle is purely a work of the Left; rather, America’s productive capacity – like its Constitutional ethos – has been under sustained attack by both Left and Right for decades now. The Productive capacity is mostly gone at this point; there’s still enough of the Constitutional ethos above the waves so that the delusionally-inclined can claim it’s still afloat (which it sorta still is) and capable of continuing its voyage and mission (which it sorta isn’t).

In the first article, Thomas Woods recalls the work of Seymour Melman, the mid-20th century American economist who – following the mid-19th century French economist Bastiat’s suggestion that one must study the long-term and hidden as well as the obvious and short-term effects of spending – looked closely at the effect of increasingly heavy military spending on the US economy.

Let me quote Woods entire quotation from Melman decades ago: “Industrial productivity, the foundation of every nation’s economic growth, is eroded by the relentlessly predatory effects of the military economy … Traditional economic competence of every sort is being eroded by the state capitalist directorate that elevates inefficiency into a national purpose, that disables the market system, that destroys the value of the currency, and that diminishes the decision power of all institutions other than its own.”

I note that Melman is concerned – as is demonstrated in the article – with the anti-market effects of military spending, which rewards inefficiency and destroys genuine competition and – as happened in this country – served purposely as a closed system to maximize costs and government subsidies while stifling the cost-saving efficiencies one might expect from extended applied research and development and large-scale production of mostly identical items.

I also note that this assault on productive efficiency from – if I may – the Right corresponded with the assault on productive efficiency (and industrial productivity itself) from the Left as the Identity Politics cadres pooh-poohed ‘male’, ‘smokestack’ culture and demanded that American work by ‘de-masculinized’ and that it be made ‘sensitive’ to the ‘other priorities’ that assorted New Left worker-groups might demand. (Including – the hell-hot ironies! – the military profession itself.*)

The growth of the defense-spending complex became “parasitic” when it exceeded exponentially the cost of simply providing defense of the U.S. itself. Thus, according to the DOD (which released figures but was not actually audited independently) in the period from 1947-1987 the DOD expended 7.62 trillion dollars (in 1982 dollars). In 1985 the Commerce Department estimated the value of the country’s “plants, equipment, and infrastructure” at about 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”, i.e. of production equipment, of infrastructure supporting that production capability, and so forth.

Thus, it seems to me, during that period starting in 1971 when the government ‘floated’ the dollar because of increasing competitive pressures from countries now recovering from WW2’s effects, the country’s physical capability to produce was being allowed to decline due to the diversion of vital monies to the defense complex. Precisely as, from the Left, a) the cultural ethos of ‘smokestack’ productivity was being assaulted and eroded by the cadres of Identity Politics who either wanted to destroy male-dominated productivity culture and grab their own piece of the envisioned ‘pie’ by rendering ‘jobs’ not as skills-based opportunities to produce but rather identity-based opportunities to collect a status and a paycheck; and b) identity-based demands that a ‘job’ conform itself to the assorted employees (essential for ‘liberation’ and ‘empowerment’) rather than conform to the overall reality-based discipline of making something useful as reliably and cheaply and efficiently as possible.

A true double-whammy.

From time to time during the 1970s and 1980s, large defense contractors tried their hand at making ‘civilian’ stuff, but with increasingly unreliable results: examples given are Boeing Vertol’s effort to make trolley cars for Boston’s Green Line transit system, which had to be replaced in short order by a Japanese manufacturer’s trolleys; Rohr’s subway cars for San Francisco’s BART system and D.C.’s system, which “chronically malfunctioned”; and Grumman’s transit buses for New York City which proved so unreliable that the City sued the company. (You can only hope that their military stuff functioned better – but how would the public know if it didn’t?)

How the government could allow all this to happen is a question that might occur.** For a long while the existence of the USSR, great super-power rival in the East, might have provided a rationale, or at least a pretext. And then in the early 1970s the ‘post-industrial society’ stuff came along (see my recent Post): the US and many major European economies were going to ‘mature’ and become more oriented to non-physical stuff like ‘knowledge’ and ‘service’ and ‘financial’ stuff (although how a nation of 170 million – in the early 1970s – or 300 million – now – could keep itself going like that is a question that seemed to elude the elite).

Nor is it necessarily true that We have gotten a lot of bang for so many bucks. Woods notes the defense analyst and commentator William S. Lind’s assessment that, for example, the US Navy of the 21st century is “still structured to fight the Imperial Japanese Navy” and that the Navy’s aircraft-carrier battle groups “have cruised on mindlessly for more than half a century, waiting for those Japanese carriers to turn up”.

They do make lovely milporn though, for those so inclined to look at videos of them – whether of a Rightist ruff-tuff, eagle-patch power-projection mindset, or of a Lefty, politically-correct mindset: We’re just a diverse and happy family out here, goody goody gumdrops! And of course not even MGM in its heyday could provide as magnificent a stage backdrop for “Mission Accomplished!”, replete with The Leader descending out of the clouds in an aircraft like a god descending from Valhalla (which, one recalls, was Leni Riefenstahl’s opening conceit in the Nazi propaganda epic “Triumph of the Will” – although there is significant historical doubt about that Leader padding his crotchy-bits for the cameras).

The Imperial Japanese Navy, unlike its Nazi counterpart, never put too many resources into its submarine service – the Pacific was a whole lot bigger than the North Atlantic so it’s understandable in its way; with the exception of a few successes – the USS Indianapolis comes sadly to mind – the Japanese did not offer much open-ocean threat to the great fleets of warships and, even more vitally, the Fleet Train, those even huger swaths of oilers, supply ships, repair ships, hospital ships, tenders of every sort, and troopships full of Marines and Army troops. When the Chinese, among many other regional powers, start putting submarines into service, especially in the Pacific, the WW2 scenario is changed ominously.

Woods also notes that there seems no vital reason to spend a quarter of a trillion dollars a year maintaining 865 bases and facilities around the planet, and tying up 190,000 or so pairs of boots.

Nicely, he notes that “liberals find nothing wrong with this”. And he’s on to something here. While the neocon Right might seek overseas military adventure in order to execute the office of Divine Deputy and Hegemon, the Left reaches the same military adventure by the kinder and gentler pretext of ‘liberating’ and ‘empowering’ the ‘oppressed’ everywhere – which is a task for which not even Heaven has thought prudent to deploy its feathered, sword-swinging legions. Right and Left are unanimous in their support for doing what God has been adjudged remiss in doing.

You could – and the magazine does , in a meaty sidebar – go back to Irving Babbitt’s observation in 1924 that whereas the medieval era saw the rising French monarchy crusading happily under the rubric of Gesta Dei per Francos (God’s Great Works accomplished through the French), the post-WW1 world could now contemplate Gesta Humanitatis per Americanos (Humanity’s Great Works accomplished through the Americans). President Wilson’s crusading spirit, Babbitt thought, would lead to “our being deprived gradually of our liberties on the ground that the sacrifice is necessary for the good of society”.

Back then even as acute an observer as Babbitt might not have envisioned just how meteoric the country’s rise to Leader of the Free World (and later, World Hegemon) would be. We are now being thus deprived on the ground that the sacrifice is necessary for the good of Humanity. And of course, it is the ‘good liberal’ (as the term has mutated over the past 45 years or so) who now wants the country to spread the ‘liberal’ agenda around the planet. As I mentioned in an earlier Post this year, William S. Lind observed that Hillary has publicly asserted that America will stay in Afghanistan until the Afghanis accept ‘women’ the way they are accepted in American public life – which means, Lind acutely concludes, that this country is at war “for feminism” and that if We intend to stay there until the Afghans accept defeat in the gender-war then We are in for a long twilight stuggle indeed.

Back then, Babbitt had to deal with Wilson who, like McKinley not long before him, had prayed mightily and decided that it was God’s Will that the US stretch forth its powerful arm as His Deputy, here, there, and everywhere on the planet. (And it’s a sign of just how corrupted the general run of American Fundamentalist religious spirit has become that since Reagan’s day it could embrace such a proposition.) Babbitt noted acidly “the particular confusion of the things of God and the things of Caesar”.

Nowadays, the secularized humanists and postmodern, post-industrial, post-Christian elites have eliminated the middle-man (God) and simply declared that America will and must intervene anytime and anywhere for ‘Humanity’ (especially in the form of oppressed Identities).

Ach! As Tom Englehardt notes in a recent article, the Cold War shouldn’t properly be considered to have ended in 1991 when the USSR rattled its last death rattle and dissolved like an evil spirit into a dark dissipating mist. Rather, the End should be put down as 2011 when America, “the other defeated super-power of the Cold War” lurched into terminal decline.

Because the disappearance of the USSR genuinely unhinged the US. It had by 1991 continuously corroded both its industrial base and its cultural and Constitutional ethos, under pressures from both Left and Right, while relying – whether anybody realized it or not at the time – on the great rival USSR’s very existence as a sort of exo-skeleton to hold the increasingly mushy American national life together. When the USSR dissolved the exo-skeleton instantly went with it, leaving the US with a hugely weakened endo-skeleton of infrastructure, productive capacity, cultural and Constitutional ethos, and political civic competence and maturity.

You don’t need a degree from Harvard Medical School to know what would quickly happen: the hugely weakened endo-skeleton meant increasingly intense and frequent wobbling and shaking and a loss of balance and agility, though the symptoms were temporarily mitigated by massive doses of easy credit and huge elite self-congratulation in the butter-greasy golden glow of its ‘successes’ in imposing its Politically Correct agendas. And the sell-off of any productive enterprises that could be outsourced.

Thus, says, Paul Craig Roberts in the second article, the “efficient” US economy of the 1960s was undermined in the 1970s through “worsening trade-offs between inflation and employment, raising the specter of stagflation” (ah there’s a term that takes me back – and right in the middle of the Bicentennial Era too). But, he says (he was a ranking Treasury official in the Reagan years), this was merely “a problem with economic policy, not a problem inherent in the capitalist economy”.

But in a lethal irony, with the collapse of the USSR in 1991, “the consequence was to initiate ruin within the U.S. economy”. Chinese and Indian socialists, disabused of the Marxist-Leninist illusions, forthwith began to “open up their economies to First World capital”.

Suddenly, then, “American corporations had access to massive supplies of unemployed, low-wage labor" who were prepared to be far more productive than America’s now-fractalized job-seekers and thus generate far more profits for their employers and investors.

Hence, the 1990s craze for off-shoring “separated Americans’ incomes from the production of the goods and services they consumed”. Not only enhanced modes of intercontinental transportation (container ships and even air-cargo aircraft), but also Internet capability, meant that all manner of even clerical and professional jobs could be off-shored (which had the collateral effect of undermining the immediate value of an American college education – or at least a college degree). And thus, in Roberts’s acute and pithy formulation: “In an off-shored economy, the profits of corporations are not a measure of the economic welfare of the population”.

The government, perhaps with an eye to consequences so serious that it later drove Darth Cheney to propose internal concentration camps, prescribed vast quantities of easy credit, cheap credit, laid on with a trowel.

The result? “By the 21st century the U.S. economy was a Potemkin economy”. Empress Catherine the Great’s minister, eager to impress his monarch with his acquisition of new territory, famously (some say fabulously) had fake villages – facades without substance – erected in desolate areas to impress her as her carriage rode through. He got status, she felt a whole lot better that things were going so swimmingly, and so what was not to like?

Consumer indebtedness replaced income growth, and the balloon metastasized into a Bubble and then a series of Bubbles (the pols could hardly put a stop to it without revealing the even more desperate abyss that the Bubbles were covering up, and anyway they had been taking PAC monies from the Big Money folk for quite a long time).

Worse, “traditional economic policy … cannot put Americans back to work WHEN THE JOBS HAVE GONE OVERSEAS”. [caps mine]

He offers a suggestion that makes fine sense but will require an act of collective will among the political class: “tax corporations according to where value is added to their product”, that is to say, if overseas then a higher tax and if here domestically, then a lower tax.

To a certain generation, this might seem akin to asking the Chicago Board of Aldermen to put a leash on Alphonse Capone (noted Italian-American entrepreneur of the 1920s); which in its turn would be akin to asking a Gilded Age Congress to put a leash on the railroad interests, and the meat-packing interests, and Standard Oil.

Congress has a rendezvous with destiny. As do We all.


*It might even be the case that as the Politically-Correct military fills its ranks with fewer and fewer combat efficient boots, the rush is on to develop whizz-bang, ‘fool-proof’ gadgetry and that this is going to continue and intensify. In which case, the absolute primacy of ‘force protection’ - so unmilitary a current military maxim – is not only an indicator of the ‘sensitive’ military brought about by New Left and Politically Correct gambits, but is a conceptual fig-leaf for the fact that the ‘force’, increasingly, needs all the protection it can get.
**This is a world of thought in itself. Did the Beltway simply fall into this mess fecklessly, making ‘deals’ (which is about all that’s left in the Identity-Politics cartoon-thinking Age) just to keep the cadres of this and that ‘base’ advocacy happy while collecting PAC money from the corporate and financial interests?

Or was it ‘planned’ (as the word applies in the Beltway these days) all along? Something along the lines of: We can let the ‘smokestacks’ and white-male-blue-collar culture and infrastructure go, thereby keeping both the largest ‘bases’ happy, while letting investment capital and corporations do what they want to do and go overseas for productivity and profit (PAC monies nicely flowing in for the privilege), while also going ‘post-industrial’ by turning the financial elements loose to do whatever they want (PAC monies nicely flowing in for the privilege), and pushing the Knowledge-and-Service society and its culture; and meanwhile keeping the defense complex happy by turning the country into the world’s policeman and showing that America still has the right stuff by intervening wherever there’s a shot at resources or forcing targeted countries to accept the evolving American cultural pattern.

If that seems a bit too much like a Rube Goldberg contraption to pass for an intelligent national Plan and Policy … well, I couldn’t disagree.

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