Can America Afford it's Belligerent Foreign Policy? - Paul Criag Roberts - VDARE Archives
How will Americans pay for the decades of war that the neocons are fomenting? The Afghan and Iraqi wars are being financed by the Chinese and Japanese whose loans cover the Bush regime’s budgetary red ink. Can US nuclear primacy succeed in forcing the indefinite extension of this financing as a form of tribute? Can the neoconservatives subdue the Islamic Middle East with nuclear weapons without endangering the flow of oil?.....The classic method of war finance is inflation. The Romans destroyed the intrinsic value of their coinage with lead. When the US can no longer sell its bonds, it can print money.
The US might have nuclear primacy, but it no longer has economic primacy. The US economy has been living on debt. In 2005 American consumers overspent their incomes for the first time since the Great Depression. The rising trade deficit is cutting into economic growth. Middle class jobs for Americans are being lost to offshore outsourcing and to foreigners brought in on work visas. Salaries in the jobs that remain are being forced down. Adjusted for inflation, starting salaries for university graduates are declining. Business Week’s Michael Mandel (September 15, 2005) compared starting salaries in 2005 with those in 2001. He found a 12.7 % decline in computer science pay, a 12% decline in computer engineering pay, and a 10.2% decline in electrical engineering pay. Psychology majors experienced a 9.3% fall in starting salaries, marketing a 6.5% decline, business administration a 5.7% fall, and accounting majors were offered 2.3% less.
Economist Alan Blinder, a former vice-chairman of the Federal Reserve, estimates that 42-56 million American service sector jobs are susceptible to offshore outsourcing. Whether or not all of these jobs leave, US salaries will be forced down by the willingness of foreigners to do the work for less....By substituting cheaper foreign labor for US labor, globalization boosts corporate profits and managerial bonuses at the expense of workers pay....Education and re-training are no protection against offshoring and foreign workers entering America on work visas.
Paleo Conservatives seem to be the only ones who have not forgotten that Adam Smith was the original critic of Imperialism not Karl Marx. Smith's message: the cost of maintaining the military forces needed to protect foreign markets and/or resources never generates enough tax revenue to break even. The result of an policy of Imperialism is a long, slow slide downward, decades of economic hardship on the citizens, and eventually social collapse and hyper-inflation.
This is how America's new Imperial system works. The US maintains client states in the Mideast that demand payment for their oil in US dollars. That keeps the world purchasing the bonds that finance our deficit, and buying dollars with which to purchase their oil. It's what we used to call the "Petro-dollar"...but you don't hear much about it, but it still exists. If the dollar loses it position as the World's reserve currency, then the US can no longer export it's inflation. So then for US citizens, it's hyper-inflation instead of creeping inflation we've had in the last 30 years. As hard as you think things are now for the middle class worker, if the US dollar loses it's position as reserve currency for the world, things will be unimaginably worse off.
But the problem is that the costs of US reliance on the Petro-dollar have become unsustainable. The cost of the occupation of Iraq is $2 billion a week, and as a result the federal deficit is growing faster then the US economy. All our enemies are delighted because the more we spend on a endless occupation of Iraq, the faster the US government has to sell off pieces of America to foreigner investors. The Arab client states have no reason to lower prices...because the higher the prices, the more American assets they can buy, and the more influence they have on American politics.
So thanks to the philosophy of Laissez Faire economics, the US has locked itself into the classic sort of imperial model that Adam Smith warned about. The political will does not exist to decrease social spending because the Babyboomers are retiring, and most of them have no savings, or medical insurance. But the interest on the debt, combined with the size of the military budget spending is so large a chunk of the Federal Budget, that even severe cuts in domestic spending will not solve the problem. Because of open borders for capital and income, the rich can easily hide their money in offshore tax havens. It will have to be the working folks, America's middle classes, that will be forced to pay for this.
The only long term solution is slow and steady disengagment from our imperial ways, beginning with a complete withdrawal from Iraq. Then the Federal government should invest the $2 billion a month it was spending on the Iraq occupation in alternative energy research to create true energy independence from fossil fuels. The Congress should dump the financial deregulation of the dysfuncational 90's, and begin to restrict the free flow of labor and capital out of the United States. Institute tariffs on any products from countries that engage in unfarir trade like Communist China. Economic policy should concentrate on increasing the incomes of the working classes, encouraging the formation of families, and ultimately increase in the birth rate among the working class. American workers should not be forced to compete against the equivalent of coolie slave labor, so all so-called "guest worker plans" should be eliminated, including the H1B Visa for high tech workers. Democrat policies to maintain it's underclass dependents must be ended. Working class should mean people that are working for living wages, not underclasses unassimilated and encouraged to be dependent on welfare. So an new emphasis on sexual morality and religion must be encouraged. Assimilation rather then diversity and multi-culturalism must be our social policy.
Most importantly, the top 20 percent, who have enjoyed the benefits of 20 years of dismantling the American industrial infrastructure, and undercutting American sovereignty, will now have to pay back the illegal and unethical prosperity they have made at the expense of the working clases. , and actually become the patriots they claim to be.
