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Michael Meeropol: Here We Go Again

Nine years ago, the first commentary I presented identified two competing approaches to economics.  The first one was personified by then Fed Chair Alan Greenspan who is well known as a free-market true-believer.   In fact in his youth he was a philosophical follower of Ayn Rand.   The other person highlighted in that commentary was the late John Kenneth Galbraith.  Galbraith was a strong supporter of government action to fight unemployment and poverty.  He was also a strong believer in macro-economic demand management following the arguments of John Maynard Keynes.   In that first commentary, I made it appear as if Galbraith was for “big government” while Greenspan was for “small government.”

Because I am focusing today’s commentary on the current militarization of our foreign policy, I now realize that I had oversimplified the differences between these two.  Greenspan, for example, is not a consistent small government libertarian.  Here’s how one observer described Greenspan’s analysis of the need for greater military spending in a recent speech.

“A diminished U.S. military means an unstable world.

Greenspan noted that at the end of the Cold War, the U.S. was left standing as the sole superpower, and it used its military heft to act as the world’s policeman, suppressing conflict in a number of hot spots for a number of years.

Until recently, the share of gross domestic savings from business, households and government as a share of various forms of entitlements remained relatively constant. What we’re talking about here, really is Medicare and Social Security, which Greenspan described as the “third rail of American politics.” And there is serious growth there that is not going to stop, as the Baby Boomers get older and as Seniors live longer lives. These entitlements, Greenspan noted, tend to rise the most during Republican administrations, but they’re rising across the board, and unless we slow the rate of growth in our entitlements, the reality is that eventually, we will have to cut military spending to afford it all.

Greenspan pointed to Russia’s “Czarist” expansionism in Ukraine, and Vladimir Putin’s implication that what would be best for Russia was to restore the Soviet Union. He pointed to clear commitments to protect NATO nations against Russian aggression. And he pointed to the rise of ISIS in the Middle East means that the U.S. will have to get further involved in that region to protect the world’s oil supply - something only the U.S. can do.

This all points to severe strain on the U.S. military at a time when our spending on it is poised to fall, and fall dramatically. This means that hot spots that had been kept calm are likely to explode, and this will create further uncertainty across the world, which will help the economies of exactly nobody. The military budgets will have to go up, but with no will to raise taxes or cut other costs, the only solution to this particularly sticky wicket, Greenspan said, is “to repeal the laws of arithmetic.”

(See “Alan Greenspan’s Nine Reasons why the Economy Stinks” by Tyler Durden available online at http://www.zerohedge.com/news/2014-09-10/alan-greenspans-nine-reasons-why-economy-stinks)

It is clear from this description that when it comes to the American empire, Greenspan’s desire for a small non-obtrusive government goes out the window.   Some may bridle at my use of the word “empire” but how else do you describe an attitude that suggests it is in our national interest to make sure that oil from other countries keeps flowing to us – even if we have to fight endless wars in the Middle East and prop up repressive backward regimes like Saudi Arabia to make sure that keeps happening.

Galbraith, on the other hand, despite his support for big-government liberalism, was one of the earliest critics of the War in Vietnam.  Were he alive today, he would be opposing the Obama Administration’s reescalation of the wars in Iraq and Afghanistan while Greenspan implicitly cheers them on.

Let’s not forget the sorry history of the effort to remake the world in our image during the Cold War – particularly the US war against the peoples of Indochina.   Between 1965 and 1973, it took protest, civil disobedience, civil disorder, insurgent political campaigns (punctuated by the assassination of Senator Robert Kennedy – and Dr. Martin Luther King -- and the police riot at the 1968 Democratic convention in Chicago) and virtual rebellion in the armed forces before the American people forced an end to the Vietnam (Laos and Cambodia) war.  And here we are again, with a so-called War on Terror that has been going on for over 13 years.

Don’t get me wrong.  As I noted in a previous commentary, the Islamic State is a disgusting bunch of terrorists who are severely oppressing the people who are unlucky enough to be living in territory they control.  However, using the US military to police the world has almost never worked out the way we want it to.   When the War against Terrorism began in 2001 we had one enemy Al Queda with a handful of people under arms hiding in the mountains of Afghanistan.  13 years later, that war has cost 4600 American lives and close to $4 trillion.  There are mini-Al Quada’s all over the place – Nigeria, Yemen and Kenya for example – while the Taliban remains undefeated in Afghanistan and the Islamic State is making mincemeat of the Iraqi army we created after 2003.  Much of the money we have spent, meanwhile, has found its way into the deep pockets of war profiteers.  Journalist James Risen in his new book (Pay Any Price:  Power, Greed and Endless War) claims that the private beneficiaries of these expenditures have received the largest transfer of public funds to private wealth in American history.  (For some details check out The Staggering Price of the 13-Year War on Terror  by Andrew Bacevich (November 23, 2014) posted online at TomDispatch_)

The true libertarian (unlike Greenspan) opposes expenditures to keep the world safe for American oil corporations.  You can follow some of their arguments in a magazine called THE FREEMAN.  I have had many cordial and good conversations with libertarians such at Dr. Richard Ebeling formerly the director of the Foundation for Economic Education about both our disagreements about domestic policy and our total agreement on foreign policy.  Similarly, many big government liberals like Galbraith distinguish between government expenditures that help the people – investing in high speed rail and alternative energy, a social safety net in the form of Medicare, the earned income tax credit and social security – and those that waste lives and treasure and benefit the one percent.

I have said this before in other commentaries but it bears repeating again.  A giant empire may not be very good for a country and its people as a whole but it sure helps enrich a privileged few.  The tragedy is that even in a democratic country like ours it is always very difficult to overcome the fear that drives ordinary people to support a militarized foreign policy. In Vietnam it was the fear of communists getting a foothold in Vietnam and ending up invading California.  Today, there are actually politicians claiming the Islamic State is poised to come across the Texas border bringing Ebola as a weapon of mass destruction.   We need to get a grip and not succumb to such idiocy.  We need a revival of the anti-war movements of the 1960s and 1970s.

Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author (with Howard Sherman) of Principles of Macroeconomics: Activist vs. Austerity Policies.




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