Tag Archives: United States

Fear is profitable. After all, what better way to oil the gears of the military-industrial complex and accumulate wealth than with a frightening slogan? Better yet, have it be a frightening slogan that portrays those that disagree as weak and worthy of scorn. In Western society, it has become more and more prevalent, since the economic crisis of ’08, to portray minorities as scapegoats.

Generally speaking, the historical precedent is one that sadly works similarly every time. During recessionary periods, fingers are pointed. Groups are targeted. And it happens because it is convenient. It is easy. It is easy to characterize the “Other” in society as vile for political gains, since they lack the social power to fight back. As the majority in the society scramble to reclaim all they have lost economically, they begin to find solace in blaming others rather than the system that produced it. This same phenomenon has reproduced itself not only the United States, but in virtually every Western society since the Great Recession of 2008.

In Europe, the crises of debt and unemployment has allowed for a frightening increase in nationalism. Nostalgia for fascism in Greece finds its face in the Golden Dawn party. Xenophobia voices are vulgarly heard through France’s third largest party, National Front, and through Germany’s National Democratic Party. In Hungary, the Jobbik party has risen to become the third largest party through Hungarian irredentism and anti-Semitism. Even in the United States, minorities are denigrated as being “moochers” as the right insists on tighter immigration regulations and cuts to social safety nets. If the economy is of greatest importance, then why do we keep allowing racist “culture wars” to dominate politics? At the most critical point, when people have everything to lose and nothing to gain, the individuals with actual solutions begin to scramble and watch as people repeatedly choose nationalist strongmen over economic sustenance.

The problem lies in ideology. Westerners are very coddled and institutionalized in a way that makes them coalesce to authoritarian power. A right-wing deviation from the normal political speak is not all that much of a radical bent compared to left-wing calls for economic fairness and institutional overhauls. For one, Western people take pride in their judicial system and police force, claiming it to be symbolic of genuine integrity. In the United States, the military is always superimposed with patriotism and honor — and going against the grain is seen as foolishly “un-American.” The institutions that uphold these spheres of power craft in the population a feeling of trust. This trust is easily mended and oftentimes exploited. And all of this is strengthened and solidified through rhetoric. Contradictory slogans equating militarism with freedom is commonplace, at least in American politics. Naturally, this is used as political bait; if you attack the militarization of the world through American power, you must despise democracy and liberty despite it being anything but. The cognitive dissonance is so blatant, but yet it goes uncontested in the American mind and it serves to fester right-wing politics. Western politics has a predisposition to be right-wing politics.

Thomas Jefferson: The Leninist Patriot

March 2, 2013

History

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Usually when one mentions Thomas Jefferson, Vladimir Lenin isn’t particularly the first person to come to mind (nor the second, nor third). At a superficial initial glance, they have little in common: a conflicted slave-owner, president, and brilliant writer that planted the seeds of democratic republicanism versus a Bolshevik leader and the main theoretician behind 20th century revolutionary thinking and praxis. A comparative analysis of these two different men would seem rather absurd given the political climate of the United States — who would have the gall to compare one of, if not the, founder of the original constitutional republic to a dirty red?

After we take off our post-McCarthyist goggles, there are some genuine comparisons to be made that merit a closer look at Jefferson’s ideology through a Leninist perspective. When the American experiment was rearing its head in the international scene, it was the first of its kind. A struggling republic midst an onslaught of Western imperial powers — few expected it to last. However, Jefferson held a firm belief that the empires of Europe would succumb to their own violence, which he considered alien to the United States. He writes to James Monroe in 1823:

I have ever deemed it fundamental for the United States never to take active part in the quarrels of Europe. Their political interests are entirely distinct from ours. Their mutual jealousies, their balance of power, their complicated alliances, their forms and principles of government, are all foreign to us. They are nations of eternal war. All their energies are expended in the destruction of the labor, property and lives of their people [1].

Calling for the complete separation from European politics, he writes to George Logan in 1801:

It ought to be the very first object of our pursuits to have nothing to do with the European interests and politics. Let them be free or slaves at will, navigators or agriculturists, swallowed into one government or divided into a thousand, we have nothing to fear from them in any form [2].

He would go on to exploit, what he viewed, European weaknesses during his time in diplomacy and terms as president. Realizing early that New Orleans was crucial for the development of the American experiment, he managed to properly balance his diplomatic talks with French powers to cheaply acquire Louisiana, while some Federalists were calling for war [3]. And he remarkably did so by using the Napoleonic wars in Europe to his advantage, since Napoleon was lacking the funds to fuel his imperialist ventures. Similarly, Lenin utilized the contradictions of European imperialism after World War One in his diplomacy and managed to retreat Russia from the war and marginally keep it secure.

Jefferson also took an internationalist approach to the American experience. “The Empire of Liberty,” as he called it, must spread its wings across the entire American continent and eventually the entire globe. He writes in 1795, commenting on the revolutions in France and Holland, in a letter to Tench Coxe:

This ball of liberty, I believe most piously, is now so well in motion that it will roll round the globe, at least the enlightened part of it, for light & liberty go together. it is our glory that we first put it into motion [4].

Again he argues this point in a 1824 letter to William Ludlow Monticello:

And I have observed this march of civilization advancing from the sea coast, passing over us like a cloud of light, increasing our knowledge and improving our condition, insomuch as that we are at this time more advanced in civilization here than the seaports were when I was a boy. And where this progress will stop no one can say. Barbarism has, in the meantime, been receding before the steady step of amelioration; and will in time, I trust, disappear from the earth [5]

After the Revolution of 1917, Lenin expounded a similar view of the ultimate destruction of the bourgeois powers of Europe. He argues in his influential pamphlet, Imperialism: The Highest Stage of Capitalism, about the nature of “decaying capitalism” and how historical necessity will bring about the demise of capitalist powers. He writes:

That imperialism is leading to annexation, to increased national oppression, and, consequently, also to increasing resistance [6].

And then on the inevitability of the destruction of imperialist capitalism:

That private economic and private property relations constitute a shell which no longer fits its contents, a shell which must inevitably decay if its removal is artificially delayed, a shell which may remain in a state of decay for a fairly long period… but which will inevitably be removed [7].

Lenin’s thoughts on the ultimate collapse of Western capitalism and its predatory nature bears resemblance to Jefferson’s writing on the destruction of the empires of Europe. The difference being, they were analyzing completely different social epochs. Lenin was witnessing, or so he believed, the transition from capitalism to some form of socialism. Jefferson, on the hand, witnessed the development of fledgling democracies and the destruction of archaic monarchies. Both articulated an internationalist tone in their message, either for Jeffersonian democracy or for socialism, and preached the inevitability of such events — Lenin called for a “revolutionary vanguard” in his April Theses, Jefferson believed in an empire of liberty with which “this ball of liberty… will roll around the world.”

Objectively speaking, both Jefferson and Lenin were internationalist revolutionaries. They viewed the old order with disdain, inevitable in its collapse, and believed in securing the future through revolution and popular struggle. Jefferson was keen and uptight in his support for the French Revolution and its excesses. Although not particularly pleased with all the Terror, he still argued in favor of the French struggles. He writes to William Short in 1793:

But time and truth will rescue and embalm [the Jacobin Terror], while their posterity will be enjoying that very liberty for which they would never have hesitated to offer up their lives. The liberty of the whole earth was depending on the issue of the contest, and was ever such a prize won with so little innocent blood? My own affections have been deeply wounded by some of the martyrs to this cause, but rather than it should have failed, I would have seen half the earth desolated [8].

His dedication to the French revolution is unquestionable; he sees it a worthy endeavor to defend at all costs. As he puts it, most bluntly, he would rather see “half the earth desolated” than see his ideals in France wither and fail. And as for Lenin, the Red Terror was used under his rule to purge the countryside of dissenters in order to ready it for socialism. The point being, both these individuals viewed themselves as instruments of history. They viewed themselves as prime movers of a social development that was inevitable in the grand historical narrative of humankind. There is a hint of arrogance in both Jefferson and Lenin in their push for social transformation, much of it being dogmatic, which is likely the reason why their ideologies intersect so often. From their condoning of violence to their opinion of Western powers to their internationalist political demeanor, Lenin and Jefferson can both be considered eerily similar in their interpretations of history and their justification for its transformation. And oddly enough, at least in American politics, one is lamented as an American savior, while the other is considered the absolute worst scourge of the Earth — never compared, they hold completely different chairs in history, seldom discussed in conjunction. Perhaps this dynamic best illustrates how absurd historiography can become, and how easily it can be morphed into fitting a particular nationalistic narrative. Two sides of a similar coin, Jefferson and Lenin truly show this absurdity in full.

The Falling Rate of Profit

January 27, 2013

Political Economy

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I. The Parable of the Broken Window

Frédéric Bastiat

In 1850, classical liberal theoretician Frédéric Bastiat published his landmark essay That Which Is Seen and That Which Is Unseen (Ce qu’on voit et ce qu’on ne voit pas). In it, he introduces his acclaimed scenario — the “parable of the broken window.” The story is a simple one: a shopkeeper’s son accidentally breaks a pane of glass and hire a glazier. And so it goes:

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child.

But what if windows continue to be broken purposefully; what if the child is, by some oddity, conspiring with the glazier to reap the benefit of profit? In short, “destruction is not profit.” The issue of destruction, and its subsequent fixing, is that of which creates no real value. It merely moves moves money from one hand to another (in this case, from the shopkeeper to the glazier).

The opportunity cost of such an action, the repeated breaking of windows, is at the expense of other actions that could add more net benefit to the town. For one, the glacier may be distracted from other necessary tasks by fixing the shopkeeper’s window repeatedly, acting as a negative constraint on his labor, or the shopkeeper might have rather used the money spent on repairs on either investment or consumption. It best can be summed by Bastiat’s phrase: “society loses the value of things which are uselessly destroyed.”

What will you say, disciples of good M. F. Chamans [French politician], who has calculated with so much precision how much trade would gain by the burning of Paris, from the number of houses it would be necessary to rebuild?

Bastiat goes on to use his argument against protectionism (one which the Austrian school of thought uses often), which is, I feel, an incorrect application of the actual parable. Bastiat was functioning within the French colonial economy and he failed to address the difficulty of smaller firms lacking the economies of scale to compete with already-established firms. This is demonstrated by the Hamiltonian “infant industry argument,” and the adoption of protectionism in the United States, allowed for the development of American industry that would have been eaten up by British competitors had they not been protected. However, this is a separate issue entirely — Bastiat’s parable can be properly applied to the opportunity cost of war and those that claim it “brings growth.” Naturally, he actually applied his thinking to the “war economy” and wrote directly of it. He differentiates between what is “seen” and costs that are “not seen.”

A hundred thousand men, costing the tax-payers a hundred millions of money, live and bring to the purveyors as much as a hundred millions can supply. This is that which is seen.

But, a hundred millions taken from the pockets of the tax-payers, cease to maintain these taxpayers and the purveyors, as far as a hundred millions reach. This is that which is not seen. Now make your calculations. Cast up, and tell me what profit there is for the masses?

Therefore, a war-driven economy does not actually create sustained growth since it takes away necessary labor by enlisting them and deviates capital to military use rather than civilian use.

II. Rapid Growth in the Post-War Era

The Post-WW2 era brought with it a period of unprecedented economy growth. The process of rebuilding Europe was relatively quick and economies sprang back on their feet. Called the “Golden Age of Capitalism,” Western European nations experienced GDP growth rates never seen before in their history and some of the lowest unemployment rates ever recorded. To many, it appeared to be the triumph of capitalism in rebounding from the previous years of carnage and war. Titles were given for each nation’s “recovery miracle” — Wirtschaftswunder in Germany, the Trente Glorieuses in France, and others. However, when placed in context, it was a development consist with capitalism’s short but sporadic history.

Source: The Economics of World War II: Six Great Powers in International Comparison

*Based on Table 1 found in Mark Harrison, The USSR and Total War: Why Didn’t the Soviet Economy Collapse in 1942? from Mark Harrison, “The Economics of World War II: an Overview,” in Mark Harrison, ed., The Economics of World War II: Six Great Powers in International Comparison, Cambridge University Press (1998), 10.

The GDP during the war differed tremendously year by year. The UK economy began feeling the economic consequences of the war after 1943, France after 1939, Italy after 1942, Germany after 1944, and Japan also after 1944. Europe had to be rebuilt — the broken window had to be fixed.

And after the war, the war-torn nations called upon their glaziers: industry. Production soared and is perhaps best demonstrated in automobile production alone, which rose drastically after 1946.

Main sources: WMVD, SMMT, JAMA, IRF, CCFA, OICA

Military spending also increased as military armaments accumulated in the post-war period. In the years between 1950 to 1960, France doubled their military spending from 11 billion to 22 billion, West Germany from 0 to 22 billion, the United Kingdom from 23 to 29 billion, and the United States from 69 to 168 billion [1]. The need for a permanent armament reserve for potential war against the Soviet forces proved to be a constant in the Cold War economies that would arise in the years after World War 2. Likewise, this stirred production levels to meet these new demands. With the increases in production, fresh new labor was needed to sustain it. Luckily, many troops from the war provided such manpower necessary to sustain these new production levels. They were absorbed into the economy with relatively ease and Western Europe experienced unemployment levels that were at historical lows. Deputy Commissioner Robert J. Myers of the Bureau of Labor Statics writes in 1964:

From 1958 to 1962, when joblessness in [France, former West Germany, Great Britain, Italy and Sweden] was hovering around 1, 2, or 3 per cent, [the U.S.] rate never fell below 5 percent and averaged 6 percent.

However, the reason is quite clear — Europe had room to grow. After being devastated by war, its cities ravaged by bombings, it had to be rebuilt. Industry began to grow rapidly and profits accrued as large inflows of labor were coming into these nations from individuals that were once fighting in the front lines. The conditions were set and the growth was focused on repairs and war production with the help of the Marshall Plan put into effect by the United States. Thereby it can be said, had the war not occurred, GDP would be much higher in these Western nations since they would not forgo the opportunities that were missed in focusing on rebuilding repairs. Once again, Bastiat’s argument can be evoked — “society loses the value of things which are uselessly destroyed.”

III. The Inevitable Crisis

As was expected, the economic boom of the post-WW2 era would not last indefinitely. A conglomeration of issues arose with the advent of the 1970s: the end of the Breton Woods Agreement in 1971, the Oil Crisis of 1973, and the policies of liberalization that ensued. The crisis and murky economic future that followed can best be characterized by employing an analysis of the rate of profit of these Western powers. The fluctuations of the rate of profit can help us better understand the crises that set in and its ramifications in the years that followed. The rate of profit can be best explained by the following simple equation:

S / (C + V)

Whereas S is surplus value, C is constant capital, and V is variable capital. The surplus value can be thought of as undistributed profits, one which do not go towards the costs of the initial labor power and machinery needed to construct the commodity. The difference between constant capital and variable capital is relatively simple — constant capital is machinery, which is relatively constant in the short run, and variable capital is mainly manifested as fluctuating wages. This relationship is crucial because, in a capitalist economy, industrialists want to maximize efficiency in order to better compete. Consequently, the more commodities are produced, the more prices fall. This translates to capital rising and surplus value subsequently falling which causes, in the long run, a tendency of the rate of profit to fall. Granted, this is only a tendency, since there are counter measures to prevent such a phenomenon from occurring (as seen in the neoliberal years of the 1980s).

United States, index numbers: 1960-5 = 100; Source: The Spain-U.S Chamber of Commerce

A crisis was inevitable after the post-WW2 boom since production had exhausted itself. The all-too-common crisis of overproduction soon followed, with the rate of profit dropping sharping starting from 1965 in conjunction with the rise of more radical movements in labor and demands for wage increases and better conditions. The fact that the rate of profit plummeted likely caused the economic malaise and stagflation of the 1970s. And the response was one we are too familiar with today — outsourcing. In order to increase profits, corporate bodies began to move to the Third World to lower their labor costs (variable capital) thus increasing their rate of profit. This is represented by the neoliberal boom of the 1980s with the rise of Reaganomics and Thatcherism

The Rate of profit in the United States; Source: The Spain-U.S Chamber of Commerce

The graph above provides us with a different look of the same data. The average rate of profit fluctuates around 24.4% from the period of 1946-1973, drops down to 18.9% from 1974-1983, and finally rises 1.2% to 20.1% from 1984 to 2009. However, bear in mind, the rate of profit begins to drop at the 2006 mark, serving as a precursor to the Great Recession and the current crisis.

Point being — what does this necessarily have to do with the supposed “Golden Age of Capitalism?” Many Keynesian economists point to their policies and argue they spurred the growth of the post-WW2 era. However, with Europe broken and demolished, their economies could only grow. Growth had to follow since so much capital was required to rebuild post-war Europe. As efficiency increased exponentially and production soared, it was safe to assume another crisis would soon follow, since the inherent contradiction of overproduction always brings with it economy calamity. And to curtail these decreasing rate of profits a new economic ideology was introduced — neoliberal doctrine, which worked to cut taxes, deregulate, and cut labor costs through Third World exploitation. The shaky footing that the “Golden Age” brought gave individuals blissful optimism, as they hoped that the policies instated would continue growth indefinitely, however they failed to curtail the inherent contradiction of the profit accrued and capital needed, which would evoke the crisis that would follow in the 1970s.

***

– Rate of profit graphs were obtained from Short and Long-Term Dynamics of the U.S Profit Rate in the Context of the Current Crisis

– Capital Accumulation and Growth in Central Europe, 1920 – 2006

– The Post-World War II Golden Age of Capitalism and the Crisis of the 1970s

– The “Millennium Crisis” and the Profit Rate

– System Failure: The Falling Rate of Profit and Economic Crisis

Dissecting Racial Privilege and Class

January 17, 2013

Critical Theory

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In contemporary society, “whiteness” is more than a category of pigmented skin. It is a social construct, an advantageous societal badge, a cultural phenomenon — an implicit privilege ingrained in the Western psyche. Likewise, it has connotations that permeate culture, especially those of us who are part of the American variant. The United States has, arguably, experienced the most racial upheaval of any nation in its brief history as a republic. Therefore, it is easy to see the remnants of a past white-supremacist society still festering, albeit not as explicitly as it once was. Now, the issues are implicit rather than explicit, covert rather than overt — they poison our culture as hidden systemic issues, inculcated in the American experience, rather than with symbolic elements that we tend to associate racism with (i.e. the Klu Klux Klan, Jim Crow, etc). Perhaps this poses a greater problem than ever before, since many white Americans have washed their hands clean of the matter after the granting of legal rights in the 1960s. Before such events, racism was in full-view and exposed by movements calling for its destruction during the Civil Rights era and prior. Sadly, these mass-movements have now largely disappeared, since they were mostly in conjunction with Vietnam anti-war protests, and they have escaped the public eye, despite the same problems still persisting.

The reasons for racial complexes are, from my understanding, directly linked to an understanding of class and distributions of affluence. Any hegemonic group, be it cultural or racial, is granted its creation and subsequent dominance by controlling capital and concentrating power. White elitism was a direct product of such concentrations. During the time of the slave power, power was granted to rich white slave-owners by the state. The relationship shifted with the end of the “plantation elites” and the development of racist capitalism in the South, but the dichotomy of oppressor-oppressed in the black experience was little changed. They were barred from many employment opportunities and promptly stripped of political rights after the establishment of Jim Crow once the Union troops left the former Confederate states with the sham of a compromise in 1877.

Convict leasing was actively used in the building of railroads in the South.

In relation to class, it’s quite clear how Jim Crow acquired its luster among white working Americans living in the South. Although their wages were low, their conditions horrid, and their hours long — at least they were white. They found a racial scapegoat. Thus, white capitalists justified their expropriation through a racial lens and trapped freemen in contracts that essentially re-instated elements of slavery, with convict leasing that sold “criminals” to private parties for their bidding. Racism in the south functioned as a buffer to prevent conflict aimed at industrialists. It created a rift between laborers, deviating their attention from inequality and subsequent efforts at unionization.

The issue with class disparity is that it creates the illusion of superiority. The hegemonic status of certain groups corresponds with inequities in wealth; when a group of individuals (i.e. whites, Protestants, etc.) are mostly congregated to one rung of the social ladder, it grants them a higher worth. Rather than attribute their privilege to the lottery of birth, they psychologically justify their position with some innate characteristic — be it race, religion (which is oftentimes taken as birthright), or ethnicity. With centuries of rule by white moneyed interests in the United States, it seems likely that the racist undertones of contemporary society began with class inequality. Therefore, class disparities preceded racist justifications, rather than vice-verse, through the expansion of markets by imperialist forces and expansionism.

In contemporary American society, these same cards are at play, although the deck has been shuffled a bit. The use of “code language” fills the right-wing political arena, which still caters to affluence and power as it always did. The last election of 2012 perhaps signified the last potential “hoorah” for white America — what pundit Bill O’Reilly calls “the real America” — in continuing the hegemony that was once fully enjoyed. The issue is the fact that many white Americans, particularly those in conservative circles, are supposedly “outraged” by the government’s catering to minorities. Some go as far as calling it discriminatory, or reverse-racism, against whites. The severe delusion of these reactionary whites is that they see their marginal decrease in privilege as under-privilege. In retrospect, opportunities are merely equalizing (slowly), not absurdly flipping inversely from white to black. This white anger manifested itself in the past election, with the white vote rallying over Romney and the South vehemently against President Obama. To put it simply, racial politics are at play once again, despite the political right’s insistence that their criticisms are based purely on some disingenuous merited assessment.

Hence, given its elaborate history, privilege is an absurdly difficult topic to wrestle with due to it potentially being “offensive.” Some political commentators have wrongly grown wary of initiating such discussions and insist we live in a “post-racial” society. They believe firmly that if we ignore the race issue, it will simply disappear. Despite their, perhaps, benevolent intentions on the surface, this exasperates the problem rather than curing it. Yes, granted, I would thoroughly like to live in a post-racial society — but, point being, we don’t. Thereby, analyses in racial relations are still crucial in assessing current conditions because we, sadly, still live in a racist society. You can deny such claims, but you are under a grave misapprehension by personally muting the cries of racial injustice in contemporary American society. Out of ethical respect, we should listen and actively take note.

***

– Race, Class, and “Whiteness Theory”

The Myth of the American Sovereign Debt Crisis

October 25, 2012

Political Economy

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Anti-austerity protests in Spain.

Since the initial days of the Obama administration, pundits and politicians alike have been predicting what, they call, “a complete government shutdown.” Fix the deficit, we need a balanced budget, cut spending; such is the rhetoric coming out of the Republican establishment that has deluded the political mainstream. As the federal public debt now approaches $16 trillion, it begs the question — when can we expect this doomsday scenario? When can we expect this assumed government collapse? And then there’s the endless threats of future hyperinflation — by the same crowd that has been making such silly “predictions” for over a century.

With all these individuals expecting a inflationary Armageddon and looming debt crisis, you would expect the argument to hold some water. To understand why such fears are unfounded, the nature of money has to first be properly understood in modern context. Its techicalities can be explained with an economic theory I find particularly fascinating; Modern Monetary Theory (MMT).

To start, we must realize that money is no longer pinned to gold. Its subsequent value is backed by the state (i.e. fiat money). This has profound implications in economic theory. For one, it means that the validity of the currency itself is based on the government maintaining a monopoly in controlling it. The government asserts this value through taxation. Thus, private confidence and taxation establish the basis of exchange value in a national economy; fiat value has no intrinsic value on its own. From this basis, can government truly “run out” of money, if it is its sole provider? Before the end of the Bretton Woods System in 1971, when currency was still pinned to gold, it most definitely could. Since moneyed printing was linked to gold in ratio, states were forced to limit their spending in accordance to revenue or be forced to promptly borrow from other governments. Now, the monetary system has been changed. Government is no longer like a a “credit card,” as its so absurdly claimed, that we just add our expenses to and pay for it a later. It is the issuer of currency, not a receiver of it as households in the United States are.

The economic flow can be broken down into two main spheres — the private sector and the public sector. The private sector accumulates assets by spending less than its income, resulting in savings. In retrospect, this savings increase is an accumulation of government-backed currency and bonds. Therefore, in order for private wealth to accumulate, government liabilities must rise parallel to it. In order for this to be done, government must spend more than it receives from taxation to create more IOUs (fiat money). This is what is commonly as known as “the deficit,” which is the stock of government debt minus its tax revenue. Therefore, government’s financial liabilities are equal to the private sector’s net private financial assets, since a creation of private financial wealth demands a greater circulation of fiat money, which is created through printing currency. Interestingly enough, this means that when the budget is fully balanced, the net private financial wealth is at zero. And if a government enters a surplus, net financial falls into the negatives, since the private industry is now indebted to the public. Likewise, it is impossible for both the public and private sector to simultaneous experience surpluses since one’s ‘debt’ is the others surplus [1].

The above graph shows the aforementioned relationship. It can be represented by the following formula:

G – T = (S – I) + (M – X)

In which, government spending (G) minus taxation revenue (T) gives the fiscal situation, either deficit or surplus, represented by the blue line on the graph; this equals savings (S) minus investment (I) added to balance of payments (i.e imports minus exports) represented by the red line. The relationship is demonstrated quite clearly; in order for financial assets to rise, financial liabilities in the form of government deficits must rise as well. The correlation is especially strong in the dates after the dismantling of the Bretton Woods agreement, after which the United States become fully based on fiat currency rather than be linked to gold. Ever since, the values of deficit to private wealth has been relatively equal in their absolute values.

This, in itself, has profound implications. For one, now we understand the link between government deficits and accumulations of private financial assets. But now, ever more, we can now use taxation to curb negative externalities and to regulate key industries rather than to simply gather revenue since we now understand government’s monetary role. The function of government, in essence, changes and allows for it to further alleviate unemployment woes & elements of poverty. However, keeping economic oversight is crucial, since if deficit spending exceeds full employment, inflationary pressures can ensue because accumulation of financial assets, for the moment, would stagnate.

Now, the inevitable question — what about Greece?

Greece is in a complex situation, much different than that of the United States. Greece uses the Euro, which is controlled by the European Central Bank of the Eurosystem, the monetary central authority of the European Union. Since Greece lacks control over its own currency, it has been brought into complete chaos with forced austerity cuts, bailouts with strings attached, and violent public unrest. Since it lacks monetary sovereignty, being restrained to reserves beyond its grasp, it is unable to control its debt crisis. The same situation plagues the rest of Europe. The Euro states are unable to print their own currency, and are thus forced to succumb to the bullying of Germany to balance their budgets, which has left countries like Spain in disastrous economic conditions.

Oftentimes, the issue of Germany or even Zimbabwe is also brought up as a counter-argument to the validity of modern monetary theory to showcase hyperinflation caused by fiat currency. Economist Randal Wray addresses this issue in his writing, talking about Germany after WW1:

Yes, once the economy gets to full employment, then extra government deficit spending can start driving up prices. But what happened in Weimar Germany was very different. During that time, the government was forced to pay extremely large war reparations in foreign currencies which it didn’t have. So it had to aggressively sell its own currency and buy the foreign currency in the financial markets. This relentless selling continuously drove down the value of its currency, causing prices of goods and services to go ever higher in what became one of the most famous inflations of all time. By 1919, the German budget deficit was equal to half of GDP, and by 1921, war reparation payments represented one third of government spending. And guess what? On the very day that government stopped paying the war reparations and selling its own currency to buy foreign currency, the hyperinflation stopped [2].

Now, there is one particular example we can point to to show the prowess of MMT. Currently, Japan’s debt to GDP ratio is over 200% and growing:

And yet they experience no instances of “government shutdown.” Perhaps even more interestingly, they are the largest single non-eurozone contributor to the rescue projects that have been instated to ‘save’ the European Union — a total of $60 billion in March of 2012. Japan is even responsible for pumping in $100 billion dollars into the IMF during the height of the crisis in 2009, all whilst its adversaries deemed it to be “bankrupt” [3]. How is this possible? Why is Japan not defaulting? The key is in its monetary system and its handling of deficits. Most importantly, Japan controls its own debt; 95% of it is held domestically by the Japanese themselves, the rest being foreign owned by other central banks [4]. Since the debt is largely owned by the Japanese themselves, they are able to collectively maintain their deficits whilst also keeping an impressive social program system.

Although I elaborated on a really rudimentary view of Modern Monetary Theory, this should suffice as to how misguided the current discussions in the political realm are. Rather than discuss the structural issues of the American economic system, we’re bickering over the technicalities of a budget whilst standards of livings drop and income inequality rises. To make matter worse, a crucial aspect of debt is consciously ignored — the issue of private debt. Households are crippled by personal debt to make up for stagnant wages, an issue I actually discussed in detail in my piece on debt deflation and crisis. The situation is dire and the proposals to cut necessary programs for already-struggling families to “balance the budget” is laughable at best, and downright frightening at its very worst.

***

– The Deficit: Nine Myths We Can’t Afford

– Deficits Do Matter, But Not the Way You Think

– Marxism and Monetary Theory: A Bibliography

– Understanding the Modern Monetary System

– Debt, Deficits, and Modern Monetary Theory

The Death of God?

August 30, 2012

Older Posts, Philosophy, Religion

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The beliefs of Western liberal society are at a fundamental crossroads. In one direction, lies secular humanism — at the other, lies ancient Judeo-Christian heritage and its supposed claim of relevance. Most individuals walk a very fine line between the two; holding onto the cultural implications of religion, while also not minding its declining involvement in government. Belief acts as a mediator which holds this delicate balance together.

Belief, in and of itself, is a obligatory view. It is a tenet you live your life by, and it has profound implications on your social psychology and the general organization of a civilization. It would be foolish to discredit the influence of religiosity in the West, in spirit and in practice. However, belief can function as a sort of ideological trap. Simply put, acting on a belief is not equivalent to actually believing it. Philosopher Slavoj Zizek provides us with a story to illustrate this point, in which he tells us the tale of physicist Niels Bohr.

“A well-known anecdote about Niels Bohr illustrates the same idea. Surprised at seeing a horseshoe above the door of Bohr’s country house, a visiting scientist said he didn’t believe that horseshoes kept evil spirits out of the house, to which Bohr answered: ‘Neither do I; I have it there because I was told that it works just as well if one doesn’t believe in it!” [1]

In an excellent passage, Zizek essentially explains the function of belief in modern society. Although individuals may personally not believe an ideology, they act as if they do because they take it others believe. In fear of reprisals, they then live as if the belief is theirs. But there is a twist: what if the other individuals do not believe it either? With this, an entire belief system is build upon the existence of non-belief among individuals. I take religion to be in this same stride, functioning as a belief in a sea of disillusioned disciples.

Such a statement is hardly revealing to the standard American Christian household. The father takes his son to Church, to educate his child on Christian values. The father, himself, was pressured to do so by his own parents. They would be disappointed if he raised his children without such a pretense. The father, himself, does not believe, but acts as if he believes to give a proper impression on his parents. The child lacks the belief also, but to not disappoint his father, he refuses to tell him. Instead, he acts as if he believes. Here, we have a situation of two non-believers, paradoxically imposing a belief on one another. Would it not be another twist of irony to say the father’s parents do not believe, just as the father and the son do not? This belief is likewise solidified, passed through familial relationships, and built upon a structure of non-belief — giving those trapped within this dilemma the illusion of a belief that is absent from the individual’s own choosing, being imposed on them by the technicalities of human relationships.

This is the death of God. The death of God is not external invasion unto the Christian church hierarchy. It is not an attack from outside the prayer circles — it is within them. It is when God as an entity becomes irrelevant to the actual substance of belief, being replaced by a complex foundation of non-belief. In Europe, trends of non-belief are stronger than in the United States. According to surveys by the Financial Times/Harris Poll, only 27% of individuals living in France truthfully believe in a Christian God or Supreme deity. This is contrasted with 73% of those in the United States [2]. Bearing in mind the different histories of European and American ancestry, I take it that such a large disparity between religiosity is largely due to the culture of the United States. Religious disbelief is looked down upon, even persecuted, in American media and society — denigrated in excessively negative terms. The question is, how many of the religious belief structures in the United States are founded on fear of consequences? Potentially, very many, I would say.

However, the implications extend further than Zizek’s story on ideology. Equally important are those that believe (for cultural reasons generally), but live their lives as if they do not. Done through ritualistic ends, their religious ideology becomes a routine rather than a philosophy of action. For many Western Christians, this is the reality. They find themselves lofting to church on some Sundays, and then vehemently arguing over whether we should say “Merry Christmas” during the holidays, and fighting to preserve prayer before football games [3]. The extent of Christian ideology in American culture has largely become a gimmick of cultural preservation more than anything else, serving as the last backlash of a decaying social phenomenon.

Christian ideology makes many universal claims. It promotes objective truth and meaning, a belief system that is dogmatic and said to be true by its disciples. They have this bastion of knowledge, the key to God’s judgement and mercy, that is said to be the absolute truth. And yet they live their lives as if this is hidden, only resurrecting (excuse the pun) it when socially beneficial. If an individual held such truth of the universe, would they not devote their entire lives if they believed so strongly it was true, rather than bickering over trivialities on cable television? The charade of these religious charlatans defending “Judeo-Christian America” is a testament to the hypocrisy of the ideology in the hearts of those that follow it. True belief would not frequent itself in discussions on media sensationalism, in an attempt to keep what always has been in American society; it would prepare, and act, in the interests of God and rely on his judgements. Perhaps if they took God’s objective truth to its fullest conclusion, they would sit and pray rather than rely on themselves. If they are so convinced of their beliefs, they would be equally be convinced God would give them a hand.

The death of God does not involve the elimination of religion, nor does it involve the tearing down of religious institutions. It involves the hollowing out of religion by its believers. It makes God into a centerpiece of disbelief, propped by complex interlocked relationships and cultural enforcement. A belief propped by non-belief, it finds itself as the comfort to those that fear the destruction of their religious and cultural identity. It finds itself as the poster-child of reactionary backlash, the broken center of the exaggerated dichotomy of secularism and religiosity, and the illusionary opponent of civil institutions by religious disciples that lack the belief themselves. During the height of Catholic ascendancy, the belief was not so fractured. Prayer was seen as a powerful tool; the Devil was a real distinguishable threat. We have long abandoned such views, despite what is heard in Evangelical circles (I can assure you there would be little hesitation for them to take human action over prayer if their own lives were in peril). Let’s be frank, God is dead –The emperor has no clothes on, we are looking straight at him, but we are too naive to admit it.

The Great Recession: Debt Deflation and Crisis

August 14, 2012

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When analyzing debt and economic growth, usually only government debts are examined. They are seen as a corollary to economic crises, devaluation of currencies, and government defaults — and while I’m not going to dispute or discuss these claims here in this post, perhaps on a later day, I will say that they are misleading trends of analyses in relation to the current financial crisis. There is another ‘kind’ of debt that is up for discussion and more pertinent to the crisis of 2007 — credit market debt, which consists of domestic non-financial sectors (household debt, business/corporate debt, and government debt) and domestic financial sector debt.

This explosion of credit began around the time of the institution of ‘Reaganomics,’ where individuals took to lending and spending over saving despite stagnant wages.

A more detailed look of the trend since 2002, with its peak. The shaded area depicts the length of the recession.

However, the above graphs show the total credit market debt. Broken down, household (consumer) credit debt depicts the same trend.

What does all this mean? Fundamentally, this means that the expansive economic growth of the previous three decades were on shaky footing to begin with, likely leading to the global economic collapse that followed. The impact of the credit boom since the 1980s is described in an article by the research institute Center for American Progress (CAP) by Christian E. Weller. He writes:

“The debt is highest among the middle class. Middle-income families before the crisis had a debt-to-income ratio of 155.4 percent in 2007, the last year for which data are available, for families with incomes between $62,000 and $100,000, which constituted the fourth quintile of income in our nation in 2007. This ratio is higher than for any other income group. Families in the top 20 percent of income (with incomes above $100,000) had a ratio of debt to income of 123.6 percent, and families in the third quintile (with incomes between $39,100 and $62,000) owed 130.7 percent of their income. Households in the bottom 40 percent of the income distribution (with incomes below $39,100 in 2007) owed well below 100 percent of their income.”

Shocking as it is, this is the not the first time such a credit upsurge occurred. There was a similar phenomenon that occurred before the Great Depression of the 30s. Samuel Brittan, in his review of Richard Duncan’s ‘The New Depression: The Breakdown of the Paper Money Economy,’ writes:

“It is certainly striking how both the 1929 Wall Street crash and the 2007-08 financial crisis were preceded by a huge credit explosion. Credit market debt as proportion of US gross domestic product jumped from about 160 per cent in the mid-1920s to 260 per cent in 1929-30. It then fell sharply in the 1930s to its original position. Later it surged ahead in two upswings after 1980 to reach 350 per cent of GDP in 2008.

This analysis of crises in relation to credit market debt is attributed to economist Irving Fisher, and his ideas were largely ignored in favor of mainstream Keynesian view of economic crises, which argued that they were caused by an insufficiency of aggregate demand. Since the recent economic crash of 2007, Fisher’s ideas have enjoyed a resurgence in economic thought. His theory on debt deflation has been of significant fascination in the heterodox Post-Keynesian school of economics, and is now beginning to enter the mainstream. Economist Paul Krugman discusses Fisher’s ideas in one of his posts on his blog “Conscious of a Liberal” in the NY Times — below is the graphic taken from the article (with added information).

Since the total credit market debt owed has been stagnant since late 2009, reaching its ‘peak,’ and if GDP steadily keeps rising, it is likely that debt deflation will occur all the same as it did during the Great Depression. However, the issue of private debt and its hindrance on the consumer is still an issue — and if spending is ever to increase significantly, the issue of wages and consumer debt must be addressed.

***

– An analysis of the total credit market debt by Crestmont Research.

The American Economic Miracle

July 13, 2012

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In 1893, Frederick Jackson Turner presented his landmark essay The Significance of the Frontier in American History to a gathering of academics at the World’s Columbian Exposition. Turner, in his thesis, argued that the unique American frontier experience shaped the United States’ development and created a distinct culture and political condition. In essence, the frontier was responsible for molding the American character into what it is.

While his thesis certainly stands true, the “Old West” also brought with it an economic anomaly — a differentiating aspect that made the United States’ economic upbringing particularly strange. From its colonial origins and throughout the 1800s, the U.S economy was consistently plagued with shortages of labor. These shortages would influence the development of slavery in the South, where plantation owners find it necessary to import more slaves to sustain their agricultural output. These shortages would also be the reason for the influx of immigrants throughout the 1800s, who where subject to extreme prejudice from nativists once some forms of unemployment actually became evident.

The above graph depicts estimates made by the Bureau of Labor Statistics. However, they are relatively high due to the impossibility of knowing the actual levels of unemployment. Little surveying was done, regional statistics were not kept, and much of the American population was self-employed. This makes assessing the unemployment rate during this period of exceptional American growth difficult. And further complications arise when youth employment is added into the calculations — which customarily started the from age of 10 in most areas. Since not all households required their children to work, making fully accurate estimates is nearly impossible.

However, given the growth of American industry during the 1800s, basic assumptions can be made. For one, the inventiveness of the U.S industrial economy can be properly explained if the labor shortages are taken into account. Because of the lack of labor in the United States, industrial capitalists had to rely on new technology to be able to increase their output and balance the lack of laborers. From this predicament, the American System of Manufacturing, as it was called, was developed. Because of its efficiency, it was revered amongst industrialists in Europe. The most important contribution being — the creation of interchangeable parts. This allowed industry to drastically increase their output and keep costs to a minimum. This also coincided with the high degree of mechanization that was starting to take root in the United States with the beginnings of the first Industrial Revolution.

Much of this technological advancement was also a product of the contention between agricultural and industrial regions during the United States’ great economic expansion. Although these clashing interests date far back to colonial times, the creation of the General Land Office in 1812 was a turning point. This independent federal agency was responsible for distributing and surveying public domain land in the largely unexplored territories of the United States. Two laws in particular addresses the rationing of these lands — the Preemption Act of 1841 and the Homestead Act. The former was passed to ration pieces of the uncultivated territory at a price. Up to 160 acres could be purchased at a time, and at very low prices. It was done to encourage those already occupying federal lands to purchase them. The Homestead Act, first enacted in 1862, was similar in its intent. Its aim was giving applicants roughly 160 acres of land free of charge west of the Mississippi River. Now, northern industrialists not only had to deal with labor shortages — they also had to satisfy their workers enough so they would not opportunistically leave and go westward.

The frontier experience did much more than cultivate the unexplored land westward; it intensified the shortages of labor in the United States. This scarcity created an inventive industrial sector that had to compensate by developing new technology, which would ultimately lead the United States to the economic dominance it enjoys today. Economist Richard Wolff, in a few of his lectures and writings, theorizes that it was this remarkable condition that created a very different experience for those living in the United States.

“What distinguishes the United States from almost every other capitalist experiment is that from 1820 to 1970, as best we can tell from the statistics we have, the amount of money an average worker earned kept rising decade after decade. This is measured in “real wages,” which means the money you earn compared to the prices you have to pay. That’s remarkable. There’s probably no other capitalist system that has delivered to its working class that kind of 150-year history. It produced in the U.S. the expectation that every generation would live better than the one before it, that if you worked hard, you could deliver a higher standard of living to your kids.”

Frankly, Wolff’s analysis makes sense. Rising wages kept the worker class’s morale high, and attracted immigrants — it also served as an incentive for working people to stay as laborers rather than receive land and move westward. So, fundamentally speaking, American employers experienced competition in the labor market for two specific reasons. One, the federal land programs provided incentives for workers to move westward and entrepreneurs had to provide reasons for them to stay and work in the form of higher wages. And second, since the labor supply was constantly in high demand, workers were not easily replaceable. This implicitly forced firms to increase their wages, to attract laborers to their respective industries.

In 2006, Michael Lind published an article in the Financial Times titled “A Labour Shortage Can be a Blessing,” which indirectly supports Wolff’s thesis on wages. He writes:

“In the ageing nations of the first world, the benefits of a labour shortage, in the form of higher productivity growth and higher wages, might outweigh the costs. Where labour is scarce and expensive, businesses have an incentive to invest in labour-saving technology, which boosts productivity growth by enabling fewer workers to produce more. It is no accident that the industrial revolution began in countries where workers were relatively few and had legal rights, rather than in serf societies where people were cheaper than machines.”

In order to validate Lind’s and Wolff’s claims, two specific economic topics must be properly historically analyzed. The first one being — is there evidence for such a labor shortage, and if so, how severe was it?

Given the estimates made by the Bureau of Labor Statistics, it would be safe to assume that unemployment was not a major issue during the 1800s. When youth employment is taken into consideration, the estimates become very inflated, since the labor pool was so large. However, beside macroeconomic analysis, there are specific scenarios which shows that such a dilemma in production was indeed persistent in the United States during the 19th century. The PBS television series “American Experience” gives one particular scenario during the construction of railroads in the 1860s that validates this assumption.

“In early 1865 the Central Pacific had work enough for 4,000 men. Yet contractor Charles Crocker barely managed to hold onto 800 laborers at any given time. Most of the early workers were Irish immigrants. Railroad work was hard, and management was chaotic, leading to a high attrition rate. The Central Pacific management puzzled over how it could attract and retain a work force up to the enormous task. In keeping with prejudices of the day, some Central Pacific officials believed that Irishmen were inclined to spend their wages on liquor, and that the Chinese were also unreliable. Yet, due to the critical shortage, Crocker suggested that reconsideration be given to hiring Chinese…”

Historian Rickie Lazzerini portrays a similar issue in Cincinnati, Ohio during the beginning of the 1800s.

“…the busy industries created a constant and chronic labor shortage in Cincinnati during the first half of the 19th century. This labor shortage drew a stream of Irish and German immigrants who provided cheap labor for the growing industries.”

The second question that must be asked is — was there actually a persistent increase in wages during the 1800s?

To properly answer this question is immensely complex, since such little data is available. However, there exists one specific academic paper on the subject that addresses this question and the one posed prior. In 1960, economist Stanley Lebergott authored a chapter addressing wages in 19th century United States in a full volume called “Trends in the American Economy in the Nineteenth Century” published by the Conference on Research in Income and Wealth. The chapter itself was titled “Wages Trends, 1800 – 1900.” He writes:

“Associated with the enormous size of these establishments was the
need to draw employees from some distance away. Local labor supplies
were nowhere near adequate. One result was the black “slaver’s wagon”
of New England tradition, recruiting labor for the mills. The other was
the distinctly higher wage rate paid by such mills in order to attract
labor from other towns and states. Humanitarian inclinations and the
requirements of labor supply went hand in hand. Thus while hundreds
of small plants in New York, in Maine, and in Rhode Island paid 30 to
33 cents a day to women and girls, the Lowell mills generally paid
50 cents” [451].

Regions that lacked adequate quantities of labor had to rely on larger wages to attract workers from afar. However, apart from the industrial north of the United States, farm wages also increased — perhaps signifying a competitive rift between the agricultural sectors and the industrial ones.

Professor Lebergott, later in his analysis, then provides the full wage computations that he was able to calculate given individual data and trends recorded by local media. He combined the data he acquired on a state by state basis, starting locally and then branching out to create a national average. Also note, the drop in wages between 1818 – 1830 he attributes to “the close of the Napoleonic Wars and the end of the non-importation agreement.”

Based on economist Stanley Lebergott’s analysis, Richard D. Wolff’s assertions are validated; the United States, for the most part, did enjoy increasing real wages throughout the 19th century. Even more so, it goes further in proving Michael Lind’s claim that shortages of labor can indeed cause wage increases and heighten technological innovation. It is very likely that the combined frontier experience and shortages in the production processes created a unique variant of capitalism that was unique to the United States. It gave American households the confidence that if they worked harder, they would earn a better living. It also gave to them the optimism that their children would enjoy a better standard of living.

This unprecedented century of growth and success also had often overlooked impact on the American psyche. Because of the inflated expectations, it instilled a unique mentality amongst working class Americans. As John Steinbeck put it, the poor don’t see themselves as victims — but rather as “temporarily-embarrassed millionaires.” It is this aspect of the American psyche that has allowed the broken system to flourish in the decades since the persistent stagnation of wages of the 1970s. Admitting the issue is just to difficult, for some; if we believe enough, the American dream just might become real again, as it was for those traveling out West to find riches and fortunes. In retrospect, the sooner working class Americans awake from this fantasy, the sooner they will realize that times have changed — and not in their favor.

***

– A lecture where Wolff discusses the frontier experience and 19th century wage increases.

– Some statistics and fact on U.S economic growth during this time period.

– A decent article on this topic from the Wall Street Journal (you need a subscription to view it).

The American War Obsession

June 21, 2012

Older Posts, Political Economy

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Since its creation, the United States has virtually been involved in perpetual war. Specifically speaking however, militarization has especially escalated, and remained high, since World War II.

As of 2011, according to the Stockholm International Peace Research Institute, the United States accounts for 41% of the world’s military spending — spending roughly 711 billion dollars, accounting for roughly 5% of GDP. These statistics are troubling as is, but perhaps even more troubling is the stranglehold the military has on the American economy. Let’s break down the facts, piece by piece.

More than one-third of all scientists and engineers are engaged in military related jobs [Sato, 8].
Many industrial sectors are intertwined with military spending, the main two being aerospace and shipbuilding [Sato, 8].
Shipbuilding is heavily dependent onmilitarization. In 2002, shipbuilding brought in 11 billion in profits — only 3.8 billion of this was from commercial shipbuilding [SCA, 1].
In total, based on 2001 data, the top 11 aerospace and defense corporations employ over 900,000 people [Sato, 9]. This number can only be assumed to have increased since the Afghanistan and Iraq wars.
War-profiteering is high, especially in the last decade. To name one, Halliburton’s KBR, Inc. division profited $17.2 billion from the Iraq War during 2003-2006 alone. More information can be found here.
The arms trade in the United States is a multi-billion dollar industry. It accounts for roughly 39% of the total world market, ranking in 170 billion dollars from ’03 to ’10.
The top sellers are ironically 5 permanent members of the UN security council; U.S, France, China, Russia, and the UK. The majority of the buyers are developing nations.
Many U.S taxpayer subsidies go toward the arms trade as well.

The United States is also a main supplier of foreign aid to other nations, especially military aid. As of 2010, much of it is allocated to Israel and Egypt.

Israel was given 3.2 billion U.S dollars in 2010, while Egypt was given 1.6 billion. However, there is little consistency; West Bank/Gaze was given 69 million in aid and other Middle Eastern states are given upwards of 100s of millions of dollars to essentially “leave Israel alone.”
Certain regions also are heavily funded. 3.3 billion U.S dollars were allocated, for example, to South and Central Asia, however that is minuscule to the total combined amount given to Egypt and Israel.

Based on 2007 statistics

As percent of federal spending (2007)

The issue with looking at American military spending is that much of it is withheld and convoluted. When military space expenditures, veteran payments, foreign aid, and other military-related costs are added in, the total actual budget is much higher than what was mentioned earlier in this post — surpassing 1 trillion U.S dollars. Moreover, the percentage of federal spending is also misleading if taken at face value; it also includes transfer payments, such as social security and medicare, which are self-financed and do not use income tax revenue. The actual military spending curve shown to the right takes this into consideration. Keeping this in mind, GDP and budget percentages soar to shocking levels.

Equally disheartening, though, is the effect this has had on poverty in the United States. There is a correlation, in recent years, to war spending and individuals living under the poverty threshold.

Fundamentally, this all of this is a reason for concern. With the United slipping from the economic dominance it once had, will it be forced to resort to military bullying to stimulate its industrial sectors and to maintain its intentional prestige? Although high military spending has been a staple in American policy for decades, it has spiked in recent years — and since the Cold War and the fall of the Soviet Union, the political machine is promoting it quite overtly since now it has little reason to hide. Frankly, using militarism to promote imperial ends must cease — there is much blood on American hands, and fostering success through war is both inhumane and unsustainable. All great empires collapse by overreaching its boundaries, due to excessive military budgets and overly-ambitious expansionist interests. The United States is on the path to be doomed to a similar fate if this jingoistic culture persists.

***

– Sato, Eiko. Culture of Peace: Rediscovery of Human Innate Potential and Capability for Peacefulness: Culture of Peace and Violence in the United States. Honolulu: University of Hawaii Library, 2005. Web.
– Shipbuilders Council of America. Economic Contribution of U.S Commercial Shipbuilding Industry. Washington D.C: , 2002. Web.
– The actual military figures were acquired from an article titled “U.S Imperial Triangle and Military Spending” from the Monthly Review.
– The written manuscript of Martin Luther King Jr.’s speech titled “Why I am Opposed to the War in Vietnam.”
– A relevant article that provides more insight: U.S Military Industrial Complex: Profiting from War

Webster’s Defense of Liberty

May 11, 2012

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Senator Daniel Webster, one of the Great Triumvirate.

The War of 1812 was a brutal conflict between the infantile United States and the British Empire, and the culmination of years of unsettled dues from the Revolutionary War. The first real test of power since its independence, aside from the Barnaby Wars, the United States was faced with a dilemma; they lacked the proper ground troops to deal with such an impending crisis from the British Crown. Scrambling for solutions, then-president James Madison sought advice from his Secretary of State James Monroe who then pitched in his two cents — instate a national draft of 40,000 men. It was this proposal that Senator Daniel Webster fiercely criticized on the House floor in his December address during the winter of 1815. His words are perhaps one of the most eloquent defenses I have read against conscription. Here’s some food for thought:

“…Is this, Sir, consistent with the character of a free Government? Is this civil liberty? Is this the real character of our Constitution? No Sir, indeed it is not. The Constitution is libelled, foully libelled. The people of this country have not established for themselves such a fabric of despotism. They have not purchased at a vast expense of their own treasure and their own blood a Magna Carta to be slaves. Where is it written in the Constitution, in what article or section is it contained, that you may take children from their parents, & parents from their children, & compel them to fight the battles of any war, in which the folly or the wickedness of Government may engage it? Under what concealment has this power lain hidden, which now for the first time comes forth, with a tremendous & baleful aspect, to trample down & destroy the dearest rights of personal liberty? Who will show me any constitutional injunction, which makes it the duty of the American people to surrender everything valuable in life, & even life itself, not when the safety of their country & its liberties may demand the sacrifice, but whenever the purposes of an ambitious & mischievous Government may require it? Sir, I almost disdain to go to quotations & references to prove that such an abominable doctrine has no foundation in the Constitution of the country. It is enough to know that that instrument was intended as the basis of a free Government, & that the power contended for is incompatible with any notion of personal liberty. An attempt to maintain this doctrine upon the provisions of the Constitution is an exercise of perverse ingenuity to extract slavery from the substance of a free Government. It is an attempt to show, by proof & argument, that we ourselves are subjects of despotism, & that we have a right to chains & bondage, firmly secured to us & our children, by the provisions of our Government. It has been the labor of other men, at other times, to mitigate & reform the powers of Government by construction; to support the rights of personal security by every species of favorable & benign interpretation, & thus to infuse a free spirit into Governments, not friendly in their general structure & formation to public liberty.”

He goes on to articulate the gruesome effects of the war on families and lives:

“…Sir, I invite the supporters of the measures before you to look to their actual operation. Let the men who have so often pledged their own fortunes & their own lives to the support of this war, look to the wanton sacrifice which they are about to make of their lives & fortunes. They may talk as they will about substitutes, & compensations, & exemptions. It must come to the draft at last. If the Government cannot hire men voluntarily to fight its battles, neither can individuals. If the war should continue, there will be no escape, & every man’s fate, & every man’s life will come to depend on the issue of the military draught. Who shall describe to you the horror which your orders of Conscription shall create in the once happy villages of this country? Who shall describe the distress & anguish which they will spread over those hills & valleys, where men have heretofore been accustomed to labor, & to rest in security & happiness. Anticipate the scene, Sir, when the class shall assemble to stand its draft, & to throw the dice for blood. What a group of wives & mothers, & sisters, of helpless age & helpless infancy, shall gather round the theatre of this horrible lottery, as if the stroke of death were to fall from heaven before their eyes, on a father, a brother, a son or an husband. And in a majority of cases, Sir, it will be the stroke of death. Under present prospects of the continuance of the war, not one half of them on whom your conscription shall fall will ever return to tell the tale of their sufferings. They will perish of disease & pestilence, or they will leave their bones to whiten in fields beyond the frontier. Does the lot fall on the father of a family? His children, already orphans, shall see his face no more. When they behold him for the last time, they shall see him lashed & fettered, & dragged away from his own threshold, like a felon & an outlaw. Does it fall on a son, the hope & the staff of aged parents. That hope shall fail them. On that staff they shall lean no longer. They shall not enjoy the happiness of dying before their children. They shall totter to their grave, bereft of their offspring, & unwept by any who inherit their blood. Does it fall on a husband? The eyes which watch his parting steps may swim in tears forever. She is a wife no longer. There is no relation so tender or so sacred, that, by these accursed measures, you do not propose to violate it. There is no happiness so perfect, that you do not propose to destroy it. Into the paradise of domestic life you enter, not indeed by temptations & sorceries, but by open force & violence.”

Powerfully speaking, he once again affirms the principles of a free society:

“…In my opinion, Sir, the sentiments of the free population of this country are greatly mistaken here. The nation is not yet in a temper to submit to conscription. The people have too fresh & strong a feeling of the blessings of civil liberty to be willing thus to surrender it. You may talk to them as much as you please, of the victory & glory to be obtained in the Enemy’s Provinces; they will hold those objects in light estimation, if the means be a forced military service. You may sing to them the song of Canada Conquests in all its variety, but they will not be charmed out of the remembrance of their substantial interests, & true happiness. Similar pretences, they know, are the graves in which the liberties of other nations have been buried, & they will take warning. Laws, Sir, of this nature can create nothing but opposition. If you scatter them abroad, like the fabled serpents’ teeth, they will spring up into armed men. A military force cannot be raised, in this manner, but by the means of a military force. If the administration has found that it cannot form an army without conscription, it will find, if it ventures on these experiments, that it can not enforce conscription without an army. The Government was not constituted for such purposes. Framed in the spirit of liberty, & in the love of peace, it has no powers which render it able to enforce such laws. The attempt, if we rashly make it, will fail; & having already thrown away our peace, we may thereby throw away our Government.”

Part of the Great Triumvirate of the Senate, Daniel Webster could not have used his talent of speaking more masterfully.