Thursday, January 25, 2007


What's good for Lockheed is good for America

Ford isn't doing so well. But Lockheed is raking it in.

In case you missed it, Harper's magazine recently published an unflinching National Intelligence Estimate on the United States, by the political scientist and Asia hand Chalmers Johnson. Back in '60s and '70s, Johnson consulted with the CIA office that prepared those reports for the President's benefit.

Johnson argues that our commitments in Iraq in Afghanistan were not solely a response to global events. Rather, they were the "inevitable result" of America's "decades-long policy of military Keynesianism."

That is to say, the defense establishment's continued growth -- and by extension the health of the entire American economy -- demanded something like the "war on terror."

Too out there for you? Remember, he said it first.

Johnson writes:

To understand the real weight of military Keynesianism in the American economy today, however, one must approach official defense statistics with great care. The "defense" budget of the United States-that is, the reported budget of the Department of Defense-does not include: the Department of Energy's spending on nuclear weapons ($16.4 billion slated for fiscal 2006), the Department of Homeland security's outlays for the actual "defense" of the United States ($41 billion), or the Department of Veterans Affairs' responsibilities for the lifetime care of the seriously wounded ($68 billion). Nor does it include the billions of dollars the Department of State spends each year to finance foreign arms sales and militarily related development or the Treasury Department's payments of pensions to military retirees and widows and their families (an amount not fully disclosed by official statistics). Still to be added are interest payments by the Treasury to cover past debt-financed defense outlays. The economist Robert Higgs estimates that in 2002 such interest payments amounted to $138.7 billion.

Even when all these things are included, Enron-style accounting makes it hard to obtain an accurate understanding of U.S. dependency on military spending. In 2005, the Government Accountability Office reported to Congress that "neither DOD nor Congress can reliably know how much the war is costing" or "details on how the appropriated funds are being spent." Indeed, the GAO found that, lacking a reliable method for tracking military costs, the Army had taken to simply inserting into its accounts figures that matched the available budget. Such actions seem absurd in terms of military logic. But they are perfectly logical responses to the requirements of military Keynesianism, which places its emphasis not on the demand for defense but rather on the available supply of money.

This is too getting too deep for a blog. The upshot is, Johnson is pessimistic.

His article was in the January issue. If you want to read more of it, drop me a line.

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