US economy

I noted these selected paragraphs from articles I read today. The topics are most certainly related.

From an article in Nigeria’s Daily Independent:

On Sudan, my country Nigeria was made to ratify the break-up of that country into North and South so that the powerful nations can have access to the oil fields in the South which they currently cannot control under the incumbent regime. Will Nigeria allow UN to split it into North and South? Never! …

Gradually, White House is bringing Al Qaeda to Nigeria even when Nigeria has no issue with Al Qaeda. The US attempt to force its Africa Command (AFRICOM) base on Nigeria is responsible for the current bombings being tagged ‘Al Qaeda bombs’, so that Nigeria can accept the inevitability of US forces in Nigeria. What’s more, with CIA agents now prowling Nigeria, more bombings should be expected, as the US is determined to pursue its 2015 prediction that Nigeria will break-up. (Cornelius Segun Ojo)


Which country has the biggest military budget per year?


The US military budget in context

From the Narco News Bulletin:

State Department cables recently made public by WikiLeaks do seem to confirm that the U.S. government is very aware that much of the heavy firepower now in the hands of Mexican criminal organizations isn’t linked to mom-and-pop gun stores, but rather the result of blowback from U.S. arms-trading policies (both current and dating back to the Iran/Contra era) that put billions of dollars of deadly munitions into global trade stream annually.

As the death toll mounts in the drug war now raging in Mexico, it pays to remember that weapons trafficking, both government-sponsored and illegal, is a big business that feeds and profits off that carnage. Bellicose government policies, such as the U.S.-sponsored Merida Initiative, that are premised on further militarizing the effort to impose prohibition on civil society only serve to expand the profit margin on the bloodshed. (Pentagon Fingered as a Source of Narco-Firepower in Mexico)

There is an election this week in Uganda. Ugandan journalist Rosebell Kagumire records some of her observations:

We have also seen Museveni try to tell the youth in the last few days, through the New Vision newspaper, which largely leads with his stories that they shouldn’t vote the opposition for it will sabotage a government plan to give them jobs. I don’t think Ugandan youth are fools to think that what a man has not done in 25 years can achieve in 5 years. Uganda produces about 400,000 graduates from higher institutions of learning every year but less than 50,000 jobs are created annually. President Museveni and his brother Salim Saleh have even gone into security business sending hundreds of Ugandan youth to Iraq and Afghanistan to reduce the numbers of idle youth. The truth is there’s no real plan for the youth and many will not be voting for the ruling party.

… But because many have for long trusted Museveni on security, few Ugandans bother to know or even ask why their sons are fighting in Somalia.

For a regime that has enjoyed such trust on security matters, there shouldn’t be thousands of police officers at every corner in Kampala right now. … no wonder people are now anxious …

We wait for the next three days and see if every home will have a policeman attached to it in the name of security.

Museveni is one of the US’s prized client dictators, sending proxy armies to Somalia and around the world, and also, a favorite of the US Africa Command.

Meanwhile, back at home in the US, the US government fails its own people and fails to do the job of governing:

Dear Poor People, Thank You for Going Without Heat So We Can Buy Another Week of War

As a result of your going without heat next winter, we will be able to afford almost one whole week of fighting the wars in Iraq and Afghanistan, which cost about $468 million a day. Although when you add in the many hidden costs like increased long-term veteran’s health care due to the conflicts, your sacrifice is probably only really going to cover maybe half a week.

I hope you understand that when we had to choose between providing basic necessities to our citizens or fighting about five more days in Iraq and Afghanistan because of [insert newest justification here], we clearly just had to choose the wars over you.

These few bits of news are worth considering in relation to each other. Our choices have consequences.

David Isenberg wrote in his Dogs of War column Friday discussing whether or not PMCs are cost effective.

If you’ve heard it once, you’ve heard it countless times: Governments and corporations turn to private military contractors because it is more cost-effective than using regular military forces. But is it true?

But whether it’s true that contractors are cost effective is at best an open question, the answer to which depends, in part, on what you mean by cost.

While outsourcing can be effective, doing things in-house is often easier and quicker. You avoid the expense and hassle of haggling, and retain operational reliability and control, which is especially important to the military.

Then there is the fact that outsourcing works best when there’s genuine competition among suppliers. …

The Bush/Cheney administration has greatly reduced competition:

An analysis showed that fewer than half of all “contract actions” -­ new contracts and payments against existing contracts -­ were now subject to full and open competition. Just 48 percent were competitive in 2005, down from 79 percent in 2001.

Many academics who examine the issue of the relative cost of private versus public point to the politics behind the ways one can measure cost. What you include or exclude can be a complicated, and highly political, exercise. Economists disagree on how to answer the question at least in part because they use different variables when measuring cost.

… What little cost-benefit analysis there has been to date has focused on narrow economic cost comparisons and generally avoided addressing equally important political factors, such as avoiding tough choices concerning military needs, reserve call-ups and the human consequences of war.

As Tyler Cowen, an economics professor at George Mason University, wrote, “Excessive use of private contractors erodes checks and balances, and it substitutes market transactions, controlled by the executive branch, for traditional political mechanisms of accountability. When it comes to Iraq, we’ve yet to see the evidence of a large practical gain in return; instead, use of contractors may have helped to make an ill-advised venture possible.”

And related to the “human consequences of war”, one big question is who pays which costs? The military budget, and the government’s operating budget are hardly the only ones affected. Many employees of the PMC corporations are finding that their immediate employer is a shell incorporated outside the US to avoid US laws, such as medical coverage for the PMC employees. Quite a number of PMC employees are third country nationals, and as individuals, may have to carry a lot of the cost of their participation. The other cost may be to their countries of origin. What needs or expectations will they bring back? And how will their training in Iraq affect their participation in society and government at home?

Outsourcing is a way of cost shifting rather than cost saving. I see it every day. The young Spanish speaking woman who cleans our offices daily is our colleague. She does a superb job. Yet the contractor she works for pays her minimum wage and no benefits. My employer “saves” money by not paying permanent employees salaries and benefits to do the cleaning. The costs are shifted onto the individual at the bottom of the pay scale who is least able to bear these costs. And of course, the costs come back to government, which must deal with the emergency situations this cost shifting generates. Walmart is famous for these cost shifting “savings”, but its size makes it visible, it is hardly alone.

As Isenberg says, it depends on what you mean by cost.

New Orleans left to drown by the Bush administration after hurricane Katrina

In reading Poisoned Wells: The Dirty Politics of African Oil, I came across this description of the government of Congo Brazzaville.

. . . it is not just inefficient public companies that are being privatized – but the very functions of the state. State shipping taxes on oil and timber are paid to private interests, and not recorded in the budget. The national airline collapsed down to little more than a vehicle for collecting air transit fees from foreign airlines; private firms have armlocks on port and shipping facilities, telecommunications, and banks, breaking laws freely or having parliament rubber-stamp new ones in their favor.

As state institutions give way to private interests, Congo’s government stands increasingly on just three remaining pillars: first, the internationally recognized sovereignty that legitimizes the oil and banking contracts; second, the state oil company and the oil and finance ministries that manage the financial engineering; and, finally the armed forces that protect the system. Even ongoing low-level conflict is tolerated, as long as it does not threaten the sovereign extractive core. “Not only do these state institutions survive, but the state begins to hang off these institutions as if nothing else existed . . . They deal with the intricacies of oil-backed loans and the oil industries. They become the state. It is not a collapsed state but a privatized state. With a collapsed state, the rulers lose control; with a privatized state, they can even increase the possibility of accumulation.”

“The people are utterly disenfranchised . . In the city everything is expensive” . . . an attractive world of international airports, satellite dishes, oil rigs, French cafes, and air-conditioned hairdressers . . . “in the rural areas there is nothing. Rape and gang-rape are taken to violent extremes; there is a total lack of structure in society, and generalized impunity . . . Congo is two nations.”
(Poisoned Wells by Nicholas Shaxson, p.116-117, ISBN 978-1403971944)

What struck me is that this is the final reduction when government is privatized. This looks like the ultimate outcome of the kind of government to which Bush/Cheney are leading the US.

The treatment of New Orleans following hurricane Katrina is one example, as illustrated above. But there are others. Sometime earlier this year I read about the Bush administration trying to privatize functions of the IRS, including tax collection, which sounds a great deal like Congo Brazzaville.

Bush vetoing the SCHIP childrens health insurance is another. The Republican argument reduces to: if your parents can’t afford private health insurance, you can’t have health insurance.

And the privatizing of spying, the outsourcing of intelligence is another example. The people who have been doing the spying on the American people are for the most part not government workers. The people spying on US citizens are private companies, the telecommunications giants, working at the behest of the Bush administration. In the Defense Intelligence Agency (DIA) contract employees occupy 51% of DIA office space. And The Spy Who Billed Me asks a number of questions about this, including:

  • Can the DIA afford $1 billion of staff who are paid a “private business salary” when it’s own government staff receive “taxpayer funded salaries”?
  • Can the DIA really afford $1 billion of staff who do not have a fiduciary duty to the DIA, but to another entity?

John Holt, in a recent article in the London Review of Books speculates that the current situation in Iraq is exactly what Bush and Cheney had in mind when they invaded Iraq.

On the assumption that the Bush-Cheney strategy is oil-centred, the tactics – dissolving the army, de-Baathification, a final ‘surge’ that has hastened internal migration – could scarcely have been more effective. The costs – a few billion dollars a month plus a few dozen American fatalities (a figure which will probably diminish, and which is in any case comparable to the number of US motorcyclists killed because of repealed helmet laws) – are negligible compared to $30 trillion in oil wealth, assured American geopolitical supremacy and cheap gas for voters. In terms of realpolitik, the invasion of Iraq is not a fiasco; it is a resounding success.

And, of course, the costs do not include any consideration of the cost to the Iraqis, once again looking like the Congo Brazzaville model. And Bush and Cheney increase their possibilities for accumulation.

Le Cauchemar de Darwin

Darwin’s Nightmare

Capitalism without democracy is just gangsterism.

See recent history in China or Russia for plenty of examples.

Lately, under BushCo, the US has been stripping away its democracy, leaving just the capitalism. As Bishop Spong says: “Capitalism courts revolution when it allows the wealthy to get too wealthy and the poor to get too poor.” In international policy, this leads naturally to the military industrial complex. And it is the main problem with globalization. This is also the reason to have domestic spying. Political opponents are in fact, economic rivals.

Without the rule of law under democratic oversight, capitalist competition and performance in the commercial marketplace quickly morph into the competition and behavior of gangsters.

Pyramid of Capitalist System, issued by Nedeljkovich, Brashick and Kuharich,
Cleveland: The International Publishing Co., 1911.

Bush cuts taxes for the wealthy, and cuts vital spending for the rest of Americans. Most of the support for eliminating the estate tax comes from just 18 families. Matt Taibbi gives us the numbers. Bush proposes a complete elimination of the estate tax in his budget. It would benefit the following people, among others. These benefits, shown in red, are compared to the cuts Bush and the 18 families propose for the rest of Americans, shown in blue.

Bush tax cuts
Bush budget CUTS

$32.7 billion gift in tax cuts to the Wal-Mart family

$28 billion to be CUT from Medicaid.

$11.7 billion tax cut gift to the heirs to the Mars candy corporation
$3.4 billion to be CUT from Veterans Administration benefits (supporting the troops?)

$9.7 billion tax cut gift to the Cox family (Cox cable TV)
$1.5 billion in CUTS for education

$826.5 million tax cut gift to the Nordstrom family
$630 million CUT – Community Service Block Grants would be eliminated

$468.4 million tax cut gift to the Ernest Gallo family
$420 million CUT from LIHEAP (heating oil to poor)

$164 million tax cut gift to the family of former Exxon/Mobil CEO Lee Raymond
$108 million CUT over ten years to COMPLETELY ELIMINATE the Commodity Supplemental Food Program. The program sent one bag of groceries per month to 480,000 seniors, mothers and newborn children.

As Taibbi says:

That’s not only bad government, it’s bad capitalism. It makes legalized bribery and political connections more important factors than performance and competition in the corporate marketplace.

In the words of Bishop Spong:

Capitalism . . . has within it the seeds of its own destruction if it allows more and more of the available wealth to be confined into the hands of fewer and fewer of the people. This was the capitalism that Karl Marx felt would finally destroy itself. Capitalism, however, as lived out in the western world has been tempered by social legislation that taxes the wealthy to provide benefits for the poor and middle classes. Capitalism courts revolution when it allows the wealthy to get too wealthy and the poor to get too poor.

Unfortunately, I noted, the recent history of the United States has moved in exactly that direction. During the eight years of the Bill Clinton presidency, which was a major portion of the decade of the 90’s, more wealth was produced for Americans than in any other decade in our national history. Indeed, it expanded the wealth of America to twice what had been produced in the entire history of an independent America. It also widened the gap between the rich and the poor to levels never before seen. That gap has widened even more under the presidency of George Bush and today rests at what I regard as dangerous levels. Every economic program of the Bush administration has been designed to enhance the wealth of the wealthy and, in fact, has exacerbated the poverty of the poor. So we have an economic policy that allows CEOs to be paid hundreds of millions of dollars, made up of salary and stock options, while refusing to provide health care for more than 40 million citizens and allowing our public schools to be significantly under funded.
John Shelby Spong, Q&A Newsletter, Feb 21,2007