News & Analysis
Military Keynesianism in Iraq
Iraq seeks U.S. arms worth $113 billion ... As U.S. forces move into the final phase of the withdrawal from Iraq, Baghdad is seeking to buy U.S. weapons worth up to $13 billion. These include F-16 fighter jets and M1A1 main battle tanks, the same systems the Americans used to crush Saddam Hussein in 2003. That's a bonanza for U.S. defense contractors, who increasingly rely on exports to keep production lines running for U.S. forces, and should keep Iraq, Iran's western neighbor, in the U.S. military orbit for the next couple of decades. U.S. officials say about half the contracts involved have been finalized, with the others still under negotiation. – UPI
Dominant Social Theme: America will continue to protect Iraq's fledgling democracy.
Free-Market Analysis: We have no idea where Iraq is getting the money to buy its weapons. Presumably, Iraq will print some money and borrow the rest. The money will essentially act as a claim on Iraq's productivity as the Iraq political and military elite arm themselves first for domestic reasons and then to combat vague international threats, according to the article. An expanded dominant social theme would be, "Iraq has emerged as a democracy within the region and now must protect its freedom by being prepared for war."
In fact, these purchases reveal more about how war is waged by the Anglo-American axis and why it is so immensely profitable for those directly involved with the supplies for war, etc. These purchases also reveal why there is so much nervousness in Baghdad over America's quasi-departure. It seems more obvious than ever that those who are currently cooperating with the American invasion of Iraq and who are invested in the current political process stand to benefit a good deal from the upcoming "peace."
It has been fascinating, generally, to watch the Iraq war because unlike the Viet Nam war where there was literally no justifiable pretext for the invasion other than Saddam Hussein's brutality. Of course if this is to be America's trigger point for war, then the US should actively invade a number of other countries as well around the world. For us, the invasion was not helping Iraqis or even about nation-building. It was really part of a larger strategy aimed at intimidating and then pacifying the Muslim world for purposes of global government.
The Middle East and Islam generally remains unavailable to Western-style regulatory democracy but from our point of view through various applications of hard and soft force the Anglo-American elite aims to change this. We remain unsure as to whether they will succeed. Here's part of an article in Arab News on the costs of the war and its effects:
- Iraq remains destabilized and torn by sectarian strife. The local police and security forces are ill-equipped to enforce law and order due to divisions among themselves, lack of training and experience. It was for nothing that Americans disbanded the Iraq Army immediately after the invasion.
- It is estimated to have cost 100,000 to 150,000 Iraqi lives and over 4,400 allied troop lives. There is another cost: The trauma of an entire generation of Iraqi children witnessing inordinate levels of violence, death, guns, bombs, and bullets. Over 2 million Iraqis live as refugees. An equal number has fled the country. ...
- It is unfortunate that many US presidents get embroiled in unnecessary and unwinnable wars; e.g. Johnson and Nixon in Vietnam, Bush Sr. and Bush Jr. in Iraq and now Obama in Afghanistan ...
The wars in Iraq and Afghanistan, unfortunate as they are, may be seen not only within the larger ambit of the elite's ambition for global governance but as the outcome of the West's increasingly perverse economic system.
It is acknowledged by many, even within the mainstream historical community, that World War II helped remove the United States and to a lesser extent Britain from severe and ongoing economic difficulties. Likewise, one could argue, military adventurism in Iraq helped provide an antidote to the US economic malaise of the late 1980s; the entry into the first Iraq war at the beginning of the 2000s may have proved helpful in ameliorating the damage done by the tech crash.
We have recently stumbled on the phrase "military Keynesianism," and more and more we wonder if this is not an apt description of the system that the Anglo-American axis has put into place. We found a definition of military Keynesianism at Wikipedia as follows:
Military Keynesianism is a government economic policy in which the government devotes large amounts of spending to the military in an effort to increase economic growth. This is a specific variation on Keynesian economics, developed by English economist John Maynard Keynes. Instances commonly supplied as examples of such policies are Germany in the 1930s and the United States in the 1980s and 2000s, although whether these assessments are accurate is the subject of vigorous debate. Noam Chomsky refers to the current US implementation of Military Keynesianism as "The Pentagon System".
The economic effects advanced by supporters of military Keynesianism can be broken down into four areas, two on the demand side and two on the supply side. On the demand side, increased military demand for goods and services is generated directly by government spending. Secondly, this direct spending induces a multiplier effect of general consumer spending. These two effects are directly in line with general Keynesian economic doctrine.
On the supply side, the maintenance of a standing army removes many workers, from the civilian workforce. In the United States, enlistment is touted as offering direct opportunities for education or skill acquisition. Also on the supply side, it is often argued that military spending on research and development (R&D) increases the productivity of the civilian sector by generating new infrastructure and advanced technology.
Of course all this is nonsense. It is part of the well-known "broken-window fallacy" and therefore partakes of the dubious assumption that one can create prosperity by destroying things and then rebuilding them. In fact, there is certainly logic to the idea that destruction creates prosperity if one simply looks at World War II from the American point of view. But a ruined Europe surely paid the price for America's resurgence.
When we researched the literature further, we found that free-market thinker Robert Higgs, Senior Fellow in Political Economy for The Independent Institute, had written on this very issue in January 2009. In article entitled Military Keynesianism to the Rescue?, he responds to an editorial in the Wall Street Journal appearing in December 2008, by Martin Feldstein entitled Defense Spending Would Be Great Stimulus. Below, we have excerpted some of Higgs' rebuttal.
The title tells you everything you need to know: military Keynesianism is the medicine being prescribed by a leading figure of the politico-economic Establishment – a Harvard professor, former chairman of the Council of Economic Advisers, former president of the American Economic Association, president emeritus of the National Bureau of Economic Research and member of the President's Foreign Intelligence Advisory Board. That a man so drenched in professional honors and attainments would be peddling such long-discredited claptrap speaks volumes about the state of mainstream economics. When you think it can't sink any lower, it does. ...
Keynesian economics rests on the presumption that government spending, whether for munitions or other goods, creates an addition to the economy's aggregate demand and thereby brings into employment labor and other resources that otherwise would remain idle. The economy gets not only the additional production occasioned by the use of these resources, but still more output via a "multiplier effect." Hence comes the Keynesian claim that even government spending to hire people to dig holes in the ground and fill them up again has beneficial effects: even though the shovelers create nothing of value, the multiplier effect is set in motion as they spend their money income for consumption goods newly produced by others. ...
How much better it would have been if the wisdom of Ludwig von Mises had been taken to heart. In Nation, State, and Economy (1919), Mises wrote: "War prosperity is like the prosperity that an earthquake or a plague brings." The analogy was apt in World War I, in World War II, and during the Cold War. It remains apt today. Contrary to the claims of Keynesian economists, government's deficit spending will not generate something for nothing; it certainly will have opportunity costs. When the government's spending goes to maintain a bloated military-industrial-imperial apparatus, the opportunity costs are even greater, because they include lives and liberties, as well as the usual economic sacrifices.
Robert Higgs' recent interview with The Daily Bell can be seen here: Robert Higgs Interview.
Keynesianism is truly a disease of the West, an economic theory that does not die. Simplified to its most basic components, it uses force to grant government (and the shadowy, mercantilist elite behind it) the power to print money via central banks. Central banks then overprint money causing endless economic misalignments that result in booms and busts. Having impoverished society, those in charge of the printing presses are tempted to "stimulate" the domestic economy (and their own bank accounts) by creating war.
Conclusion: Always, Keynesianism is destructive. It spreads poverty at home and violence abroad. It centralizes power wherever it is practiced, so that the banking establishment and the military complex are inexorably pressed together until they are virtually one unit. Eventually, a large portion of a nation's creativity and creation may be co-opted by military production and subsequent sales. This is the political system that the West has exported to Iraq and is in the process of attempting to spread to Afghanistan. We prefer free markets.
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Posted by Ingo Bischoff on 09/14/10 10:30 PM
@ Greg Colvin
The USD is not a pure fiat currency. It is a currency backed by the productivity (tax payments) of the U.S. taxpayer. Nevertheless, the USD is a "Ponzi Scheme" which 36 years after Nixon closed the "gold window" finally fell apart with the explosion of interest payments due as result of the exponential "compound interest" function.
Trying to get out of this situation was the purpose of TARP. Creating USDs based on defaulted mortgages and credit card debt is essentially creating "pure fiat currency". The life span of such currency is extremely short, historically.
The Arab oil nations knew that this would eventually happen with the USDs created after the August 15, 1971 default. For that reason, the Arabs met with representatives from the Treasury (Paul Volker) and Wall Street (Citi, G/S) in Jaimaca at the end of the 1970s to hammer out an agreement to recycle "Petro Dollars" into gold futures for the account of the Arab oil countries. Citi's involvement in gold mining in Ghana was an upshot of this agreement.
Things have changed since the 1970s, but there was never any doubt on the part of the Oil Sheiks about the nature of the "post August 1971 USD".
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Posted by Ingo Bischoff on 09/14/10 10:00 PM
"This is the political system [military keynesianism] that the West has exported to Iraq and is in the process of attempting to spread to Afghanistan."
That, in my opinion is a far too optimistic statement.
Keynesianism requires a certain level of "civilization" beyond that of "tribalism" in which Keynes' ideas can be perpetrated. The West is such civilization, the Middle East is not.
The funny part is, that Keynes never thought his idea contained much logic.
At the beginning of WW I, it was Keynes who made bets with his collegues that the war would not last beyond six month, as by then governments' gold reserves would be spent.
To justify the monetizing of government debt after the gold was spent during WW I, Keynes developed what we know as "Keynesianism" almost as a joke. When he presented the idea, someone remarked, "you know it won't work in the long run..." His remark was, "I know that, but who cares? In the long run, we all die."
It is amazing how Keynesianism has hung on in the West. My bet is, it will never succeed in the Middle East.
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Posted by Greg Colvin on 09/14/10 09:26 PM
I don't know if I buy it, but there is an argument that the US dollar is less of a fiat currency than it appears. Oil, illegal weapons, and illegal drugs are priced in dollars, and the Saudi's do their best to maintain stable oil prices. And, as the current reserve currency, it is in the interests of the holders of those reserves to maintain their value.
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Posted by Greg Colvin on 09/14/10 09:19 PM
@duane
Have you read the First Amendment? We are not a Christian nation, and Muslims should be quite welcome here.
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Posted by Onebornfree on 09/14/10 08:43 AM
@ Lila
"War, either on individuals, groups, or other states is a fundamental feature of all governments everywhere."
Theoretically, this can be argued.
Historically, it's just not true. Governments have been more or less war-like, sometimes because of their size, sometimes because of international checks and balances, sometimes because of culture, sometimes because of leadership. "
Lila, I would be happy to further discuss your comments/observations via private email[see below], otherwise, "no dice" I'm afraid:-)
onebornfree @ yahoo dot com
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Posted by AmanfromMars on 09/14/10 06:43 AM
"Hi, Great site! I love the interactive comments between your posters and your staff, but I would like to comment on this thread too. But I think that I may be too stoned to effectively relate my thoughts in a cogent fashion." ... Posted by Dr.D on 9/14/2010 1:43:01 AM
There is no apparent evidence of anything unusual to be of any concern to anyone in that short post, Dr.D., and such caution as you have exercised does bode well for any future contributions that you may be prepared to make.
To expand everyone's horizons beyond any narrow confines which may be acting as blinkers, and which may be as much to do with attempts to retain a control in a vested interest position with established and Establishment status quo orders/Power Elites, as anything else, pleased be advised of this development which is not so hindered to under-perform in Sub Prime. It is so a fact as stated, and thus is any dismissal or doubt as to its provenance, a selfish delusion which would identify one as being less than well enough equipped to wield any influence in the direction of the Future, which would be surely a shame for which one would have to accept full responsibility and accountability and blame. It is self explanatory. and although posted in reply to another article, is highly relevant to the discussion and article here, too. And it provides a heck of a lot of information and intelligence which is yet to be classified or disproved or denied.
And having checked back to see if it was still hosted on the site where it appeared earlier this morning [albeit at the second attempt at posting because of the hyperlink problem as cited at the end]... is it now disappeared, which immediately tells one it is hot, and too hot for minnows and minions to handle? But the truth always surfaces with an Immaculate Sublime Vengeance and with Internet Service Vendors where it can do most good with the Good, and most harm to the Bad, with ITs Independent Software Vehicles. I just hope that the somewhat limited formatting tools on the Daily Bell display it as intended and as required for any chance at some sensible understanding, or questioning of any ambiguous or innovative points raised and/or revealed.
"But its chief executive, Ian King, wants to expand both the services business and the group's cybersecurity, intelligence and national security division ‒ areas considered to have strong growth potential regardless of tightening defence spending."
Control CyberSpace, aka Communications and Computers Coordinating Clouds and Content for Command of Civilisation, and you have Absolute Powers over Currency and Global Potential. However, as you will have to Imagine, is it not just as Simple as Spinning a Pathetic Political Tale, which in the Present Arrogant Ignorant Default, introduces Conflict and War and New Worthless Defense Honey Traps and Billion Dollar Contracts for Old Style Redundant Weapon Systems to both Home Sucker Industries and Foreign Sovereign Nations alike.
Control of the Information and Intelligence Space which Drivers Future Human Perception is the New Hot Front Line Paradigm, which fortunately does not suffer the Fool or the Warmonger in its Fields, for it has Base IT Savvy Requirements which render those Primitive Tools, Relics of the Past. And the following, is the sort of thing which the Future and IT and Media brings ....... and miss that boat, and you will be stranded in a barren desert, and surrounded and at the mercy of those whom you had planned to attack/invade/defraud ....... and that is between a rock and a hard place, with nowhere to hide and nowhere to go.
[blockquote]A Question of Board Novell
Posted Tuesday 14th September 2010 04:28 GMT
"The Cloud Manager stack uses SOAP-based APIs for create the Web services that link into hypervisors and their respective consoles and uses standard Internet protocols for communication."
That sentence needs to be rewritten to make any sense at all.
And it can be rewritten in two ways, each of which tells a similar, and some would even say identical, leading story.
The Cloud Manager stack uses SOAP-based APIs for the Web to create services that link into hypervisors and their respective consoles and uses standard Internet protocols for communication.
The Cloud Manager stack uses SOAP-based APIs for services to create the Web that link into hypervisors and their respective consoles and uses standard Internet protocols for communication.
Both of them though require the same thing of the Cloud Manager ..... a Chief Virtual Operating System Officer to Provide Novel Intellectual Property for Reign and Perfect Tempest Storms*. A Must Have Control Operative for any and all Self Respecting, Model Empire, Future Builders.
Now if that is what Novell Cloud Management is all about ..... Remote Virtualised Control/CyberSpace Control of Earthed Governance Functions, Facilities and Utilities ..... then is the Future Guaranteed a NEUKlearer HyperRadioProActive CHAOS Order with Clouds Hosting Advanced Operating Systems.
And do you think it is a Post Modernist Capitalist Order of Swiss DNAI too .... for Dynamic Neutral Applications of Intelligence which Favours and dDelivers Excellence to All in this Age of Virtualisation?
* Tempest/TEMPEST is a Sublime Facility thought able to compromise Utilities. The exact nature of whatever it is thought to be able to provide are never disclosed for reasons of considerable overwhelming wealth advantage and international security presumably.
Click to view link [/blockquote]
Per Ardua ad MetaAstra for NIRobotIQ Virtual Flight Control Centres and CyberIntelAIgent Traffic Control.
[Posting to CyberSpace has its controlling foibles too, and this second posting with a hyperlink removed from the original, is to test for immediate Independent comment appearance, as goodness knows where the first one went to. :-)]
Click to view link
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Posted by Dr.D on 09/14/10 01:43 AM
Hi, Great site! I love the interactive comments between your posters and your staff, but I would like to comment on this thread too. But I think that I may be too stoned to effectively relate my thoughts in a cogent fashion.
Reply from The Daily Bell
Come back when you feel up to it.
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Posted by Huh on 09/14/10 12:11 AM
@Duane
"We need to leave the Middle East to its own devices[...] We do not need no stinking Islam in this christian conservative nation!"
Now if only you had thought of that before you had the blood of hundreds of thousands of dead Middle Eastern Muslims on your hands? Christian nation? Humbug! The actions of the merchants of death have tainted the image of the USA forever, unless you happen to believe in an especially bloodthirsty Christ.
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Posted by John Edwards on 09/13/10 11:24 PM
I have come to the conclusion that our Western, Central bank, fiat-money based economic model is the outward manifestation of the true underlying occult forces that control and shape the societies they operate in.
I have come to this conclusion through much observation and interaction of/with my fellow citizens.
1. Money printed out of nothing backed by nothing but a promise to pay someone or something in the future is then traded for goods and services without extinguishing that debt in the first instance is in a very real sense transmogrification of nothing into something. You know, lead into gold and all that...
2. Hence the people who have the most of it can be considered imbued with occult power and are feared for it by those who recognise it's (money's) occult power. You know, cash in a suitcase. No more.....whatever.
3. Most people will do almost anything to get the stuff. Some people will do ANYTHING to get it. Treachery, murder, war, prostitution. You know....join the army, bank, government.
4. Just as the oculist's want, we are now poised ready, through oppressive legislation and technology, to incarcerate, punish, torture, and/or kill civilians everywhere, who challenge the authority of this gargantuan, occult, military-industrial-Imperial complex that now exists in real time and will come to define all our lives if we do not resist. Reminds me of the Salem Witch Trials, and the Spanish Inquisition to name but two atrocities committed in the name of thought-crime.
5. Competition caused by Central bank monetary policies that incur debt to the collective for the movement of wealth created by this imbalance to the few is a crime against humanity.
A meta-court must be convened to consider the gravity of these crimes and many others.
The Internet will have to do for now.
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Posted by Venus Ramey on 09/13/10 09:58 PM
Where will Iraq get the money for the $13 billion arms purchase from the U.S., why the bankers in the American Military Industrial Complex, of course. And, if they need some paper money from out of nowhere the FED might help, I'm sure their presses are already inked up.
I dare our beloved BELL to start an instrument like The Bell up in an Arab language (maybe more than one) written by American bloggers translaged into the Arab language. Those poor people are just now getting involved in the Elite plans and it would be the merciful, ethical, and Christian thing to warn them, they have had enough horrors forced on them. And we have already sacrificed enough for Poor Little Israel.
Reply from The Daily Bell
We have written before that the Islamic world is under sustained attack from the West.
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Posted by Mike on 09/13/10 08:50 PM
I meant to say ....."westernized" Iraq... and .... Middle Eastern neighbors.. apologies for the typo. Its what happens when one tries to write cogently after slaving all day running a business during these inflationary times.
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Posted by Mike on 09/13/10 08:48 PM
If I was a betting man I would wager that within 10 years "westernized" will have experienced a coup of some sort and the new "rulers" will be using our military hardware to attack one of their Middle Eastern. Such is how the game plays out in a tribal society. Oh but thanks to hubris Amerika thinks they can "civilize" these people. An arrogant thought by an empire on the verge of collapse.
Reply from The Daily Bell
Our point all along has been, perhaps, that tribal societies do not need such civilizing.
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Posted by Lila Rajiva on 09/13/10 07:13 PM
@DB
I share your sense that names are important. That's how the debate is controlled.
@onebornfree
"War, either on individuals, groups, or other states is a fundamental feature of all governments everywhere."
Theoretically, this can be argued.
Historically, it's just not true. Governments have been more or less war-like, sometimes because of their size, sometimes because of international checks and balances, sometimes because of culture, sometimes because of leadership.
Names..and nuances..are quite important. Not for physical self-defense, but for intellectual self-defense.
Reply from The Daily Bell
"I share your sense that names are important. That's how the debate is controlled."
Good point.
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Posted by J.D.Beck on 09/13/10 06:27 PM
The American author Norman Thomas wrote a book in 1935 titled:
"WAR, No profit, no glory, no need." It is perhaps one of the greatest anti-war books ever published...and if America was what it pretends to be...books like this would be a must read for all American students.
America...speaking plain and direct has become the mother of all whores....so sad to see this happen...as the average American is a hardworking, naive, but goodhearted individual.
Go to Click to view link and check out the tab about us.
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Posted by Duane Bass on 09/13/10 05:31 PM
I, personally would be afraid that some of these major weapons would be handed over to Islamic terrorists. . . I mean they are all Muslim right?
We need to leave the Middle East to its own devices. Let them grow their own food, or let them drink oil. We, the USA, have plenty of both . . . We do not need no stinking Islam in this christian conservative nation!
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Posted by Rolland Carpenter on 09/13/10 05:12 PM
The mongrel economics of America's path to bankruptcy should not be dignified as "Keynesian". Keynes made a case for government deficit spending in periods of depression only. His arguments have never been discredited, but used to give dignity to the mongrel spending of the US government. We have had continuous, uninterupted deficits for over 50 years, good times and bad.
Now, to justify even more massive deficits, we are hearing this inexcuseable abdication of government responsibility called "Keynesian". And to then further misuse the term, we are given a truly bizarre theory for needless war: Military Keynseianism!!
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Posted by FBJ on 09/13/10 02:39 PM
Come, come now.
Where is the money for weapons purchases coming from?
Let us just check the business sections of the web. Iraq is getting in bed with some very unlikely bedfellows, who have bid/won the rights to operate some of Iraq's major oil fields. Their new bedfellows include China and Russia. And, the money they will be receiving will be ' out of this world', especially since the US is still keeping Iraq on an almost unlimited allowance.
They should be afraid of the US departing Iraq. The US just might decrease the amount of 'foreign aid/rebuilding' which they are paying for. That would of course mean that Iraq would have to start paying their own civil servants, and begin paying for their own infrastructure.
Whatever happened to 'to the victor go the spoils'? Also, they just might need those weapons, If the railroad which Iran/Tehran is, as we write, negotiating purchase for, from the Chinese, is built. The super railroad will extend across Iran to the Iraq border, making a 'super highway' for any future wars, straight into Iraq.
Reply from The Daily Bell
How convenient.
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Posted by Bill on 09/13/10 01:53 PM
Amazing: that you just found this-
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Posted by John on 09/13/10 01:24 PM
"The Middle East and Islam generally remains unavailable to Western-style regulatory democracy but from our point of view through various applications of hard and soft force the Anglo-American elite aims to change this. We remain unsure as to whether they will succeed."
I think they have succeeded already. There may not be democracies but there are dictatorships in the Islamic world propped up by the PE. Take Saudi as an example, oil is exchanged for dollars, the dollars are either deposited back into the western banking system or military and other technologies are bought from the west, this means the Saudi family is kept in power by the PE. Saudi practices Usury has a fiat currency and uses fractional reserve banking. King Faisal in the 1970s was making noises about demanding Gold in exchange for Oil and he was murdered by someone in the Saudi family!
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Posted by Raymond Simons on 09/13/10 12:13 PM
Iraq is prepared to issue NEW currency as soon as the new government is seated. For a time this new currency will have "value" but probably not for long although it should be long enough for them to "pay" for the military hardware.
The other route they may go is to borrow the funding from the World Bank which we in turn provide funding. Either way they get the stuff free and our taxpayers pay our own companies to build the stuff for Iraq. Great way the world is run, eh?
Reply from The Daily Bell
The World Bank will fund US$100 billion in military supplies? Wow.
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