Krugman Gives Clue to Why Endless U.S. Wars

September 6, 2010 by admin

In the roundtable discussion about our current economic crisis on ABC News' This Week 9/5/10, Noble Prize winning economist Paul Krugman made a very telling statement:

What we need is more demand. I've been looking at the polling and other things from 1938. This actually kinda resembles 1938 when FDR cut back too soon and the economy went back to recession, people were deeply pessimistic. They said that it's never going to recover, the budget deficit is too big, it's going to last for a decade or more, just more demand won't do it, budget deficits are, we need to cut that budget deficit. Then we were, in a way, very fortunate. The war came along and took off all the restrains and we had a recover and it was not structural, we just didn't have enough demand.

I know that most politicians and the economists who work for them insist that this is a recession and not a depression, whereas the growing ranks of those in the unemployment lines may beg to differ.

Now it would appear that the Great Depression that so devastated the U.S. in the 30's has gone the way of Pluto. It has been demoted to a double-dip recession, which is pretty much what we have now. But that's just an aside. That's not why I'm quoting Krugman.

He sees the problem now as one of a lack of demand. This was also the problem in what I will continue to call the Great Depression. It is a problem that is inherent in capitalism and one that necessarily becomes more and more critical as capital becomes concentrated in fewer and fewer hands. Karl Marx called it the crisis of over production. The majority of the people become so poor that they can no longer afford what they produce no matter how badly they need it. Goods build up in warehouses, workers are laid-off, then they can't afford to buy stuff either so even less product is sold and the vicious cycle continues until demand returns for some reason.

Paul Krugman also tells us what created the demand that finally broke the Great Depression: we were, in a way, very fortunate. The war came along...

I have heard World War II called many things. This is the first time I have heard it called 'fortunate'. But economically speaking, he is exactly right. While FDR's 'New Deal' brought some relief to millions, it took a World War to break the back of the Depression, and we have been dependent on War for our economic 'health' ever since.

With the drop in government spending at the end of WWII, the U.S. went into an 8 month recession from February to October 1945. and then another 11 month recession in 1948/49. Fortunately for the economy, by then the Cold War with it's massive spending on Weapons of Mass Destruction, was rapidly being developed. Perhaps the Recession of 1949 showed that a Cold War wasn't enough. Fortunately for the U.S. economy, the Korean War started in 1950 and the economy got better.

In the Korean War, the U.S. mowed down civilians who were merely trying to flee the fighting, bombed cities out of existence, and we now know, made the use of biological weapons [ see The Crimes of Empire, p. 134] as part of our fighting doctrine, and actually used biological agents including the plague, anthrax, scarlet fever and encephalitis against Koreans and Chinese. Anyone with a slightest doubt about the incredible barbarity and criminal conduct of the U.S. military in the Korean War really owes it to themselves to watch this excellent BBC documentary Kill Them All on Google Video. Obstinately, we entered the Korean War because the communist insurgents that had been fight against the Japanese and for Korean independence since 1910 were looking likely to win. We killed no less that 2 million civilians and probably another million Korean combatants on both sides. But our economy did bounce back.

As soon as the Korean War ended, the U.S. economy again began to falter. The Recession of 1953 lasted 10 months and sparked a massive increase in national security spending. In spite of this increased Cold War spending, there was another recession in 1958 for 8 months and then just two years later, a 10 month recession that ended in Feb. 1961. By November of that year Kennedy was already stepping up military aid to South Vietnam, a Buddhist country created by the French in 1955 and run by, Diem, a Catholic from New Jersey. Of course U.S. military aid is never just money that you can spend as you see fit, i.e. you can't use it to buy AK-47s just because it is a better rifle and fewer of our allies will die if they are armed with it. You buy M-16s because that's how we make our money. We're not funding war to simulated demand for somebody else's economy. The U.S. had already been bankrolling 80% of the French effort from '48 till their defeat in '54. After that, we started carrying all of the load.

Clearly that wasn't enough. Even with all the artificial demand created by our Cold War and our murderous hot ones, the economy was falling into recession every 2 or 3 years. Five recessions occurred between the end of WWII and the beginning of the Vietnam War. Like the Korean War, the Vietnam War was a racist war conducted by the U.S. in a very barbaric manner. I have already detail how we murdered as many as 4 million civilians in my documentary Vietnam: American Holocaust. If you don't think that the Vietnam War was a racist war or warrants the title holocaust, and you don't think the question important enough to spend 87 minutes watching my doc., I suggest you at least look at this picture of how the U.S. troops treated Vietnamese bodies. And if you don't think the practice of throwing Vietnamese POW's out of helicopters was routine, I can provide you with at least four independent sources for that too.

But on a brighter note, all this meanest did result in one of the greatest periods of economic prosperity since the Great Depression, almost 9 years without a recession. In spite of the war now going full bore, there was a slight recession in 1969. Then when the Vietnam War started to wind down, and the troops started coming home, we fell into a much more serious funk with the 1973-75 recession in which unemployment hit 9%.

There was little appetite for war among most Americans in the direct aftermath of Vietnam, and while the military budget never slowed down, President Jimmy Carter was a decent man who sought to replace war with it's moral equivalent. The result was that the economy again began to falter and Ronald Reagan was able to ride into the Whitehouse on the Recession of 1980. The recession continued until November 1982 and unemployment reached almost 11%. Reagan was only able to turn that around with a whole series of mean little wars in many places and massive increases in the military budget. By the time he left office the military budget was 43% higher than it was at the height of the Vietnam War, but he also gave us eight years without a recession. When the Soviet Union fell apart there was suppose to be a 'peace dividend', instead we got another recession.

When we didn't have the Soviet Union to kick around any more, and the War on Drugs failed to generate enough demand, the War on Terror fortunately came into focus. It is almost as if they loaded the old Cold War propaganda into the word processor and did a find: communism, replace: Islamic terrorist, replace all, and they were off and running with a new motivation for the old spending and then some.

And so it goes for the U.S. economy. Since the Great Depression it was required war for it's very survival. Blood sucking capitalism is not a metaphor to be taken lightly. Our relative prosperity has been built on a foundation of corpses, and it is systematic, so went Obama comes into office behind the warmonger Bush, he has not choice but to continue and even expand his policies. With the country in what increasing looks like a depression to me, and unemployment north of 10%, he dare not bring the troops home, or stop the drones from flying and the babies from dying. Our capitalist economy requires this at this late stage of its life.

Paul Krugman missed one important difference between our economic situation now and that of 1938. In 1938 we were a country at peace. We hadn't played the war card yet and that could and did bail us out. Now the economic situation is very similar except for this very important difference: Today we have wars going on in Iraq, Afghanistan, Pakistan, Yemen and Somalia. We are preparing them against Iran, North Korea and Venezuela. We spend 48% of the entire world military budget and we are still heading into a depression.

Capitalism is doing down. It is already past its expiration date. It is rotting alive now. The main question we have to address is whether we will go down with it or go forward without it.

I don't hate America but I do hate what capitalism has done to her.