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The Case That Wars Fuel U.S. Economic Booms

The Republicans are censoring their own anti-New Deal logic.
 
 
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In the great debate about the stimulus package -- which, underneath all the cant is really nothing more than a debate about how America's scarce wealth should be divided --  one of the right wing's favorite mantras was their claim that the New Deal did nothing to end the Depression. Instead, they argue, it was World War Two that ended the Depression.

So far, the liberals' counterargument is to throw out a bunch of statistics arguing that the New Deal did work. Both sides take their argument to the real of hypothetical realities: either the '30s could have been worse without the New Deal (liberals argue) or the 30s would have been better off without the New Deal (right-wingers argue). But let's stop and consider the Republican right wing's argument about World War Two's effect on its own merits: if it really was the war that pulled America out of the Depression, that is hardly an argument in favor of endless tax cuts and small government. The wartime economy was the very opposite of the Adam Smith model of free trade and minimal government interference -- it was, instead, New Deal economics to the tenth power, in which the government managed and controlled just about every single facet of the citizenry's lives. And then of course there's the war's outcome: America emerged victorious and largely unscathed with comparatively little cost in lives compared to the war's other major participants, while all of America's global competitors essentially committed mass suicide and were left prostrate at our militarized feet.

The Republican right unintentionally raised a very serious issue, but no one seems to want to call them on it, not even their own supporters. The can of worms they've opened leads to this: what if America's booms and busts are tied not to monetary policy, taxation levels or government regulation, but rather to our success or failure as an imperialist war machine? What if our wealth is a consequence of our ability to plunder the world's wealth, often by default thanks to our competitors' suicidal behavior?

Consider this very simple, surface chronology of the past 100 years (and why not stick with the surface -- after all economics, despite all of its complex statistical mathematics, has turned out to be little more than glorified astrology):

1914-1918: World War I. America ends up on the winning side at comparative little cost in American lives, no destruction to the homeland or to our economy. Whereas America's European competitors commit mass suicide both demographically and economically. This is followed by:

1920-1929: One of the greatest boom decades in American history. No great wars, no new mass suicide by competitors. That is, nothing new to plunder. This leads to:

1929-1939: The Great Depression. No new wars, no new imperial expansion, and with it, feeble economic expansion. This is followed by:

1939-1945: World War II. America ends up on the winning side at comparative little cost in American lives, no damage to the American homeland. America's European and Asian competitors commit mass suicide both demographically and economically. Global markets (minus Communist world) are America's for the taking. Which leads to:

1945-1960: American economic boom. America's economy makes up half of the world's GDP in 1950, and rides its biggest sustained boom in U.S. history, including an unprecedented rise in living standards.

1945-1960: French and British empires, already weakened competitors of America's empire, decline and collapse for good, allowing the American empire to expand further by filling the vacuum. America fights Korean War 1950-52; wisely halts it to a draw after just 2 years, meaning little net gain or loss. Communist empire expands -- communist countries by nature are uncompetitive against the U.S. economically, except inasmuch as they deny markets to U.S. goods and keep the empire in check. This leads to:

1960-1970: The American economic boom, still riding off the momentum of the World War II wealth transfer, gradually begins to sputter as the decade wears on. This economic decline accelerates in tandem with:

1963-1975: America loses its first war ever in Vietnam. With its first imperial defeat, the American empire is in retreat. Once-compliant countries from Latin America to the Middle East assert themselves; Third World becomes increasingly either socialist or "non-aligned"; America plunders less and less of the world's wealth. This leads to:

1970s: Economic stagnation, decline in standard of living. This eventually leads to the election of an avowed American imperialist, Ronald Reagan, which is followed by:

1981-1989: American economy ramped up for Cold War against "Evil Empire." Reagan racks up massive debt and pours enormous state funds into "winning" the Cold War against the "evil empire." Militarizes the economy and the culture. Imperial decline halted. Latin America reabsorbed into soft American empire, while many Arab states also become more compliant, especially following the bombing of Libya. Fund war against Soviets in Afghanistan, letting them bleed, without any damage to American homeland. This leads to:

1980s: American economy begins to grow again, though still not as fast as in the 60s or 50s, the period after victory in World War II.

1989-1991: American victory in the "Cold War": the Communist empire collapses. American empire absorbs these new markets without firing a shot or suffering damage in the homefront, opening up massive new opportunities for wealth plunder. America's biggest economic competitor, Japan, essentially collapses. In 1991, America wins Gulf War 1, its first big war victory since Vietnam. American empire, without rivals, suddenly resurgent again. This leads to:

1990s: Economic boom, which accelerates towards the end of the decade, reaching levels of growth not seen since the 50s and 60s.

2001: Brief recession which many say will spell doom to America's booming economy. But then:

2001-2: America wins war against Afghanistan, leading to world recognizing for the first time that America is not only an empire, but a "hyperpower." Economy quickly turns around and begins to boom again, until:

2003-8: America loses only its second war in its history against Iraq. The victory in Afghanistan slowly unwinds and starts morphing into another defeat. That's two war losses in one decade. Which leads to:

2007-present: The new Great Depression.

So if you follow the Republican right-wing's own logic, the question isn't whether or not we should raise or lower taxes, or whether we should fund programs that teach kids about STDs. America's economic booms and busts have nothing to do with Adam Smith's three-pointed-hat Calvinist fantasies and everything to do with whether we win or lose wars, and, more importantly, if our competitors commit mass suicide in these wars, allowing us to ride in at the end, after our competitors have bankrupted and bled themselves to death, as we did in World Wars I and II, and again in the Cold War. The more we behave like sly jackals feeding on the steaming, nutrition-rich corpses of other peoples' collapsed empires, the stronger our economy, and the better we live (the more we can cut our taxes or increase our social spending or both, depending on the amount we've plundered). But if we start a war, fight it by ourselves, and lose -- as the idiots did in Iraq and in Vietnam and now in Afghanistan -- then prepare for the Big Decline. University of Chicago professor Robert Pape recently characterized America's imperial collapse as: "one of the largest relative declines in modern history. Indeed, in size, it is clearly surpassed by only one other great-power decline, the unexpected internal collapse of the Soviet Union in 1991."

Of course, like every economic model bandied about these days, this one has its flaws -- and yet, it's the most obvious model of all. The only difference is that this most obvious model is the one model no one, left or right, has the guts to consider. Maybe because it's too obvious; more likely because it offends the sensibilities of both liberals and conservatives, whose professed openness for the "hard truth" only refers to "truths that are hard on the other side." As Paul Krugman recently admitted, "Well, the Great Depression did eventually come to an end, but that was thanks to an enormous war, something we'd rather not emulate."

The left wants to believe that the economic history of nations has a moral to it, and that moral is that greed inevitably leads to the collapse we're witnessing today; the right wants to believe the flipside to this morality tale, that a nation's economic history serves a Calvinist god and his "invisible hand": individuals must be allowed to prove themselves, freed from the shackles of a secular and therefore evil state, and God rewards the economically pious (i.e. free-marketers who believe in hard work); if the state assumes the role of god and interferes in the wealth-division, then the Calvinist god gets very angry and strikes down that state with stagflation or smites it with nagging low growth. Or something silly like that.

So now I'm wondering: if the right-wing wants to put a giant fence around its new argument against the New Deal, stopping their own line of reasoning at the point where it debunks Keynsian economists, censoring their own line of reasoning before it can go to the next logical step, which is that victorious wars which destroy your competitors are good for the American economy, and are the reason why America had such an unprecedented boom in the post-war period; and its opposite: when you lose a war like the one in Iraq, the right-wing Republicans' pet project, it leads to the sort of economic collapse we're witnessing today. By their own logic, they are responsible for screwing us for the next decade because these would-be imperialists are circus monkeys, as useless as AIG's bosses when it comes to managing their imperial fantasies.

It also raises the question of what the hell we're doing ramping up the war in Afghanistan, just as it's become clear that we've lost. It's the graveyard of empires; what is Obama planning there, two consecutive losses? Has any nation ever screwed up that badly? Moreover, wars are only good for the American economy when there's something to plunder at the end of it all. What's there to plunder from Afghanistan, assuming we even win: dirt? Opium? (Well, OK, I'm all for the opium, but even I know that won't create a nation of happy nuclear families; happy junkies, yes, but not wealthy new homeowners.)

If war is what fuels American prosperity, as the George Wills and others on the right are half-arguing in their sly, cowardly way, then have the guts to say so, and stop lying about private enterprise.

 
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