Courtesy of the Samizdat Blog, which also contains such refreshing delights as the reference to the Kafka Sutra.
Thursday, October 04, 2007
Poetry in War
When Yellow Ribbons and Flag-Waving Aren't Enough
An ex-soldier's take on recent war poetry
Wednesday, October 03, 2007
Dillon Read And The Aristocracy Of Stock Profits
Catherine Austin Fitts' Mapping the Real Deal
A Serialised Story - Part 1 of 20 (publishing August/September 2007)
"... With this in mind, I decided to write “Dillon Read & Co Inc. and the Aristocracy of Stock Profits” as a case study designed to help illuminate the deeper system. It details the story of two teams with two competing visions for America. The first was a vision shared by my old firm on Wall Street — Dillon Read — and the Clinton Administration with the full support of a bipartisan Congress. In this vision, America's aristocracy makes money by ensnaring our youth in a pincer movement of drugs and prisons and wins middle class support for these policies through a steady and growing stream of government funding and contracts for War on Drugs activities at federal, state and local levels. This consensus is made all the more powerful by the gush of growing debt and derivatives used to bubble the housing and mortgage markets, manipulate the stock and precious metals markets and finance trillions missing from the US government in the largest pump and dump in history — the pump and dump of the entire American economy. This is more than a process designed to wipe out the middle class. This is genocide — a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts.
This case study provides a detailed example of the financial kickback machinery that makes the process go. It works something like this. A group of executives and investors start a company. Rather than build a business the old fashioned way, company profits are pumped up with government legislation, contracts, regulation, financing, subsidies and/or enforcement. This dramatically increases the value of the company's financial equity. The company and its initial investors then sell their stock at a profit. Such profits replenish contributions made to the kind of politicians who can arrange such government benefits. Such profits also fund philanthropy to foundations and universities that have large endowments that invest along side the investors. These tax-exempt organizations provide graduates to staff positions in the game, intellectual justification to attract popular support and photo opportunities which bestow legitimacy and social stature. Personnel cycle through the management and boards of business, government and academia, as real productivity falls and government deficits grow.
The second vision was shared by my investment bank in Washington — The Hamilton Securities Group — and a small group of excellent government civil servants and appointees who believed in the power of education, hard work and a new partnership between people, land and technology. This vision would allow us to pay down public and private debt and create new business, infrastructure and equity. We believed that new times and new technologies called for a revival that would permit decentralized efforts to go to work on the hard challenges upon us — population, environment, resource management and the rapidly growing cultural gap between the most technologically proficient and the majority of people. We believed that private and public capital should flow to that which was most economically productive rather than be mixed in a complex cocktail of insider deals designed to hollow out the American economy and culture..."
[ full article ]
The Who's Your Daddy Nation
Editor’s Note: The bullying con game that passes for Establishment power in the United States appears finally to be reaching a painful end point, even though few Americans have a clear idea about what can be done to start setting matters right.
In this guest essay, poet Phil Rockstroh looks at the extraordinary challenge facing a people who have traded their birthright as citizens of a Republic for the faux security of a "who's your daddy" nation:
"We must become the change we want to see."
-- Mahatma Gandhi
"In any case, I hate all Iranians."
--Debra Cagan, Deputy Assistant Secretary to Defense Secretary, Robert Gates
How many times do we, the people of the U.S., have to go around on this queasy-making merry-go-round of propaganda and militarism before we shout -- enough! -- then shutdown the whole cut-rate carnival and run the scheming carnies who operate it out of town?
It is imperative the nation's citizens begin to apprehend the patterns present in this ceaseless cycle of official deceit and collective pathology. This republic, or any other, cannot survive, inhabited by a populace with such a slow learning curve.
Over the last three decades, the authoritarian right has risen to create the nation they have been longing for since their humbling by the Watergate scandal.
After being subdued and humiliated by the mechanisms of a free republic, the Right has turned the tables -- and subdued and humiliated the republic. If the trend continues, all but unchallenged and unabated, we might as well replace the torch held aloft by Lady Liberty with a taser.
How could it come to this? How did so many U.S. citizens grow so apathetic, oblivious, if not flat-out hostile to the tenets of a free republic?
The authoritarianism inherent to the structure of multi-conglomerate corporatism is antithetical to the concept of the rights and liberties of the individual. Most individuals -- bound by a corporation's secrecy-prone, hierarchical values -- will, over time, lose the ability to display free thinking, engage in civic discourse, and even be able to envisage the notion of freedom....
[ Read on ]
FTW: 'Most Interesting Hypothesis To Date on Motives for Iraq Invasion'
Picked up by FTW's Peak Oil Blog:
Peak Oil, Missing Oil Meters and an Inactive Pipeline: The Real Reason for the Invasion of Iraq?
By Paul Cherufka
In this article I will present research that supports a rather startling hypothesis: that the USA invaded Iraq primarily to enable the secret diversion of a portion of Iraq’s oil production to Saudi Arabia. This was done in order to disguise the fact that Saudi Arabia’s oil output has peaked, and may be in permanent decline. The evidence for this conclusion is circumstantial, but it does knit up many of the loose threads in the mystery of the American administration’s motivation for invasion.
To lay the groundwork we need to set out a couple of assumptions.
The primary assumption is that the world’s oil production has been on a plateau for the last two years, and in fact we may be teetering on the brink of the production decline predicted by the Peak Oil theory. Such a decline could be dangerous to the world economy, both directly through the loss of economic capacity and indirectly (and perhaps more importantly) through the loss of investor confidence in the global economic structure.
The primary assumption is that the world’s oil production has been on a plateau for the last two years, and in fact we may be teetering on the brink of the production decline predicted by the Peak Oil theory. Such a decline could be dangerous to the world economy, both directly through the loss of economic capacity and indirectly (and perhaps more importantly) through the loss of investor confidence in the global economic structure.
The second assumption is that the oil production of Saudi Arabia is key to maintaining the global oil supply. Saudi Arabia supplies over 10% of the world’s crude oil, with over half of that coming from one enormous field named Ghawar. There is a large and well-informed body of opinion that believes that if Saudi oil production goes into decline the world will follow because there is not the spare capacity anywhere else to make up for such a decline. Saudi Arabia is notoriously tight-lipped about the state of their oil fields, and in fact oil production information is considered to be a state secret. The only trustworthy information the world really has about Saudi Arabia’s oil are their aggregated production figures.
The conclusion that can be drawn from these two assumptions is that if Saudi Arabia’s production began to decline and the world found out about it, there would be a significant risk of a world-wide economic panic that would destabilize markets and throw nations like the USA into a recession or depression that would be worse than the actual damage done by the loss of the oil. We can assume that the prevention or postponement of such a crisis would be an extremely high priority for the administrations of both the USA and Saudi Arabia....
[ full article ]
The conclusion that can be drawn from these two assumptions is that if Saudi Arabia’s production began to decline and the world found out about it, there would be a significant risk of a world-wide economic panic that would destabilize markets and throw nations like the USA into a recession or depression that would be worse than the actual damage done by the loss of the oil. We can assume that the prevention or postponement of such a crisis would be an extremely high priority for the administrations of both the USA and Saudi Arabia....
[ full article ]
Metafuture and Alternative Futures
"...Memes are like genes but focused on ideas. Memes are ideas that pass from person to person, become selected because they offer us advantages in our thinking, in our survival and thrival. Certainly, war as a meme, I would argue, has reached its limits in terms of offering longer lasting solutions to Earth's problems, I would argue.
Another world is possible! We need a field that begins the process of moving beyond the world of hawks and doves. And a world that recognizes that multiple traditions are required to transform war and peace. Within our histories are resources of peace, whether Islamic, Vedic, Christian, Buddhist or secular.
But first we must challenge the litany of war. Unless it is contested, we will assume that because it is, it always will be. The next task is to challenge the systems that support war: the military-industrial export complex; national education systems; our historical identities. We also need to challenge the worldviews that both support and are perpetuated by war: patriarchy and survival of the fittest. Ultimately, we need a new story of what it means to be human..."
From: Alternative Futures of War: Imagining the impossible, by Sohail Inayatullah
A necessary evil?
Vernon W. Ruttan, Is War Necessary for Economic Growth? Military Procurement and Technology
Reviewed for EH.NET by Robert Higgs, The Independent Institute.
Vernon W. Ruttan, Regents Professor Emeritus in the Department of Applied Economics and Adjunct Professor in the Hubert H. Humphrey Institute of Public Affairs at the University of Minnesota, is a well-known contributor to the literature on the economics of technological change. In his latest book, Is War Necessary for Economic Growth?, he ostensibly seeks to establish the relationship, if any, between the U.S. government's preparation for or engagement in warfare and the creation of new general-purpose technologies that contribute to increasing the rate of economic growth.
I would like to think that the publisher's marketing department, not the author, bears responsibility for the book's foolish title. If we know anything at all about economic growth, we know that peace is among its essential conditions. No nation can expect to improve its economic well-being in the midst of a maelstrom of death and destruction. In fact, what Ruttan examines is not war at all, but government subsidies to and direct engagement in technological development and government purchases of technically-advanced goods and services. That these subsidies, engagements, and purchases occur under the rubric of "war" or "defense" is almost incidental. The military aspect matters only in the political sense that historically the U.S. government has marshaled the greatest amounts of resources for research and development in connection with military endeavors.
Seeking to "demonstrate that military and defense-related procurement has been a major source of technology development across a broad spectrum of industries that account for an important share of U.S. industrial production" (p. vii), Ruttan presents in successive chapters capsule economic histories of technological development in six areas: interchangeable parts and mass production; aircraft; electrical power generation and nuclear energy; computers; the Internet; and space-related goods, such as missiles, satellites, and related communications systems. In each chapter, he draws on a wide selection of secondary sources to describe how the government's involvement affected the course of technological change. Although these descriptive chapters are informative and clearly written, they present no new evidence or analysis. Economic historians will be familiar with the broad outlines of much of the information presented, if not with all the details.
Ruttan does not claim that the six areas he discusses constitute a random sample of all industries or even of industries in which the government has actively engaged in stimulating technological development. Indeed, he appears to have chosen these six areas because he knew beforehand that the government played an especially important role in each of them. Given this aspect of the evidence Ruttan considers, the reader must hesitate to place great weight on the book's findings. Yes, interchangeable parts, aircraft, computers, and so forth have been important areas in which the government contributed to hastening certain technological developments, but these areas are far from composing the whole economy. Areas such as nuclear power generation and space-related activities have even less significance for the overall economy.
Ruttan's discussions in this book are strictly tertiary. Indeed, in several regards, the book resembles a textbook. Various topics are discussed in boxes set apart from the main text (for example, "postal subsidies for airline development," "the national energy laboratories," and "origins of the global positioning system"). All of the tables and figures are borrowed from secondary sources or from well-known published collections of data. Each chapter includes an extensive set of references. The indexes occupy about ten percent of the book's total pages.
In the final chapter, Ruttan draws some more general conclusions, in the form of informed personal judgments, about the government's engagement in the various areas considered in the descriptive chapters. These conclusions take the form, for example: "In the absence of military support for R&D during World War II and military procurement during the Korean War, the transition to jet commercial aircraft propulsion would have occurred much more slowly" (p. 164). Well, yes, of course. Such conclusions say little more than that the government generated some spillover effect on the rate and direction of technological change in commercial areas related to the military projects for which the government spent lavishly. When Ruttan tries to go further, however -- when he opines, for example, that between 1900 and 1950, "productivity growth in the electric power industry was the major driver of productivity growth in the entire U.S. economy," and "[d]uring the last several decades of the twentieth century the computer and microprocessor emerged as the major drivers of productivity growth in the U.S. economy" (p. 166) -- his judgments may well be questioned. What he means by "major driver" is neither obvious nor explicated
In a box called "Military R&D: The Productivity Puzzle" (pp. 169-71), Ruttan raises critical questions for his analysis that he does not answer adequately. Again, he gives only his considered judgment. At one point, however, that judgment seems damaging for his own ultimate conclusions, when he states: "My own view is that we do not yet have, and perhaps cannot have, a body of rigorous econometric evidence against which to evaluate the economic impact of defense and defense-related R&D and procurement" (p. 170). He avers that "careful narrative analysis of individual cases is at present a more effective method of capturing the effects of complementarity than econometric analysis" (p. 170). This judgment is problematic because although careful narratives may reveal many things that econometric analysis does not, they still cannot answer the ultimately crucial, intrinsically quantitative question: what was the overall net payoff to the government's expenditures, considering military and commercial results together? Moreover, because the military aspects of the matter take place within an essentially nonmarket context, as Ruttan explicitly recognizes at one point (pp. 169-70), only the commercial (that is, private market) part of the return on the government's subsidies, direct engagement, and procurement can be computed in a meaningful way, and computation of even that part of the net return raises difficult analytical challenges.
Ruttan accepts too readily the conclusion derived from neoclassical blackboard economics that private actions give rise to "market failure" because of "suboptimal" amounts of investment in technological change. He laments that the United States "has not yet designed a coherent set of institutional arrangements for public support of R&D for civil purposes" (p. 182). Here one is tempted to remark, thank God. If the government were to get even more deeply involved in making big financial bets (with the taxpayers' money) about technological development, the most probable result would be a massive waste of resources arising from the inherently political nature of any likely government program. If you want a template, just think of ethanol.
Finally, Ruttan anticipates that because of changes in the nature of military technology and the diminished prospects for a great military mobilization such as World War II or the Cold War, the government will not make efforts comparable to those it made in the past, and hence the rate of economic growth will be diminished. He asks: "Will it take a major war or threat of war to induce the mobilization of the scientific, technical, and financial resources necessary to develop major new general-purpose technologies? My answer to this question, based on historical experience, is that it may" (p. 185). Although this flaccid conclusion leaves Ruttan looking forward to "incremental rather than ... revolutionary changes in both military and commercial technology" during the next half century (p. 185), we need not fret. In truth, Ruttan does not know what the technological future holds in store; indeed, no one does.
Ruttan seems excessively focused on technological change per se; he does not give adequate attention to the economics of the matter. The general population does not benefit from faster technological progress, however, unless the rate of return on that development is supernormal. As Ruttan recognizes at one point, "the advances in scientific and technical knowledge and commercial technology induced by demand for defense and defense-related technology in the past imposed very heavy opportunity costs on the U.S. economy" (p. 185). Obviously, the government has specialized in pouring money into military projects decades in advance of the advent of opportunities for significant commercial applications. Moreover, the wastes associated with military R&D and military procurement of goods and services are themselves legendary, as amply documented by the contributors to a book I edited, Arms, Politics, and the Economy: Historical and Contemporary Perspectives (1990). In contrast, motivated by sufficiently free markets, clever scientists, inventors, and engineers are never likely to run out of promising ideas to develop -- ideas that contribute directly to human well-being, rather than to the enlarged potential for wreaking death and destruction that military technological development seeks.
Robert Higgs is Senior Fellow in Political Economy at the Independent Institute and editor of the Institute's scholarly quarterly The Independent Review: A Journal of Political Economy. His most recent books include Against Leviathan: Government Power and a Free Society (2004), Resurgence of the Warfare State: The Crisis since 9/11 (2005), and Depression, War, and Cold War: Studies in Political Economy (2006).
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