[A-List] US and UK Imperialism: Conscription Ahead

["Anyutka" <annewilliamson@xxxxxxx>]

I have been increasingly worried about the return of conscription - Chris
Sanders states the reasons plainly here.  We
are not creating jobs for the young here in the US - in fact, all those kids
who were told 10 years ago to study
computer science are out in the cold now as their jobs are being exported.
In fact, the greatest rise in unemployment
is among recent college graduates.  But a chilling detail from a news story
on average American bankrupts I read
yesterday really put a chill down my spine.  One young couple highlighted in
the story had gotten themselves into
debt first for their educations, and then just in order to live, they then
when to debt counselors and got their ship righted
through belt-tightening and moving to a smaller apartment, while the
husband - who'd lost his private sector job - was
reported now to be a nearly commissioned officer in the military!  And so
the young couple's prospects for stability -
not growth! - were looking brighter, the banal report concluded.  But,
honestly, our economic problems are so immense
that I can not imagine what would be a more attractive and possible
proposition for our American youth in the very near future
than the military.  What a catastrophe! -A.


Goodbye Rome, hello Sparta

September 17, 2003



Lycurgus intended to remove any inequalities in ownership of personal
property as well as real property, but he realised that it would be too
difficult to proceed openly. Therefore he took and indirect approach. His
solution was to ban ownership of gold and silver, and to allow only money
made of iron. The iron coins of Sparta were dipped in vinegar to make the
metal brittle and worthless.

The helots were slaves whom the Dorians had conquered. They were owned by
the state, not by individuals, and they were ruthlessly oppressed by their
Spartan masters.

The helots did the labour, so the Spartans had plenty of leisure time.

Plutarch's Lives, a modern English edition, abridged and edited by Wilmot H.
McCutchen, 1998



The news that the Bush Administration requires another $87 billion to
finance its occupation and counterinsurgency operations in Iraq will not
have come as a surprise to SRA readers. Others are beginning to take note as
well.  The obvious implication is for an open ended call on the American
taxpayer in the long run, and in the short run for further lending from
Japan and China to finance the cash outlay.

Total foreign holdings of US debt obligations are rising rapidly, both in
absolute as well as proportional terms. More than 40% of the United States’
direct obligations are held by foreign governments. More than two thirds of
that is held by Asian governments, the biggest lenders by far being Japan
and Greater China. The reason for what we think is a de facto managed
floating currency rate regime between the three countries could not be
clearer. The US needs to ensure the smooth flow of Asian savings to finance
its war machine.

The US is, economically speaking, on a hiding to nowhere. The problem is not
incidental and temporary but structural, and for all intents and purposes is
also permanent. Shedding industrial jobs over the last twenty years has also
meant shedding the capability to make things. This of course means that the
US will find it difficult both to sell abroad in order to raise net exports
and to recycle industrial profits via wage growth to raise domestic demand.
The problem is exacerbated by the sheer size of the military economy[i],
which is by definition unproductive. It is a net drain on the economy
because the things that it produces are not used to produce anything except,
well, death. This is unlike, say, machine tools, which are used to make
other things that can be used to make still more things. This is,
incidentally, what is really meant by productivity growth as opposed to the
silly notions about productivity bandied about by Wall Street, which views
cost cutting by firing workers as “productivity” enhancing.
Profits-enhancing, yes, but that is a different thing altogether.

The Asian economies have been content to go along with all this because of
the attractions of the American market, but firing American workers does not
make for a buoyant economy to soak up those “cheap” exports. The solution,
as we have discussed in depth elsewhere, has been to promote debt issuance
in order to maintain demand.

What might have been plausibly viewed sixty years ago as a virtuous circle
promoting recovery from the world war has metastasised into something quite
different, which makes the prospect of turning the clock back very difficult
to imagine. Nowhere is this more evident than in the United Kingdom, which
has appropriated the American models of privatisation, deindustrialisation,
and debt finance and made them her own. The serial blunders that have
followed in the wake of all this (the railways, British Airways, the Inland
Revenue asset sale, the sale of defence industries and so on) have passed
with barely a murmur. This is perhaps due to Britain having enjoyed status
for most of that time as a net oil exporter, thanks to its North Sea
reserves. North Sea production has, however, peaked, and along with it, so
has the revenue windfall enjoyed by the government. Statistical games have
helped too. Britain’s balance of payments has been healthy because of a
substantial surplus in earnings on overseas assets. This, however, has been
boosted by large British acquisitions of stakes in American companies. Even
if the company is not wholly owned, all of its earnings are counted as
inflows under present balance of payments accounting practice.

The bottom line for both economies is that they have become more dependent
than ever on the rest of the world to make things work. The nearly religious
fervour with which they promote “globalisation” and “free trade” is much
more understandable when one understands this. But the War on Terror is a
signal, if one needs one, that the high water mark of free markets,
privatisation, and for that matter, free trade, has been reached, at least
for this cycle.

It is a noteworthy fact, that for all the ink spilled in the last twenty
five years for these three causes (Remember the supply-siders? Where are
they now?) the public sector has grown and grown. In the UK, public sector
employment has now reached a staggering 26% of the labour force. Thus,
public sector way inflation of nearly 6% is not simply a statistic: it is a
forecast of things to come. In the US the public sector work force is
smaller as a proportion of the labour force, but at over 16% is still large.
Over the last thirty years, moreover, the US prison population has
skyrocketed to more than 2 million from less than 200,000. With government
encouragement of the use of prison labour by the corporate sector, prisoners
are arguable part of the public sector work force. When a state incarcerates
that many people, it can no longer be considered mere punishment, but rather
social and economic engineering.

This is just a taste, we submit, for what is to come. America’s generals
have said all along that they needed far more troops than the 150,000 that
they currently have deployed in Iraq to pacify the country. The problem is
that the Army does not have any more troops. Britain is in the same fix.
Rumsfeld has been to the country and seen the situation. Whatever he says in
public, he certainly knows what the score is.

The problem is that there is an election to win next year and his man is
unpopular. But after the election, with the war going badly, there will be
little reason to wait. Conscription is coming back. What better way to soak
up surplus labour?

Think we are wrong? Don’t bet on it. And use the stock market’s strength
this year to get out. The insiders are.



Chris Sanders





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[i]The national security budget, comprising direct annual cash payments for
military operations and procurement (forecast at over $500 billion for the
coming fiscal year), pensions and health benefits for military retirees,
intelligence gathering, and homeland security, is estimated by us to be in
the neighbourhood of $800 billion. This does not take into account the
implicit subsidy to the so-called “private sector” contractors (tradable
market cap of over $1.5 trillion) who work for the Pentagon on cost-plus
contracts, not does it include the cost of carry on the debt issued to pay
for all this. The real cost is almost certainly over $1trillion or more than
10% of GDP. This is big however you wish to look at it.