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NAME: Harry Targ
EMAIL: Targ@purdue.edu
DATE: 03/29/2008

TITLE: From a Permanent War Economy to the War on Terrorism: Consequences for America's Well Being

Harry Targ

In the Beginning

After suffering the greatest economic depression in United States history, this country participated in a war-time coalition with Great Britain and the former Soviet Union to defeat fascism in Europe and Japanese imperialism in Asia. As a result of the economic mobilization for war, the United States economy grew to become the most powerful one by war’s end. By 1945, Americans were responsible for three-fourths of the world’s invested capital and controlled two-thirds of its industrial capacity. Near the end of World War II, General Motors CEO Charles Wilson recommended that the U.S. continue the wartime partnership between the government, the corporate sector, and the military to maintain what he called a “permanent war economy.”

To justify a permanent war economy-ever increasing military expenditures, bases all around the world, periodic military interventions, and the maintenance of a large land army, navy, and air force-an external threat was needed. In 1947 President Truman told the American people that there was such a threat, “international communism.”

Many liberals and conservatives remained skeptical about high military expenditures. But, just before the Korean War started, permanent war economy advocates threw their support behind recommendations made in a long- time classified document, National Security Council Document 68, which recommended a dramatic increase in military spending. NSC-68 also recommended that military spending from that point on should be the number one priority of the national government. When presidents sit down to construct a federal budget they should first allocate all the money requested by military and corporate elites and lobbyists concerned with military spending. Only after that should government programs address education, health care, roads, transportation, housing and other critical domestic issues.

When the United States entered the Korean War, Truman committed the nation to a permanent war economy. Each subsequent president did likewise. According to Chalmers Johnson, between 1947 and 1990, the permanent war economy cost the American people close to $9 trillion. Over 100,000 U.S. military personnel died in wars and military interventions during this period. And, in other countries, nearly 10 million people died directly or indirectly in wars in which the United States was a participant.

Some influential Americans raised criticisms of the new permanent war economy. For example, while he subsequently complied with many of the demands for more military spending, President Eisenhower declared in one of his first speeches in office that “every gun that is made, every warship launched, every rocket fired, signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” After eight years in the White House Eisenhower gave a prescient farewell address in which he warned of a “conjunction of an immense military establishment and a large arms industry” which was new in American history. And, he proclaimed; “We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.” Incidentally, his original draft spoke of a “military-industrial-academic complex.”

Seven years later, in the midst of the Vietnam War, Dr. Martin Luther King Jr. proclaimed “Somehow this madness must cease. We must stop now. I speak for those whose land is being laid waste, whose homes are being destroyed, whose culture is being subverted. I speak for the poor of America who are paying the double price of smashed hopes at home and death and corruption in Vietnam. I speak as a citizen of the world, for the world as it stands aghast at the path we have taken.”

The Permanent War Economy Today

So we find ourselves in the midst of a war today that is already more costly than any war except World War II, against an enemy magnified, demonized, and mythologized as much or more than the cold war enemy to justify a $3 trillion price tag, the deaths of almost 4,000 soldiers, ten times that number of disabled veterans, and casualties and deaths of Iraqis and Afghanis probably exceeding a million people. This is what the permanent war economy has come to.

But at least has the vision of Charles Wilson and the framers and advocates of NSC 68 born fruit in terms of the domestic economy? The answer to this question is complicated but in the end clear. The U.S. economy is subject to cycles of growth and decay; expansion and recession; and periods of increased consumerism and low unemployment versus periods of declining product demand, lower wages, and high unemployment.

Looking at the period since World War II, bursts of increased military spending brought the U.S. economy out of the recessions of the late 1940s and 50s. The 60s economy boomed as the Vietnam war escalated before the economic crises of the 1970s. The so-called Reagan recovery was driven by dramatic increases in military spending. 1980s military spending equaled the total value of such spending between the founding of the nation and 1980.

In addition, military spending has benefited those industries, communities, and universities which have been the beneficiaries of such largesse. In our own day, Halliburton, Bechtel, and Kellogg, Brown, and Root have done quite well. For example, when Dick Cheney left his post as Secretary of Defense in 1993 to become the CEO of Halliburton, its subsidiary, KBR jumped from the 73rd ranked Pentagon contractor to the 18th.

Military spending pumps money into the economy to the advantage of selected multinational corporations and some communities. Usually recipients of defense dollars are part of what C. Wright Mills called, “the power elite,” those powerful individuals who are at the apex of government, corporate, and military institutions who can influence policy. On the other hand, most citizens are not beneficiaries of military spending.

“Indirect effects” of military spending, which are being felt dramatically now, overwhelm the short-term stimulative effects of such spending. Military spending is “capital intensive,” that is the investment of dollars in military goods and services require less labor power to produce than the investment of comparable dollars in other sectors of the economy. Robert Pollin and Heidi Garrett-Peltier refer to spending on Iraq as a “job killer.” They estimate that $1 billion spent on investments in education, healthcare, energy conservation, and infrastructure would create anywhere from 50 to 100 percent more jobs than comparable spending on the war. They say; “Taking the 2007 Iraq war budget of $138 billion, this means that upward of one million jobs were lost because the Bush Administration chose the Iraq sinkhole over public investment.”

Further, military spending requires government to borrow money from private sources. Consequently, the more borrowing for the military, the less funds are available for non-military economic activity. Non-military spending gets “crowded out” by investment in arms.

Paralleling this, expanding investments in military reduce the resources of society that can be allocated for the production of goods and services that have a use value. Military spending constitutes waste in that the resources that go into armies, navies, air forces, and weapons of human destruction cannot be put to constructive use. Looking at government spending alone, the 2008 federal budget calls for a $35 billion increase in military spending, bringing the total to $541 billion. At the same time federal aid to state and local governments will fall by $19.2 billion. The war on Iraq has already cost $522.5 billion and it is projected by distinguished economists that the total cost for the war, including paying debts, veterans benefits, and replacing destroyed equipment, will top $3 trillion.

The Permanent War Economy in One State

Citizens of Indiana have already spent $8 billion on the war. And, the National Priorities Project estimates that the 2008 budget will cost Indiana taxpayers an additional $1.3 billion for the war. At the same time the 2008 war costs will lead to cuts in 100 federally funded programs in the state that meet community needs, including $17.8 million for Community Development Block Grants for 44 communities; $8.3 million for low-income home energy assistance; $11.2 million in cuts for Social Services Block Grants; and $4.7 million for Section 8 Housing Choice Vouchers.

Looking at Congressman Steve Buyer’s Indiana Fourth Congressional District (and he is a solid supporter of the war), taxpayers have paid $965.3 million for the war so far. If he and his colleagues had said no to a war on Iraq the money could have provided:

Conclusion

These and other data make it crystal clear that military spending, particularly on this war in Iraq, “crowds out” significant social programs and virtually every non-military program at national, state, and local levels. It is also clear that military spending, as compared to other public and private investments, creates fewer jobs and opportunities for young people than non-military government spending and private investment. Evidence is overwhelming that basic needs-education, health care, housing, transportation, good-paying jobs, safe and clean environments-are increasingly not being met. And one reason they are not being met is because of the spending for war, and especially this war on Iraq. The warnings President Eisenhower made over forty years ago-that military spending was distorting the economy and peoples lives and there existed unwarranted influence of a military-industrial complex in American society-are still relevant today although the magnitude of the distortions brought about by spending and war have grown to an extent unimagined in the 1950s.

For these economic reasons, along with the moral and political ones, the American people must end the wars in Iraq and Afghanistan and begin the process of challenging “the permanent war economy.”

Harry Targ teaches U.S. foreign policy and international relations and is a member of the National Executive Committee of the Committees of Correspondence for Democracy and Socialism (CCDS).

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