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Legacy of Ashes The History of the CIA Tim Weiner

Amazon.com Books

Retired Reader on August 10, 2007

 A Degree of Truth

As Tim Weiner makes clear in the first pages of this book, the driving force for the creation of CIA was to establish a clearing house where all intelligence information available to the U.S. could collated, vetted, and organized into coherent knowledge. And as he also makes clear this mission was subverted and overshadowed from the start by the culture of the veterans of the WWII Office of Strategic Services (OSS) who dominated the early CIA. These veterans were far more comfortable with covert action and clandestine collection of intelligence than desk bound intelligence analysis. So from the time of its creation to the present, the Directorate of Intelligence (analytic shop) has existed in the shadow of the Directorate of Operations (DO). Virtually every CIA Director from the beginning has focused on one or all of the following: initiating DO operations; cleaning up messes left by DO operations; or reorganizing the DO to do a better job.

This book is a case in point. Although ostensibly about CIA as an institution, the book really focuses on DO and its alleged failures. This fascination with the DO by journalists, Presidents, and CIA Directors has allowed the analytic arm of CIA to atrophy from almost the very first. Yet the many failures and embarrassments that Weiner has chosen to chronicle in this book are as much the fault of DI as DO.

Now this book is essentially a massive and well written critique of CIA and especially the DO. For the most part it is pretty accurate, but as CIA has pointed out in a rather pitiful rebuttal of the book, it is not entirely fair and balanced. For example, in 1998 India exploded a nuclear weapon to the utter surprise and amazement of the entire U.S. Intelligence Community (IC).

Weiner jumps on the CIA in particular for its failure to predict this event. What he did not mention was the fact that India used its considerable knowledge of the workings of the U.S. Intelligence System to develop and execute a masterful denial and deception program. Further, India has a world class counter-intelligence service that makes collection of secret intelligence in India a very dicey proposition in the best of circumstances. True CIA was guilty in this instance of mirror imaging and failed to creatively use a number of clues available from secret and open sources, but it also had a really tough nut to crack, As Weiner chronicles the many missteps that CIA has made, he would be more credible had he also gone into a bit more detail about the impressive obstacles faced by CIA operations officers. In the end this is a fascinating book that accurately chronicles a part, but not the entire CIA story.

Shalom Freedman "Shalom Freedman" (Jerusalem,Israel)

A first- rate richly sourced thought- provoking study, July 11, 2007

The incident which gives this book its title reveals something essential about its tone and direction. At the end of his two - terms of office President Eisenhower called into his office, the former legendary OSS officer and director of the CIA Allen Dulles, and said to him point- blank. " After eight years you have left me , a "legacy of ashes." In other words the institution whose task it was to provide vital intelligence to the U.S. Executive on world - affairs had not done its job. Eisenhower was concerned about what legacy would be handed on to his successor, President Kennedy. And surely enough some months later 'The Bay of Pigs' fiasco occurred in great part because of the faulty plan and information provided by the CIA's Richard Bissell. Bissell believed an infiltrating semi- Army of 1600 would easily defeat Castro's sixty- thousand troops. The result was the Kennedy Administration's first major disaster.

The two - sides of Intelligence work, the gathering of information, and the undertaking of covert operations are generously surveyed in this work. Weiner a long- time reporter for the NY Times devoted twenty- years to this book, and in the course of it read through fifty- thousand declassified CIA Intelligence documents. He also interviewed ten former directors of the CIA.

He points out errors made all along the way. Frank Wisner at the beginning ignored 'intelligence gathering' and sent during the Korean War thousands of hired agents to suicidal behind- the- enemy- lines operations. In the Bay of Pigs fiasco and in numerous other operations the CIA instead of providing hard, truthful contradictory analysis essentially worked to politically support a prior decision of the Executive branch. Speaking 'truth to power' has not been its essential strong point.

Weiner understands the difficulty of having a spy agency in a democracy where there is always a certain discomfort regarding covert operations. His argument is nonetheless not about the wrongness of having such an Agency in a Democracy, but rather about the too frequent failures of judgment and action.

This book is extremely rich , providing new insight into a great share of American post- war history. It touches upon almost all the major conflicts. It also chronicles CIA successes wherever they have occurred, It is not in other words a one- sided politically motivated bashing of the Agency but rather a thoughtful, informative, challenging study that may provide valuable guidance as to how the Agency should be reformed to better confront the many security challenges the U.S. is facing today.

 jl

Too jounalistic, October 5, 2007

While Legacy of Ashes provides interesting bits of information regarding the CIA's distant and recent past, it is not good history because it provides almost no context for the events that it describes. It leaves one with the impression of a CIA populated by comic book bad guys, lunatics and clowns.

In the Second World War and the period immediately thereafter, having been forced out of a self-imposed hiatus from dealing with the rest of the world, the United States had come face-to-face with totalitarianisms and the unparalleled carnage they had wrought. We learned of the Nazi death camps, the victims of communism in countries that were grist for the Soviet mill and, as time went on, untold millions who died for Mao's Marxist experiments in China. It should be no surprise that those who witnessed the slaughter and destruction that followed what appeared to be a triumphant march of ideology would be able to justify extreme measures to slow it down. This central reality gave rise to dramatic changes in the U.S. military including the build-up of a nuclear arsenal, the Marshall plan, communist "witch hunts", the space program, and the CIA. In short, the world was a very different and much more dangerous place than we had imagined, the U.S. was the only major western nation left intact, and we were struggling to find effective ways to deal with existential threats.

Unfortunately, very little of this context is provided in Legacy of Ashes. Too often we are left with nothing but the operational details of failed efforts to accomplish - what? The CIA and/or the White House wanted to overthrow Guatemala and Iran or assassinate Castro because personalities were enamored of covert operations?

That so many efforts were poorly thought out or poorly executed can be instructive, but, again, not without more context. Although rarely mentioned, the Soviets were engaged in covert operations around the world, including assassinations, coups and the arming and training of some stunningly unsavory characters. Were the Soviets more successful? If so, why? Is there something about our national character or form of governance that makes us preternaturally unable to succeed in the arena of covert operations and intelligence? In recent years the United States appears to have reached a consensus view that many of the types of efforts to which the early CIA devoted enormous energy should not be a part of our arsenal. Is this view correct in light of the very different types of threats we now face? Unfortunately, these important topics are not considered in any depth in this book.

Finally, I was left to wonder whether the author's reliance on primary and secondary documents and interviews with former CIA staff led him to accept their biases even as he criticized the agency. In particular his treatment of Vietnam seems insufficiently critical of conclusions reached by CIA analysis. For example, his treatments of Diem and the role of the Buddhist monks are facile and superficial. And I was surprised by his apparent acceptance of the notion that the war was not winnable because of the size and strength of the Viet Cong and that the Tet offensive provided evidence of this. In fact, the Tet offensive was a catastrophic military defeat for the Viet Cong which left it routed. It never again played any significant role in the war which became increasingly conventional, right through the Easter offensive in 1972, which the ARVN with U.S. air power defeated, and the final invasion in 1975 which saw Soviet tanks rolling through Saigon. But the author appears to accept the CIA's contemporaneous assessments over those of subsequent history.

While the author has clearly put a great deal of work into this volume, it is more of a greatly expanded news article - heavy on details while short on context - than the history of the CIA that the nation needs, and may have to wait many years to get.

Izaak VanGaalen

Intelligence as Misnomer, September 9, 2007

This is a very thoroughly-researched and well-documented history of the CIA, from its inception in 1947 to the present day. The author, Tim Weiner, is a New York Times reporter who has covered the agency for many years. His book is based on more than 50,000 documents from the CIA archives, many of them recently declassified. It is stronger on events that happened more than, say, twenty years ago, since documents on the last two decades still remain classified.

This is primarily a history of the CIA's failures, and the list of failures is very long. Even some of the agency's rare successes ultimately end up as unintended consequences. The outright failures were failures of intelligence, events that the agency was unable to foresee such as the Soviet explosion of the atomic bomb, the Soviet invasion of Afghanistan, the collapse of the Soviet Union, the Iraqi invasion of Kuwait, and, more recently, the 9/11 attacks. Failures to predict the future are somewhat forgivable since they are crimes of omission or just plain incompetence.

The author tells us that the CIA's mission from the beginning was problematic. It has the duel task of collecting intelligence and conducting covert operations. This combination is a dangerous mix in that it will end up corrupting the integrity of both. Many of the covert operations such as the Bay of Pigs were undeniable failures. But many of the so-called successes such as aiding Islamic warriors against the Soviet occupation of Afghanistan or installing the Shah in Iran turned out to be very short-lived. The unintended consequences or "blowback" have come back to haunt in a very big way. This is not to say that the CIA is responsible for the current state of Iran or Afghanistan, that would be giving them too much credit. The emphasis of this book is about the CIA's ineffectiveness.

Weiner seems more concerned about the incompetence of the agency than their immorality. Unlike the post-Watergate screeds against the CIA calling for its termination, this author wants to build a better agency. This is laudable. Anyone who thinks the United States does not need an intelligence agency is living in a dream world. Whether we need covert operations is still an open question. The morality of these operations need to be discussed before they can be conducted.

Weiner's first step in building a better agency would be hiring competent personnel who speak the language and know the history and culture of the country where they are stationed. (Read Amazon reviewer and former spy Robert D Steele, who has written at great length on this subject.) The current practise of hiring political cronies to foreign stations would be laughable if it weren't so tragic. Weiner's account of the student takeover of the US Embassy in Tehran in 1979 is a good example. They captured William Daugherty, head of CIA station. They accused him of masterminding a vast spy network in the Middle East. In reality Daugherty had only worked for the agency nine months and didn't speak the language. No intelligence there.

In the back of my mind I can't help thinking that the agency must have gotten some things right, and that Weiner is only giving half of the balance sheet. It must be noted that failures make good reading, and that the prevention of a disaster or a terrorist act does not. In any event, this book is a good read and hopefully it will make the agency more circumspect about its future operations.

[Dec 1, 2008] Barack Obama says US 'will maintain strongest military on planet', as Clinton confirmed top diplomat - Telegraph

Mr Obama promised greater use of diplomacy and greater emphasis on building alliances around the world as he formally introduced his national security team, which included Hillary Clinton as secretary of state.

But the former Illinois senator, whose rise was built on his opposition to the Iraq war, delivered a message of surprising toughness that at times could have come from George W Bush.

Related Articles

Mr Obama said: "To ensure prosperity here at home and peace abroad, we all share the belief we have to maintain the strongest military on the planet."

[Aug 19 2008] George Monbiot The US missile defence system is the magic pudding that will never run out by George Monbiot

The Guardian

Poland is just the latest fall guy for an American foreign policy dictated by military industrial lobbyists in Washington

It's a novel way to take your own life. Just as Russia demonstrates what happens to former minions that annoy it, Poland agrees to host a US missile defence base. The Russians, as Poland expected, respond to this proposal by offering to turn the country into a parking lot. This proves that the missile defence system is necessary after all: it will stop the missiles Russia will now aim at Poland, the Czech Republic and the UK in response to, er, their involvement in the missile defence system.

The American government insists that the interceptors, which will be stationed on the Baltic coast, have nothing to do with Russia: their purpose is to defend Europe and the US against the intercontinental ballistic missiles Iran and North Korea don't possess. This is why they are being placed in Poland, which, as every geography student in Texas knows, shares a border with both rogue states.

They permit us to look forward to a glowing future, in which missile defence, according to the Pentagon, will "protect our homeland ... and our friends and allies from ballistic missile attack"; as long as the Russians wait until it's working before they nuke us. The good news is that, at the present rate of progress, reliable missile defence is only 50 years away. The bad news is that it has been 50 years away for the past six decades.

The system has been in development since 1946, and so far it has achieved a grand total of nothing. You wouldn't know it if you read the press releases published by the Pentagon's missile defence agency: the word "success" features more often than any other noun. It is true that the programme has managed to hit two out of the five missiles fired over the past five years during tests of its main component, the ground-based midcourse missile defence (GMD) system. But, sadly, these tests bear no relation to anything resembling a real nuclear strike.

All the trials run so far - successful or otherwise - have been rigged. The target, its type, trajectory and destination, are known before the test begins. Only one enemy missile is used, as the system doesn't have a hope in hell of knocking down two or more. If decoy missiles are deployed, they bear no resemblance to the target and they are identified as decoys in advance. In order to try to enhance the appearance of success, recent flight tests have become even less realistic: the agency has now stopped using decoys altogether when testing its GMD system.

This points to one of the intractable weaknesses of missile defence: it is hard to see how the interceptors could ever outwit enemy attempts to confuse them. As Philip Coyle - formerly a senior official at the Pentagon with responsibility for missile defence - points out, there are endless means by which another state could fool the system. For every real missile it launched, it could dispatch a host of dummies with the same radar and infra-red signatures. Even balloons or bits of metal foil would render anything resembling the current system inoperable. You can reduce a missile's susceptibility to laser penetration by 90% by painting it white. This sophisticated avoidance technology, available from your local hardware shop, makes another multibillion component of the programme obsolete. Or you could simply forget about ballistic missiles and attack using cruise missiles, against which the system is useless.

Missile defence is so expensive and the measures required to evade it so cheap that if the US government were serious about making the system work it would bankrupt the country, just as the arms race helped to bring the Soviet Union down. By spending a couple of billion dollars on decoy technologies, Russia would commit the US to trillions of dollars of countermeasures. The cost ratios are such that even Iran could outspend the US.

The US has spent between $120bn and $150bn on the programme since Ronald Reagan relaunched it in 1983. Under George Bush, the costs have accelerated. The Pentagon has requested $62bn for the next five-year tranche, which means that the total cost between 2003 and 2013 will be $110bn. Yet there are no clear criteria for success. As a recent paper in the journal Defense and Security Analysis shows, the Pentagon invented asures that the costs spiral out of control.

Spiral development means, in the words of a Pentagon directive, that "the end-state requirements are not known at programme initiation". Instead, the system is allowed to develop in whatever way officials think fit. The result is that no one has the faintest idea what the programme is supposed to achieve, or whether it has achieved it. There are no fixed dates, no fixed costs for any component of the programme, no penalties for slippage or failure, no standards of any kind against which the system can be judged. And this monstrous scheme is still incapable of achieving what a few hundred dollars' worth of diplomacy could do in an afternoon.

So why commit endless billions to a programme that is bound to fail? I'll give you a clue: the answer is in the question. It persists because it doesn't work.

US politics, because of the failure by both Republicans and Democrats to deal with the problems of campaign finance, is rotten from head to toe. But under Bush, the corruption has acquired Nigerian qualities. Federal government is a vast corporate welfare programme, rewarding the industries that give millions of dollars in political donations with contracts worth billions. Missile defence is the biggest pork barrel of all, the magic pudding that won't run out, however much you eat. The funds channelled to defence, aerospace and other manufacturing and service companies will never run dry because the system will never work.

To keep the pudding flowing, the administration must exaggerate the threats from nations that have no means of nuking it - and ignore the likely responses of those that do. Russia is not without its own corrupting influences. You could see the grim delight of the Russian generals and defence officials last week, who have found in this new deployment an excuse to enhance their power and demand bigger budgets. Poor old Poland, like the Czech Republic and the UK, gets strongarmed into becoming America's groundbait.

If we seek to understand American foreign policy in terms of a rational engagement with international problems, or even as an effective means of projecting power, we are looking in the wrong place. The government's interests have always been provincial. It seeks to appease lobbyists, shift public opinion at crucial stages of the political cycle, accommodate crazy Christian fantasies and pander to television companies run by eccentric billionaires. The US does not really have a foreign policy. It has a series of domestic policies which it projects beyond its borders. That they threaten the world with 57 varieties of destruction is of no concern to the current administration. The only question of interest is who gets paid and what the political kickbacks will be.

Comments

Paul Krugman, New York Times Columnist and Author of The Great Unraveling Losing Our Way in the New Century - A BuzzFlash Interview

Paul Krugman, New York Times Columnist and Author of "The Great Unraveling: Losing Our Way in the New Century"

A BUZZFLASH INTERVIEW

Paul Krugman to BuzzFlash.com: "Well, a couple of things. The first is that a good part of the media are essentially part of the machine. If you work for any Murdoch publication or network, or if you work for the Rev. Moon's empire, you're really not a journalist in the way that we used to think. You're basically just part of a propaganda machine. And that's a pretty large segment of the media.

As for the rest, certainly being critical at the level I've been critical –- basically saying that these guys are lying, even if it's staring you in the face –- is a very unpleasant experience. You get a lot of heat from people who should be on your side, because they accuse you of being shrill, which is everybody's favorite word for me. And you become a personal target. It can be quite frightening. I've seen cases where a journalist starts to say something less than reverential about Bush, and then catches himself or herself, and says something like, "Oh, I better not say that, I'll get 'mailed.'" And what they mean by "mail" is hate mail, and it also means that somebody is going to try to see if there's anything in your personal history that can be used to smear you.

It's like shock therapy, aversion therapy. If you touch these things, you yourself are going to get an unpleasant, painful electric shock. And most people in the media just back off as a result."

[May 31, 2008] On the Burgeoning Military/Industrial Complex

In his final speech as President, Dwight Eisenhower warned against a heretofore unrecognized danger to America, namely the growing influence of what the Commander in Chief called the "military/industrial complex". This excerpt reminds us that despite our nostalgic view of the 1950s, the struggle against Communist was seen as an epic battle:
Throughout America's adventure in free government, our basic purposes have been to keep the peace; to foster progress in human achievement, and to enhance liberty, dignity and integrity among people and among nations. To strive for less would be unworthy of a free and religious people. Any failure traceable to arrogance, or our lack of comprehension or readiness to sacrifice would inflict upon us grievous hurt both at home and abroad.

Progress toward these noble goals is persistently threatened by the conflict now engulfing the world. It commands our whole attention, absorbs our very beings. We face a hostile ideology -- global in scope, atheistic in character, ruthless in purpose, and insidious in method. Unhappily the danger is poses promises to be of indefinite duration. To meet it successfully, there is called for, not so much the emotional and transitory sacrifices of crisis, but rather those which enable us to carry forward steadily, surely, and without complaint the burdens of a prolonged and complex struggle -- with liberty the stake. Only thus shall we remain, despite every provocation, on our charted course toward permanent peace and human betterment.

Crises there will continue to be. In meeting them, whether foreign or domestic, great or small, there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties....

But each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs -- balance between the private and the public economy, balance between cost and hoped for advantage -- balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between actions of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration....

Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well...

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military/industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together....

Another factor in maintaining balance involves the element of time. As we peer into society's future, we -- you and I, and our government -- must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.


I had to include the last bit, even though it deviates from the thrust of this post; you seldom hear public officials today conjoin the notions of stewardship and fiscal prudence.

Reader Charles directed us to an article in today's Asia Times on the stunning growth in defense-related spending under the Bush administration. While the costs of the war in Iraq get a good deal of media attention, the overall expansion in military expenditures is given comparatively short shrift. This piece remedies that oversight.

From the Asia Times:

The Pentagon's massive bulk-up these past seven years will not be easily unbuilt, no matter who dons the presidential mantle on January 19, 2009. "The Pentagon" is now so much more than a five-sided building across the Potomac from Washington or even the seat of the Department of Defense. In many ways, it defies description or labeling....

The Pentagon's core budget - already a staggering US$300 billion when Bush took the presidency - has almost doubled while he's been parked behind the big desk in the Oval Office. For fiscal year 2009, the regular Pentagon budget will total roughly $541 billion (including work on nuclear warheads and naval reactors at the Department of Energy).

The Bush administration has presided over one of the largest military buildups in the history of the United States. And that's before we even count "war spending". If the direct costs of the wars in Iraq and Afghanistan, as well as the global "war on terror", are factored in, "defense" spending has essentially tripled.

As of February 2008, according to the Congressional Budget Office, lawmakers have appropriated $752 billion for the Iraq war and occupation, ongoing military operations in Afghanistan, and other activities associated with the "war on terror". The Pentagon estimates that it will need another $170 billion for fiscal 2009, which means, at $922 billion, that direct war spending since 2001 would be at the edge of the trillion-dollar mark....

With a military budget more than 30 times that of all State Department operations and non-military foreign aid put together, the Pentagon has marched into State's two traditional strongholds - diplomacy and development - duplicating or replacing much of its work, often by refocusing Washington's diplomacy around military-to-military, rather than diplomat-to-diplomat, relations.

Since the late 18th century, the US ambassador in any country has been considered the president's personal representative, responsible for ensuring that foreign policy goals are met. As one ambassador explained, "The rule is: if you're in country, you work for the ambassador. If you don't work for the ambassador, you don't get country clearance."

In the Bush era, the Pentagon has overturned this model...

The Pentagon invariably couches its bureaucratic imperialism in terms of "interagency cooperation". For example, last year US Southern Command (Southcom) released Command Strategy 2016, a document which identified poverty, crime and corruption as key "security" problems in Latin America. It suggested that Southcom, a security command, should, in fact, be the "central actor in addressing ... regional problems" previously the concern of civilian agencies. It then touted itself as the future focus of a "joint interagency security command ... in support of security, stability and prosperity in the region....

The Pentagon has generally followed this pattern globally since 2001. But what does "cooperation" mean when one entity dwarfs all others in personnel, resources, and access to decision-makers, while increasingly controlling the very definition of the "threats" to be dealt with.....

In the Bush years, the Pentagon has aggressively increased its role as the planet's foremost arms dealer, pumping up its weapons sales everywhere it can - and so seeding the future with war and conflict.

By 2006 (the last year for which full data is available), the United States alone accounted for more than half the world's trade in arms with $14 billion in sales.....

In the area of "intelligence", the Pentagon's expansion - the commandeering of information and analysis roles - has been swift, clumsy, and catastrophic..... The Pentagon's takeover of intelligence has meant fewer intelligence analysts who speak Arabic, Farsi or Pashto and more dog-and-pony shows like those four-star generals and three-stripe admirals mouthing administration-approved talking points on cable news and the Sunday morning talk shows.....

the Pentagon now controls more than 80% of US intelligence spending, which he estimated at about $60 billion in 2007. As Mel Goodman, former CIA official and now an analyst at the Center for International Policy, observed, "The Pentagon has been the big bureaucratic winner in all of this.....

When the deciders in Washington start seeing the Pentagon as the world's problem-solver, strange things happen. In fact, in the Bush years, the Pentagon has become the official first responder of last resort in case of just about any disaster - from tornadoes, hurricanes and floods to civil unrest, potential outbreaks of disease or possible biological or chemical attacks.

In 2002, in a telltale sign of Pentagon mission creep, Bush established the first domestic military command since the civil war, the US Northern Command (Northcom). Its mission: the "preparation for, prevention of, deterrence of, preemption of, defense against, and response to threats and aggression directed towards US territory, sovereignty, domestic population, and infrastructure; as well as crisis management, consequence management, and other domestic civil support."

If it sounds like a tall order, it is.

In the past six years, Northcom has been remarkably unsuccessful at anything but expanding its theoretical reach....

The US Agency for International Development and the State Department have traditionally been tasked with responding to disaster abroad; but, from Indonesia's tsunami-ravaged shores to Myanmar after the recent cyclone, natural catastrophe has become another presidential opportunity to "send in the Marines" (so to speak). The Pentagon has increasingly taken up humanitarian planning, gaining an ever larger share of US humanitarian missions abroad.....

In fact, the Pentagon doesn't do humanitarian work very well. In Afghanistan, for instance, food-packets dropped by US planes were the same color as the cluster munitions also dropped by US planes; while schools and clinics built by US forces often became targets before they could even be put into use. In Iraq, money doled out to the Pentagon's sectarian-group-of-the-week for wells and generators turned out to be just as easily spent on explosives and AK-47s....

Meanwhile, should the Earth not be enough, there are always the heavens to control. In August 2006, building on earlier documents like the 1998 US Space Command's Vision for 2020 (which called for a policy of "full spectrum dominance"), the Bush administration unveiled its "national space policy". It advocated establishing, defending and enlarging US control over space resources and argued for "unhindered" rights in space - unhindered, that is, by international agreements preventing the weaponization of space. The document also asserted that "freedom of action in space is as important to the United States as air power and sea power".....(The leaders of China, Russia and other major states undoubtedly heard the loud slap of a gauntlet being thrown down.)...

Of all the frontiers of expansion, perhaps none is more striking than the Pentagon's sorties into the future. Does the Department of Transportation offer a Vision for 2030? Does the Environmental Protection Agency develop plans for the next 50 years? Does the Department of Health and Human Services have a team of power-point professionals working up dynamic graphics for what services for the elderly will look like in 2050?


There's a good bit more in the article proper.

[May 9, 2008] Mundane product, juicy returns

angrybear.blogspot.com

Information Clearinghouse gets a h/t for this article in LA Times -- - May 9, 2008:
In 1961, Dwight D. Eisenhower, in his famous farewell address as president, warned of the "acquisition of unwarranted influence" by what he called the "military-industrial complex" in the United States. Today, however, the "large arms industry" of Eisenhower's day is only part of a complex equation. Civilian firms such as PepsiCo and IBM form the backbone of what more accurately can be described as a "military-corporate complex." These businesses allow the Pentagon to function, to make war and to carry out foreign occupations.

For example, in 2006 (the last year for which official figures are available), PepsiCo and IBM ranked among the Pentagon's top 100 contractors, taking in $286,696,943 and $291,825,309, respectively. This was no aberration. The previous year, they received $233,053,993 and $382,408,117 each, according to Department of Defense documents. In fact, both companies have been defense contractors every year since at least 2000. And there isn't anything special or odd about PepsiCo or IBM, when it comes to the Pentagon.

Almost a decade after Eisenhower's farewell address, there were still only 22,000 prime contractors doing business with the Department of Defense. Today, that number tops 47,000. While the well-known giant arms makers -- Lockheed Martin, Boeing, Northrop Grumman and General Dynamics -- remain the largest contractors, they are dwarfed by the sheer number of fellow contractors from all imaginable economic sectors.

These stretch from coast to coast and around the globe, from entertainment giants such as Columbia TriStar and Twentieth Century Fox to auto-making titans Ford and General Motors to Big Pharma power players such as Pfizer. Even the Krispy Kreme Doughnuts chain took in almost $500,000 from the Pentagon in 2006, while Coca-Cola cleaned up with more than $100 million in taxpayer dollars.

In 2006, the Pentagon's list of its top 100 suppliers also included such well-known civilian firms as Tyson Foods ($335,239,095), Goodrich Corp. ($344,091,017), Procter & Gamble ($362,461,808), Kraft Foods ($500,799,104), Dell ($636,343,593), ExxonMobil ($1,176,354,936), FedEx ($1,303,032,027) and General Electric ($2,327,705,161). Also on the Pentagon's 2006 payroll were such often-ignored defense contractors as the animated mouse-house, the Walt Disney Co.; iPod-maker Apple; sunglasses purveyor Oakley; cocoa giant Nestle; ketchup producer Heinz; and chocolate bar maker Hershey.

These are, in fact, today's "typical defense contractors." They are the companies that regularly take in tax-funded payouts from the Pentagon for services and goods (chiefly for the more than 1.3 million active members of the armed services). Few realize the actual look and shape of the new "militarized" U.S. economy. It's not just the classic "permanent armaments industry" -- it's civilian and it's widespread.

Such large sums of money through privatizing supply makes for interesting connections with products of everyday civilian life. What I have not been able to find are data on the weight of soldiers just prior to going on tour to the weight of soldiers just after finishing their tours...whoppers and pepsi rations in between.

[May 24, 2008] Military-industrial complex - Wikipedia

A military-industrial complex (MIC) is composed of a nation's armed forces, its suppliers of weapons systems, supplies and services, and its civil government.

The term "MIC" is most often used in reference to the United States, where it gained popularity after its use in the farewell address of President Dwight D. Eisenhower, though the term is applicable to any country with a similarly developed infrastructure. It is sometimes used more broadly to include the entire network of contracts and flows of money and resources among individuals as well as institutions of the defense contractors, The Pentagon, and the Congress and Executive branch.

This sector is intrinsically prone to principal-agent problem, moral hazard, and rent seeking. Cases of political corruption have also surfaced with regularity.

A similar thesis was originally expressed by Daniel Guérin, in his 1936 book Fascism and Big Business, about the fascist government support to heavy industry.

[May 15, 2008] Another challenge issued by ilsm

History: How the US Grew the Military Industrial Complex.

The size of the US national security (war) machine is not related to threats to the nation nor any reasonable or efficient response to those wildly inflated threats. Threats are overstated and the solution to the fake insecurity is always the most expensive and profitable, neither effective nor efficient. Those are engineering specification terms never used to describe warfare state value.

Good to whittle beaks for profits and keeping the trough filled.

The US DoD outsourced weapons making after WW II. During WW II for profit industries: Chryser, General Motors, Kaiser Aluminum, et al, mobilized for the war effort made military weapons work and mass produced very good quality. Some may conclude that the mobilized private sector took defense firms' and arsenals' products to greater heights of quality and efficiency.

After the war the congress, National Security Act of 1947, decided to use private companies for arming a vaguely defined continuous mobilization. A largely unneeded and overly profitable arms establishment grew from the politics and greed.

Instead of being like the commercial companies which produced the weapons that won World War II, these nationall security industries quickly became for profit arsenals not as good as pre war public arsenals but more expensive with profits and enough money to buy congress. In 1961 Eisenhower called it the military industrial complex.

The motive for perpetual mobilization and long war is profit. In the 1940's the Air Force became the first and subsequently main customer of RandD Inc. We know it as RAND. This think tank is responsible for such concepts as Mutually Assured Destruction (MAD) and other plans to wage nuclear armageddon. Some think their analyses created the bloated military industrial complex. They advocated arming ourselves to the teeth while the Soviets were collapsing economically.

Other think tanks arose in RAND's image all funded by military industrial complex war profits and all selling the freightfully insecure alternatives of not buying all the unneeded super weapons.

Why does the US have for profit arsenals which are not effective? Short answer is the stuff is as related to security as wooden beaks strapped to the general's faces.

The think tanks sold the most expensive, unneeded solution and no one asked if any of it is "worth the taxpayers' dough" because there was a lot of money to be made. The useless war machine took funding from better uses that the poor and meek needed.

Then the "supporters" equate patriotism with militarism, masked by propaganda and war profits funded media blitzes.

Think tanks falsely defining the "strategy and structure" of the warfare state estabishment is one way to keep the trough filled with gold. Building on the services' "strategic investment objectives" is another.

None of it is worth the taxpayers' scarce money. But it is good for the military industrial complex, the trough.

Next week I will discuss how the think tanks sell "continuous mobilization" to keep them all whittlin beaks.
-------------------------
Another piece by ilsm

Comments

Henry,

GDP is a questionable metric if the increase in GDP associated with much military spending doesn't represent an increase in welfare. islm is arguing, I think, that much of our military spending doesn't buy us peace or security. It certainly doesn't buy me a night on the town. At some point, arguing that military spending is good because it boosts GDP is circular - government spending is a chunk of GDP. What, beyond noting that spending = spending, does your observation about military spending and GDP get us?
k harris | 05.15.08 - 7:38 am |

===

***The motive for perpetual mobilization and long war is profit. In the 1940's the Air Force became the first and subsequently main customer of RandD Inc. We know it as RAND.***

Without arguing too much about your main thesis, you've chanced to pick a poor example. RAND is one of about two dozen not for profit Federal Contract Research Centers. Others you may have heard of include MITRE, Cal Tech's Jet Propulsion Laboratory, the Stanford Linear Accelerator and Fermilab. There's a list of FCRC's here:

http://www.sourcewatch.org/ index...it_Institutions

The justification for the FCRCs is that they isolate research and analysis from the Federal bureaucracy and keep the employees out of the rigid and, if you ask me, often quite unproductive, civil service heirarchy.

It's hard for profit to be a corrupting factor when the operation is required by law not to make one.

BTW, Daniel Ellseerg of Pentagon Papers fame was a RAND employee. Perhaps the claim of autonomy isn't entirely unjustified.

If you wish to find a for profit think tank to beat on, may I suggest Science Applications International (SAIC)?
vtcodger | 05.15.08 - 7:52 am

===

***Military spending mostly leads to the production of military stuff, with very little spill-over to the rest of the economy.***

I'd agree with that with the caveat that much of the US success in avionics, satellite technology, materials technology, and computers was built on military research. Research -- not deployment. We'd have gotten much the same social benefit if nothing other than prototypes had been built.

The credit for many of these things is sometimes given to NASA, but I think that's largely incorrect. NASA isn't entirely worthless, but time and time again, the military did the R&D and NASA mostly followed later and issued press releases. e.g. The Hubble Space Telescope is a remarkable instrument, but to a great extent, it appears to be an upgrade of the optics and platform of the much older and highly classified KH-11 spy satellites with the telescope pointed in the other direction.
vtcodger | 05.15.08 - 10:42 am |
#

***The size of the US national security (war) machine is not related to threats to the nation nor any reasonable or efficient response to those wildly inflated threats.***

I couldn't help but think of one of the early chapters in C Northcote Parkinson's book "Parkinson's Law". Parkinson traces the growth of the bureaucracy at Whitehall in comparison to the size of the British fleet and notes that while the fleet faded away along with the empire after World War II, the paper pushers continued to multiply. He concludes that the bureaucracy would have grown at about the same rate independent of the number of ships in the navy. Or, indeed, whether the navy had any ships at all.
vtcodger | 05.15.08 - 10:48 am |
#


Good post Islm!

I have had this debate with some of my right wing friends.

If the great ideological struggle for the next 50 years is the "War on Terrorism" why are we spending money on upgrading our nuclear weapons arsenal, building more naval ships, increasingly sophisticated manned aircraft (as opposed to drones which do have some uses) etc, rather than on interpreters, spies, special forces etc which are what is needed to fight terrorist cells?

If he responds that we need the high tech stuff because of China or a resurgent Russia, then I guess the War on Terrorism isn't the most important struggle.

Sometimes he admits that it is all about the money. Actually, I think a part of it is that he just feels good about hating people who are different than him.
terry | 05.15.08 - 10:51 am |
#


vtcodger,

I haven't looked at the data, but as I'm sure you know, so many factors affect GDP growth that a factor with a real effect won't necessarily show up as a strong correlation or even as a correlation in the correct direction (positive/negative), because other factors can overwhelm that individual factor.

I would think that higher military spending, like any increase in government spending has a positive (Keynesian) short-term impact on GDP, particularly if much of it is spent domestically. I can't speak to relative multiplier effects vs. other types of government spending, but I would say that technology spin-offs are one economic benefit.

Also -- this is not an insignificant consideration -- insofar as military spending fosters or maintains conditions in the world that are conducive to our economic growth (e.g., ensuring oil supplies), it has a positive impact on GDP. Obviously military action, particularly if poorly chosen and/or executed, can end up making things worse rather than better, but that's not the intention and need not be the case.
Brooks | 05.15.08 - 10:51 am |
#

[Feb 28, 2008] Jesse's Café Américain Why the US Has Really Gone Broke

Why the U.S. Has Really Gone Broke
Chalmers Johnson
Le Monde Diplomatique
February, 2008
Global confidence in the US economy has reached zero, as was proved by last month’s stock market meltdown. But there is an enormous anomaly in the US economy above and beyond the subprime mortgage crisis, the housing bubble and the prospect of recession: 60 years of misallocation of resources, and borrowings, to the establishment and maintenance of a military-industrial complex as the basis of the nation’s economic life

The military adventurers in the Bush administration have much in common with the corporate leaders of the defunct energy company Enron. Both groups thought that they were the “smartest guys in the room” — the title of Alex Gibney’s prize-winning film on what went wrong at Enron. The neoconservatives in the White House and the Pentagon outsmarted themselves. They failed even to address the problem of how to finance their schemes of imperialist wars and global domination.

As a result, going into 2008, the United States finds itself in the anomalous position of being unable to pay for its own elevated living standards or its wasteful, overly large military establishment. Its government no longer even attempts to reduce the ruinous expenses of maintaining huge standing armies, replacing the equipment that seven years of wars have destroyed or worn out, or preparing for a war in outer space against unknown adversaries. Instead, the Bush administration puts off these costs for future generations to pay or repudiate. This fiscal irresponsibility has been disguised through many manipulative financial schemes (causing poorer countries to lend us unprecedented sums of money), but the time of reckoning is fast approaching.

There are three broad aspects to the US debt crisis.

First, in the current fiscal year (2008) we are spending insane amounts of money on “defence” projects that bear no relation to the national security of the US. We are also keeping the income tax burdens on the richest segment of the population at strikingly low levels.

Second, we continue to believe that we can compensate for the accelerating erosion of our base and our loss of jobs to foreign countries through massive military expenditures — “military Keynesianism” (which I discuss in detail in my book Nemesis: The Last Days of the American Republic). By that, I mean the mistaken belief that public policies focused on frequent wars, huge expenditures on weapons and munitions, and large standing armies can indefinitely sustain a wealthy capitalist economy. The opposite is actually true.

Third, in our devotion to militarism (despite our limited resources), we are failing to invest in our social infrastructure and other requirements for the long-term health of the US. These are what economists call opportunity costs, things not done because we spent our money on something else. Our public education system has deteriorated alarmingly. We have failed to provide health care to all our citizens and neglected our responsibilities as the world’s number one polluter. Most important, we have lost our competitiveness as a manufacturer for civilian needs, an infinitely more efficient use of scarce resources than arms manufacturing.

Fiscal disaster

It is virtually impossible to overstate the profligacy of what our government spends on the military. The Department of Defense’s planned expenditures for the fiscal year 2008 are larger than all other nations’ military budgets combined. The supplementary budget to pay for the current wars in Iraq and Afghanistan, not part of the official defence budget, is itself larger than the combined military budgets of Russia and China. Defence-related spending for fiscal 2008 will exceed $1 trillion for the first time in history. The US has become the largest single seller of arms and munitions to other nations on Earth. Leaving out President Bush’s two on-going wars, defence spending has doubled since the mid-1990s. The defence budget for fiscal 2008 is the largest since the second world war.

Before we try to break down and analyse this gargantuan sum, there is one important caveat. Figures on defence spending are notoriously unreliable. The numbers released by the Congressional Reference Service and the Congressional Budget Office do not agree with each other. Robert Higgs, senior fellow for political economy at the Independent Institute, says: “A well-founded rule of thumb is to take the Pentagon’s (always well publicised) basic budget total and double it” (1). Even a cursory reading of newspaper articles about the Department of Defense will turn up major differences in statistics about its expenses. Some 30-40% of the defence budget is “black”,” meaning that these sections contain hidden expenditures for classified projects. There is no possible way to know what they include or whether their total amounts are accurate.

There are many reasons for this budgetary sleight-of-hand — including a desire for secrecy on the part of the president, the secretary of defence, and the military-industrial complex — but the chief one is that members of Congress, who profit enormously from defence jobs and pork-barrel projects in their districts, have a political interest in supporting the Department of Defense. In 1996, in an attempt to bring accounting standards within the executive branch closer to those of the civilian economy, Congress passed the Federal Financial Management Improvement Act. It required all federal agencies to hire outside auditors to review their books and release the results to the public. Neither the Department of Defense, nor the Department of Homeland Security, has ever complied. Congress has complained, but not penalised either department for ignoring the law. All numbers released by the Pentagon should be regarded as suspect.

In discussing the fiscal 2008 defence budget, as released on 7 February 2007, I have been guided by two experienced and reliable analysts: William D Hartung of the New America Foundation’s Arms and Security Initiative (2) and Fred Kaplan, defence correspondent for Slate.org (3). They agree that the Department of Defense requested $481.4bn for salaries, operations (except in Iraq and Afghanistan), and equipment. They also agree on a figure of $141.7bn for the “supplemental” budget to fight the global war on terrorism — that is, the two on-going wars that the general public may think are actually covered by the basic Pentagon budget. The Department of Defense also asked for an extra $93.4bn to pay for hitherto unmentioned war costs in the remainder of 2007 and, most creatively, an additional “allowance” (a new term in defence budget documents) of $50bn to be charged to fiscal year 2009. This makes a total spending request by the Department of Defense of $766.5bn.

But there is much more. In an attempt to disguise the true size of the US military empire, the government has long hidden major military-related expenditures in departments other than Defense. For example, $23.4bn for the Department of Energy goes towards developing and maintaining nuclear warheads; and $25.3bn in the Department of State budget is spent on foreign military assistance (primarily for Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Republic, Egypt and Pakistan). Another $1.03bn outside the official Department of Defense budget is now needed for recruitment and re-enlistment incentives for the overstretched US military, up from a mere $174m in 2003, when the war in Iraq began. The Department of Veterans Affairs currently gets at least $75.7bn, 50% of it for the long-term care of the most seriously injured among the 28,870 soldiers so far wounded in Iraq and 1,708 in Afghanistan. The amount is universally derided as inadequate. Another $46.4bn goes to the Department of Homeland Security.

Missing from this compilation is $1.9bn to the Department of Justice for the paramilitary activities of the FBI; $38.5bn to the Department of the Treasury for the Military Retirement Fund; $7.6bn for the military-related activities of the National Aeronautics and Space Administration; and well over $200bn in interest for past debt-financed defence outlays. This brings US spending for its military establishment during the current fiscal year, conservatively calculated, to at least $1.1 trillion.

Military Keynesianism

Such expenditures are not only morally obscene, they are fiscally unsustainable. Many neo-conservatives and poorly informed patriotic Americans believe that, even though our defence budget is huge, we can afford it because we are the richest country on Earth. That statement is no longer true. The world’s richest political entity, according to the CIA’s World Factbook, is the European Union. The EU’s 2006 GDP was estimated to be slightly larger than that of the US. Moreover, China’s 2006 GDP was only slightly smaller than that of the US, and Japan was the world’s fourth richest nation.

A more telling comparison that reveals just how much worse we’re doing can be found among the current accounts of various nations. The current account measures the net trade surplus or deficit of a country plus cross-border payments of interest, royalties, dividends, capital gains, foreign aid, and other income. In order for Japan to manufacture anything, it must import all required raw materials. Even after this incredible expense is met, it still has an $88bn per year trade surplus with the US and enjoys the world’s second highest current account balance (China is number one). The US is number 163 — last on the list, worse than countries such as Australia and the UK that also have large trade deficits. Its 2006 current account deficit was $811.5bn; second worst was Spain at $106.4bn. This is unsustainable.

It’s not just that our tastes for foreign goods, including imported oil, vastly exceed our ability to pay for them. We are financing them through massive borrowing. On 7 November 2007, the US Treasury announced that the national debt had breached _$9 trillion for the first time. This was just five weeks after Congress raised the “debt ceiling” to $9.815 trillion. If you begin in 1789, at the moment the constitution became the supreme law of the land, the debt accumulated by the federal government did not top $1 trillion until 1981. When George Bush became president in January 2001, it stood at approximately $5.7 trillion. Since then, it has increased by 45%. This huge debt can be largely explained by our defence expenditures.

Our excessive military expenditures did not occur over just a few short years or simply because of the Bush administration’s policies. They have been going on for a very long time in accordance with a superficially plausible ideology, and have now become so entrenched in our democratic political system that they are starting to wreak havoc. This is military Keynesianism — the determination to maintain a permanent war economy and to treat military output as an ordinary economic product, even though it makes no contribution to either production or consumption.

This ideology goes back to the first years of the cold war. During the late 1940s, the US was haunted by economic anxieties. The great depression of the 1930s had been overcome only by the war production boom of the second world war. With peace and demobilisation, there was a pervasive fear that the depression would return. During 1949, alarmed by the Soviet Union’s detonation of an atomic bomb, the looming Communist victory in the Chinese civil war, a domestic recession, and the lowering of the Iron Curtain around the USSR’s European satellites, the US sought to draft basic strategy for the emerging cold war. The result was the militaristic National Security Council Report 68 (NSC-68) drafted under the supervision of Paul Nitze, then head of the Policy Planning Staff in the State Department. Dated 14 April 1950 and signed by President Harry S Truman on 30 September 1950, it laid out the basic public economic policies that the US pursues to the present day.

In its conclusions, NSC-68 asserted: “One of the most significant lessons of our World War II experience was that the American economy, when it operates at a level approaching full efficiency, can provide enormous resources for purposes other than civilian consumption while simultaneously providing a high standard of living” (4).

With this understanding, US strategists began to build up a massive munitions industry, both to counter the military might of the Soviet Union (which they consistently overstated) and also to maintain full employment, as well as ward off a possible return of the depression. The result was that, under Pentagon leadership, entire new industries were created to manufacture large aircraft, nuclear-powered submarines, nuclear warheads, intercontinental ballistic missiles, and surveillance and communications satellites. This led to what President Eisenhower warned against in his farewell address of 6 February 1961: “The conjunction of an immense military establishment and a large arms industry is new in the American experience” — the military-industrial complex.

By 1990 the value of the weapons, equipment and factories devoted to the Department of Defense was 83% of the value of all plants and equipment in US manufacturing. From 1947 to 1990, the combined US military budgets amounted to $8.7 trillion. Even though the Soviet Union no longer exists, US reliance on military Keynesianism has, if anything, ratcheted up, thanks to the massive vested interests that have become entrenched around the military establishment. Over time, a commitment to both guns and butter has proven an unstable configuration. Military industries crowd out the civilian economy and lead to severe economic weaknesses. Devotion to military Keynesianism is a form of slow economic suicide.

Higher spending, fewer jobs

On 1 May 2007, the Center for Economic and Policy Research of Washington, DC, released a study prepared by the economic and political forecasting company Global Insight on the long-term economic impact of increased military spending. Guided by economist Dean Baker, this research showed that, after an initial demand stimulus, by about the sixth year the effect of increased military spending turns negative. The US economy has had to cope with growing defence spending for more than 60 years. Baker found that, after 10 years of higher defence spending, there would be 464,000 fewer jobs than in a scenario that involved lower defence spending.

Baker concluded: “It is often believed that wars and military spending increases are good for the economy. In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment” (5).

These are only some of the many deleterious effects of military Keynesianism.

It was believed that the US could afford both a massive military establishment and a high standard of living, and that it needed both to maintain full employment. But it did not work out that way. By the 1960s it was becoming apparent that turning over the nation’s largest manufacturing enterprises to the Department of Defense and producing goods without any investment or consumption value was starting to crowd out civilian economic activities. The historian Thomas E Woods Jr observes that, during the 1950s and 1960s, between one-third and two-thirds of all US research talent was siphoned off into the military sector (6). It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles.

Can we reverse the trend?

Nuclear weapons furnish a striking illustration of these anomalies. Between the 1940s and 1996, the US spent at least $5.8 trillion on the development, testing and construction of nuclear bombs. By 1967, the peak year of its nuclear stockpile, the US possessed some 32,500 deliverable atomic and hydrogen bombs, none of which, thankfully, was ever used. They perfectly illustrate the Keynesian principle that the government can provide make-work jobs to keep people employed. Nuclear weapons were not just America’s secret weapon, but also its secret economic weapon. As of 2006, we still had 9,960 of them. There is today no sane use for them, while the trillions spent on them could have been used to solve the problems of social security and health care, quality education and access to higher education for all, not to speak of the retention of highly-skilled jobs within the economy.

The pioneer in analysing what has been lost as a result of military Keynesianism was the late Seymour Melman (1917-2004), a professor of industrial engineering and operations research at Columbia University. His 1970 book, Pentagon Capitalism: The Political Economy of War, was a prescient analysis of the unintended consequences of the US preoccupation with its armed forces and their weaponry since the onset of the cold war. Melman wrote: “From 1946 to 1969, the United States government spent over $1,000bn on the military, more than half of this under the Kennedy and Johnson administrations — the period during which the [Pentagon-dominated] state management was established as a formal institution. This sum of staggering size (try to visualize a billion of something) does not express the cost of the military establishment to the nation as a whole. The true cost is measured by what has been foregone, by the accumulated deterioration in many facets of life, by the inability to alleviate human wretchedness of long duration.”

In an important exegesis on Melman’s relevance to the current American economic situation, Thomas Woods writes: “According to the US Department of Defense, during the four decades from 1947 through 1987 it used (in 1982 dollars) $7.62 trillion in capital resources. In 1985, the Department of Commerce estimated the value of the nation’s plant and equipment, and infrastructure, at just over _$7.29 trillion… The amount spent over that period could have doubled the American capital stock or modernized and replaced its existing stock” (7).

The fact that we did not modernise or replace our capital assets is one of the main reasons why, by the turn of the 21st century, our manufacturing base had all but evaporated. Machine tools, an industry on which Melman was an authority, are a particularly important symptom. In November 1968, a five-year inventory disclosed “that 64% of the metalworking machine tools used in US industry were 10 years old or older. The age of this industrial equipment (drills, lathes, etc.) marks the United States’ machine tool stock as the oldest among all major industrial nations, and it marks the continuation of a deterioration process that began with the end of the second world war. This deterioration at the base of the industrial system certifies to the continuous debilitating and depleting effect that the military use of capital and research and development talent has had on American industry.”

Nothing has been done since 1968 to reverse these trends and it shows today in our massive imports of equipment — from medical machines like _proton accelerators for radiological therapy (made primarily in Belgium, Germany, and Japan) to cars and trucks.

Our short tenure as the world’s lone superpower has come to an end. As Harvard economics professor Benjamin Friedman has written: “Again and again it has always been the world’s leading lending country that has been the premier country in terms of political influence, diplomatic influence and cultural influence. It’s no accident that we took over the role from the British at the same time that we took over the job of being the world’s leading lending country. Today we are no longer the world’s leading lending country. In fact we are now the world’s biggest debtor country, and we are continuing to wield influence on the basis of military prowess alone” (8).

Some of the damage can never be rectified. There are, however, some steps that the US urgently needs to take. These include reversing Bush’s 2001 and 2003 tax cuts for the wealthy, beginning to liquidate our global empire of over 800 military bases, cutting from the defence budget all projects that bear no relationship to national security and ceasing to use the defence budget as a Keynesian jobs programme.

If we do these things we have a chance of squeaking by. If we don’t, we face probable national insolvency and a long depression.


(1) Robert Higgs, “The Trillion-Dollar Defense Budget Is Already Here” , The Independent Institute, 15 March 2007, http://www.independent.org/newsroom ...
(2) William D Hartung, “Bush Military Budget Highest Since WWII”, 10 February 2007, http://www.commondreams.org/views07 ...
(3) Fred Kaplan, “It’s Time to Sharpen the Scissors”, 5 February 2007, http://www.slate.com/id/2159102/pag ...
(4) See http://www.encyclopedia.com/doc/1G1 ...
(5) Center for Economic and Policy Research, 1 May 2007, http://www.cepr.net/content/view/11 ...
(6) Thomas E Woods, “What the Warfare State Really Costs”, http://www.lewrockwell.com/woods/wo ...
(7) Thomas E Woods, Ibid.
(8) John F Ince, “Think the Nation’s Debt Doesn’t Affect You? Think Again”, 20 March 2007, http://www.alternet.org/story/49418 /

[Feb 4, 2008] Federal spending mythology, by Paul Krugman

One thing I’ve written about a number of times, but becomes especially worth emphasizing now that John McCain is the presumptive Republican nominee, is the myth of runaway federal spending under the Bush administration. McCain has said on a number of occasions that he doesn’t know much about economics — although, straight-talker that he is, he has also denied having ever said such a thing. But one thing he thinks he knows is that the Bush administration has been spending like a drunken sailor. Has it?

Consider the actual record of spending. Never mind dollar figures, which grow because of inflation, population growth, and other normal factors. A better guide is spending as a percentage of GDP. And this has increased, from 18.5% in fiscal 2001 to 20% in fiscal 2007.

But where did that increase come from? Three words: defense, Medicare, Medicaid. That’s the whole story. Defense up from 3 to 4% of GDP; Medicare and Medicaid up from 3.4% to 4.6%, partially offset by increased payments for Part B and stuff. Aside from that, there’s been no major movement.

Behind these increases are the obvious things: the war McCain wants to fight for the next century, the general issue of excess cost growth in health care, and the prescription drug benefit.

So the next time Mr. McCain or anyone else promises to rein in runaway spending, they should be asked which of these things they intend to reverse. Are they talking about pulling out of Iraq? Denying seniors the latest medical treatments? Canceling the drug benefit? If not, what are they talking about?

Comments

robertdfeinman says...

I'll say it again, using percentage numbers is a false measure.

Better to compare spending against other similar societies. By this measure militarism is completely out of whack. US military spending is as much as the rest of the world put together. Does the US have 50% of the world population or 50% of the economic activity?

Is GDP a meaningful denominator given the bubbles caused by overvaluing of financial assets and other intangibles?

Does that "defense" line include all aspects of militarism, or only those explicitly called defense? Does it include the current wars which are funded by special, supplemental, appropriations? Does it include hidden costs buried in other departments? Does it include payments on the national debt caused by prior military adventures? Does it include payments to veterans and other benefits?

I also dislike seeing Medicare/Medicaid and Social Security called "federal spending". These programs are government administered. The money is raised explicitly to fund these activities. If it weren't for LBJ trying to disguise the true cost of the Vietnam war then they would never have been added to the budget.

Militarism is 50% of the discretionary federal budget. How does that compare with other industrialized nations? What do they have instead that we are lacking because we have drained all this money from other activities?

If Krugman's point is that Bush hasn't been much worse than several prior presidents then that's true, but so what. If you get run over by a car does it matter if it was the front wheel that killed you or the rear one which followed?

The forces in this country are beyond rational control. The majority party can make changes around the edges but is unwilling, or unable to alter the basic direction.

Chalmers Johnson calls it the military/industrial/congressional complex and it's about to take us over a cliff. What destroyed the USSR? Well there may be lots of causes, but one that stands out is the unwillingness of the nomenklatura to see the reality staring them in the face - the society was economically hollow.

How to Sink America - by Chalmers Johnson and Tom Engelhardt

After all, there are those disastrous Afghan and Iraqi wars still eating taxpayer dollars as if there were no tomorrow. Then there's what enthusiasts like to call "the next war" to think about, which means all those big-ticket weapons, all those jets, ships, and armored vehicles for the future. And don't forget the still-popular, Rumsfeld-style "netcentric warfare" systems (robots, drones, communications satellites, and the like), not to speak of the killer space toys being developed; and then there's all that ruined equipment out of Iraq and Afghanistan to be massively replaced – and all those ruined human beings to take care of.

You'll get the gist of this from a recent editorial in the trade magazine Aviation Week & Space Technology:

"The fact Washington must face is that nearly five years of war have left U.S. forces worse off than they have been in a generation, yes, since Vietnam, and restoring them will take budget-building unlike any in the past."

[Jan 26, 2008] naked capitalism Does Violating International Law Make Us Safer

This Administration is not merely incapable of learning, but seems insistent on doing the wrong thing with a vehemence. The invasion of Iraq was a violation of international law (the fig leaf of UN Resolution 1441 in the run up to the invasion has not impressed the experts), an attack on a country that posed no threat to the US and had taken no aggressive actions. Even if Saddam had possessed WMD, he had no ability to deliver them to the US.

Henry Kissinger spoke about a year ago at a synagogue to which he owed a big favor. It had sponsored his family's escape from Germany, and as he tells the story, they got out at the last possible moment. It was an informal presentation, and Kissinger could not contain his contempt for the Administration, stating repeatedly not merely that they had made mistakes, but that every decision they made was the wrong one. My friend who was in attendance said it was the most unequivocal condemnation she had ever heard.

It appears to have enlisted a bit of support in their active, reckless incompetence. In the Guardian, James Galbraith dissects the manifesto of five former Nato generals, led by former chairmae-emptive nuclear attacks to prevent the spread of nuclear arms and WMD (hat tip Mark Thoma).

There are no checks on this process. We got it woefully wrong with Iraq, insisting they had WMD when a team of UN weapons had found none and was barred from completing its work. And it's OK for India and Israel to not sign the international nuclear accords and become nuclear powers, but not for Iran. The US arrogance is breathtaking. We are a rapidly fading military power, yet we try to play the role of Collussus bestride the world. And because Iraq has visibly overstrained our capabilities, we are now having to threaten the use of nukes.

And even if you believe this is mere saber rattling intended to serve merely as a deterrent, there is no evidence that it is effective. Jonathan Glover's book Humanity, which looks into why the horrors of the 20th century came about, also dissects how the Russian missile crisis was averted. He attributes it to two factors: the recent publication of Barbara Tuchman's The Guns of August, which made clear how World War I was the result of failed communications and rigid assumptions, and a half-day briefing the new President and his key lieutenants received on the horrors of nuclear war. In fact, a gripping passage reveals how Dean Rusk had to go to some lengths to rein in the Navy, which was overly eager to engage the Soviets.

But perhaps the most articulate defense of the reason to stay within the confines of international law comes from Roger Bolt's screenplay about Thomas More, A Man for All Seasons:

More: Yes. What would you do? Cut a great road through the law to get at the Devil?

Roper: I`d cut down every law in England to do that.

More: Oh! (advances on Roper) And when the last law was down, and the Devil turned round on you --where would you hide, Roper, the laws all being flat? (He leaves him) This country’s planted thick with laws --man's laws, not God's --and if you cut them down --and you’re just the man to do it --d`you really think you could stand upright in the winds that would blow then? (Quietly) Yes, I`d give the Devil benefit of law, for my own safety`s sake.


Talking up pre-emptive strikes serves to legitimate unwarranted aggression, which per More's speech, can just as easily be used to justify attacks on us.

From the Guardian:

Five former Nato generals, including the former chairman of the US Joint Chiefs of Staff, John Shalikashvili, have written a "radical manifesto" which states that "the West must be ready to resort to a pre-emptive nuclear attack to try to halt the 'imminent' spread of nuclear and other weapons of mass destruction."

In other words, the generals argue that "the west" - meaning the nuclear powers including the United States, France and Britain - should prepare to use nuclear weapons, not to deter a nuclear attack, not to retaliate following such an attack, and not even to pre-empt an imminent nuclear attack. Rather, they should use them to prevent the acquisition of nuclear weapons by a non-nuclear state. And not only that, they should use them to prevent the acquisition of biological or chemical weapons by such a state.

Under this doctrine, the US could have used nuclear weapons in the invasion of Iraq in 2003, to destroy that country's presumed stockpiles of chemical and biological weapons - stockpiles that did not in fact exist. Under it, the US could have used nuclear weapons against North Korea in 2006. The doctrine would also have justified a nuclear attack on Pakistan at any time prior to that country's nuclear tests in 1998. Or on India, at any time prior to 1974.

The Nuremberg principles are the bedrock of international law on war crimes. Principle VI criminalises the "planning, preparation, initiation or waging of a war of aggression ..." and states that the following are war crimes:

"Violations of the laws or customs of war which include, but are not limited to, murder, ill-treatment or deportation of slave labor or for any other purpose of the civilian population of or in occupied territory; murder or ill-treatment of prisoners of war or persons on the seas, killing of hostages, plunder of public or private property, wanton destruction of cities, towns, or villages, or devastation not justified by military necessity."

To state the obvious: the use of a nuclear weapon on the military production facilities of a non-nuclear state will mean dropping big bombs on populated areas. Nuclear test sites are kept remote for obvious reasons; research labs, reactors and enrichment facilities need not be. Nuclear bombs inflict total devastation on the "cities, towns or villages" that they hit. They are the ultimate in "wanton destruction". Their use against a state with whom we are not actually at war cannot, by definition, be "justified by military necessity".

"The west" has lived from 1946 to the present day with a nuclear-armed Russia; no necessity of using nuclear weapons against that country ever arose. Similarly with China, since 1964. To attack some new nuclear pretender now would certainly constitute the "waging of a war of aggression ..." That's a crime. And the planning and preparation for such a war is no less a crime than the war itself.

Next, consider what it means to determine that a country is about to acquire nuclear weapons. How does one know? The facilities that Iran possesses to enrich uranium are legal under the non-proliferation treaty. Yes, they might be used, at some point, to provide fuel for bombs. But maybe they won't be. How could we tell? And suppose we were wrong? Ambiguity is the nature of this situation, and of the world in which we live. During the cold war, ambiguity helped keep both sides safe: it was a stabilising force. We would not use nuclear weapons, under the systems then devised, unless ambiguity disappeared. But the generals' doctrine has no tolerance for ambiguity; it would make ambiguity itself a cause for war. Thus, causes for war could be made to arise, wherever anyone in power wanted them to.

The generals' doctrine would not only violate international law, it repudiates the principle of international law. For a law to be a law, it must apply equally to all. But the doctrine holds that "the west" is fundamentally a different entity from all other countries. As the former Reagan official Paul Craig Roberts has pointed out, it holds that our use of weapons of mass destruction to prevent the acquisition of weapons of mass destruction is not, itself, an illegal use of weapons of mass destruction. Thus "the west" can stand as judge, jury and executioner over all other countries. By what right? No law works that way. And no country claiming such a right can also claim to respect the law, or ask any other country to respect it.

Conversely, suppose we stated the generals' doctrine as a principle: that any nuclear state which suspects another state of being about to acquire nuclear weapons has the right to attack that state - and with nuclear weapons if it has them. Now suppose North Korea suspects South Korea of that intention. Does North Korea acquire a right to strike the South? Under any principle of law, the generals' answer must be, that it does. Thus their doctrine does not protect against nuclear war. It leads, rather, directly to nuclear war.

Is this proposed doctrine unprecedented? No, in fact it is not. For as Heather Purcell and I documented in 1994, US nuclear war-fighting plans in 1961 called for an unprovoked attack on the Soviet Union, as soon as sufficient nuclear forces were expected to be ready, in late 1963. President Kennedy quashed the plan. As JFK's adviser Ted Sorensen put it in a letter to the New York Times on July 1, 2002:

"A pre-emptive strike is usually sold to the president as a 'surgical' air strike; there is no such thing. So many bombings are required that widespread devastation, chaos and war unavoidably follow ... Yes, Kennedy 'thought about' a pre-emptive strike; but he forcefully rejected it, as would any thoughtful American president or citizen."

It's not just citizens and presidents who are obliged to think carefully about what General Shalikashvili and his British, French, German and Dutch colleagues now suggest. Military officers - as they know well - also have that obligation. Nuremberg Principle IV states:

"The fact that a person acted pursuant to order of his government or of a superior does not relieve him from responsibility under international law, provided a moral choice was in fact possible to him."

Any officer in the nuclear chain of command of the United States, Britain or France, faced with an order to use nuclear weapons against a non-nuclear state would be obliged, as a matter of law, to ponder those words with care. For ultimately, as Nuremberg showed, it is not force that prevails. In the final analysis, it is law.

[Jan 31, 2008] On the Road to Ruin

Financial Armageddon

Historians have detailed a strong, almost symbiotic link between between a nation's fiscal health and it's military standing.

By the same token, many have also shown that when there is a disconnect between strategic and other goals, on the one hand, and a nation's economic and financial wellbeing, on the other, that often signals that the country in question is on the road to ruin. This condition is generally referred to as military -- or, in the case of empires, imperial -- overstretch.

In recent years, a number of well-known and respected researchers have come to the conclusion that the U.S. is suffering from this invariably fatal cancer, which historians seem to agree played a starring role in the fall of the 700-year old Roman empire, among others.

One in particular, whose latest book, Nemesis, The Last Days of the American Republic, I have read and would heartily recommend, is Chalmers Johnson. In "Tomgram: Chalmers Johnson, How to Sink America," which appears at Tomdispatch.com, a project of The Nation Institute, and which is edited by Tom Engelhardt, Mr. Chalmers notes his deadly serious concerns about the future of our nation.

Within the next month, the Pentagon will submit its 2009 budget to Congress and it's a fair bet that it will be even larger than the staggering 2008 one. Like the Army and the Marines, the Pentagon itself is overstretched and under strain -- and like the two services, which are expected to add 92,000 new troops over the next five years (at an estimated cost of $1.2 billion per 10,000), the Pentagon's response is never to cut back, but always to expand, always to demand more.

After all, there are those disastrous Afghan and Iraqi wars still eating taxpayer dollars as if there were no tomorrow. Then there's what enthusiasts like to call "the next war" to think about, which means all those big-ticket weapons, all those jets, ships, and armored vehicles for the future. And don't forget the still-popular, Rumsfeld-style "netcentric warfare" systems (robots, drones, communications satellites, and the like), not to speak of the killer space toys being developed; and then there's all that ruined equipment out of Iraq and Afghanistan to be massively replaced -- and all those ruined human beings to take care of.

You'll get the gist of this from a recent editorial in the trade magazine Aviation Week & Space Technology:

"The fact Washington must face is that nearly five years of war have left U.S. forces worse off than they have been in a generation, yes, since Vietnam, and restoring them will take budget-building unlike any in the past."

Even on the rare occasion when -- as in the case of Boeing's C-17 cargo plane -- the Pentagon decides to cancel a project, there's Congress to remember. Contracts and subcontracts for weapons systems, carefully doled out to as many states as possible, mean jobs, and so Congress often balks at such cuts. (Fifty-five House members recently warned the Pentagon of a "strong negative response" if funding for the C-17 is excised from the 2009 budget.) All in all, it adds up to a defense menu for a glutton.

Already, Secretary of Defense Robert Gates has said that 2009 funding is "largely locked into place." The giant military-industrial combines -- Lockheed Martin, Northrop Grumman, Boeing, Raytheon -- have been watching their stocks rise in otherwise treacherous times. They are hopeful. As Ronald Sugar, Northrop CEO, put it: "A great global power like the United States needs a great navy and a great navy needs an adequate number of ships, and they have to be modern and capable" -- and guess which company is the Navy's largest shipbuilder?

There should be nothing surprising in all this, especially for those of us who have read Chalmers Johnson's Nemesis, The Last Days of the American Republic, the final volume of his Blowback Trilogy. Published in 2007, it is already a classic on what imperial overstretch means for the rest of us. The paperback of Nemesis is officially out today, just as global stock markets tumble. It is simply a must-read (and if you've already read it, then get a copy for a friend). In the meantime, hunker in for Johnson's latest magisterial account of how the mightiest guns the Pentagon can muster threaten to sink our own country. (For those interested, click here to view a clip from a new film, "Chalmers Johnson on American Hegemony," in Cinema Libre Studios' Speaking Freely series in which he discusses military Keynesianism and imperial bankruptcy.) Tom

Going Bankrupt: Why the Debt Crisis Is Now the Greatest Threat to the American Republic
By Chalmers Johnson

The military adventurers of the Bush administration have much in common with the corporate leaders of the defunct energy company Enron. Both groups of men thought that they were the "smartest guys in the room," the title of Alex Gibney's prize-winning film on what went wrong at Enron. The neoconservatives in the White House and the Pentagon outsmarted themselves. They failed even to address the problem of how to finance their schemes of imperialist wars and global domination.

As a result, going into 2008, the United States finds itself in the anomalous position of being unable to pay for its own elevated living standards or its wasteful, overly large military establishment. Its government no longer even attempts to reduce the ruinous expenses of maintaining huge standing armies, replacing the equipment that seven years of wars have destroyed or worn out, or preparing for a war in outer space against unknown adversaries. Instead, the Bush administration puts off these costs for future generations to pay -- or repudiate. This utter fiscal irresponsibility has been disguised through many manipulative financial schemes (such as causing poorer countries to lend us unprecedented sums of money), but the time of reckoning is fast approaching.

There are three broad aspects to our debt crisis. First, in the current fiscal year (2008) we are spending insane amounts of money on "defense" projects that bear no relationship to the national security of the United States. Simultaneously, we are keeping the income tax burdens on the richest segments of the American population at strikingly low levels.

Second, we continue to believe that we can compensate for the accelerating erosion of our manufacturing base and our loss of jobs to foreign countries through massive military expenditures -- so-called "military Keynesianism," which I discuss in detail in my book Nemesis: The Last Days of the American Republic. By military Keynesianism, I mean the mistaken belief that public policies focused on frequent wars, huge expenditures on weapons and munitions, and large standing armies can indefinitely sustain a wealthy capitalist economy. The opposite is actually true.

Third, in our devotion to militarism (despite our limited resources), we are failing to invest in our social infrastructure and other requirements for the long-term health of our country. These are what economists call "opportunity costs," things not done because we spent our money on something else. Our public education system has deteriorated alarmingly. We have failed to provide health care to all our citizens and neglected our responsibilities as the world's number one polluter. Most important, we have lost our competitiveness as a manufacturer for civilian needs -- an infinitely more efficient use of scarce resources than arms manufacturing. Let me discuss each of these.

The Current Fiscal Disaster

It is virtually impossible to overstate the profligacy of what our government spends on the military. The Department of Defense's planned expenditures for fiscal year 2008 are larger than all other nations' military budgets combined. The supplementary budget to pay for the current wars in Iraq and Afghanistan, not part of the official defense budget, is itself larger than the combined military budgets of Russia and China. Defense-related spending for fiscal 2008 will exceed $1 trillion for the first time in history. The United States has become the largest single salesman of arms and munitions to other nations on Earth. Leaving out of account President Bush's two on-going wars, defense spending has doubled since the mid-1990s. The defense budget for fiscal 2008 is the largest since World War II.

Before we try to break down and analyze this gargantuan sum, there is one important caveat. Figures on defense spending are notoriously unreliable. The numbers released by the Congressional Reference Service and the Congressional Budget Office do not agree with each other. Robert Higgs, senior fellow for political economy at the Independent Institute, says: "A well-founded rule of thumb is to take the Pentagon's (always well publicized) basic budget total and double it." Even a cursory reading of newspaper articles about the Department of Defense will turn up major differences in statistics about its expenses. Some 30-40% of the defense budget is "black," meaning that these sections contain hidden expenditures for classified projects. There is no possible way to know what they include or whether their total amounts are accurate.

There are many reasons for this budgetary sleight-of-hand -- including a desire for secrecy on the part of the president, the secretary of defense, and the military-industrial complex -- but the chief one is that members of Congress, who profit enormously from defense jobs and pork-barrel projects in their districts, have a political interest in supporting the Department of Defense. In 1996, in an attempt to bring accounting standards within the executive branch somewhat closer to those of the civilian economy, Congress passed the Federal Financial Management Improvement Act. It required all federal agencies to hire outside auditors to review their books and release the results to the public. Neither the Department of Defense, nor the Department of Homeland Security has ever complied. Congress has complained, but not penalized either department for ignoring the law. The result is that all numbers released by the Pentagon should be regarded as suspect.

In discussing the fiscal 2008 defense budget, as released to the press on February 7, 2007, I have been guided by two experienced and reliable analysts: William D. Hartung of the New America Foundation's Arms and Security Initiative and Fred Kaplan, defense correspondent for Slate.org. They agree that the Department of Defense requested $481.4 billion for salaries, operations (except in Iraq and Afghanistan), and equipment. They also agree on a figure of $141.7 billion for the "supplemental" budget to fight the "global war on terrorism" -- that is, the two on-going wars that the general public may think are actually covered by the basic Pentagon budget. The Department of Defense also asked for an extra $93.4 billion to pay for hitherto unmentioned war costs in the remainder of 2007 and, most creatively, an additional "allowance" (a new term in defense budget documents) of $50 billion to be charged to fiscal year 2009. This comes to a total spending request by the Department of Defense of $766.5 billion.

But there is much more. In an attempt to disguise the true size of the American military empire, the government has long hidden major military-related expenditures in departments other than Defense. For example, $23.4 billion for the Department of Energy goes toward developing and maintaining nuclear warheads; and $25.3 billion in the Department of State budget is spent on foreign military assistance (primarily for Israel, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Republic, Egypt, and Pakistan). Another $1.03 billion outside the official Department of Defense budget is now needed for recruitment and reenlistment incentives for the overstretched U.S. military itself, up from a mere $174 million in 2003, the year the war in Iraq began. The Department of Veterans Affairs currently gets at least $75.7 billion, 50% of which goes for the long-term care of the grievously injured among the at least 28,870 soldiers so far wounded in Iraq and another 1,708 in Afghanistan. The amount is universally derided as inadequate. Another $46.4 billion goes to the Department of Homeland Security.

Missing as well from this compilation is $1.9 billion to the Department of Justice for the paramilitary activities of the FBI; $38.5 billion to the Department of the Treasury for the Military Retirement Fund; $7.6 billion for the military-related activities of the National Aeronautics and Space Administration; and well over $200 billion in interest for past debt-financed defense outlays. This brings U.S. spending for its military establishment during the current fiscal year (2008), conservatively calculated, to at least $1.1 trillion.

Military Keynesianism

Such expenditures are not only morally obscene, they are fiscally unsustainable. Many neoconservatives and poorly informed patriotic Americans believe that, even though our defense budget is huge, we can afford it because we are the richest country on Earth. Unfortunately, that statement is no longer true. The world's richest political entity, according to the CIA's "World Factbook," is the European Union. The EU's 2006 GDP (gross domestic product -- all goods and services produced domestically) was estimated to be slightly larger than that of the U.S. However, China's 2006 GDP was only slightly smaller than that of the U.S., and Japan was the world's fourth richest nation.

A more telling comparison that reveals just how much worse we're doing can be found among the "current accounts" of various nations. The current account measures the net trade surplus or deficit of a country plus cross-border payments of interest, royalties, dividends, capital gains, foreign aid, and other income. For example, in order for Japan to manufacture anything, it must import all required raw materials. Even after this incredible expense is met, it still has an $88 billion per year trade surplus with the United States and enjoys the world's second highest current account balance. (China is number one.) The United States, by contrast, is number 163 -- dead last on the list, worse than countries like Australia and the United Kingdom that also have large trade deficits. Its 2006 current account deficit was $811.5 billion; second worst was Spain at $106.4 billion. This is what is unsustainable.

It's not just that our tastes for foreign goods, including imported oil, vastly exceed our ability to pay for them. We are financing them through massive borrowing. On November 7, 2007, the U.S. Treasury announced that the national debt had breached $9 trillion for the first time ever. This was just five weeks after Congress raised the so-called debt ceiling to $9.815 trillion. If you begin in 1789, at the moment the Constitution became the supreme law of the land, the debt accumulated by the federal government did not top $1 trillion until 1981. When George Bush became president in January 2001, it stood at approximately $5.7 trillion. Since then, it has increased by 45%. This huge debt can be largely explained by our defense expenditures in comparison with the rest of the world.

The world's top 10 military spenders and the approximate amounts each country currently budgets for its military establishment are:

1. United States (FY08 budget), $623 billion
2. China (2004), $65 billion
3. Russia, $50 billion
4. France (2005), $45 billion
5. Japan (2007), $41.75 billion
6. Germany (2003), $35.1 billion
7. Italy (2003), $28.2 billion
8. South Korea (2003), $21.1 billion
9. India (2005 est.), $19 billion
10. Saudi Arabia (2005 est.), $18 billion

World total military expenditures (2004 est.), $1,100 billion
World total (minus the United States), $500 billion

Our excessive military expenditures did not occur over just a few short years or simply because of the Bush administration's policies. They have been going on for a very long time in accordance with a superficially plausible ideology and have now become entrenched in our democratic political system where they are starting to wreak havoc. This ideology I call "military Keynesianism" -- the determination to maintain a permanent war economy and to treat military output as an ordinary economic product, even though it makes no contribution to either production or consumption.

This ideology goes back to the first years of the Cold War. During the late 1940s, the U.S. was haunted by economic anxieties. The Great Depression of the 1930s had been overcome only by the war production boom of World War II. With peace and demobilization, there was a pervasive fear that the Depression would return. During 1949, alarmed by the Soviet Union's detonation of an atomic bomb, the looming communist victory in the Chinese civil war, a domestic recession, and the lowering of the Iron Curtain around the USSR's European satellites, the U.S. sought to draft basic strategy for the emerging cold war. The result was the militaristic National Security Council Report 68 (NSC-68) drafted under the supervision of Paul Nitze, then head of the Policy Planning Staff in the State Department. Dated April 14, 1950 and signed by President Harry S. Truman on September 30, 1950, it laid out the basic public economic policies that the United States pursues to the present day.

In its conclusions, NSC-68 asserted: "One of the most significant lessons of our World War II experience was that the American economy, when it operates at a level approaching full efficiency, can provide enormous resources for purposes other than civilian consumption while simultaneously providing a high standard of living."

With this understanding, American strategists began to build up a massive munitions industry, both to counter the military might of the Soviet Union (which they consistently overstated) and also to maintain full employment as well as ward off a possible return of the Depression. The result was that, under Pentagon leadership, entire new industries were created to manufacture large aircraft, nuclear-powered submarines, nuclear warheads, intercontinental ballistic missiles, and surveillance and communications satellites. This led to what President Eisenhower warned against in his farewell address of February 6, 1961: "The conjunction of an immense military establishment and a large arms industry is new in the American experience" -- that is, the military-industrial complex.

By 1990, the value of the weapons, equipment, and factories devoted to the Department of Defense was 83% of the value of all plants and equipment in American manufacturing. From 1947 to 1990, the combined U.S. military budgets amounted to $8.7 trillion. Even though the Soviet Union no longer exists, U.S. reliance on military Keynesianism has, if anything, ratcheted up, thanks to the massive vested interests that have become entrenched around the military establishment. Over time, a commitment to both guns and butter has proven an unstable configuration. Military industries crowd out the civilian economy and lead to severe economic weaknesses. Devotion to military Keynesianism is, in fact, a form of slow economic suicide.

On May 1, 2007, the Center for Economic and Policy Research of Washington, D.C., released a study prepared by the global forecasting company Global Insight on the long-term economic impact of increased military spending. Guided by economist Dean Baker, this research showed that, after an initial demand stimulus, by about the sixth year the effect of increased military spending turns negative. Needless to say, the U.S. economy has had to cope with growing defense spending for more than 60 years. He found that, after 10 years of higher defense spending, there would be 464,000 fewer jobs than in a baseline scenario that involved lower defense spending.

Baker concluded:

"It is often believed that wars and military spending increases are good for the economy. In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment."

These are only some of the many deleterious effects of military Keynesianism.

Hollowing Out the American Economy

It was believed that the U.S. could afford both a massive military establishment and a high standard of living, and that it needed both to maintain full employment. But it did not work out that way. By the 1960s, it was becoming apparent that turning over the nation's largest manufacturing enterprises to the Department of Defense and producing goods without any investment or consumption value was starting to crowd out civilian economic activities. The historian Thomas E. Woods, Jr., observes that, during the 1950s and 1960s, between one-third and two-thirds of all American research talent was siphoned off into the military sector. It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles.

Nuclear weapons furnish a striking illustration of these anomalies. Between the 1940s and 1996, the United States spent at least $5.8 trillion on the development, testing, and construction of nuclear bombs. By 1967, the peak year of its nuclear stockpile, the United States possessed some 32,500 deliverable atomic and hydrogen bombs, none of which, thankfully, was ever used. They perfectly illustrate the Keynesian principle that the government can provide make-work jobs to keep people employed. Nuclear weapons were not just America's secret weapon, but also its secret economic weapon. As of 2006, we still had 9,960 of them. There is today no sane use for them, while the trillions spent on them could have been used to solve the problems of social security and health care, quality education and access to higher education for all, not to speak of the retention of highly skilled jobs within the American economy.

The pioneer in analyzing what has been lost as a result of military Keynesianism was the late Seymour Melman (1917-2004), a professor of industrial engineering and operations research at Columbia University. His 1970 book, Pentagon Capitalism: The Political Economy of War, was a prescient analysis of the unintended consequences of the American preoccupation with its armed forces and their weaponry since the onset of the Cold War. Melman wrote (pp. 2-3):

"From 1946 to 1969, the United States government spent over $1,000 billion on the military, more than half of this under the Kennedy and Johnson administrations -- the period during which the [Pentagon-dominated] state management was established as a formal institution. This sum of staggering size (try to visualize a billion of something) does not express the cost of the military establishment to the nation as a whole. The true cost is measured by what has been foregone, by the accumulated deterioration in many facets of life by the inability to alleviate human wretchedness of long duration."

In an important exegesis on Melman's relevance to the current American economic situation, Thomas Woods writes:

"According to the U.S. Department of Defense, during the four decades from 1947 through 1987 it used (in 1982 dollars) $7.62 trillion in capital resources. In 1985, the Department of Commerce estimated the value of the nation's plant and equipment, and infrastructure, at just over $7.29 trillion. In other words, the amount spent over that period could have doubled the American capital stock or modernized and replaced its existing stock."

The fact that we did not modernize or replace our capital assets is one of the main reasons why, by the turn of the twenty-first century, our manufacturing base had all but evaporated. Machine tools -- an industry on which Melman was an authority -- are a particularly important symptom. In November 1968, a five-year inventory disclosed (p. 186) "that 64 percent of the metalworking machine tools used in U.S. industry were ten years old or older. The age of this industrial equipment (drills, lathes, etc.) marks the United States' machine tool stock as the oldest among all major industrial nations, and it marks the continuation of a deterioration process that began with the end the Second World War. This deterioration at the base of the industrial system certifies to the continuous debilitating and depleting effect that the military use of capital and research and development talent has had on American industry."

Nothing has been done in the period since 1968 to reverse these trends and it shows today in our massive imports of equipment -- from medical machines like proton accelerators for radiological therapy (made primarily in Belgium, Germany, and Japan) to cars and trucks.

Our short tenure as the world's "lone superpower" has come to an end. As Harvard economics professor Benjamin Friedman has written:

"Again and again it has always been the world's leading lending country that has been the premier country in terms of political influence, diplomatic influence, and cultural influence. It's no accident that we took over the role from the British at the same time that we took over… the job of being the world's leading lending country. Today we are no longer the world's leading lending country. In fact we are now the world's biggest debtor country, and we are continuing to wield influence on the basis of military prowess alone."

Some of the damage done can never be rectified. There are, however, some steps that this country urgently needs to take. These include reversing Bush's 2001 and 2003 tax cuts for the wealthy, beginning to liquidate our global empire of over 800 military bases, cutting from the defense budget all projects that bear no relationship to the national security of the United States, and ceasing to use the defense budget as a Keynesian jobs program. If we do these things we have a chance of squeaking by. If we don't, we face probable national insolvency and a long depression.

Chalmers Johnson is the author of Nemesis: The Last Days of the American Republic, just published in paperback. It is the final volume of his Blowback Trilogy, which also includes Blowback (2000) and The Sorrows of Empire (2004).

[Note: For those interested, click here to view a clip from a new film, "Chalmers Johnson on American Hegemony," in Cinema Libre Studios' Speaking Freely series in which he discusses "military Keynesianism" and imperial bankruptcy. For sources on global military spending, please see: (1) Global Security Organization, "World Wide Military Expenditures" as well as Glenn Greenwald, "The bipartisan consensus on U.S. military spending"; (2) Stockholm International Peace Research Institute, "Report: China biggest Asian military spender."]

Copyright 2008 Chalmers Johnson

[Jan 25, 2008] Stephen Laniel’s Unspecified Bunker » Krugman paraphrased “Embalm, bury, and cremate. Take no chances!”

slaniel | Conscience of a Liberal, The | Friday, January 25th, 2008

What follows is as brief a synopsis as I can come up with for The Conscience of a Liberal. Still, it’s 1500 words long. That says a lot about Krugman, and about my wordiness.

At the close of the Hoover administration, it was clear that a Democrat would be elected to the presidency. It was by no means clear, though, that we’d get FDR and the New Deal. Out of catastrophe we got protection for the unemployed, for the elderly, and for the poor; and got job relief. The going was hard, but FDR did it. As he said in his speech at Madison Square Garden on the eve of the 1936 election, after the first four years of his administration:

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.

(There’s a recording of FDR delivering the speech, embedded within that last link. Give it a listen. It’s a remarkable speech, and the wind builds in FDR’s sails as he goes along.)

Stop and ponder that excerpt for a moment, if you please. Just try to envision the hell that Obama or Clinton would bring down on themselves if they spoke like FDR. Labeling them “Communist” would be the least of their worries. The military-industrial complex, about which Eisenhower warned us, would never stand for the phrase “war profiteering.” The candidate would be crushed before his or her next speech.

For a few years the forces of reaction tried desperately to roll back the New Deal. Out of that we got McCarthyism, whose purpose wasn’t to root out Communists but rather to reverse the New Deal. As Richard Hofstadter put it:

What I believe is important, however, to anyone who hopes to understand the impulse behind American anti-intellectualism is that this grievance against intellectuals as ideologues goes far beyond any reproaches based on actual Communism or fellow-traveling . . . The truth is that the right-winger needs his Communists badly, and is pathetically reluctant to give them up. The real function of the Great Inquisition of the 1950’s was not anything so simply rational as to turn up spies or prevent espionage (for which the police agencies presumably are adequate) or even to expose actual Communists, but to discharge resentments and frustrations, to punish, to satisfy enmities whose roots lay elsewhere than in the Communist issue itself. . . . McCarthy’s bullying was welcomed because it satisfied a craving for revenge and a desire to discredit the type of leadership the New Deal had made prominent.

Had the Great Inquisition been directed only against Communists, it would have tried to be more precise and discriminating in its search for them: in fact, its leading practitioners seemed to care little for the difference between a Communist and a unicorn.

McCarthy lost. The Republicans made their peace with the New Deal after beating up on Truman for a while (Korea and all that). Out of this accommodation came Eisenhower. The New Deal was by now far too popular to overthrow, so Republicans and Democrats came together for 30 years or so. They really were “Republicrats” in that interval — parties without many essential differences on policy. There was even a marriage of convenience between Northern Democrats, who supported greater rights for blacks, and Southern Democrats who obviously didn’t. But the South derived a lot of benefit from the New Deal (read especially volume 1 of Robert Caro’s LBJ bio, on the electrification of rural Texas), so they clung to the party. It didn’t hurt that the South had always been Democrats, since Republicans had been the party of Lincoln.

The New Deal, and especially the tax policies that went along with it, led to greater income equality than the U.S. had seen in half a century. Political moderation went along with economic leveling.

But the legacy of slavery tore apart the Democratic party. LBJ’s signing of the Civil Rights and Voting Rights Acts was the death knell. The Dixiecrats had enough. They split off and became Republicans. The GOP exploited this. Republicans became more and more extreme, using all the codewords of race (”states’ rights” and so forth) to disguise what they were really after. Today the GOP is dominated by two wings: the businessmen, who wish for more immigration (cheaper labor) and lower taxes; and the rural, conservative Christian wing that is afraid of blacks and immigrants.

The GOP is corrupt and has become the party of cronyism. This cronyism is at its worst in the Iraq War: we elected people who explicitly wish to destroy government, so we shouldn’t expect that they’d put their hearts into governing. They especially wouldn’t be able to run a war. Wars call for shared sacrifice and for increased taxes, two things that Republicans are loath to defend. The GOP’s utter failure in the Iraq War will cut out one of its fundamental pillars, namely that it’s strong on defense. Its constant accusations that Democrats are the party of taxing and spending should have died long ago.

The weakness of unions plays a crucial role in all of this. Republicans gutted unions in the 70’s and 80’s, starting with Goldwater. It didn’t have to happen this way, and contrary to popular belief it has nothing to do with a postindustrial economy: European nations, and Canada, have by and large maintained their unions’ strengths; only the U.S. and Britain — dominated by Reagan and Thatcher — have lost significant union membership, because conservatives looked the other way while companies illegally fired union-organizing employees.

Hence Democrats find themselves poised at a crucial moment. With all the momentum and much of the power, they could reinstate the New Deal. They could succeed where Truman and Nixon failed, and institute national health insurance. In so doing, they could prove to Americans that government can work. We know that national health insurance can work, because it does work in every other advanced industrialized nation. With health care successful, we could reclaim a progressive nation and finally take the country back from the reactionaries. And we could re-empower unions, giving power back to the people and taking it away from the robber barons.

So it should be obvious: the Republicans will not have this. They know that single-payer health insurance will work. They know that allowing it to succeed — which it would, left to its own devices — would spell the end of movement conservatism. The fight over health insurance means substantially more than it may appear at first glance. The GOP will stop at nothing to destroy it. The 2008 presidential campaign may turn out to be the dirtiest, ugliest, most straightforwardly fraudulent campaign we’ve ever seen.

All of these are Krugman’s observations. In this book he is essentially the anti-Obama. Compromise with the GOP, says Krugman, is impossible. It was impossible during the New Deal, and it’s impossible now. We won then because the public overwhelmingly wanted what FDR offered. We will win now — if we fight like hell — because universal health insurance is what the public wants. We cannot compromise with those who seek the destruction of all we stand for. As Kissinger put it in A World Restored (and Krugman quoted in The Great Unraveling):

For powers long accustomed to tranquility and without experience with disaster, this is a hard lesson to come by. Lulled by a period of stability which had seemed permanent, they find it nearly impossible to take at face value the assertion of the revolutionary power that it means to smash the existing framework. The defenders of the status quo therefore tend to begin by treating the revolutionary power as if its protestations were merely tactical; as if it really accepted the existing legitimacy but overstated its case for bargaining purposes; as if it were motivated by specific grievances to be assuaged by limited concessions. Those who warn against the danger in time are considered alarmists; those who counsel adaptation to circumstance are considered balanced and sane, for they have all the good “reasons” on their side: the arguments accepted as valid in the existing framework. Appeasement, where it is not a device to gain time, is the result of an inability to come to grips with a policy of unlimited objectives.

But it is the essence of a revolutionary power that it possesses the courage of its convictions, that it is willing, indeed eager, to push its principles to their ultimate conclusion.

Krugman has long asserted that the Bush administration is, in Kissinger’s sense, a revolutionary power, and that the public’s mistake is to believe it amenable to Democratic reason.

The question is whether Democrats have the leadership to bring us what we deserve.

2 Comments

  1. The weakness of unions plays a crucial role in all of this. Republicans gutted unions in the 70’s and 80’s, starting with Goldwater. It didn’t have to happen this way, and contrary to popular belief it has nothing to do with a postindustrial economy: European nations, and Canada, have by and large maintained their unions’ strengths; only the U.S. and Britain — dominated by Reagan and Thatcher — have lost significant union membership, because conservatives looked the other way while companies illegally fired union-organizing employees.

    Again, that’s why I think this goes back to a mindset shift from pre-WWII immigrant labor vs. post WWII baby-boom aspirations. I don’t think Canada or Europe had the same type of situation.

    However, what might be more instructive is to compare what set the stage not only for Reagan but what set the stage in the UK for Thatcher. It seems like the UK and the US were doing some different things.

    Comment by mrz — January 26, 2008 @ 9:29 am

  2. Well, Krugman’s point — and it’s not his alone — is that much of what happened in the U.S. that set the stage for the Reagan Revolution gets back to race. The GOP got strength from (not to put too fine a point on it) racist Southerners. Business interests, who in some ways are the natural enemies of racists, hooked up with them. So race powered the anti-union force of the 70’s and 80’s.

    Not sure about Britain.

    Comment by slaniel — January 26, 2008 @ 12:28 pm



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