Friday, 18 February 2011


Is the individual citizen to blame for America’s inevitable decline, are the political and financial elites that make policy for their own benefit, or is the deeply entrenched system responsible? Who exactly is it that must attend the Alcoholics Anonymous meetings and admit there is a chronic problem with destructive long-term consequences? The decline of West, especially the US, toward “Third World” status is inevitable owing to structural causes of the “corporate welfare capitalist state” which political elites sustain on behalf of the financial elites.

Within that corporate welfare structure rests the defense sector, which is largely parasitic and contributes to sectoral imbalances in the global economy. In 2009 global military expenditures amounted $1.531 trillion, or 2.7% of world GDP. Led by the US, which spends about half (48%) of the world defense spending is 49% higher today than in 2000. Europe comes in second highest in the world with 20% spending on defense, Chine at 8% and Russia at 5%. The rise in US defense spending despite the 2008-2010 economic crisis, and despite Obama whose slick PR campaign convinced the American voters that he would change course from the previous regime. And he did in areas where the basic structure of corporate welfare capitalism was not impacted.

When I addressed this issue on the WAIS Forum in 2004, global defense spending stood at $1.1 trillion and the US share was $623 billion. Back then, there were of course the predictable neo-McCarthyist sophistry tactics by individuals who may sincerely believe that more on defense and less on social programs means a stronger America until the end of time. The irony is that all that defense spending has actually contributed to the economic decline of the US, not to its strength as apologists argue, and to a decline of living standards and greater socioeconomic gap between rich and poor.

Obama's proposed budget for 2011 stands at $3.83 trillion, of which $1 to $1.45 trillion will be devoted to defense, which includes Homeland Security, FBI counter-terrorism, foreign arms sales, Energy Department defense-related spending, veterans pensions and other costs, NASA satellites, and interest on debt for past wars. As a percentage of GDP, the US budgetary deficit is about as bad as it is for the European Union's southern European nations and Ireland that are currently under pressure from the IMF, the European Central Bank, Germany and France to engage in fiscal tightening that is chocking economic growth and resulting in higher unemployment and lower living standards.

The US could address the chronic deficit problem that has accounted for a weak dollar if it sharply reduces defense and defense-related spending. That defense spending accounts $1-$1.5 trillion out of a total $3.8 trillion necessarily entails that this parasitic sector takes resources from the civilian economy and it contributes to lower living standards. What does it offer in return, 'the illusion of safety and security' and the continued decline of the civilian economy that needs resources to become more competitive globally. That Obama has been increasing defense spending is hardly surprising, considering that he wants to win the votes of the conservative Democrats in the 2012 election.

Today is the beginning of the twilight for the alcoholic patient who will not admit he has a chronic problem–and the alcoholic is not the individual citizen who keeps borrowing to shop because corporations have indoctrinated her/him to believe that without the latest fashion attire, a new car and whiter teeth there is nothing but misery awaiting in a society that values material possessions instead of human beings. The alcoholic is the system of corporate welfare capitalism “American-style” transplanted to the rest of the world. As a result of the 2008-2010 global financial crisis, governments led by the US curtailed public spending but increased defense spending.

Defense contractors including Northrop Grumman, Boeing, Lockheed-Martin, Honeywell, General Dynamics, etc. (top 100 defense corporations in which philanthropist billionaires along with politicians have investments) are maintained profitable because government provides lucrative contracts for their growing revenue. These corporations and their legal and consultant for fee defenders argue that they are a vital part of the economy, that anyone uttering a word otherwise must be stopped by alerting the citizens of “enemies that hate our freedom”!

Like an alcoholic patient who refuses to admit there is a problem because the liver and the rest of the body seems to be still functioning, similarly the financial and political elites along with their apologists prefer to believe in miracles rather than take corrective measures now. Unfortunately, in the result will be that the “alcoholics” who cause the symptoms of this economic and social disease do not and will not suffer; they are not and will not lapse toward Third World status.

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