Alternative Insight

War Cometh Before a Fall

The most volatile combination for igniting hostilities is the rare occurrence of a declining economy and a still powerful military. Will an all powerful nation, which is accustomed to the highest standard of living, allow its comfortable economic lead to be slowly eroded by loss of markets, denial of access to necessary resources and an unassailable competition to its products? Does war cometh before a fall?

War has economic roots; no matter how it is made to appear. Define it as spreading freedom, fighting terrorism or protecting citizens, the driving force for war is to gain economic advantage. Protecting markets, acquiring new markets, crushing competition, defeating those who impede expansion, and controlling resources are the usual causes of wars that involve industrialized nations. As an example, Al-Qaeda is a definite threat and must be countered. This valid concern conveniently allows the war on terrorism to be used as an excuse for other battles. Nigel H. Maund, in an article, “The Epic Struggle for World Hegemony,” is more direct. Nigel Maund forcibly claims: "The War on Terror is nothing other than a massive, albeit obviously transparent, smokescreen for the real war: the war for resources and the economic survival of the United States as a global power.

Can Maund's assertions be confirmed? The war in Iraq, falsely posed as a war to prevent Hussein from acquiring weapons of mass destruction, has been re-designated as a war against terrorism. Syria and Iran, who struggle with their own local terrorism and have not supported any terrorist activities against the U.S., are also included in the U.S. war against terrorism. Why? To protect markets, acquire new markets, and defeat those who hinder U.S. expansion and its intent to control resources.

War has cometh on previous occasions - Philip II Spain attacking England in 1588; the age of imperialist wars that kept the industrialized nations growing, and the fascist nations' aggressions during the1930's; wars waged to erase competition, secure resources and as a rescue from possible economic downfalls. It is more possible to cometh in a climate of declining resources coupled with increasing demand for the resources; more likely to cometh in an economic environment of many low cost and highly competitive producers; more likely to cometh in an atmosphere of regional trade agreements that prejudice nations which aren't part of an economically strong region. It is likely to cometh from a nation with increasing defense production and that uses credit, rather than exports, to support its economy. It is likely to cometh in the near future. The United States most resembles the "ice warrior" that cometh. The story is conveyed in a few graphs. It starts with national defense.

A massive increase in U.S. national defense spending is shown in the following graph.

Granted that the 9/11 attack forced the U.S. to augment its fighting capability. Nevertheless, its defense budget cruised at an elevated level for decades. Did 9/11 demand an almost doubling of the defense budget in four years to counter terrorism, or did the huge appropriations serve to temporarily stimulate a damaged economy and prepare for the next war; the invasion of Iraq? The reaction to the U.S.military expansion has been a worldwide arms race with the U.S. enriching itself by supplying many of the weapons. The United States accounted for 28 percent of world defense expenditures in 1986 and 34 percent in 1994.
Today it accounts for approximately 50 percent.

The war footing has provided a temporary stimulus to an economy that is now receiving huge shocks from dubious credit support. The Gross Domestic Product (GDP) has increased at an exponential rate, but for what reason? Certainly increases in GDP fuel credit expansion, but is credit expansion adding a kicker to the gradually increasing slope of the curve, which is satisfied by printing money. Statistics seem to support that supposition. Compare the GDP growth and Credit Outstanding growth.








The huge and constantly increasing debt has grown more than two times faster than the GDP in the last forty years and is approaching an almost vertical asymptote that cannot be sustained. In other words, if this growth curve of Credit Outstanding is required to fuel GDP growth, the GDP growth also cannot be sustained and the GDP growth will either slow, or the GDP will decline. The excessive credit has been used to finance government debt, primarily defense spending that does not add to the productive resources of the economy, risky mortgages for a home construction industry, consumer purchases of imported goods and foreign purchases of debt. The increasing deficit in the trade balance (goods and services and income receipts) is tracking the debt and is another example of the economic decline of the United States.


U.S. assets are transferred to other nations to accommodate the deficit. The dollar slowly shrinks in value and inflation creeps up as import prices increase. And there are no apparent polices to combat these trends - just the opposite - U.S. policies have forged regional trade alliances that don't include U.S. participation.

The Association of Southeast Nations (ASEAN) has as members: Indonesia, Thailand, Malaysia, Singapore, Philippines and Brunei, Vietnam, Myanmar, Cambodia and Laos. This dynamic economic region has a combined gross domestic product of more than $1 trillion. ASEAN also has free-trade agreements with China, South Korea, and more recently, with Japan.
The European Union (EU) is moving towards becoming a super nation composed of twenty-seven member states. It is the the largest economy in the world with a nominal GDP of €11.6 (US$15.7) trillion in 2007. The common market currency, the Euro, is slowly replacing the dollar as an international standard.
The Commonwealth of Independent States (CIS) unites former Soviet Republics to cooperate on matters of economics, defense and foreign policy. The principal features of the alliance - it controls vast oil and gas resources and some members are not friendly to the U.S.

Natural resources, once available to the U.S. upon command, are being directed to newly developing and other industrialized nations. A $235 billion trade deficit with China furnishes the Asian nation with capital to partner with other nations throughout the world and assists it in developing and acquiring scarce resources. Nations, such as Venezuela and Bolivia are breaking ties with "Yankee imperialism," and controlling their own vital resources.

How do the other nations respond to U.S. economic upheavals? They are increasing their military power. Russia has been most prominent in broadcasting a military challenge by sending its fleet into the Mediterranean Sea, declaring readiness to deploy new military facilities in Belarus, including nuclear weapons, and by resuming day long flights of its strategic aviation fleet. The Shanghai Cooperation Organization (SCO), Eurasia's mild response to NATO, conducted military exercises in August. About 6,000 troops from Russia, China and four Central Asian states participated in maneuvers, which have been considered to act as a signal to Western nations not to interfere in the affairs of the SCO countries. This attitude was emphasized by the appearances of Iran President Mahmoud Ahmedinejad and Afghanistan President Hamid Karzai as invited observers.

How does the U.S. respond to the economic upheavals? The Iraq war has exaggerated the problem. Instead of appropriations for programs that reduce deficits, increase exports and increase productivity, funds are wasted on military programs that yield wounded bodies and destroyed production. The U.S. has made its commitment - an arms race to support its weapon manufacturers and a war in Iraq begetting a war against Iran - more instability and additional economic challenges. The administration has not proposed creative programs to halt the monotonic increases in debt that drive the pretentious increases in GDP; has not offered opportunities to decrease the government deficit and the trade imbalance; has not decreased energy and raw material imports and has not engaged in effective agreements that allow U.S. acquisition of natural resources. If the problems grow and the U.S standard of living declines, the U.S. government will seek an obvious solution for a strong power: capture markets, capture resources, crush competition, silence those who impede expansion. War cometh before a fall.

september, 2007


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