Here is an excerpt from Bill Moyer’s recent interview with Andrew Bacevich which touches on the issues raised by this series. In particular, Bacevich surveys the period we will now cover:
****
BILL MOYERS: You say in here that the tipping point between wanting more than we were willing to pay for began in the Johnson Administration. “We can fix the tipping point with precision,” you write. “It occurred between 1965, when President Lyndon Baines Johnson ordered U.S. combat troops to South Vietnam, and 1973, when President Richard Nixon finally ended direct U.S. involvement in that war.” Why do you see that period so crucial?
ANDREW BACEVICH: When President Johnson became President, our trade balance was in the black. By the time we get to the Nixon era, it’s in the red. And it stays in the red down to the present. Matter of fact, the trade imbalance becomes essentially larger year by year.
So, I think that it is the ’60s, generally, the Vietnam period, slightly more specifically, was the moment when we began to lose control of our economic fate. And most disturbingly, we’re still really in denial. We still haven’t recognized that.
BILL MOYERS: Now you go on to say that there was another fateful period between July 1979 and March of 1983. You describe it, in fact, as a pivot of contemporary American history. That includes Jimmy Carter and Ronald Reagan, right?
ANDREW BACEVICH: Well, I would be one of the first to confess that – I think that we have misunderstood and underestimated President Carter. He was the one President of our time who recognized, I think, the challenges awaiting us if we refused to get our house in order.
BILL MOYERS: You’re the only author I have read, since I read Jimmy Carter, who gives so much time to the President’s speech on July 15th, 1979. Why does that speech speak to you so strongly?
ANDREW BACEVICH: Well, this is the so-called Malaise Speech, even though he never used the word “malaise” in the text to the address. It’s a very powerful speech, I think, because President Carter says in that speech, oil, our dependence on oil, poses a looming threat to the country. If we act now, we may be able to fix this problem. If we don’t act now, we’re headed down a path in which not only will we become increasingly dependent upon foreign oil, but we will have opted for a false model of freedom. A freedom of materialism, a freedom of self-indulgence, a freedom of collective recklessness. And what the President was saying at the time was, we need to think about what we mean by freedom. We need to choose a definition of freedom which is anchored in truth, and the way to manifest that choice, is by addressing our energy problem.
He had a profound understanding of the dilemma facing the country in the post Vietnam period. And of course, he was completely hooted, derided, disregarded
****
In this interview, which we consider one of the most enlightening we have read this year, Andrew Bacevich so completely disagrees with the main thrust of our series, it is simply a matter of taking his entire argument and turning it on its head for you to grasp the essential point we are making here.
The war against Vietnam marks the critical turning point when the United State’s trade balance descended into a deficit from which it has not since recovered.
So far we agree with Bacevich until we reach this:
By the time of the Carter administration, Bacevich paraphrases Jimmy Carter, “we’re headed down a path in which not only will we become increasingly dependent upon foreign oil, but we will have opted for a false model of freedom. A freedom of materialism, a freedom of self-indulgence, a freedom of collective recklessness.”
This is the typical interpretation of post-war American history as conveyed by that section of the American intellectual class who believe the economic problems the US currently faces amount to the vice of rampant materialism.
In this argument, for instance, the wars and occupations of Iraq and Afghanistan, as well as the intimidation of Iran, the current conflict with Russia over Georgia, can all be traced to the desire of The American People for cheap oil. (A variant of this theory also includes the profits of American oil companies.)
Bacevich advances that argument this way:
Our foreign policy is not something simply concocted by people in Washington D.C. and imposed on us. Our foreign policy is something that is concocted in Washington D.C., but it reflects the perceptions of our political elite about what we want, we the people want. And what we want, by and large – I mean, one could point to many individual exceptions – but, what we want, by and large is, we want this continuing flow of very cheap consumer goods.
We want to be able to pump gas into our cars regardless of how big they may happen to be, in order to be able to drive wherever we want to be able to drive. And we want to be able to do these things without having to think about whether or not the book’s balanced at the end of the month, or the end of the fiscal year. And therefore, we want this unending line of credit.
Thus, we are led to believe, our sons and daughters are killing Arabs in Iraq because we want cheap oil, and the Washington elite is trying to deliver on that demand. But, as we have seen, NSC-68 and Washington’s military buildout long preceeded the dependence on foreign oil or the trade deficit.
The argument, in other words, tries to ascribe to the allegedly materialistic and debt ridden population of selfish insatiable baby boomers, and their equally selfish and insatiable progeny, a result which was already in existence when the baby boomers were babies!
Still, we have to admit, to get from Bacevich’s view of American history to our view only requires the substitution of a few words:
The Bacevich argument is this:
Since 1970, Americans have become increasingly dependent on imported goods purchased on credit, which led Washington to erect a massive national security state in 1950.
Our argument would be this:
Since 1970, Americans have become increasingly dependent on imported goods purchased on credit, because Washington erected a massive national security state in 1950.
The leading economic concern the authors of NSC-68 was the impact of an aggressive policy of containment on domestic consumption of Americans. Keyserling argued, as we have seen, that impact would be offset by greatly accelerated economic growth increased defense spending would generate.
But, then again, Keyserling was an idiot.
Military spending is not for human consumption – one can live in a bomb shgelter, but not in a bomb. Bullets can’t be eaten, aircraft carrier hangers can’t be used to assemble cars.
Military expenditures are productive effort expended on unproductive goals.
Beyond the aircraft carriers, and submarines, and tanks, and bombs, and bullets, which require the diversion of human effort from the satisfaction of human needs, those who will employ these weapon systems must be themselves fed, clothed and provided the comforts of civilization – as thinly measured though they may be for the average soldier and his/her family.
But, in addition to these two categories of cost – and, setting aside any destruction of productive capacity which ensues from their actual employment on the field of battle, such as civilian lives lost, rice paddies poisoned, villages torched, and the decline of the birth rate of the local population – one must also figures in the lost output of those employed as service men and women, and, therefore, withdrawn from the productive labor market.
Only an economist could call this waste economic growth. Just as it takes an economist to describe both the activities which create a superfund site, and the activties which clean up that site as GDP.
It is what economists do. There is no cure for this, we fear.
Since, in the real world, where you live ( the planet where bullets can’t be eaten by the soldier, who didn’t produce them, because he was too busy killing the peasants who grow the rice we all need to satisfy our hunger) all that effort is a diversion from human consumption, a substitute for this wasted human effort must be found.
For any nation hoping to maintain their standard of living while wasting human effort on this scale, of course, imports fill in the difference. But, to import, one must export to pay for the things imported, and by 1970, the United States had exhausted its trade surplus and was running a deficit.
From that point forward, the American standard of living could only be maintained by one of two choices:
Dismantle the national security state. or,
Convince everyone else on the planet to feed and clothe you.
Amazingly, Henry Kissinger figured out how to do the latter.
Is serious left criticism of government’s share of GDP possible? (20)
Continued from here.
Here is an excerpt from Bill Moyer’s recent interview with Andrew Bacevich which touches on the issues raised by this series. In particular, Bacevich surveys the period we will now cover:
****
BILL MOYERS: You say in here that the tipping point between wanting more than we were willing to pay for began in the Johnson Administration. “We can fix the tipping point with precision,” you write. “It occurred between 1965, when President Lyndon Baines Johnson ordered U.S. combat troops to South Vietnam, and 1973, when President Richard Nixon finally ended direct U.S. involvement in that war.” Why do you see that period so crucial?
So, I think that it is the ’60s, generally, the Vietnam period, slightly more specifically, was the moment when we began to lose control of our economic fate. And most disturbingly, we’re still really in denial. We still haven’t recognized that.
BILL MOYERS: Now you go on to say that there was another fateful period between July 1979 and March of 1983. You describe it, in fact, as a pivot of contemporary American history. That includes Jimmy Carter and Ronald Reagan, right?
ANDREW BACEVICH: Well, I would be one of the first to confess that – I think that we have misunderstood and underestimated President Carter. He was the one President of our time who recognized, I think, the challenges awaiting us if we refused to get our house in order.
ANDREW BACEVICH: Well, this is the so-called Malaise Speech, even though he never used the word “malaise” in the text to the address. It’s a very powerful speech, I think, because President Carter says in that speech, oil, our dependence on oil, poses a looming threat to the country. If we act now, we may be able to fix this problem. If we don’t act now, we’re headed down a path in which not only will we become increasingly dependent upon foreign oil, but we will have opted for a false model of freedom. A freedom of materialism, a freedom of self-indulgence, a freedom of collective recklessness. And what the President was saying at the time was, we need to think about what we mean by freedom. We need to choose a definition of freedom which is anchored in truth, and the way to manifest that choice, is by addressing our energy problem.
He had a profound understanding of the dilemma facing the country in the post Vietnam period. And of course, he was completely hooted, derided, disregarded
****
In this interview, which we consider one of the most enlightening we have read this year, Andrew Bacevich so completely disagrees with the main thrust of our series, it is simply a matter of taking his entire argument and turning it on its head for you to grasp the essential point we are making here.
The war against Vietnam marks the critical turning point when the United State’s trade balance descended into a deficit from which it has not since recovered.
So far we agree with Bacevich until we reach this:
By the time of the Carter administration, Bacevich paraphrases Jimmy Carter, “we’re headed down a path in which not only will we become increasingly dependent upon foreign oil, but we will have opted for a false model of freedom. A freedom of materialism, a freedom of self-indulgence, a freedom of collective recklessness.”
This is the typical interpretation of post-war American history as conveyed by that section of the American intellectual class who believe the economic problems the US currently faces amount to the vice of rampant materialism.
In this argument, for instance, the wars and occupations of Iraq and Afghanistan, as well as the intimidation of Iran, the current conflict with Russia over Georgia, can all be traced to the desire of The American People for cheap oil. (A variant of this theory also includes the profits of American oil companies.)
Bacevich advances that argument this way:
Thus, we are led to believe, our sons and daughters are killing Arabs in Iraq because we want cheap oil, and the Washington elite is trying to deliver on that demand. But, as we have seen, NSC-68 and Washington’s military buildout long preceeded the dependence on foreign oil or the trade deficit.
The argument, in other words, tries to ascribe to the allegedly materialistic and debt ridden population of selfish insatiable baby boomers, and their equally selfish and insatiable progeny, a result which was already in existence when the baby boomers were babies!
Still, we have to admit, to get from Bacevich’s view of American history to our view only requires the substitution of a few words:
The Bacevich argument is this:
Since 1970, Americans have become increasingly dependent on imported goods purchased on credit, which led Washington to erect a massive national security state in 1950.
Our argument would be this:
Since 1970, Americans have become increasingly dependent on imported goods purchased on credit, because Washington erected a massive national security state in 1950.
The leading economic concern the authors of NSC-68 was the impact of an aggressive policy of containment on domestic consumption of Americans. Keyserling argued, as we have seen, that impact would be offset by greatly accelerated economic growth increased defense spending would generate.
But, then again, Keyserling was an idiot.
Military spending is not for human consumption – one can live in a bomb shgelter, but not in a bomb. Bullets can’t be eaten, aircraft carrier hangers can’t be used to assemble cars.
Military expenditures are productive effort expended on unproductive goals.
Beyond the aircraft carriers, and submarines, and tanks, and bombs, and bullets, which require the diversion of human effort from the satisfaction of human needs, those who will employ these weapon systems must be themselves fed, clothed and provided the comforts of civilization – as thinly measured though they may be for the average soldier and his/her family.
But, in addition to these two categories of cost – and, setting aside any destruction of productive capacity which ensues from their actual employment on the field of battle, such as civilian lives lost, rice paddies poisoned, villages torched, and the decline of the birth rate of the local population – one must also figures in the lost output of those employed as service men and women, and, therefore, withdrawn from the productive labor market.
Only an economist could call this waste economic growth. Just as it takes an economist to describe both the activities which create a superfund site, and the activties which clean up that site as GDP.
It is what economists do. There is no cure for this, we fear.
Since, in the real world, where you live ( the planet where bullets can’t be eaten by the soldier, who didn’t produce them, because he was too busy killing the peasants who grow the rice we all need to satisfy our hunger) all that effort is a diversion from human consumption, a substitute for this wasted human effort must be found.
For any nation hoping to maintain their standard of living while wasting human effort on this scale, of course, imports fill in the difference. But, to import, one must export to pay for the things imported, and by 1970, the United States had exhausted its trade surplus and was running a deficit.
From that point forward, the American standard of living could only be maintained by one of two choices:
Amazingly, Henry Kissinger figured out how to do the latter.
To be continued
This entry was posted on August 19, 2008 at 3:06 pm and is filed under General Comment, economics, political-economy, politics with tags budget, budget deficit, budget surplus, current account, CURRENT ACCOUNT DEFICIT, deindustrialization, exchange rates, exports, imports, inflation, Jimmy Carter, political-economy, richard nixon, shorter work week, stagflation, stagnant, The Economy, trade, TRADE DEFICIT, trade surplus, Trickle Down Economics, Vietnam, Vietnam War. You can follow any responses to this entry through the RSS 2.0 feed You can leave a response, or trackback from your own site.