Tuesday, November 1, 2011

Thomas E. Woods on the Idiocy of "War-Time Prosperity"

"If spending on munitions really makes a country wealthy, the United States and Japan should do the following: Each should seek to build the most spectacular naval fleet in history, an enormous armada of gigantic, powerful, technologically advanced ships. The two fleets should then meet in the Pacific. Naturally, since they would want to avoid the loss of life that accompanies war, all naval personnel would be evacuated from the ships. At that point the U.S. and Japan would sink each other's fleets. They could then celebrate how much richer they had made themselves by devoting labor, steel, and countless other inputs to the production of things that would wind up at the bottom of the ocean."................................................................................................P.S. I would also add a question to this wonderful piece of irreverence. If in fact it WAS WW2 that got us out of the Great Depression, why then isn't it the case that the two conflicts (three, if you count Libya, four, if you count Pakistan, five, if you count Yemen, six, if you......) of today haven't produced a similar miracle? It's like, what, the sons a' bitches aren't big enough?

17 comments:

Mordechai said...

Very simple Will;

WW2 was about dividing up the vast resources of the planet, whether the US/British or the Japanese/Nazis would get to control the spoils of the war.

Post WW2 we fought a 45 year "cold war" against the USSR for the same control but at a much lower level of both military action and direct costs to the economy.

The current wars in the Middle East are about the US trying but failing to control the local governments, who decide who gets access to the resources under their territory.

Oh yea and the fact we haven't been able to increase the output of geologically sourced petroleum since 2005, even though the worlds demand keeps growing so the price increases putting ever more and more stresses on the economies of those competing economically for said resources.

It is really about the limit to cheap/easy resource extraction, what drove the worlds economy since WW2. Combined with the geological physical limit to the speed extraction given the current technology and costs of said extraction methods. As costs of extraction rises, combined with ever more complicated methods, the availability of resources becomes more uncertain.

This sends costs of resources higher adding to economic stresses, incorporating with the high debt already carried by world economies, it cannot support at current levels of living here if other societies want to achieve our levels of living.

IE, the war in the middle east isn't stopping other economic powers from competing for resources like WW2 did. In fact our spending on the wars directly benefit our economic competitors, keeping resources flowing around the globe. The detriment to the US at the same time by removing a large amount of economic capital from our economy.

Which is why the wars have hurt us economically while the rest of the planet benefited at very little cost to their economies.

Rusty Shackelford said...

37,you're a one trick pony."while the rest of the planet benefited at very little cost to their economies," Have you recently looked at Greece,Italy,Spain,Portugal and to a lesser extent England and France?

Energy has very little to do with their economic woes....socialistic policies do.

Mordechai said...

Energy has very little to do with their economic woes....

Um rusty the cost and availability of energy is a very important driving factor in every economy,

In fact the Germans and Japanese based much of the strategy for their military operations on trying to secure good energy resources for their war machines and industrial output to supply such machines.

We won because in a large part we prevented them from achieving said energy goals.
The last 6 years shows the rise in energy prices along with a non growth is supplies means that some places in the worlds economies will not be supplied all their needs. Which dictates a rise in prices, this causes economic conditions to deteriorate because growth cannot happen is supplies for energy cannot grow to supply the economy.

Sorry but there is a very real reason the dollar when it was disconnected from gold standard by Nixon was connected to Oil, in such Oil prices around the planet were set in dollar terms from 1972 forward.

The problems are two fold, the over reliance on debt, and rapid rise of energy prices post 2005 directly helped create conditions where an economic downturn could happen, and because this is the first economic downturn where the availability of energy supplies are not rising for a larger demand growth is stifled.

The over reliance of debt is the reason for the Oct 2008 bailout of wall street and European 2011 Euro crisis from Greece, Italy, Spain Ireland etc. That is solvable, with various abstract adjustments to either the books of banks IE a haircut, or restructuring of expenditures to revenues.

The energy crunch that the world has faced since 2005 cannot be adjusted in abstract terms, because no energy or too high a cost, energy doesn't appear.

So yes the fact that WW2 was mainly fought over resources, and today the wars are also for resources, however the strategy doesn't work like WW2 because our economic competitors are not directly involved in said wars, just befitting from our large capital expenditures, which are draining our economy while they use the reliance of debt from them to us as a tool to deepen our economic situation to their benefit.

That is not in disput unless your grasping of the situation is one dimensional.

Rusty Shackelford said...

37,it seems no one but yourself actually care about the drivel your posting on this subject....but I'd give you a B+ for your effort.

Report back to us with a follow up in three weeks.

Mordechai said...


Report back to us with a follow up in three weeks.


Sorry little one but I don't take requests from third grade mentalities.

Rusty Shackelford said...

You will report with a follow up in three weeks.

Now,good day sir.

Dervish Sanders said...

Rusty: it seems no one but yourself actually care about the drivel your posting on this subject....but I'd give you a B+ for your effort.

When brains were being passed out Rusty thought they said "trains" and he said, "no thanks, I already have a set".

What #37927 said was no drivel. As for who cares? I do... because I'm someone who cares about the truth.

Rusty Shackelford said...

I'm going to have to trademark my witty lines so I can charge WD and 37 when they use them,seeing that neither of them has a humorous vein in their bodies.

Mordechai said...

You will report with a follow up in three weeks.

How 'bout ya holds yer breath till I do, OK junior?

Dervish Sanders said...

Rusty: I'm going to have to trademark my witty lines...

You really are dumb if you think you came up with the "handing out brains" bit. Good luck getting that trademark.

Mordechai said...

Will, this article speaks to the question you posed here, it is long but good reading to think about your question.

Mending Dr PEMBy’s broken ladder

By Cameron Leckie

Just imagine for a few moments what the symptoms of a world at the limits to growth might include. Not just any world though, but one that has an economy that is global in nature, hyper-complex, industrial in form, credit driven, consumes resources (many of which are non-renewable) at an exponentially growing rate, and its financial system is designed around perpetual economic growth.

If this global economy was reaching the limits to growth it would be reasonable to expect that there would be warning signs. Symptoms that all was not well. Some possible symptoms, in no particular order, might include: Increased volatility in financial markets, whether they be in stocks, bonds, commodities, or precious metals; debt increasing to the point where the interest payments place a significant burden on society; increasing scarcity of key natural resources; increasing cost of living pressures on families and communities; increasing conflict between capital and labour; increasing political instability both in and between nations; increasing costs of dealing with the pollution caused by economic activity; and increasing difficulty in maintaining existing infrastructure and services.

A brief survey of news headlines around the world suggests that all of these symptoms currently exist to a greater or lesser degree.

One of the key questions facing us today is whether these symptoms are acute or chronic. Due to the all powerful forces of the market combined with human ingenuity, the conventional wisdom suggests, or maybe hopes, that these symptoms are acute. The treatment described by Dr PEMBy (PEMBy = Politicians, Economists, mass Media and central Bankers) is government stimulus, low interest rates, and if it gets really serious, some electronic money printing (quantitative easing). These responses, it is hoped, will treat the acute symptoms leading to a return to growth, although it is hard to understand how when it fails to consider the other symptoms.

The sheer scale of responding too the global economies current symptoms suggest however that they are chronic in nature. The world’s greatest ever credit expansion took more than forty odd years to reach its zenith; it will no doubt take a decade or more to unwind. Developing alternatives to fossil fuels on a meaningful scale, if it is even possible, will take several decades. Stabilising our climate could take a century or more. If these symptoms are chronic then a different treatment regime is needed. Indeed treating the symptoms as acute when they are in fact chronic is likely to only exacerbate the underlying condition – namely a global economy at the limits to growth.

Whilst Dr PEMBy has, and will likely continue to tell us, that if we just swallow their prescription a return to growth is just around the corner, there is a significant difference between the current situation to previous economic downturns - differences that imply that the current downturn is not just cyclical as Dr PEMBy is ever so fond of telling us. This can best be explained by panarchy theory.

Mordechai said...

(cont)

Panarchy is a model that can be used to describe how ecological and social-ecological systems function. It recognises that such systems go through phases of growth and decline, the adaptive cycle. A system initially accumulates capital rapidly and its components become more connected. As the system matures it develops negative feedback loops amongst its components to keep the system in balance. Over time the system becomes so rigid and dependent upon a particular set of conditions that a change to those conditions triggers a collapse. The collapse breaks apart the connections within the system, increasing its resilience and setting the conditions for growth to recommence. Panarchy theory recognises that systems operate at multiple levels from the micro to the macro and over different timescales with each system providing feedback to those above and below it.

In normal times the feedback between the various systems provides buffering. So when a system collapses, the feedback from other systems at different phases in the adaptive cycle both limit the depth of the collapse and assist in its reorganisation. There is a danger however. When enough systems reach the collapse phase simultaneously, this result can be a very deep collapse from which recovery is either impossible or very slow.

This is the difficult prospect that we face. Not only are there a number of chronic symptoms afflicting the global economy but many of them appear to be approaching the collapse phase simultaneously. Examples include the increasingly erratic climate, the global peaking of crude oil production, the debt crises of many countries and the increasing difficulty of our politicians and the political system to address our current ills. This has the potential to lead to a deep and comparatively rapid collapse of many of the systems that we currently rely upon.

The prospect of a deep collapse is magnified by society’s tendency to, as Ronald Wright author of A Short History of Progress describes it, kick out the rungs beneath us as we climb the ladder of progress. These rungs can be thought of as a safety net. Take for example food. Only a couple of generations ago many people provided a proportion of their food through the backyard vegie patch, a few chickens and some fruit trees. Today, the vast majority of us rely almost exclusively on food provided by the global food industry. Not only are we now dependent on a system over which we have no control but most of us have lost the skills and knowledge required for successful food gardening. Combined with this loss of knowledge is the trend towards homes that do not have adequate space for something as quaint as a vegetable garden. We have thrown away this rung like so many others over the last century or more of ‘progress.’

It would not be an unreasonable assumption to suggest that the Dr PEMBy’s amongst us will be the last to realise, and publicly acknowledge, that our current method of organising the economy, and by extension society, has reached a point where it no longer meets the circumstances upon which it is predicated. In short it is failing. Whilst targeted at a different scenario, perhaps Norman Dixon nailed Dr PEMBy’s problem in On the Psychology of Military Incompetence when he stated that “After a long history of wrong thinking they could not afford to be wrong.”

If the treatment prescribed by Dr PEMBy is only likely to worsen the condition, what should we do? Are street protests and the ‘Occupy’ movement appropriate responses? Or are there other more effective ways that the rest of us could and probably should respond? For most people, at least in the developed nations, economic growth and the expectation of it continuing are what we consider to be normal.

Mordechai said...

(cont)

Dmitry Orlov, a witness to the collapse of the Soviet Union and author of Reinventing Collapse: The Soviet Example and American Prospects, has explained how normalcy broke down in Russia. First people stopped being scared to speak their mind, next they stopped taking the authorities seriously and finally the authorities stopped taking each other seriously. Maybe the ‘Occupy’ movement and other much larger protests in Europe are the first step of the 99 per cent in seriously holding Dr PEMBy to account. While the anger and frustration of these people, with their livelihoods at stake, can be understood it is difficult to see what they will achieve other than further wounding the proverbial golden goose, with no substitute in it place.

Perhaps a far more effective response, although much less exciting than participating in a protest I suspect, would be to re-build the rungs (and hence reduce the depth of any potential collapse) that progress has thrown away on its seemingly relentless climb up the ladder. The list of actions that individuals and communities can take to rebuild a level of resilience in society is enormous. Examples of which are demonstrated by the Green Wizards project and Transition Towns.

Finally, popular culture is not at all helpful in addressing the prospects that we now face. Indeed it is part of the problem as it aims to empty our wallets while getting you to react rather than think. Leaving it behind is one way by which we can all show Dr PEMBy the prescriptions offered are not to be taken seriously, indeed Dr PEMBy is not to be taken seriously.

If the reaction of the world’s stock markets to news, or even non news, announced by Dr PEMBy is any indication, as a whole we are still taking the authorities far too seriously. As the global economy bumbles from one crisis to the next and the legitimacy of Dr PEMBy and their ability to understand, let alone control, events becomes less and less, the importance of those who have focused on the practical actions of mending the bottom rungs on Dr PEMBy’s broken ladder will come to the fore. For it is these people who will not only limit the depth of the collapse that Dr PEMBY is leading us to but may in fact build the basis of an economy and society that is healthier, happier and more meaningful.

end

Will though not a direct answer to your question abovem this article points out what the problem is and how each one of us individually might be able to work on a part of a solution.

Will "take no prisoners" Hart said...

I drive a Sentra, don't eat meat (and haven't for nearly 20 years now), recycle basically everything, and keep the thermostat as low as humanly possible. But, yes, if there are other things that I can additionally do, I am more than open.

dmarks said...

Jimmy Carter had it right on keeping the thermostat low. I hate it when people have houses stifling hot. Waste of energy, and very uncomfortable.

Dervish Sanders said...

dmarks: Jimmy Carter had it right...

As he often does (and did). A highly underrated president, IMO. He would have served a second term if not for Reagan's treason (negotiating with the Iranians to hold the hostages until after the election).

Will "take no prisoners" Hart said...

How come you only accuse Republicans of such dastardly actions; Bush as a war criminal, Reagan a traitor? What about frigging LBJ? That miserable son of a bitch was single-handedly responsible for the deaths of tens of thousands of young American men. And what about FDR? He routinely targeted major population centers in Japan throughout the war (I personally don't have a problem with this in that we were basically fighting for world freedom in WW2 but YOU as a progressive who so rails against targeting civilians should at least have some pause). And, of course, the fact that Mr. Obama has nearly sextupled the drone attacks in Pakistan, YOU'D THINK......