Wednesday, September 21, 2011

Military and Financial Adventurism: Two Sides of a Bad Coin

Global war against Muslim political activists and domestic economic crisis both appear here to stay, so it is high time for Americans to recognize that they are connected and to start trying to figure out how global war and domestic economic crisis impact each other.

Two long trends characterize the political environment of the U.S. today: an expensive, forward-leaning foreign policy and a debilitating economic crisis. Neither is being resolved. If fraud is the act of selling something on false pretenses, then both Washington's policy toward the Islamic world and the joint Washington-Wall St. attitude toward the behavior of Big Finance are fraudulent. Washington is selling its militant stance regarding global political Islam as in the interests of U.S. national security, even though it is actually undermining that security by provoking hostility. Washington is selling its coddling of Big Finance as "reform," even though it is precisely the lack of thorough reform that is setting us up for a second financial crisis. The situation in each policy realm is in fact so bad that the moderate tone of the above words itself approaches deception. [Those who would like to read a summary of U.S. policy toward the Muslim world that does not try so hard to be polite can turn to the award-winning U.S. foreign policy reporter Nick Turse; those who want the criminal nature of the financial crisis spelled out for them can turn to economist and former Federal financial regulator William Black.]

That the U.S. faces these two adverse trends simultaneously is obvious, but these two trends tend nevertheless to be considered in isolation. Therefore, the incredibly dangerous, non-linear ways in which the two might feed off each other is overlooked, as are the potential solutions that might be obvious were we to think of them together. For example, the obvious solution to the budget crunch is to stop wasting so much money spinning wheels in counterproductive efforts to control an endless series of Muslim cultural, political, psychological, and economic brushfires not amenable to military solutions in the first place.

Before focusing on solutions,  however, we need to understand the context in which we as a society currently find ourselves, and "train wreck" is not the appropriate metaphor; more accurately, the appropriate metaphor is "double train wreck." The problem is not just that Washington faces two major problems, but that each is making the other worse. The military-political crusade against not just presumed terrorists but a global array of politically active Muslim groups advocating justice for Muslim societies rests on moral grounds and national security grounds concerning which debate is perhaps possible, but one thing is clear: Washington's approach is expensive.

That drain of resources for military adventures leaves less to combat the weakened economy that has resulted from the financial adventures of gambling bankers, brokers, and mortgage firms. In addition, America's foreign creditors are increasingly reluctant to loan us the funds to power a military campaign they find distasteful in the first place, while such trade partners as Saudi Arabia are looking for less controversial partners, and allies such as Turkey beginning to view the U.S. as a hopelessly incompetent global leader. The links also work the other way: a gutted economy of unemployed workers combined with a financial system now focused not on investing in the American economy but on manipulating the savings of Americans to enrich the elite can hardly avoid weakening the ability of the U.S. to spend about half the world's military budget all by itself. So the war undermines our ability to maintain a strong economy, while the weak economy undermines the war. The urgency for Americans to understand that these two trends are interacting is hard to overstate.

Nevertheless, all that is, frankly, obvious. What is not obvious is exactly how the two negative trends of endless military adventure and endless economic crisis will interact. Since the public debate pays little attention to the fact of their interaction in the first place, it is not surprising that little insight about the actual dynamics of how these two trends interact is available. Are the interactions additive or multiplicative (i.e., exponential)? Is there a time delay that will generate nasty instability? Is there a logical approach to resolving the two problems jointly, whereby we need to do X on foreign policy in tandem with or before or after we do Y on the domestic economy?

It is a safe bet, unfortunately, that no one knows. Suffice it to say that since neither adverse trend shows any sign of being resolved, we'd better start trying to figure out how global war and domestic economic crisis impact each other.
Technical Note: I kept technical terms out of the above overview, but the implication is that the nexus of domestic economic trends and foreign policy constitute a complex-adaptive system characterized by exceedingly complex causal dynamics. Therefore, not only is the prediction of any specific event hard because all the parts are evolving, but surprise is easy to predict because the underlying forces work in irregular ways. Recent examples of surprise include 9/11, the bursting of the mortgage bubble, the size of the CDO market, the viciousness of Israel's invasion of Lebanon in 2006...

Do you want more surprises?

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