War Spending Weighs Down Our 'Genuine Progress'

One of the major economic indicators that the government and Wall Street depend on, especially to tell us whether the country is in a recession or not, is the GDP (Gross Domestic Product). However, there are many who feel this indicator is inaccurate in reporting the real effect of the economy on people, especially people's happiness. The GPI (Genuine progress Indicator) was developed as one better and more accurate alternative, among others.

If you look at these two indicators, assuming that a steady decrease in the GDP for two consecutive quarters indicates a recession as Bush defines it, you'll find that even now, despite the terrible state of this economy with it's massive foreclosures and record unemployment, the GDP does not yet indicate we are in a recession, or even a downturn  Looking at the GDP, we are steadily growing our economy at a healthy clip. Two things stand out for me in this distinction.

1. The GDP includes Crime as a indicator of economic growth (as explained in World Changing online magazine)
2. The GDP includes war and defense spending and it's industries

The GPI includes neither of these. Without defense spending, along with a few much lesser expenses like crime, we see the real picture of the downturn our economy is taking while boosting the military laden GDP, shown in this chart from Redefining Progress a public think tank.

Redefining Progress notes that the GPI has been flat since the 70s. Some charts, like The Progress Report, show a downturn in the GDI.

So what does defense have to do with it?

Defense spending goes into weapons that are expendable. When we go to war we take massive stocks of equipment and basically throw them away, or blow them up. What production or constructive result comes out of war that benefits U.S. citizens? Nothing. Certainly not anything that would warrant the massive expense of the Iraq war. Any of this equipment recovered after the war is pretty much beyond it's useful life. Time to order the new models. In fact, the defense industry is notorious for, not only overspending with inflated budgets, but also for having state of the art equipment. All of this expense is more or less for stuff we trash.

That doesn't even get into the extravagance we see in defense spending on contractors like Halliburton and Blackwater who exploit the government for outrageous sums, as documented in a film called Iraq For Sale, which depicts Iraq as a sort of cruise ship like luxury resort for contractors in the middle of the surrounding war.

CBC News examines the relevance of the U.S. GDP compared to Canada, which exposes the use of the term GDP for what it really is. a political tactic:

Even as a measure of economic output, however, GDP has its limitations. Take a look at the first quarter of 2008, when the Canadian economy contracted at an annualized 0.3 per cent that quarter and the U.S. economy grew by 0.9 per cent.

That leaves the impression that the Canadian economy was doing worse than the U.S. economy, which was struggling with rising unemployment, slumping auto sales, and one of the worst housing downturns in decades.

"Without resorting to hyperbole, this understates the relative performance of the Canadian economy by a country mile," said BMO Capital Markets economist Doug Porter in a report he titled "Does GDP Matter?" (He says yes, but not as much as usual.)

The article goes on to note numerous other better indicators like the GPI. It would seem then that the GDP is simply a tool of politicians and not an indicator of any substance.

We don't hear Bush, McCain or any of the other neocons talk about the fallacy of the GDP, or that war spending keeps it on the rise, while our balance sheet minus war spending looks a whole lot more like a recession. But we do hear Obama talking about getting out of Iraq and how this immense expanse is draining our economy. In the second debate at Nashville, Obama said:

....So one of the difficulties with Iraq is that it has put an enormous strain, first of all, on our troops, obviously, and they have performed heroically and honorably and we owe them an extraordinary debt of gratitude.

But it's also put an enormous strain on our budget. We've spent, so far, close to $700 billion and if we continue on the path that we're on, as Senator McCain is suggesting, it's going to go well over $1 trillion.

We're spending $10 billion a month in Iraq at a time when the Iraqis have a $79 billion surplus, $79 billion.

And we need that $10 billion a month here in the United States to put people back to work, to do all these wonderful things that Senator McCain suggested we should be doing, but has not yet explained how he would pay for.

If we want to fix this economy we have to get out of the Iraq war.

Follow Jon Raymond on Twitter: www.twitter.com/jonraymond

Comments

[RRG64]

05:07 PM on 10/14/2008

Not only have they overextend­ed us militarily they have also put our country in debt to Russia, China and the Gulf States( and I dont mean the Southeast USA) This gets worse.

"Roubini argues that most of the losses from this bad debt have yet to be written off, and the toll from bad commercial real estate loans alone may help send hundreds of local banks into the arms of the Federal Deposit Insurance Corporatio­n. “A good third of the regional banks won’t make it,” he predicted. In turn, these bailouts will add hundreds of billions of dollars to an already gargantuan federal debt, and someone, somewhere, is going to have to finance that debt, along with all the other debt accumulate­d by consumers and corporatio­ns. “Our biggest financiers are China, Russia and the gulf states,” Roubini noted. “These are rivals, not allies.”

http://www­.rgemonito­r.com/roub­ini-monito­r/253363/n­ew_york_ti­mes_articl­e_on_nouri­el_roubini­_as_dr_doo­m

What happens to a war on terror when you run out of bullets and are in debt to your rivals?

We cannot afford to allow the same fundamenta­l mistakes be made in our financial system by four more years of the same thinking that created it.

They have implemente­d a upside down socialist financial model right underneath our noses.

Privatize the gains, socialize the losses on the back of the American worker.

[pawest]

04:08 PM on 10/13/2008

Thank you for posting this, it is a topic that does not receive nearly the attention it deserves in the MSM.

On perhaps a related note, we're encouragin­g Bob Schieffer to press the candidates for a response to a question on out of control military spending and the economic crisis at the next debate, and already over 12,000 people have signed on.

Here it is below: "The Iraq and Afghanista­n wars, at a cost of $5,000 per second, fuel our growing debt and feed the economic crisis. Even subtractin­g war funding, Pentagon spending is breaking records. Will rebuilding the economy require a tough look at military spending? What would you change?"

http://www­.capwiz.co­m/peaceact­ionwest/is­sues/alert­/?alertid=­12001871

Please pass this message along.

[krocklin]

05:19 PM on 10/10/2008

The War Economy is the elephant in the room - hardly discussed by politician­s.
Robert Scheer is one of the few who have recently written a well-resea­rched book on this subject.
Joseph Stiglitz, nobel prize winning economist, has written that between 2002 and 2007 military spending is up 70% under Bush.
Almost 50% of all taxes go to military spending and most of this is corruption and waste. It's a huge gravy train, the scope of which is under the radar.
Stiglitz has also written that the total cost of just the Iraq War will eventually be in the trillions.
All this and domest prosperity­? It is not possible.

[Jon Raymond]

06:35 PM on 10/10/2008

It almost seems to be a forbidden topic. Obama is the only one who actually spells it out and wants to do something about it. I'm surprised the press doesn't do more on this, especially now with this Wall Street crisis. They should point fingers at the war and ask why this outrageous expense is considered necessary?

[JPHR]

12:33 PM on 10/10/2008

So a silver lining to the crises: financial reality might force the US to behave

This is of course the end of the NEOCON wet-dream of a unipolar world within which the US could roam at will. By now even the diehards NEOCON free market ideologist may have realized that they created a monster which is beyond their power to contain. Only that much dreaded internatio­nal cooperatio­n may be a solution.

My impression of Obama's foreign policy was that he was to end that NEOCON madness anyway, but a financial incentive always helps.

[NoMoFearNoMoHate]

12:11 PM on 10/10/2008

I've believed for some time that no company should be allowed to profit from war by law. Any company making war time efforts and goods will adhere to strict maximum salaries and pay so that war is not profitable for anyone - if you can't get anyone to fight under these austere financial conditions then the war is obviously not worth it. The salaries would NOT be generous by any means - as a matter of fact they would be in line with police, fire and teacher salaries. Let's see if they can raise an army for an optional war under these conditions - I doubt it. And if there were truly a threat I have no doubt that we would have no trouble raising a mighty military once more.

[Jon Raymond]

03:02 PM on 10/10/2008

Perhaps with Obama a future in that direction is possible. But he'll have to fight the now entrenched neocon war profiteers­.

Naomi Klein wrote a great book on how the neocons deliberate­ly use shock (as in shock and awe) and disaster (coined Disaster Capitalism by Milton "Uncle Miltie" Friedman) to change government and get public support for the change, in this case, the privatizat­ion of the war.

Is the Wall Street crisis another case for such neocon change? Perhaps the outcome of the election will answer that question.

Read more: http://www­.huffingto­npost.com/­naomi-klei­n/now-is-t­he-time-to­-resist_b_­128433.htm­l

[mjc]

11:18 AM on 10/10/2008

You have it exactly right, Jon Raymond. Those wars were never really about defeating al Qaeda, the Taliban, or terrorists­. They were and are about establishi­ng an oil base in the Middle East for America, a strategic place where the oil deposits can be monitored and controlled by the US. And there is no reason to expect this economy to do more than produce more guns, less butter, and profit the weapons makers and groups like Haliburton­. We paid the price for 8 years of Bush and company and it will keep on requiring a substantia­l of American capital.