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Oct. 12, 2019 - Ron Paul Liberty Report
15:14
'The Economic Costs of US Empire' - Nathan Goodman

George Mason University PhD candidate Nathan Goodman speaks at the 2019 RPI Washington Conference on how the US global military empire makes us poorer and less free.

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Time Text
Fiscal Costs of American Empire 00:02:31
Now we hear a lot about how dangerous the U.S. Empire is.
We learn about how we're making enemies overseas.
We learn about how immoral it is to bomb people overseas.
But there's something that we really also need to, and this is a good argument to make with some people who aren't swayed by the others, and that is that the U.S. Empire is a big ripoff.
It costs a lot of money, and it gives us very, very little in return.
And so that's why we're really pleased to bring someone to speak with you today who is an expert in this, who's been reading and writing, lecturing on this for a while now.
And he's also a member of the next generation that's coming up, the next generation of intellectuals.
And we're happy to say that intellectually he's here with us.
He spoke yesterday at our student seminar and did a terrific job.
And that's Nathan Goodman, who's finishing his PhD at George Mason University in Economics.
And he is a specialist in the economic costs of empire.
So Nathan, happy to have you join us.
Thank you so much, Daniel.
So in fiscal year 2019, the U.S. Department of Defense has a budget of approximately $693 billion.
And according to the costs of war project at Brown University's Watson Institute, the United States federal government has spent or obligated $5.9 trillion on the wars in Afghanistan, Pakistan, and Iraq from their beginning to fiscal year 2019.
Now, in an important sense, we need to remember that these are lower bound estimates of the fiscal cost of American Empire.
After all, American Empire consists of more than the Department of Defense, and it consists of more than the U.S. wars in those three countries.
The NSA, CIA, Department of Homeland Security, all of these are part of the national security state.
The DEA isn't just enforcing a war on drugs at home, they are waging a war on drugs abroad throughout Latin America and the world.
The State Department and USAID engage in foreign aid programs that largely serve imperial ambitions.
So the costs of empire are higher than the numbers I just gave you.
But whatever number we put on the fiscal costs of American Empire, it's important to remember that we're not just talking about the government spending dollars.
Alternative Uses Matter 00:04:36
When they spend those dollars, they are diverting real resources from alternative uses.
When metal is used to build a fighter jet, we are taking away that metal from other projects, whether that's a commercial jet, medical equipment, tractors, forks and knives, buildings, or anything else that you could make with that same material.
Similarly, an engineer who works on making drones for the U.S. military, they might otherwise develop any number of innovative consumer products or medical devices or capital goods that could increase productivity.
So we shouldn't just think of military spending as moving money around.
We are giving up real goods and services that could enrich our lives in countless ways.
Is that cost worth it?
To answer that question, we need to consider two key problems that plague systems of central planning.
Economist Don Lavoie called these problems the knowledge problem and the power problem.
Let's consider the knowledge problem first.
How do we know whether a particular use of resources makes people better off or worse off?
When an entrepreneur starts a business making, say, cell phones, they're going to need to pay for various inputs.
They need to buy materials like metals or minerals or plastics.
And they also need to hire engineers, factory workers, sales associates, and countless other people.
Both the materials and the people could be usefully employed elsewhere in the economy.
And knowledge about what consumers value and what the alternative uses of these resources are, well, that's highly dispersed throughout the world.
It can't be contained within a single mind.
No single mind has all that knowledge.
But prices transmit that knowledge.
If consumers become more interested in an alternative product that uses some of the inputs that we're using to make that cell phone, the price of those inputs is going to rise.
This encourages the entrepreneur to find ways to use less, to economize on that resource, even if the entrepreneur doesn't know why the price increased.
Then profit and loss provides crucial signals.
If the entrepreneur makes a profit, that indicates that people value the final product that they've made more than they value the inputs or alternative uses of the inputs that go into it.
On the other hand, making losses indicates that value is being destroyed.
The input being used is, the inputs being used could be valued more on other alternative uses than the final output that the firm has made.
So in a world where countless people cooperate all around the globe, each with knowledge that they could not communicate directly, we have signals in the form of prices and profit and loss that encourage us to abandon projects that aren't worth it.
Does something analogous happen with state-provided security and war?
Unfortunately not.
If a cell phone, burger, or cup of coffee isn't worth the price to me, I can choose not to buy it.
Were you ever given an unsubscribe option from American Empire?
If I want to stop paying to subsidize the brutal Saudi war in Yemen, for instance, I have very few options.
There is, of course, a noble tradition of war tax resistance in the United States, with Henry David Thoreau refusing to pay poll taxes that he believed funded the Mexican-American War, and Noam Chomsky and others resisting taxes during the Vietnam War.
But tax resistors face repression.
They risk incarceration.
They risk garnishing of their wages.
They risk having their property seized.
And even moving out of the United States isn't enough to avoid paying for American Empire.
When you criticize U.S. foreign policy, you might get told, hey, if you don't like it, you can leave.
Well, even if you leave, you still are seen as owing taxes to the U.S. government unless you go through a costly process of renouncing your citizenship.
And that's ignoring that there are also funds gained through inflation, through the printing of money.
That's a tax on everyone who holds U.S. dollars.
In a free market, we can learn which projects create value for consumers using the feedback provided by prices and profit and loss.
But since empire rests on violations of private property rights, it lacks this feedback.
Even if political leaders wanted to know whether what they're doing is worth it, they would lack the feedback necessary to know.
The knowledge problem that plagues all forms of central planning means that even the best-intentioned imperialists will squander scarce resources.
In addition to the knowledge problem, the empire is subject to the power problem.
That is, those with political power have incentives to act badly, to abuse their power.
This takes various forms.
Perverse Incentives of Power 00:03:32
Pervasive secrecy enables officials to conceal illegal and opportunistic activity.
When he was director of national intelligence, James Clapper was asked whether the NSA collected data on millions of Americans.
He said, no, not wittingly.
He committed perjury.
We know he committed perjury because Edward Snowden heroically blew the whistle on the PRISM program and other programs of mass surveillance of Americans.
Snowden is essentially in exile and would be prosecuted if he ever returned home.
Meanwhile, the statute of limitations has expired for Clapper's perjury.
With great power comes greatly reduced accountability.
Often, the perverse incentives of power come in the form of opportunities to profit from government contracts.
Individuals who work in the national security state can often find lucrative jobs, working for defense contractors or serving on their boards.
They then use their connections in government and their reputations for public service to direct taxpayer money to these businesses.
This is called the revolving door, and military leaders often walk through it repeatedly.
Jim Mad Dog Mattis recently resigned as Donald Trump's Secretary of Defense and rejoined the board of directors at General Dynamics, which sells ammunition, weapons, and much more to the Pentagon.
He previously sat on General Dynamics Board of Directors before becoming Secretary of Defense.
Until 2013, he had been commander of U.S. Central Command, or CENTCOM.
During his first stint at General Dynamics, Mattis made almost $1 million.
American Empire can be quite lucrative.
Former White House Chief of Staff John F. Kelly has also benefited from the revolving door.
In 2016, he was, or rather, until 2016, he was the commander of U.S. Southern Command, or Southcom.
He then worked as an advisor for Dyne Corp International, which contracts extensively with the Pentagon.
Dyne Corp paid him $166,666.
And then later in 2016, he was nominated by Trump to head the Department of Homeland Security.
Now, as Secretary of Homeland Security, John Kelly oversaw numerous civil liberties abusives, including the detention of migrant children.
He went on to work as White House Chief of Staff, and now he sits on the board of directors of Caliburn International, a company that runs federally funded detention camps for those migrant children.
Given these lucrative opportunities, bureaucrats within the security state have strong incentives to direct scarce resources towards firms in the military-industrial complex, regardless of whether those projects serve the public interest.
Elected officials face similar incentives.
They can fund militarist projects that employ people in their districts or home states.
Meanwhile, most ordinary taxpayers have little incentive to monitor this spending.
There's just too much of it and the costs are too dispersed on all of us.
But you know those whose jobs depend on it will vote if their job is lost due to budget cuts.
So even politicians who publicly criticize the military-industrial complex, such as Senator Bernie Sanders, will therefore tend to vote for wasteful military spending when the funds go to their constituents.
Sanders often rails against the military-industrial complex, and he's voted against more defense budget bills than any other 2020 Democratic presidential contender, but he has also repeatedly voted for the wasteful F-35 fighter jet program, and that's because the F-35 is being built by workers in his home state of Vermont.
Tyranny Comes Home 00:03:41
Political incentives can turn even self-proclaimed socialists into imperialist, militarist crony capitalists.
Political power.
Thank you.
Thank you.
Political power does not create incentives for responsible foreign policy or responsible cost-benefit analysis.
Officials in the national security state work under a shroud of secrecy, which allows them to opportunistically abuse their power.
They can find lucrative opportunities with their cronies, and politicians have similar incentives to waste your money.
But even with the costs associated with the knowledge problem and the power problem, some might argue that U.S. Empire is worth it, that it's worth it to protect our freedom.
After all, there are those who would use violence to threaten American liberty and who can put a price tag on liberty.
But this argument misses that American Empire is itself a threat to your liberties.
As economists Chris Coyne and Abigail Hall document in their book, Tyranny Comes Home, The Domestic Fate of U.S. Militarism, foreign interventions often come back to undermine domestic liberty.
Part of this is because war is made by the central government and therefore tends to promote an increase in centralized power at home.
In addition to this centralizing tendency, empire requires developing new social control techniques that are often brought home.
For instance, drones were developed to surveil and bomb abroad, killing people on the presidential kill list, for example.
Today, Customs and Border Protection uses drones to surveil the Southwest borderlands, and that invades the privacy not just of immigrants, but of U.S. citizens who live there.
Individuals who intervene abroad often learn skills that they later use to undermine your liberties.
So, for instance, around the turn of the 20th century, 1899, 1900, around that time, the U.S. was occupying the Philippines.
Now, the Filipinos didn't want us there, and they resisted U.S. occupation.
The U.S. responded, killing those who resisted, torturing those who resisted, and relentlessly surveilling those who resisted.
Ralph Van Diemen headed up those surveillance initiatives.
And once he developed those skills in surveillance and intelligence, he didn't just let those skills languish when he came home.
No, he built the roots of the modern surveillance state that invades all of your privacy today.
Similarly, John Nelson served in an elite force recon unit during the Vietnam War.
These force recon units were aggressors in 95% of their operations, and they killed 34 Vietnamese for every man on their team that they lost.
Later, when he came home, Nelson worked at the LAPD, rather.
He worked at the Los Angeles Police Department, and he built the first SWAT team.
Today, SWAT teams will kick down the doors of Americans, often not to go after anyone who's accused of a violent crime, but instead simply to serve warrants for nonviolent drug offenses.
John Burge also served in the Vietnam War.
When he came home, he worked for the Chicago Police Department, and he administered a torture program that tortured around 200 black men.
That torture technique was called by officers on the team the Vietnam Special.
The techniques of social control and violent coercion and monitoring that are learned through Americans' interventions abroad come home to undermine your liberty.
So American militarism does not protect your freedom.
Favorite Warmongers' Legacy 00:00:47
It jeopardizes it.
And you need to add that loss of liberty to the costs of U.S. empire.
The knowledge problem and the power problem that I've discussed today are institutional problems that inherently result from centralized political power.
We cannot solve these problems simply by placing the right people in charge of the American empire.
Many anti-war analysts focus on how morally reprehensible particular people in power are, and they're often correct to do so.
But even if we oust your least favorite Washington warmongers tomorrow, these problems will persist as long as we have an empire.
The only way to get the costs of American empire under control is to abolish it.
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