This is a great speech to Australian leaders and should be heard by all. Ferguson's view of history is very organic and fits Chris's view in many ways. His main difference is a bent toward deflation rather than inflation. BTW, Feguson is Economic History Professor at Harvard. He has an opposite view from Paul Krugman about how to solve the USA's problems.
What do you think about the statements he made about the necessity of American military pulling back in the next five years for fiscal reasons?
You may recall from reading the Alfred W. McCoy article we discussed in the other forum topic a few weeks ago:
"Counterintuitively, as their power wanes, empires often plunge into ill-advised military misadventures. This phenomenon is known among historians of empire as 'micro-militarism' and seems to involve psychologically compensatory efforts to salve the sting of retreat or defeat by occupying new territories, however briefly and catastrophically. These operations, irrational even from an imperial point of view, often yield hemorrhaging expenditures or humiliating defeats that only accelerate the loss of power.
"Embattled empires through the ages suffer an arrogance that drives them to plunge ever deeper into military misadventures until defeat becomes debacle. In 413 BCE, a weakened Athens sent 200 ships to be slaughtered in Sicily. In 1921, a dying imperial Spain dispatched 20,000 soldiers to be massacred by Berber guerrillas in Morocco. In 1956, a fading British Empire destroyed its prestige by attacking Suez. And in 2001 and 2003, the US occupied Afghanistan and invaded Iraq. With the hubris that marks empires over the millennia, Washington has increased its troops in Afghanistan to 100,000, expanded the war into Pakistan, and extended its commitment to 2014 and beyond, courting disasters large and small in this guerilla-infested, nuclear-armed graveyard of empires."
- Alfred W. McCoy, in The Decline and Fall of the American Empire
I would suggest that just as we had a "housing bubble" driven by a "credit bubble" and we now have a "debt bubble", we hit a military spending "bubble" with the Afghan and Iraq wars. I feel the first was initially justifiable, but badly mis-focused and long played poor cousin (in both funding and troop commiments) to the entirely unnecessary Iraq war. And if the real reasons really were mineral resources, pipelines, and oil wells that we were after, it would have made more sense to do as we did with the Shah or even early Hussein years: covertly prop up despotic dictators who could:
Such an "evil" strategy certainly would have cost us a lot less. Instead, other countries (namely China) have signed lucrative resources contracts with Iraq and Afghanistan's governments - at far less cost in blood, international prestige, and money.
I think this military spending "bubble" will also burst. For one, no one wants to INCREASE military spending in Iraq and Afghanistan - we're already committed to a couple of trillion dollars and likely will have to spend some more in the future. And if the 1991 Gulf War is any guide (by 2003, 40% of Gulf War veterans' were on disability payments), we will likely see huge costs in the next decade that will be shifted to the VA administration (and thus off the military's budget).
As Niall mentioned in his speech, sometime in the next 10 years (more likely 5), our debt service (interest payments on the national debt) will be higher than our military/defense budget. That along with many other factors such as the increasing need to provide social services (Social Security, Medicare/Medicaid, VA benefits, food stamps, Section 8,etc.) will likely be the impetus for decreasing our military's spending. Already, Defense Secretary Gates has fought hard battles against influential Congressmen over cuts. I think the situation will only get worse in the future.
I've been thinking about that speech all day. The warning to Austrailians that Asia and Africa will be part of a Chinese Empire that will begin as trade relations that they may need to defend, leaving Austraila and New Zeland isolated. America would not be able to go to their defense.
The Empire will be more of a hegemony, and like imperial China of old, consists of vassal states offering tribute and the productive output of their citizens, lands and factories (owned and run by Chinese state-owned corporations). China will increasingly use excuses of past historical dynastic control (take the gas-rich Spratly Islands, for example) to muscle its way into "disputed" territories.
The only hope I see is Australia, New Zealand, and other Asian countries like Thailand, Singapore, etc. joining into a mult-national force with America to counteract China's military dominance. Our nation may well see its military become "mercenary to the Free World" - which I think wouldn't be a bad idea. Imagine Germany and Japan PAYING us for the privilege of being there.
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