 | | The Daily Reckoning | Thursday, July 5, 2012 |
- The mighty US military vs. the law of diminishing returns,
- Incompetence, gunpowder and the imperial Big Bang ahead,
- Plus, Bill Bonner follows Ben Franklin through the TSA line...
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| | | Giving in to Temptation | | The Misguided Focus of the US Military-Industrial Complex | | |  | | Bill Bonner |
Reckoning today from Paris, France...
Sic transit Gloria imperii...
“Hey Bill,” writes a Dear Reader. “You are a sad excuse for a military analyst. You can criticize the military all you want, especially from your leftist headquarters in Paris. But when trouble comes, you’re going [to] wish you had US military forces to protect your sorry ass.”
Hey Dear Reader, your editor replies, go f**... Never mind. You may be right. Maybe history doesn’t work now the way it used to.
Our beat here is economics. But the US ‘security’ industry currently eats up about $1 trillion per year — which is a big part of the economy and an even bigger part of the federal budget. When we talk about an upsurge in manufacturing, for example, we are talking about an industry that is making 40% of its output for the Pentagon. And when we talk about an increase in the use of energy, we could mention the world’s biggest energy user — also the Pentagon. And when we calculate the US federal deficit we could remind ourselves that every penny of it is about what America’s ‘security’ agenda costs.
Dear Readers will also recall that we are not the kind of economist you see on TV...the kind that wins a Nobel Prize with some elaborate mathematical proof of a proposition which is, on its face, preposterous. No, we are an old fashioned ‘literary’ economist...the kind that can barely do binomial equations, let alone calculus.
What we are interested in is how the world works. And we notice that the world of military spending works just like the rest of the world. That is, it obeys the law of declining marginal utility. You can put more in...but you don’t necessarily get more out.
But first, our dear reader above missed the point. First, we’re not criticizing the military. We’re not criticizing the uniform, that is; we’re criticizing the man in it. He will always do what comes naturally — when he can get away with it; he will aggrandize his own position at others’ expense. He is a lazy, foul, half-witted, opportunist...always trying to do the least work for the most reward possible. That is to say, he is just like the rest of us.
Second, when the next real shooting war breaks out, we’re not likely to thank the Pentagon; we’re more likely to curse it. We’ll be sorry we spent so much money to produce such a fat, coddled and incompetent military industry.
Why incompetent?
Strategically, the proper job of a defense department is to defend the country...not to waste its resources stirring up trouble all over the world. It is meant to protect the nation against enemies, not create them.
It is also incompetent in a tactical sense. So much money, time and effort is spent fighting make-believe enemies — ‘terrorists’ or ‘insurgents’ — that it will most likely lack the equipment and the know-how to fight a real one. We don’t have to know in detail how the US military will fail. Instead, we know that power and money corrupt...and enfeeble. You see, military power — like almost everything else you can mention in a family publication — is subject to the law of declining marginal utility...aka the law of diminishing returns. At some point, you can spend more...and get less. And when the real test comes, we predict, the US military will fail...it will be too corpulent, too slow, and too out-of-date to meet the challenge.
Military preparedness probably reaches the point of declining marginal utility when the armed forces are able to mount a credible defense of the nation and its borders — and no more. Thereafter, “the military-industrial complex,” as Eisenhower called it, becomes too inwardly-focused...on promotions, on procedures, on procurement...too self-serving. In a real war, it is usually humbled by a faster, cheaper, more modern enemy.
But it gets worse. A large, well-funded military is a tempting weapon. Keep it lying around, loaded...and someone is bound to get killed. After a while, the temptation to use a big army is irresistible. A large military is typically captured by the militarists, who want to use it for their own glory. At that point, the army is no longer an asset to the country it is meant to serve; it is a danger. It will enter into ruinous wars...turn against its own citizens...or both
But why does the US security industry focus on phony enemies...and insignificant threats? Because it is looking out for Number One. It is being human. It is taking resources from the productive part of the economy and redistributing them to itself...with no benefit, other than the aforementioned aggrandizement of the military itself, along with its contractors, suppliers, and its pet politicians.
The US military has more power and more money than any institution in the world. It has now been taken over by neo-con ideologues with their own crackpot agendas. It has the support of the American people and their government. We can imagine how this will turn out...badly!
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Arab ‘Petro Powers’ Plot New Currency To Replace Dollar
This step will create the “gulfo”, a new petro-currency that will allow their ‘club’ of oil exporters to eliminate the Dollar as the pricing currency for oil contracts. This new “shredded” dollar will upend everything as you know it.
Get the story here.
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| | The Daily Reckoning Presents | Independence Day...and the Glories of a Strong Military...
By Bill Bonner | | | Fritz Bayerlein knew war — modern war — better than almost anyone. The 45-year-old general had served in Hitler’s army his entire adult life. He had fought on all major fronts — in Poland, North Africa, Russia and France.
By 1944, he was getting tetchy. At first, the idea of a German Empire, stretching from the Atlantic to the Pacific...from the Baltic to the Mediterranean...had made him feel proud. After all, he was a professional soldier and Germany’s men-in-arms could make it possible. The Wehrmacht had not lost WWI...it had been stabbed in the back, everybody knew that. Bayerlein, who had fought in WWI too, could hold his head up. He was a general in the army...and captain in Germany’s leading industry, the military. On paper, France had the world’s largest military in 1939. But Bayerlein knew that Germany’s fighting men were the best.
But something had gone wrong. The finest fighting force the world had ever seen had lost North Africa...was being mauled in Russia...and was now facing annihilation in France.
The Wehrmacht in Normandy was up against a different kind of enemy. The Russians could throw what seemed like an unlimited number of troops against it. German soldiers mowed them down...but they just kept coming.
The Allies were different. They didn’t like to waste men. But they had what appeared to be an unlimited supply of firepower. From the air. From the sea. From the ground. The poor German soldier was taking it from every direction.
Where did all this firepower come from? America.
At the time WWII began, the US had a tiny army — number 16 in the global lineup — smaller than Roumania’s army. The US had few soldiers, few weapons, and experience that — compared to the Europeans and Japanese — was minimal. Its soldiers were poorly paid and poorly trained.
But at least it had one thing — the world’s top economy. Despite the Great Depression and the New Deal, America’s private, profit-seeking businesses could still produce. And when the orders came in for weapons and ammunition, they worked day and night to fill them. The result was the biggest arsenal ever created.
Now, after this Independence Day, we can take a moment to reflect on how far the US military has come...from the cold, ragged force at Valley Forge...to the unprepared army of 1940...to the world’s biggest and most expensive fighting force. It has its troops all over the world, in 200 different countries, according to one report. It has all the latest equipment...and a budget more than 10 times greater than total US government spending in 1940.
In the winter of 1777-78, the troops at Valley Forge weren’t paid anything. They had to beg food from local farmers. Now, US soldiers are among the best paid people in America.
Hey, dear reader, want to earn more money? Join the army!
Military Pay Higher Than Ever Compared to Civilian Wages
As private sector salaries flattened over the last decade, military pay climbed steadily, enough so that by 2009 pay and allowances for enlisted members exceeded the pay of 90 percent of private sector workers of similar age and education level.
That’s one of the more significant findings of the 11th Quadrennial Review of Military Compensation report released last week, given its potential to impact compensation decisions by the Department of Defense and Congress as they struggle to control military personnel costs.
Officer pay by 2009 exceeded salaries of 83 percent of civilian peers of similar age with bachelor and masters degrees. Enlisted are compared to workers with high school diplomas, some college or associate’s degrees.
To make its pay comparisons, the QRMC used Regular Military Compensation, which combines basic pay with Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) plus the federal tax advantage on the tax-free allowances.
By 2009, the report says, average RMC for enlisted exceeded the median wage for civilians in each comparison group — high school diploma, some college and two-year degrees. Average RMC was $50,747 or “about $21,800 more than the median earnings for civilians from the combined comparison groups.”
For officers, average RMC was $94,735 in 2009. That was “88 percent higher than earnings of civilians with bachelor’s degrees, and 47 percent higher than earnings of those with graduate-level degrees,” the report says.
Excluded from its pay comparisons with civilian workers are other elements of compensation that would make the military advantage appear wider. The military pays no FICA payroll tax on BAH and BAS, for example. Also, active duty receive free health care for themselves and family members if enrolled in TRICARE Prime, while health insurance costs for civilian workers have increased steadily over the decade.
If health benefits were compared, says the report, the take-home pay advantage over civilians would grow by $3000 and $7000 per year for enlisted, depending on family size, and by $2000 to $4800 for officers. The officer advantage is smaller because more of their peers in the private sector have employer health coverage. |
Pentagon boosters will say people who risk their lives to protect the nation deserve to earn more than other people. But first, the nation is in no danger; it has no serious enemies other than those the Pentagon creates. It hardly needs such expensive protection.
Second, as to the risks they face, it was recently reported that the number one danger for America’s fighting forces in Iraq and Afghanistan is themselves. Suicide takes down more soldiers than the enemy.
Popular films glorify the US military. Airlines offer soldiers free upgrades. Not since Germany in the ’30s have military men been held in such high regard. And while the US sinks towards bankruptcy, no candidate from either party suggests serious cuts to the Pentagon budget. Nor does any candidate recall the July 4th grievances against George III:
“He has affected to render the military independent of and superior to civil power.”
But shifting resources from the productive sectors to the military machine may some day be fatal. You can’t fight a real war with an over-paid, boondoggle-ridden army. You need firepower. And you get firepower from a dynamic, free economy, not one burdened by a pampered military industry.
Fritz Bayerlein had no doubt about the superiority of his men and his equipment. In an equal fight, he would win. But the Allies had so much firepower; the playing field was tilted so far against him he had no chance. If he moved in daylight, American planes would soon be diving towards him...bombing him, strafing him, napalming him. And at night, the artillery continued...churning the ground, blowing up his supplies, and burying him alive.
Bayerlein’s division had lost 5,600 men in 48 days of straight fighting. The replacements were boys, often under the age of 18 who had little training. There was no real hope that they would be able to hold the line against Omar Bradley’s attempt to break out from the Allies’ Normandy beachhead. The landings had succeeded. More than 600,000 troops and 80,000 vehicles had been unloaded, with firepower such as the world had never seen. But they had not been able to advance on Paris. Bradley had seen the English and Canadians get bogged down trying to get around Caen to the East. Since the English had drawn German forces to Caen, he would break through their lines elsewhere...which happened to be right where Fritz Bayerlein was in command.
Bradley put his firepower to work on July 25th. The planes went into action first. American war correspondent Ernie Pyle was an eyewitness:
“They came in groups, diving from every direction, perfectly timed, one right after another. Everywhere you looked separate groups of planes were on the way down or on the way back up, or slanting over for a dive.”
The Germans went to ground. But the ground itself gave way. Hardly a square foot of it was untouched. The Wehrmacht couldn’t dig itself in deep enough to get away. And the deeper it went, the more it got buried in the next wave of attacks. When the bombing was over, survivors pulled themselves out of the dirt and saw a “landscape of the moon.” Many had been driven crazy or were numb from the noise. A thousand lay dead. It was on the following day, July 26th 1944, that a lieutenant arrived with orders from Bayerlein’s commanding officer, Gunter von Kluge. He was ordered to ‘hold out.’ He was not to allow “a single man to leave his position.”
At that moment, perhaps, if not before, the general’s enthusiasm for world domination must have flagged:
Don’t worry, he told the lieutenant, “everyone is holding out. Everyone. My grenadiers and my engineers and my tank crews — they’re all holding their ground. Not a single man is leaving his post. Not one. They’re lying in their foxholes mute and silent, for they are dead. Dead. You may report to the field marshal that the Panzer Lehr Division is annihilated. Only the dead can now hold the line.”
Bayerlein survived the war and died 25 years later. Von Kluge did not. He committed suicide in 1944. Omar Bradley’s breakout headed south...and then wound back to the north to encircle 2 German divisions, in the “Falaise Pocket.” Fifty thousand German troops were captured.
Regards,
Bill Bonner,
for The Daily Reckoning
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| | | | | And now back to Bill for the rest of today’s reckoning... | | | “We got a call from our daughter last night,” said friends, whose daughter is staying at our house in Baltimore. “She is doing very well. She said she had a hard time sleeping at night because of the helicopters...but now she’s gotten used to it.”
“Helicopters? Oh yes...the police helicopters...”
We’ve gotten used to them too. We scarcely notice them. Soon, we probably won’t notice the drones either. And now we go through airport ‘security’ without noticing that it is absurd and unconstitutional.
They now have ‘security’ personnel at railroad stations too. A friend, recently making the trip from New York to Baltimore, reported that Homeland Security agents pulled some passengers aside to riffle through their belongings.
But you can’t be too careful, can you?
Actually, you can. Carefulness...aka security...costs time and money. Not only that, it breeds a timid, risk-averse population afraid of its own shadow. These patriots are easy to control...and easy to lead — even to their own destruction.
Remember the words of Ben Franklin:
People willing to trade their freedom for temporary security deserve neither and will lose both |
But another Dear Reader reminded us yesterday that poor ol’ Ben couldn’t even get on a plane in today’s America. At airport security would he meekly take off his coat, and put his shoes on the belt...and then hold his hands up in the air so the king’s agent...ooops, we meant TSA agent...could see him naked? Not likely. He’d probably be amazed...flabbergasted...at what mindless slaves his descendants had become.
“Surely you don’t actually believe that I intend harm to this flying machine or to the people in it, do you?”
“Sir, put you your shoes on the conveyor. And your belt.”
“Do you have a warrant for a search of my personal affairs?”
“Sir, you’re holding up the line...”
“By what right do you...”
At that point, the goons would probably be on him. They’d probably hit him with a stun gun and then hold him in jail...
pending waterboarding.
Regards,
Bill Bonner,
for The Daily Reckoning
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