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A Poor Economy and Foreign Policy Go Hand in Hand

by

CNN’s Wolf Blitzer made an interesting and revealing observation last night while discussing exit polls that CNN had conducted. Blitzer’s observation provides good insight into how mainstream political commentators and pundits think when it comes to such issues as the economy and foreign policy.

Voters were given a list of issues and asked which one was most important to them. The economy received around 40 percent and foreign policy received something like 9 percent. This led Blitzer to comment that most people placed a high priority on the economy in the election and a low priority on foreign policy.

What Blitzer and so many others like him in the mainstream press fail to recognize, however, is the close interrelationship between the economy and foreign policy. They’re unable — or unwilling — to see that it’s foreign policy, in large part, that is responsible for America’s bad economic conditions.

After all, to suggest that foreign policy is one of the major causes of the bad economy is to point the finger in the direction of the U.S. military, the military-industrial complex, and the CIA. Composing what has become known as the “national-security state,” these entities have, over time, become the driving force of U.S. foreign policy.

To speak ill of the military, the MIC, and the CIA is, in the minds of the mainstream press, akin to heresy, lack of patriotism, or even treason. It’s just not done by a responsible, mainstream media. They feel that the nation is at war and that we’ve got to stay together and support the troops. In the minds of the mainstream press, the last thing they want to be doing is creating division in the country by suggesting that the military, the MIC, and the CIA are responsible, in large part, for the country’s depressed economic conditions.

Equally important, most mainstream commentators wouldn’t ever buy it anyway. For them, a recession or a depression just sort of hits countries willy-nilly, just like the flu does. The last thing on their minds is the possibility that the government itself is the cause of the recession or depression. On the contrary, they see the government as the medicine — the solution — to a bad economy.

For them, that’s what the presidential election is largely all about — selecting the person who would likely be the best manager of the economy. Once he’s in office, the president is expected to whatever is necessary to bring an end to the recession or depression with a myriad of government actions and programs. He’s expected to save the country from the economic crisis or emergency, just like, they say, Franklin Roosevelt did during the Great Depression.

The reality, however, is completely different. The reality is that foreign policy is a major contributing cause of America’s depressed economic conditions.

One of the root causes of America’s economic woes is the high level of federal spending. Part of the problem is obviously the welfare state. Another part is the regulated economy and interventionist programs, such as the drug war.

But another root cause of federal spending involves the national-security state — the military establishment, the military-industrial-complex, the CIA, the NSA, and all of the other aspects of what libertarians refer to as the warfare state. Included here, of course, are the expenses associated with the invasions and long-term occupations of Iraq and Afghanistan, the hundreds of overseas military bases, the thousands of domestic bases, drone operations, military involvement in the drug war, the operation of overseas prisons, and so forth.

How does all this spending contribute to poor economic conditions? This is the one of things that mainstream commentators and pundits just don’t get. They see all that federal spending on the military and CIA as an economic boon, one that serves as a constant “stimulus” to economic activity. In their minds, billions of dollars in military spending means jobs for soldiers, contractors, suppliers, weapons-producers, road builders, and countless other people. The mainstreamers see that all that spending as something good. Think how many jobs it produces!

Alas, they are unable to see that it’s actually all destructive — that it is, in fact, a major contributing cause to depressed economic conditions in a country.

The key to a wealthy, dynamic, energetic, prosperous economy lies in the extent to which people are free to engage in economic enterprise, trade with others, and accumulate wealth. As people begin saving their wealth, that adds to the level of capital that is available to businesses. Businesses use people’s savings to purchase equipment, tools, and facilities that are intended to make workers more productive. As productivity rises, so do income and wealth.

That’s the only way for people’s standard of living to go up. Free enterprise, free trade, and rising accumulation of savings and capital.

Now, enter the welfare-warfare state. Let’s say that federal officials confiscate 50 percent of people’s income, half of which is spent on the welfare state and regulated economy and the other half on the warfare state.

That 50 percent confiscation is going to have a severe depressing effect on economic conditions. That’s 50 percent less wealth that is going into a rising standard of living for people.

Then, to make the situation worse, the government uses much of that money to attract people away from the private sector and into the public sector. Thus, those people are no longer part of the sector that is producing wealth. They are part of the sector that is now living off of the wealth that has been confiscated.

Add to the confiscation of wealth a myriad of rules and regulations interfering with people’s ability to enter into occupations and on their ability to trade with others around the world (e.g., sanctions and embargoes) and it becomes easy to see how an ever-growing government sector operates not as a stimulus but rather as a depressant.

And then you’ve got the debt aspect. Once spending exceeds what officials consider is a reasonable level of taxation, they resort to borrowing money to finance the excess spending. They don’t want any tax revolts and they know that people usually don’t revolt over too much government debt. They tell people not to worry about the debt — that by the time it comes due, they’ll be dead anyway.

When the level of debt becomes excessive, that’s when they resort to inflation, which is a process by which government pays off its debt with newly printed paper money. That’s where the Federal Reserve comes in. That’s its function. It inflates the money supply in order to permit officials to continue spending and borrowing. The value of the dollar plummets, as reflected by ever-rising prices in society. Needless to say, the mainstream commentators and pundits inevitably blame this on greed rather than on the government. Moral and spiritual values inevitably plunge in an era of inflation.

So, once one sees that the government is the cause of a depressed economy or an impoverished nation, the solution becomes clear: repeal the welfare state programs, end the drug war and other regulatory/interventionist programs, and dismantle the vast permanent military establishment — i.e., close all the foreign and domestic military bases, discharge the troops into the private sector, and get rid of the CIA, the NSA, and other parts of America’s Cold War military-intelligence machinery.

That would produce several positive effects. All the wealth that was being confiscated to fund the welfare-warfare state can now remain in the hands of the private sector, where it rightfully belongs. And all the people in the public sector, including those in military and CIA, will now be in the private sector, where they will be holding productive jobs that contribute to rising standards of living.

What should CNN have asked people? Instead of compartmentalizing the issues, a much better question would have been: “How concerned are you that the federal government’s welfare state and warfare state, including the taxation, spending, debt, and inflation used to fund them, are sending our nation down the road to destruction?”

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.