Permanent War is a Racket

"I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents." ~~  Major General Smedley Darlington Butler (USMC), from his book War Is a Racket (1935)

The more things change, the more they stay the same. The French novelist and critic, Jean-Baptiste Alphonse Karr, didn't live during the American militarism of the twentieth century, and certainly wasn't speaking of perpetual and permanent war, but his oft translated "plus ça change, plus c'est la même chose", accurately describes the nature of imperialism and the expansion of empire by the United States during the last century and up to the present. General Smedley Butler couldn't have refined the business of expansionism better than in his controversial, War Is a Racket, when he summarized:

"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small 'inside' group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes."

General Butler knew the theatrics of war: the propaganda and lies that are useful to inciting and continuing war; the pain and suffering inflicted, not only upon those unfortunate enough to be within the direct path of the carnage of war, but also those who pay an economic cost through the depletion of their nation's treasury. No nation is rich enough to pay for war and the betterment of society, although Lyndon Johnson tried.

Greg Coleridge cites six very lucrative ways that corporations profit from war. One is the control of strategic resources. "[O]il, natural gas, and other physical resources (water in the future) are the aim of business corporations to either control or gain access to. US- and UK-based transnational energy corporations initiated the drive for war in Iraq for oil and in Afghanistan for natural gas." It's not just coincidental that Exxon/Mobile and other Big Oil corporations recorded record profits recently. Another way corporations profit, obviously, is through the sale of weaponry. The Pentagon’s top three contractors are Lockheed Martin, Boeing, and Northrop Grumman. Their projects usually operate on a cost-plus arrangement, so the more expensive the implement of war, the more profitable the company.  

The profits from waging war are obvious. Merriam-Webster defines mercenary this way: "One that serves merely for wages; especially a soldier hired into foreign service." Mercenaries are motivated to take part in hostilities essentially by the desire for private gain. Because the term, "mercenary", retains so many negative connotations, the new term used internationally is Private Military Companies (PMCs). To further dilute and confuse, the mainstream media usually refer to these simply as "contractors".  You know them well: Xe Services, LLC, formally Known as Blackwater. Their name became synonymous with Fallujah in 2004, when four of their own were killed and hung from a bridge by Iraqi insurgents.
 
At least ninety percent of its revenue comes from government contracts, two-thirds of which are no-bid contracts. From CorpWatch: "In 2003, Blackwater landed its first truly high-profile contract: guarding civilian Administrator L. Paul Bremer in Iraq, at the cost of $21 million for 11 months. Since June 2004, Blackwater has been paid more than $320 million out of a $1 billion, five-year State Department budget for the Worldwide Personal Protective Service, which protects U.S. officials and some foreign officials in conflict zones. In 2006, Blackwater won the remunerative contract to protect the U.S. embassy in Iraq, which is the largest American embassy in the world." To understand the enormity of the costs involved, every U.S. soldier deployed to Afghanistan and Iraq is matched by at least one civilian working for a private company. War is big business. 

After war devastates and destroys, reconstruction reaps billions of dollars for large construction contractors such as Bechtel Corporation and Halliburton. War reconstruction, as Mr. Coleridge compares, is similar to what conservatives disdained about "make work" projects of FDR's Works Progress Administration, except they're beneficial to a select few corporate entities as opposed to society at-large.  Instead of participating in the building of infrastructure, such as the construction of Hoover Dam back in the 1930s, for example, companies such as Bechtel are awarded prime cost-plus contracts to rebuild torn apart countries -- inept and as inefficient as they may be. As disaster capitalism dictates, for-profiteers are dispatched to privatize previously publicly owned and controlled infrastructure -- all at taxpayer expense. Amazingly, greater than one-third of Bechtel's and Haliburton's revenues came from sweetheart no bid contracts to rebuild Iraq, as reported by The Centre for Research on Globalisation (CRG), an independent and non-profit research and media organization based in Montreal. From the article: 

"Apart from Halliburton the Bechtel Corporation was immediately singled out for a no bid contract by USAID, for the repair and rebuilding of destroyed power generation facilities, electrical grids, municipal water systems, sewage systems, airport facilities, dredging and repair of Umm Qasr seaport before the seaport was occupied; and for reconstruction of schools, ministries, irrigation structures and transport links, after the deliberate destruction of a substantial part of the civilian infrastructure by targeted precision bombing only with a view to justify these reconstruction contracts. Never before in history has one company been granted a contract for the reconstruction of an entire country which will eventually be worth up to $100 billion. Since 2003 more than one third of the annual revenues of Halliburton and Bechtel are derived from the no bid contracts in Iraq, conclusively establishing the real objective of the war."

War is big business; reconstruction is also big business. But what is even more lucrative, more profitable, and easy money for the banking syndicate is government debt. War costs money -- masses amount of money. More money than any country, or empire, can generate from normal tax revenue streams. So, of course, debt accrues...and accrues...and accrues. That's the problem we face now. Deficits have spun out of control, adding more debt to an already beleagued budget. Not only have we bailed out the "too big to fail" banking system, but we're now paying interest on war debt (along with the interest to bail them out, among other things). As Coleridge correctly points out, "[t]he government allows banks to literally create money out of thin air to purchase US Treasury notes. Governments are on the hook for not only the principle of the loans but interest. Thus, banks profit from receiving interest payments and whatever principle may be repaid for money they never had to begin with. This is profit of glorious proportions to banking corporations. Wars, thus, create government dependency to banks – which explains why throughout history banks have encouraged Kings and other royalty to war with each other." 

And of course, next comes the privatization part -- the part that's hanging over our heads like the sharpened blade of an already bloodied guillotine. If you've read Naomi Klein's brilliant The Shock Doctrine - The Rise of Disaster Capitalism, you already know what this means and how it works. From Ms. Klein's introduction:

"I call these ochestrated raids on the public sphere in the wake of catatrophic events, combined with the treatment of disasters as exciting market opportunities, 'disaster capitalism'."

The "catastrophic event" we're experiencing is that there's not enough money to pay for domestic programs and war at the same time. It's the old, and very true, economic truism that's anything but a cliché: "guns or butter". Any economist will tell you that a nation can have one or the other, but not both -- at least not for long. We've reached "the long", and it hasn't been by accident. It was purposeful and carefully arranged. Just as a it takes all the musical instruments in a symphony orchestra playing their individual parts, the current push to privatize Medicare, for example, took an assault on many fronts in order to get the traction that it has. Under a relatively stable economy with manageable yearly deficits, topics such as the Paul Ryan's privatization plan would never see the light of day. But wars and occupations, and the preparations that accompany them, costing $6 trillion (one trillion is a million millions) since 2001, the business of war has tapped us out. And that's just the business of war! It doesn't include the notorious Bush tax cuts that were extended for two years by our sitting president, and which he's considering making permanent, or the TARP to bail-out the "too big to fail" investment banks in the fall of 2008. The meter's still running on this debacle.

So whether the provocations and pretenses for war, first in Afghanistan and then in Iraq, were legitimate or not; whether they were retaliatory for actual injustices or only purported as such, Naomi Klein's book title provides the essential understanding of how contemporary capitalism -- disaster capitalism -- works. It was the classical economist, Milton Friedman, who observed that "only a crisis -- actual or perceived -- produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable." We saw this in Wisconsin earlier this year, in Ohio, and in so many other states that instituted austerity measures while selling off public assets to corporate interests.  

Yes, General Butler was right -- war is a racket. Today it's a permanent racket. It's the fastest and most convenient way to alter a society economically. The financial ramifications have been devastating for most, but for a select and elitist few, the riches are unimaginable.

The embedded trailer for Why We Fight (2005 film) is an amazing documentary describing the rise and maintenance of the military-industrial-[congressional] complex that President Eisenhower warned us about during his farewell address in January, 1961 -- fifty years ago. Download it, rent it, borrow it, or watch it at a friend's house. Filmmaker Eugene Jarecki offers an in-depth look at how the United States has become a permanent-war machine and empire.