Looming economic storm: The war comes home

Washington has committed upwards of a trillion dollars toward the war in Iraq. And that’s not counting the billions invested by private companies flooding that devastated but resistant country with armed mercenaries and other profit-seeking vultures.

A new survey conducted by the British polling agency ORB, which asked a random selection of Iraqis how many people living in their households had died as a result of violence brought on by the war, estimates the Iraqi death toll at 1.2 million. (The Observer, Sept. 16)

Conventional wisdom says all that death and destruction abroad should mean economic boom times at home. Instead, homes are being foreclosed left and right, the stock market is falling, record numbers are without health insurance and jobs are drying up.

Today the dread “r-word” is on every economist’s lips: recession.

The chickens have come home to roost.

The theories of how and why may differ. Time magazine in its Sept. 13 feature “Cracks in the economy” laid it all on the mortgage crisis, spelling out the crisis of overproduction in luxury housing, noting a 5-to-7- year surplus of condominiums in Miami. Economists quoted in the Sept. 7 New York Times article “Recession fear heightened as 4-year growth in jobs ends” paint a broader picture of economic instability.

None of them are talking directly about the war as a cause—at least, not yet.

A bit more truth could be gleaned in the fine print of an Aug. 1 Boston Globe article headlined, “Analysis says war could cost $1 trillion.” Admitted the Globe, “Some leading economists have predicted that, depending on how long troops remain in Iraq, the endeavor could reach several trillion dollars as a result of more ‘hidden’ costs.”

But they all agree—the storm is coming.

Of course, working-class, poor and oppressed communities have been dealing with the war’s economic consequences all along. Already tattered social programs have been hacked to shreds to build bombs. Real wages have continued to fall for workers providing for families while their loved ones serve as cannon fodder. And those fortunate enough to get work often find that their jobs have the lifespan of a Monarch butterfly.

700,000 more uninsured kids

At the end of August, the Census Bureau reported that another 2.2 million people, including 700,000 children, joined the ranks of the uninsured in 2006, raising the total without health insurance to 47 million. That’s up from 44.8 million in 2006.

Grotesque though they are, these figures don’t begin to tell the truth, since they exclude the millions of undocumented workers.

The inflation-adjusted median earnings of women and men employed full-time fell in 2006 for the second year straight. Median household income nudged up less than 1 percent because more household members were working full-time, multiple jobs or longer hours to make ends meet. (Bureau of Labor Statistics) Median income is the point at which half earn more and half earn less.

In 1987, the wealthiest one-fifth of the U.S. population got 46.2 percent of all income. That had risen to 50.5 percent by 2006. In contrast, the lowest-paid fifth of the population earned 3.8 percent of all income in 1987. Last year, this bottom 20 percent got just 3.4 percent of all income, according to an Economic Policy Institute analysis of Census figures.

Meanwhile, a United Nations International Labor Organization report issued in early September found that U.S. workers were the world’s most productive in 2006, in part because they work more hours and more intensely than their counterparts in other industrialized countries.

Hot on the heels of this report came news from the Labor Department that the U.S. economy suffered an overall loss of 4,000 jobs between July and August. It was the first decline in employment since 2003. While the official unemployment rate for August held steady at 4.6 percent, the percentage of adults with jobs fell. The number of “discouraged workers”—those not actively looking for work and thus not counted by the government—rose by nearly 600,000.

Many of the job losses that contributed to the overall drop were from the plummeting housing market—but the Labor Department figures covered a period before the worst cutbacks had been announced in that field.

“Since then, some large lenders like Countrywide and Lehman Brothers have continued to lay off workers,” reported the New York Times. “IndyMac Banccorp, a large mortgage lender, said it would be cutting about 1,000 jobs over the next several months.”

New York City Mayor Michael Bloom-berg issued a memo to city agencies essentially calling for a hiring freeze on all but “critically necessary hires.” He blamed the measures on the housing downturn, an anticipated decline in big real-estate deals, and lower-than-expected profits on Wall Street.

This is not merely a local phenomenon. According to the Times, state and local government agencies, many of them dealing with budget shortfalls connected to the housing slump, have also cut an average of 27,000 jobs per month over the last three months.

“If the economy is not headed toward recession, it is very close to one,” said Mark Zandi, chief economist at Moody’s. (Economy.com)

War: a narcotic that becomes a depressant

In an article published in the aftermath of the first Gulf War in 1991, Workers World Party founder Sam Marcy wrote:

“It has been standard bourgeois economic theory, whether openly expressed or not, that a big war ends a depression and, once the war is over, a new cycle of capitalist development begins. The stagnation and stagflation of the late seventies and early eighties are attributed to the fact that there was no really big war in that period. True, there was Grenada, the merciless bombing of Libya, the shelling and destruction in Lebanon, not to speak of U.S. mercenary activity around the globe, particularly in Latin America and Africa. But none of this amounted to a big war in bourgeois common parlance.

“This theory that a war brings prosperity and stops capitalist recession has been widely acclaimed even in sections of the labor movement, and in particular in those industries related to the military-industrial complex. Wide sections of bourgeois public opinion have been deeply affected by this, and have shown their readiness to support capitalist war precisely because they believe it either safeguards their jobs or will pull them out of a recession. ...

“Military production is supposed to inject new life into the economy, like a shot of a powerful narcotic. But after so many years of enormous borrowing to pay for an area of production which is parasitic and adds nothing to the real growth of the economy, this stimulus eventually turns into a depressant.

“Military commodities are commodities sui generis [of a peculiar kind]. They are not produced to be sold on the open market. Most of the time, their fulfillment as commodities is realized through sale by a prearranged contract where the government is the sole customer.

“The military-industrial complex has produced more weapons than can ever be used. They must be constantly updated, and the government has to pay the cost of obsolescence. This pumping up of the military budget is the product of a phase of capitalist overproduction which can’t go on endlessly.” (“The Relentless Economic Decline,” Workers World, April 25, 1991)

But there is a solution. If workers and oppressed peoples here follow the path of resistance—ably demonstrated in great diversity by their sisters and brothers in Iraq, Palestine, Iran, Venezuela, Cuba, Nepal and many other countries—they can bring an end to imperialist war and ultimately to the boom-and-bust capitalist system.