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P.O. Box 201 St. George Station, Staten Island NY 10301 pasi.eblast@gmail.com John Bostrom, 718-816-6242, jbostrom@si.rr.com Sally Jones, 718-448-0791, sjones@si.rr.com |
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Sunday Dec. 15, 2002 Staten Island NY
Perhaps it was the holidays, the weather, or the lack of publicity from the local daily. For whatever cause, there were only about thirty people at the Unitarian Church near Snug Harbor on Sunday the 15th. This is a much smaller crowd than usual for the monthly Public Forum series. The series, currently titled "What's Happening to America?" has been running an average of one forum each month since 9/11, and has hosted, among others, Pulitzer prize-winning author Jonathan Schell, gubernatorial candidate Stanley Aronowitz, civil rights advocate Norman Siegel, and anti-war poet and protestor Rev. Daniel Berrigan, who packed the church to standing-room-only with an overflow into the parish hall.
Whatever the reason for the low turnout, the topic, "The War and the Economy," couldn't have been more timely. The audience was intent on the speakers' presentations, and responded pointedly in the extended question and answer period.
Sidney Gluck
The lead speaker was Sidney Gluck, Chairman of the New Energy Policy Association;
President of the Sholom Aleichem Memorial Foundation; a member of the Eastern Economic
Association (EEA) and the Union for Radical Political Economists (URPE). He is
also Co-Chairman of the US-China Society of Friends; and a retired member of the
Social Science Faculty of the New School for Social Research. A specialist in modern
Chinese economy and culture, Mr. Gluck organized the Live and Let Live movement, a
precursor of SANE, in 1955. President Nixon used the seven-point Live and Let Live
program in opening relations with China. Turning to the Iraq war, Gluck said that it is "wholly the concoction of the oil interests." Iraq is the second largest world oil producer, and the target is not only getting this oil for the US, but controlling its flow to China, our next global competitor, which has no oil resources of its own. Unlike the first Gulf War, which was paid for almost entirely by our allies, this one will be paid entirely by US taxpayers, and the cost will be much greater. The best case scenario, a very quick war, would still cost $50 billion. More realistic estimates for the military costs alone run as high as $300-400 billion over the next ten years. Adding in the necessary infrastructure rebuilding and humanitarian aid brings the cost as high as $1.9 trillion. Further, there is a great risk of complete disruption of the entire world economy. Those real concerns were voiced on December 5th by a group of conservatives, including Henry Kissinger, who expressed grave doubts about the Bush administration strategy. Around the world, the United States is no longer seen as a defender of justice or freedom, but as an imperial aggressor. Attacking Iraq would only deepen this worldwide loss of faith in America.
Chris Rude
The next speaker was Chris Rude, a graduate student at the New School, and a former consultant to the UN on the Asian financial crisis. Mr. Rude passed out a graph showing the trends of output from government, foreign and private sectors from 1952 to 2000.. The three sectors stayed closely together
until the seventies, sloping gradually upwards from $2 trillion to $4 trillion over those
two decades. Over the eighties they gradually separated, with government output rising to ten trillion, and the private sector lagging behind at about four. In the nineties, the private sector suddenly shot upwards, crossing the government line at 9 billion in 1997 and continuing to a high of $16 billion in 1999 before crashing back to 12 billion by 2000. We all know the story of the further decline in the last two years. This was the private sector's speculative technology and telecom "bubble."
This dramatic surge by the private sector, said Rude, and especially its leading the rest of the economy, is highly unusual. What's not generally known is how the bubble was financed. The stock market does not raise money. The 90's in fact were the occasion of the biggest buy-back ever of corporate stock - corporations cannibalizing their own stock to finance the investment boom. The legacy, showing up in the news now, is widespread corporate debt. Whenever the financial sector borrows more from itself than it gives to the rest of the economy, there is trouble. Everyone hears about the failures of Enron, WorldCom, and United, but not everyone realizes that behind each of these is the failure of one or more financial institutions.
The technology boom also represents a tremendous over-capacity, an unrealized potential. For example, despite the billions invested in fiber optic technology, only 3% of current total fiber optic capability is actually being utilized.
Pensions are also being affected. "We've all lost our 401K's," said Rude. But defined benefits are also going to go south. The rules are being changed so that corporations don't have to honor benefits. This is a key issue in the Transit Worker's strike, that they are being asked to pay more out of pocket to their pension funds. We will all soon face wider corporate reneging on pension investment.
Rude said he can't understand the persistent myth, now accepted as gospel by both Republicans and Democrats, that "government spending doesn't help the economy." "It's proven in every basic economic textbook,' he said, "that government spending does spur the economy." The problem (as defined by corporations) is that ordinary people, not corporations, are the ones who derive economic benefit from such spending. The current focus of both parties is on giving tax cuts to corporations - who are heavily invested in constantly courting legislators through lobbying - rather than benefit consumers, who only go to the polls every few years.
Since Reagan, said Rude, the US has become the world biggest net debtor. We are thus in a precarious financial situation. The US dollar has been acting strangely since 9/11. The US is no longer seen as a safe investment haven. War with Iraq would almost certainly further destabilize the dollar. There is no way out of this one. We'd be spending a billion dollars a day just to keep our economy afloat. The result could very likely be nothing less than chaos on the world market.
Robin Carey
The third speaker was Robin Carey of Grimes Hill, and a retired economics
professor at the College of Staten Island. The first question to be addressed, said Ms.
Carey , is "Do we have the resources to fight a war with Iraq?" That question is fairly
simple to answer. Even with 6% unemployment, we still have a $10 trillion economy. So even
if the war cost from $60 billion to $1.5 trillion, one can't say we couldn't afford
it.
However, the next question, said Ms. Carey, is more important: "Even if a war is affordable, is that what we want to do with that amount of money?" Most people, she said, could easily come up with a huge list of projects - health care and education, for example - where that money would be far better spent. The choice between these options and going to war is a no-brainer. "Remember the New York fiscal crisis?" asked Ms. Carey. "The whole country could go into just such total fiscal disarray. "
There are other concerns about a war with Iraq. The Bush administration remains determined to deliver on its promised tax cut. But in a war economy, such a tax cut would benefit only the very, very rich. Moreover, war with Iraq would affect the oil supplies of both Iraq and Saudi Arabia and bring huge dislocations to the world economy. The "bizarre" Bush Doctrine of pre-emptive strikes against "evil" is already changing the foreign image of the US in from the defender of liberty to the Big Dog who decides who is going to be punished next in the world. Finally, war with Iraq will bring about an atmosphere of irrationality, and in that atmosphere of "nothing to lose," someone will almost certainly decide to "take out" Israel.
John Walker
The final speaker, John Walker of Stapleton, is the Director of the Master of
Science in Accounting program at CUNY Queens College, and was a candidate in the 2001
elections for Borough President of Staten Island. He is also a combat veteran of the Vietnam
War. Mr. Walker began by pointing out though he has a Ph.D. in economics, as a combat
veteran he tends to approach matters from a practical point of view. The current situation,
he said, is very different from the last Gulf War. That war cost an estimated $61 billion,
but US allies reimbursed all but about $7 billion. US taxpayers will be bearing the cost of
this war without such help from our allies. Further, in Operation Desert Storm, the Iraqi forces
were fighting in a foreign country, with only sand dunes for cover. The Iraqis will fight
this war in the urban and forested areas of their native country. A significant guerilla
campaign, much like Vietnam, is possible and likely.
This war will also be very different from the Afghanistan campaign. It would be a grave mistake to think that the Iraqis will collapse like the Taliban. A far more likely scenario is that of the Russians drawn into conflict and finally defeated by the northern Afghani resistance. Iraq also has a far more intricate and self-sufficient agriculture and infrastructure. Unlike Afghanistan, it doesn't depend heavily on imports or exports. On the other hand, the Iraqi army is only at perhaps 1/8 its Gulf War strength, and the country has been devastated by the deliberate destruction of its infrastructure during the Gulf War and ten years of economic sanctions.
Still, the costs of the war will be staggering. Per a recent study from the Committee
on International Security Studies of the prestigious American Institute of Arts and Sciences,
these costs would range from $99 billion (best case) to nearly $2 trillion (worst case.) All that money, said Walker, will go directly to Iraq - $6,413 for every American man, woman and child over the next ten years. How would the country pay for that? Not by cutting taxes. The answer would be even more borrowing from the private financial interests, leaving the super-wealthy even more wealthy, and everyone else facing a
huge deficit for generations.
| Probable Cost of War with Iraq (in US $ billions) | ||
| Reason for Expense | Best Case | Worst Case |
| Direct Military | - $ 50 | - $ 140 |
| Occupation and peacekeeping | - $ 75 | - $ 500 |
| Reconstruction and nation-building | - $ 30 | - $ 105 |
| Humanitarian aid | - $ 1 | - $ 10 |
| Total Direct costs | - $ 156 | - $ 755 |
| Short-term benefit of access to Iraqi oil vs. long-war disruption of world oil markets |
+ $ 40 | - $ 778 |
| Short-war job creation vs. long-term negative macroeconomic impact |
+ $ 17 | - $ 391 |
| Total indirect costs | - $ 57 | - $1,169 |
| TOTAL NET COST | - $ 99 | - $1,924 |
In addition, Walker said, there are a few other negatives not mentioned by this study.
The best-case cost of Homeland Security would be at least $5 billion. But
the worst case scenario includes up to three expected World-Trade Center incidents, with a total
negative impact of at least $500 billion. Walker noted that one single life insurance company
has already experienced 9/11-related cost increases of $80 million.
| Additional Costs ( in US $ billions) | Best Case | Worst Case |
| Minimal Homeland Security costs vs. impact of one to three WTC-type incidents |
- $ 5 | - $ 500 |
| TOTAL MONETARY COST | - $ 104 | - $2,424 |
| Cost per US man/woman/child | - $ 347.00 | - $8,080.00 |
There are also non-monetary costs. This war will be an urban war, with soldiers going door
to door, getting people out of their houses. The military expects at least 45,000 combat deaths.
That would mean another 300,000 veterans permanently disabled, possibly with new chemical
and biological disorders. How, said Walker, do you measure that?
| Non-monetary losses to life and health | ||
| Deaths | 250 | 45,000 |
| Disabilities | 2,000 | 300,000 |
Walter Persans: A very comprehensive presentation, but I'm dismayed. In 1940 we had no
Army, no Navy, we were not prepared for war. Roosevelt's war helped to bring us us out of the economic pits. In 2002, we already have an extensive military; there's nothing left to build. That solution will not bring the economy out of the doldrums. What would?
John Walker: The salvation of this economy is realizing the enormous potential of information technology, which hasn't even begun o be explored. As Chris noted, only 3% of fiber optic technology is being used in practice. The problem is that the power structures have found out that if you open up the economy using the Internet, it significantly changes the culture, even the way people do business. The economy starts to work its way out of control by the huge corporate interests. The wealth starts to be redistributed. That's a big problem for the corporate powers who now control the wealth of this country. So the throwback to military investment is a throwback to WWI and WWII.
The problem that the leadership and the more conservative economists are not considering is that that old formula no longer works. We must either utilize this untapped capacity or write it off. And writing it off would collapse the corporate economy.
Chris Rude: Yes, WWII pulled the US economy out of a slump. That isn't going to happen with this war on Iraq. We already have a good military economy. That sector is hardly in trouble.
Orlando Garcia: When you look at what the US military is already spending - $1 billion every day - even these astronomical figures seem small. At most, it would take only six years at current military spending rates to cover even $2 trillion in costs. I wonder if the main reason for the war isn't that if you keep spending like that, preparing for war, you eventually have to have a war to use up the equipment.
Chris Rude: This is definitely a tail wagging the dog kind of situation. We are certainly capable of spending our money any way we want. There are options other than spending on war. For example, a sound federal fiscal policy would be to subsidize state governments, as it did until Reagan cut the subsidies. All our cities and states have budget problems. Why not transfer federal funds to the states, so that, for example, we could have affordable higher education? That's a perfectly sound fiscal policy, and we're being hoodwinked into thinking that it can't be done because we "have to" fight a war on terrorism and invest in military actions abroad.
John Walker: The military approach to solving our problems is not going to work. One lesson we should have learned learned from pulling out of the Vietnam War is that the economy doesn't react that quickly. Of course we want to keep the economy from collapsing. We don't want to cause tremendous dislocation of all the people working in the defense industry workers, and basically make them homeless. So we can't just abandon the defense industry and put nothing in its place. But we can gradually change that technology to peaceful uses.
We need to figure out that this is what we did wrong in the past - we didn't control the transition from a guns to butter economy We didn't help the defense corporations understand what they need to do shift their focus from war to peace. What happened is, totally different corporations had to take the new technologies and put them to peaceful uses, because the defense corporations who invented the technologies didn't know how to do anything but make weapons. We have to help the defense corporations to learn how to make the economic conversion. The current administration just wants to keep on with things as they happened in the past, and as Chris pointed out, that won't happen
Sally Jones: Chris, you say that Republicans and Democrats alike don't believe that government spending helps the economy. But I hear on the news that the Bush is offering $500 billion to Turkey so they can buy military equipment Those contracts are with US corporations. They did the same thing with Israel, with Egypt, with Syria, with all countries - the Philippines, etc, and they're going to be doing it, after the war, with Iraq - . That is government spending, and it's a lot of money, going from our treasury to foreign countries, and then right back into the US to purchase products that create jobs and stimulate the economy. My question is how can we argue against that kind of government spending versus the kind of spending we saw in the thirties, that took us out of the Depression, and to some extent the War on Poverty. What's the difference?
Chris Rude: You're perfectly right. Government spending does create demand for exports. Any kind of government spending spurs the economy. But we don't talk about it in terms of economics, we talk about it mainly in terms of foreign policy. We talk about destroying another country, and the bottom line there is that it stimulates our economy, but we talk about it only in terms of foreign policy. And when the administration talks about stimulating the economy, they only talk about tax cuts. It amazes me that the students I teach - mostly NYU Business School students, so they all hate government - they all know that tax cuts stimulate the economy. I can show them the equations and the proofs, even show them that dollar for dollar, government spending stimulates the economy more than tax cuts - but they have this unshakable, ideological, philosophical notion, it's more like a mental block, actually, that "government intervention is bad for the economy." Yet obviously, a dollar spent on public education for New York City would have a more useful positive economic impact on the ordinary citizen than a dollar spent on bombing Iraq.
Enrique DeUrquiza: I was born in Argentina and though I am an American citizen, I travel frequently back there. On my most recent visit a few weeks ago, I was struck by, for the first time, a lot of anti-American feelings. This is related to the deep financial crisis in Argentina, which is associated there with undue financial pressure from largely American financial institutions. I wonder if we realize how much hatred the Bush administration is producing all over the world. We are no longer seen as defenders of democracy, of freedom, of human rights. On the contrary, we are perceived as bullies who are interested only in our own economy. This is a very important point for the American people: how is it that we are perceived in the world?
Robin Carey: That's one of the dangers, that we're clearly in a go-it alone mode here. It's shocking to me as well how much anti-American feeling there is. A lot of people have memories of the US helping people after WWII - those memories are no longer around. And if we are truly serious about regime change in Iraq, we're going to have to operate on the post-WWII model - above all, what we did with Japan. We did a good job there. But it took years and years of effort, and a tremendous outlay of energy and commitment. And I just don't think that that is what people think they are getting into here.
John Walker: The growth of anti-American sentiment is one of the main reasons why the worst-case scenario is more likely for the costs of this war. Without international support and good will, reconstruction and nation building is going to be infinitely more difficult. We are in the position of imposing our will on a foreign country where we, not another country, have been the aggressor. In effect, we will be saying, you will do what we want, or else, and until you accept it, we will be here shoving it down your throats. That's going to be a very expensive proposition. .
Chris Rude: I can think of four places where anti-American sentiment is very strong. Certainly Argentina, but also Brazil, Columbia and Venezuela, which have protracted guerrilla warfare situations in which the US has joined on the side of the establishment under the usual cover of it being a war against drugs. I expect the situations there will only escalate and that anti-American sentiment will only grow as this happens.
Saundra Escuder: I just want to say thank you, I'm grateful for the information, and grateful to the Unitarian Church that this is being held in a church. I have a question I've asked myself,
and I want to ask it of others. You hear all this information, and you ask,What can I do as an individual to work for peace? I've designed a little button that says Pray for World Peace, and I would ask that everybody pray for peace. And maybe we wouldn't have to get to this point. And I would like to ask, what can a person do, to help in this effort, to stop this war?
John Walker: Every little bit that each of us does, even thinking about the issues, helps. And we can write letters, to government, to newspapers. We can participate in forums like this, keep ourselves informed. There is certainly Peace Action of Staten Island, an organized group on Staten Island that cares about these issues and can begin to mobilize people to stand up and speak out. That's what we need to do above all. We need to stand up and speak out.
Rona Solomon: I just got back from taking Professor Gluck to the Ferry. In the car he told me that the main concern we should all be concerned about is the slow growth of fascism in our country. The center has moved very far to the right. We need to strongly encourage the growing campus movement for peace. And since the politicians aren't listening to us, maybe we could put economic pressure on the corporations who give them their campaign contributions. Let them know that we're dissatisfied with the push for war..
Bill Johnson: I am a Vietnam veteran, and I've been a member of Vietnam Veterans against the War. I'm emotionally against using the word "peace," because whenever I've heard it, it's always been cover for a big lie. It was used in the spring of 1970, when I went with the First Calvary into Cambodia, and one to two million people died because we went in there. But I'm as passionately anti-war as anyone can be. I protested with thousands of others in front of the UN about the way they've been involved in this war. It makes me sick, the way we've bombing Iraq constantly over the last ten years, the thousands of deaths we've already inflicted. These are real bombs. The smart bombs they show you on TV don't show you the real deaths after the little blip explodes. They don't show you that they're destroying water, electrical, the infrastructure. I don't understand how you speakers can be so dispassionate about this situation. But you've never seen what a B52 strike does. We need to get more passion into this movement and raise a ruckus, or there are going to be many, many more real deaths.
Guest: You can talk and talk all you want, but the problem no one will mention is that there's nothing we can do about it! It's all going to happen anyway! This administration doesn't listen to us, and they're going to do whatever they want!
Chris Rude: The problem with pessimism is that it leads to paralysis. I remember trying to talk to 250 freshmen right after 9/11. What can you say? All I could tell them was that courage is a key virtue.
Alan Moore: You've mentioned the split between the old oil-based economy and the new but underused technology economy, The Republicans can't seem to make up their minds whether they stand for the new information age or the planet being burned to a black cinder. My question is, what other economic ventures can be supported by ordinary people?
Chris Rude: The interesting case here is Robert Rubin, Treasury Secretary under Clinton, who presided over the repeal of the Banking Act of 1933, Glass-Steagal, which prohibited banks from selling stock and merging with insurance companies. Rubin then went on to become president of Citicorp and preside over the largest hank merger in world history, with the Travelers [Insurance] Group. The thinking is that there was no choice, that government regulation disrupts Wall Street. That's why you also had the Telecommunications Act of 1966, deregulating that sector in favor of internal censorship. We know where that led! And now the new Bush economic team is an attempt to make amends to Wall Street for the disruption that the war will cause there.
John Walker: One thing we know is that the coop's of the 30's didn't require the higher skills that would be needed to survive in today's technological world. We need a new model with a different structure from the old one of bulk purchasing and broadly supervised manual labor. Now we need keyboard skills and the ability to work with databases and information. It requires a bigger investment in training. But it would be very valuable for a group of people to develop a model that is workable now.
John Bostrom: I've been listening to a Christmas carol called "Rise Up Shepherd and Follow," about the Star of Bethlehem. And it struck me, that star was shining in the sky for everyone to see. But you don't see pictures of ten thousand shepherds around the manger of Jesus. There are just a handful. Because to follow the star, as the song says, you have to "leave your sheep and leave your lambs." Very few shepherds are willing to do that. Following the star is not a popular thing to do - in fact it's usually considered pretty crazy. I can't help but notice how few we are, relatively speaking, raising our voices for peace and against this war. But I think there's a parallel there. It's always just a few people in the beginning. And if a star like that calls to you, and you are given the grace and strength to follow it, you do it, regardless of how alone you are.
We are speaking up for peace, as loudly as we can, because we know it's right. And if we continue, in time, others will follow. In the beginning, it's hard. Like Fox Mulder says on the X Files, people "want to believe" that everything is OK. They don't want to face the horror of what this war really means. I don't want to face it myself. I would love to believe that it's just some psychological neurosis of my own and that everything is really OK out there. That's what the media is telling all of us every day, over an over. Relax! Watch TV! Consume! Don't worry, be happy! Be a happy, normal American, and leave the politics to the politicians! It's a very seductive message. If there had been TV and radio in the time of Jesus, there probably would have been no shepherds at all at his crib. It takes a very strong star to shine through that noise pollution We manage to see the star of peace only because its light is so strong. It calls to us, and we follow it. It's already been a very, very long journey, and there's still a very long way to go - rivers to cross, mountains to climb. But like the saying says: there is no way to peace - peace is the way.
This public forum was sponsored by the Social Concerns Committee of the Unitarian Church of Staten Island. A forum is generally held once each month on Sunday at i:00 PM. For more information on the Forum Series, see the web site, http://home.si.rr.com/jbostrom/UUForum. The Church is located at 312 Fillmore Street, one block east of Snug Harbor and one block south of Richmond Terrace. For more information on the Church, call the office, 447-2204, or the minister, Rev. Ben Bortin, 816-0160.
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