Sunday, March 16, 2008

A connection that needs to be made

These days the media showers us with gloomy reports and predictions about the economy. Some accounts, looking to a new Depression, seem alarmist. But no one knows for sure.

I am experiencing the situation personally in two ways. First, I have had to give up my trips to Europe, normally occcurring once every two years. The dollar is just too weak against the Euro. Then there are well-warranted fears about my income. Much of my pension is tied to the stock market. The current downturns on Wall Street will take a big bite out of my monthly checks.

Another issue now being canvassed is the cost of the Iraq War. Joseph Stigler's estimate of the total tab is three trillion dollars. Even if we adopt a somewhat lower figure of two trillion, the amount is almost beyond belief.

There is clearly a causal relationship between these two phenomena. We have not been asked to pay for the war in the conventional way, through direct taxes, so we are paying for it by seeing the wrecking of the dollar and the economy.

We hear nowadays that the economy is the main issue in the election, pushing aside the War. But they are the same issue!

By and large the presidential candidates are sidestepping the connection, even as they rally to addressing the lamentable state of the economy. It is understandable why John McCain, an inveterate war-monger, and Hillary Clinton, a long-time chearleader for the war, should want to change the subject. By why have John Edwards and Barack Obama largely ignored this fateful connection? After all, Edwards has forthrightly owned up to his mistake in supporting the war. Obama criticized it from the start. Far worse is the craven conduct of "our leaders" in the Democratic Congress, who have turned out to be Bush's leading enablers. According to the Constitution, Congress holds the purse strings. To all intents and purposes, the congressional Democrats could have ended the War in 2007, by simply refusing to vote to fund it. Out of cowardice and political calculation, they did not.

It is all a great puzzle--and scarcely an academic one. This appalling, unnecessary war has made us all poorer. But still it goes on.

PS (March 21). I doubt that anyone in the Obama and Clinton campaigns reads this blog. However, the New York Times today reported that both made a connection between the war and the economy (and not it seems for the first time for either).

However, on closer inspection these remarks turn out to be observations of the familiar money-transfer kind. "If we weren't spending all these bucks on the war, we could spend them on health care, education, and other worthy domenstic causes." This is my view misses the main point, which is that our economy has been devastated by fighting a war that we have not been asked to pay for. Just as with Lyndon Johnson and Richard Nixon, it is this imbalance that is driving down the dollar and causing many of the other ill effects.

Yes, if we could end the war in early 2009 (something I believe, by the way, that neither Obama or Clinton will actually do), we could start transferring money in the sense that is being mentioned. Except for one thing: there is no money.


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