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OpEdNews Op Eds    H2'ed 3/20/17

The neoconservatives' dismal performance

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Message Jean-Luc Basle

Remember the day the Berlin Wall fell in November 1989: a ray of hope arose in the sky. Two years later, when the Soviet Union collapsed, everyone dreamed of peace and prosperity after forty years of Cold War. This wasn't to be. Some men in Washington D.C. had a different view of the future. Peace would be gained by the United States' domination of the world and prosperity by an American version of laissez-faire policies. Those men were the new conservatives: the neoconservatives. Twenty-five years later an evaluation of their performance is appalling. The world is not at peace and prosperity is unequally distributed.

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The United States is still at war in Afghanistan after fourteen years -- the longest war in the country's history which long ago lost its purpose, if ever it had one. The United States is hopelessly bogged down in Iraq. Yet, this did not stop neoconservatives from destroying Libya, fanning a revolution in Syria and helping the Saudis fight a war in Yemen. In the interim, they even found time to divide Soudan into two unmanageable parts. Quite a record. The human cost of these wretched wars is sickening. The tally of dead, wounded and refugees is unknown but numbers in the millions. The human tragedy is unfathomable and for that reason rarely, if ever described. The justification for these wars is a pack of lies. Afghanistan was invaded in search of bin Laden, as if one needs a whole army to find one man. Shouldn't this be the work of the CIA? And Iraq was attacked under a false pretext.

Subjugating Russia is an integral part of the neoconservatives' hegemonic plan. In return for Gorbachev's acquiescence to Germany's reunification, Secretary of State, James Baker vowed not to move NATO "one inch to the East". Since then, twelve Eastern nations joined the military alliance. Ballistic missile antimissiles have been based in Poland and Rumania supposedly to threaten Iran while being aimed at Russia. Western powers recently conducted the largest military exercises in the Baltic States since the June 1941 Barbarossa operation. No wonder Moscow feels threatened.

The military expenditures associated with this hegemonic policy are staggering. They stood at $144 billion in 1980. By the end of the Cold War, they had nearly tripled ($305 billion in 1992). After a small decrease in the mid-90s -- the ephemeral peace dividend -- they more than doubled by 2010 ($766 billion).

On the domestic front, the performance is equally distressful. The unfettered laissez-policies promoted by the Federal Reserve and the Treasury resulted in the worst recession since the Great Depression. Paul Volcker, the legendary Federal Reserve chairman, who rigged inflation out of the economy in the 1980s, labelled it the Great Recession in reference to the 1929 crisis. It originated in the subprime crisis of 2008 caused by excessive real estate bank loans deliberately made to insolvent debtors. Potentially, it could have been much worse. The trade and financial links connecting banks, corporations and government agencies around the world form a huge grid. The subprime crisis acted as a short circuit in that grid stopping the flow of funds -- the life blood of the economy. Fortunately, it was rapidly fixed by the U.S. Treasury and the Federal Reserve but at a cost which the American people will find out later.

The 2009 budget deficit was nearly twice as large as Franklin Roosevelt's 1934 deficit (9.8% vs. 5.8% of GDP). Concomitantly, the Federal Reserve injected over $3,600 billion in the banking sector to jump start the economy.

In spite of this massive effort, results were slow in coming. The crisis had taken a heavy toll on the economy and the people. The recession lasted two years. Growth resumed slowly afterward. Employment fell by 4 million in 2009 and 2010. Long term employment reached 18% (two-third the Great Depression's highest level). It is now down to 10%, a number twice as large as the much vented official level which excludes discouraged workers and part time employees. The Treasury's Wall Street rescue plan plus the massive increase in military expenditures created a pile of debt. The Federal debt nearly doubled from $9,240 billion in 2007 to $17,400 billion in 2016 (105% of GDP) -- the largest increase ever occurred by an American government.

The neoconservatives' economic policies had three other consequences. The globalization of the world's economy, officially recognized by the creation of the World Trade Organization in 1995, led to a massive offshoring of American jobs and a rapid deterioration of the balance of trade with a deficit reaching $762 billion in 2006. It is also at the start of a growing inequality between the haves and the have-nots. Today, the wealthiest 1% derived as much income as they did in 1929, i.e. about 18%. This trend was reinforced by the Federal Reserve's easy money policy, known as "quantitative easing". It had the effect of boosting the stock market to unrealistic highs, enriching the wealthy unjustly while creating a new financial bubble.

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Former Vice President Citigroup New York (retired) Columbia University -- Business School Princeton University -- Woodrow Wilson School

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