American domestic and foreign policies are not framed in a vacuum rather they depend on theories emanating from scholars and intellectuals. For example, Milton Freidman's economic thoeries have been considered the gospel since the early 1980s. Presidents and their top adivisors usually choose theories that are in accord with their own ideology. Unfortunately, most of these theories are problematic at best.

::::::::

In advanced democracies, economic, political and global policies are rooted in theories developed by scholars and intellectuals who imbue government decisions with legitimacy and credibility.   Given that not all scholars in a particular field agree with each other, government leaders will often choose those theories that are in accord with their own ideology and that of their advisors.   The norm in choosing advisors and secretaries of the various cabinet posts is to seek out people who are part of the corporate, cultural and intellectual elite whose worldviews are somewhat similar to that of the president and his top advisors.

For example, despite Obama's selection of mostly Wall Street executives to staff key economic positions and selection of Gates at defense and Clinton at State, progressive people in the Democratic Party still remained hopeful of progressive policies despite the lack of alternative points of view among advisors.

When Colin Powell was appointed to Secretary of State in the Bush Administration, he was considered a moderate despite his career in the military.   Many of the other appointees, such as Cheney, Wolfowitz, Abrams, Pearle, Rumsfeld and Libby shared a very similar ideology, as might be expected given their membership in PNAC.    

Prevailing economic theories have changed over the years but since the 1980s, Milton Freidman's apotheosized monetarist theories have formed the backbone of economic and social policy.   Others who have contributed to current mainstream thought in economics include Alan Greenspan, Arthur Laffer and Friedrick Hayek.

In foreign policy, the concept that concrete interests or national interests can override legal and moral considerations prevails in foreign policy decisions.   Thus in Iraq, millions of people were killed, four million became refugees and in addition, Iraq's infrastructure was virtually destroyed, all of which was justified on the basis of the imperative to protect American national interests.   Invoking the invasion of Kuwait and later, weapons of mass destruction and ties to el Qaeda, as justifications were propaganda strategies essential for the construction of "necessary illusions" to render illegal polices palatable..

Specific examples of policies resulting from these theories include tax reduction to increase tax revenue, a balanced budget by reducing the social safety net, free markets, deregulation and privatization and humanitarian interventions.

There are primarily three major problems with this approach to governance in a democratic state in which social justice, human rights and rule of law are highly respected.   Some of these theories are based on absurd, hidden or obscure assumptions that render the theories totally invalid or they function merely as propaganda pretexts or "necessary illusions" masking the true motives for decisions which are actually based on ideologies or motives that would not be acceptable to the public.    The other problem is that economics is treated as a quasi-science in which outcomes of economics' mathematical constructions are ascribed greater accuracy than is warranted.

Consider the paradoxical belief amongst many political leaders and elected representatives of the people that reducing taxes generates greater tax revenue.   Arthur Laffer developed the Laffer curve, popularized by Jude Wanniski in the 1970s, which defines government tax revenues as a function of all possible tax rates.   Except near the extremes of zero taxes and 100% taxes, lower taxes translate into greater tax revenues based on the premise that lower taxes   encourages people to invest and spend more, triggering more economic activity.   The taxes from the greater economic activity presumably offset the loss in tax revenues due to tax cuts.

Taxation systems are far too complex to construct such a simple correlation between tax rates and tax revenues.    Tax rates are a multiplicity of different rates such as personal income, corporate income, sales taxes, inheritance taxes, taxes on investments and payroll taxes just to mention a few.

For example, President Reagan reduced the top personal tax rate from 70% to 28% between 1982 and 1989, during which time federal receipts grew from $618 billion to $991 billion.   On the other hand, other taxes were increased during the same period such as FICA and payroll taxes.   FICA taxes increased a whopping 88.6%.   Reagan's budgets also resulted in large deficits which would have been lower without any tax cuts.

It's also important to note that his tax cuts greatly benefitted the rich at the expense of working people   suggesting that the cuts were more ideological than economically sound.

Although there may be an interaction between tax rates and tax revenues, the precise nature of the interaction is unknown given the labyrinthian set of parameters in any given economy and the difficulty in predicting the behaviour of human beings.   As a matter of fact, the Laffer Curve was not constructed through a mathematical deductive process but through crude empirical observations.

In general tax cuts have tended to benefit the wealthy and corporations, justified on the basis of the "trickle down" theory which doesn't hold water.   The most efficient method to increase consumption is to give tax breaks to those people who need it the most because they will spend it immediately on food, clothes and rent whereas the wealthy may spend it on foreign products, travel or investments.

Free Markets are the underpinning of the U.S. economy, an unquestioned presupposition in mainstream discourse.    In theory, a free market economy is one in which all markets within it are unregulated by any parties other than those people in the market who are seeking to buy or sell their labour or products.   In particular, a free market can only exist in its pure form when the role of the state is limited to tax collection and enforcement off private ownerships and contracts.

A number of conditions must exist in order for a market to be free.   Prices must only be determined by the decisions of buyers and sellers en masse in the market.   Although perfect competition is not necessary for a market to operate freely, at least monopolistic competition must prevail.   There must be many competing producers, where no single or small number of producers can control the market price and where there are few barriers to entry to or exit from the market.

Virtually none of these conditions exist and, in fact, in some cases the extreme opposite is true.

One of the major factors undermining the freedom of markets in the United States is defense expenditures which causes a major disruption to decision-making pertaining to buying and selling.   It is a singular violation of the monopolistic criteria since there is only one buyer and in virtually every case, there are very few sellers.   For consumers, there is no utility in the products produced and it is a preposterous stretch to argue that they are protected by the weapons systems purchased by the government.

There is a myriad of private corporations who sell weapons and armaments to the government and the dollar value of the sales is leviathan.   For example, in 2010, Lockheed Martin Corp. won almost $17 billion in contracts, Northrop Grumman Corp. won #11 billion, and Boeing Co. won $10.5 billion.    Overall, the government purchased a total of $140 billion from the private sector. On research, development and testing, the government spent another $79 billion.

In addition to purchasing weapon systems and armaments, the government spent over $25 billion on the services of private contract companies, constituting another major intrusion into the operation of the private sector.

While defense spending substantially interferes with the criteria limiting the role of government in the market, government subsidies to various sectors in the economy render the pursuit of free markets meaningless.

Handouts to industries can assume many forms including grants and other direct payments, government credit subsidies and guarantees and market price supports to name but a few.   The impact of these handouts is to lower costs for the recipient companies and therefore to reduce the price of their products.    Price determination in a free market is supposed to be based exclusively on the actions of buyers and sellers or in economic terms, supply and demand.   As in defense spending, handouts are a major form of government interference strictly prohibited in a true free market economy.

For Example, handouts to the energy sector are primarily directed toward the fossil fuel industries rather than renewable energy companies.   In the period 2002 to 2008, subsidies to fossil fuel corporations totalled $72 billion while subsidies to renewables totalled $29 billion, half of which targeted corn-based ethanol, a source of fuel which hardly qualifies as a renewable given the quantity of fossil fuels and water required to grow it.

In the agricultural sector, in the period 1995 to 2009, Riceland Foods received $554 million, Farmers Rice Coop $146 million and Harvest States Cooperatives $49 million.   During this period, the total subsidies to the agricultural sector amounted to over $246 billion.

These farm subsidies empowered U.S. food exporters to undercut foreign competition, particularly in developing countries since Europe subsidizes its farmers as well.   Government interference determined who was selling at the best price and therefore which exporters were successful.

Agricultural subsidies in conjunction with IMF policies, heavily influenced by the United States and Europe, had a ruinous effect on the agricultural sector in many developing countries.   For example, Jamaica was forced by the IMF to raise interest rates to farmers to 23%, ban tariffs and refrain from any subsidies to farmers.   Up until that point, Jamaican farmers had been supplying both the domestic population and the tourist industry but were practically forced out of business by the heavily subsidized U.S. products and IMF policies.   The fate of the agricultural sector in Jamaica resulted from actions of the American government not from market forces.

Another obstacle to markets operating freely in the U.S. is the external cost of production otherwise known as externalities.   Prices in a free market system are strictly determined by the interaction of buyers and sellers but in the case of externalities, some of the costs of production are not included in the price and hence buyers are not reacting to the true price.

Examples of externalities include health problems suffered by employees due to inadequate health protection in the workplace or environmental destruction caused as a by-product of production.   In both cases, these costs are paid by someone other than the buyer and seller and therefore interfere with the forces of supply and demand.

One of the key conditions of monopolistic competition is the non-coerced interaction of many buyers and sellers neither of whom are powerful enough to influence the behaviour of the market.   Ironically, in order to maintain monopolistic conditions, the government must step in with regulations to prevent either buyers or sellers from becoming too large despite the proviso of minimum government intervention.   In this case, government regulations are essential since there would be no free market given an oligopoly or monopoly in any sector of the economy.   The regulations become the lesser of two evils.

In many sectors of the American economy oligopolistic conditions do exist due to the relaxation of regulations such as the Glass Steagall Act.   When a few companies dominate the market in any sector of the economy, the realization of free markets is not possible.   These few companies have too much control over prices and can limit the ability of other potential producers from entering the market.

The agricultural sector is dominated by a few companies.   For example, three beef packers, namely Tyson, Cargill, JBS controlled 90% of the market in 2008.   Similarly, four pork packers, Smithfield Foods, Tyson Foods, Swift & Co. and Cargill, dominated 64% of the market in the same year.   Soybean crushing was dominated by three companies, ADM, Bunge, Cargill who controlled 71% of the market.                                                                                     

Increasing horizontal and sometimes vertical integration allows these big companies to set the prices and dictate terms to the farmer.   If a farmer refuses to accept a demand imposed by big corporations, they will lose their contract.   Such conditions are the best described as non-free markets.

Free markets clearly do not exist in the United States and the insistence on maintaining free markets by our leaders and legislators is simply an attempt to serve the interests of large corporations at the expense of the public.   Free markets have been one of the pretexts for not creating a single-payer healthcare system and for the race to privatize the educational system.   Cuts to social benefits are justified by the need to support the free market system.

Policies conceived in the U.S. foreign policy and defense communities are based on specific objectives and created on the basis of a foreign policy doctrine which has guided them at least since World War II.

This doctrine, based on the international relations theory of "realism", subordinates legal, ideological or moral considerations to national interests grounded in levels of power among states.   Realism assumes the belief that states are inherently aggressive, obsessed with security and only constrained from expansion by opposing powers and therefore the pursuit of national interests realistically must be the highest priority.

This doctrine is the key to understanding why American foreign policy regularly violates international law including the Geneva Conventions, Convention on Torture, Genocide Convention, the Inhumane Weapons Convention and the UN Charter and is the motivation to question the rationalizations and normalizations of foreign policy actions.

This pragmatic approach is grounded in a long history of theories emanating from the works of William James, John Dewey, Charles Sanders Pierce, Walter Lippmann, Hans Morgenthau and Karl Paul Reinhold Niebuhr

There is an expansive dichotomy between the essence of the ideas espoused by these men and the actual application of their principles in practice by foreign-policy decision-makers.   According to the philosophy of "political realism", values including human rights and international law must be sacrificed to "concrete interests" in the name of "political realism".

One critical flaw in this philosophy is that human rights and international law are indivisible and compromising them in the interests of some ostensibly higher cause renders them meaningless.

Another critical flaw is characterized by the so-called "concrete interest" which in almost all cases is an action to serve exclusively American interests by violating human rights or international law.   "Military humanism" was nothing more than a euphemism rationalizing actions that were, in fact, war crimes, such as the bombing of Serbia.   Primarily civilian targets including hospitals, schools, apartment buildings and factories were targeted violating the Geneva Conventions, the United Nations charter, the NATO Charter and the Helsinki Accords.

The aforementioned theories are either non-operational such as free markets or a pretext for ignoring international law and norms of morality.   Theories are the foundation on which policies are based and when the foundation is weak, the policies are misguided or misplaced.

To explain why American leaders embrace these policies is to open Pandora's Box.   Corporate donations, lobbying and the "swinging door" distort the priorities of the government by seducing it into serving the interests of corporations over the public interest.

Authors Website: http://consuming-ourselves.blogspot/

Authors Bio:
I have been a professor of political science at Seneca College in Toronto. I have published five books the last of which "Selling Out: Consuming Ourselves to Death" was released in May/08. As well, I have been featured in CounterPunch, Z Magazine,Dissenting Voice and College Quarterly. Additionally, I have delivered numerous papers at international academic conferences including Cambridge and Oxford.