by Paul Craig Roberts, Paul Craig Roberts:
The US military/security complex and its numerous supporters in the House and Senate can’t get enough of war. The one they have going in Ukraine has denuded NATO members and the US of weapons and ammunition, thus creating a massive resupply market for US armaments manufacturers. This is great profit news for the merchants of death, but it is a foolish policy to be warring with Russia when we are out of bullets.
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Not content with our precarious position, Washington if fomenting war with China. NATO is no longer limited to the North Atlantic Treaty Organization. It has been expanded to the South Asian Treaty Organization.
Michael Hudson, my sometime coauthor, tells us about it in “The Looming War Against China” https://www.unz.com/mhudson/the-looming-war-against-china/ . It is going to be a costly war for everyone, especially for the US as US manufacturing has been relocated in China.
One of the good things that jumps out of Hudson’s article is that Washington’s wars on Russia and China have destroyed globalism. Hudson notes that the world has divided into blocs: America and its empire vs. the rest of the world. Hudson emphasizes the cost and loss of efficiency of this breakup, but in my view the silver lining is that globalism is Washington’s mechanism for hegemony and keeping other countries under its thumb. With the dollar as global money, Washington had no problem financing its huge trade and budget deficits. The breakup of globalism that Washington has caused is very much against Washington’s interest and permits the rise of a multi-polar world.
Hudson’s analysis cannot be obtained from the Council on Foreign Relations or any think tank, or from the State Department, Pentagon, National Security Council, or from any university. I recommend Hudson’s analysis. It will enhance your perception as events unfold, the meaning of which the media is incapable of explaining.
I have one cautionary note. Hudson makes a mistake that he often makes. In this case it is a purely gratuitous mistake as it has no relation to the points he makes. As I have corrected him many times, this time I will do so publicly.
Hudson associates the cause of American de-industrialization and the rise of the financialized economy with “Ronald Reagan’s tax cuts for the wealthy.” That is the way I read his sentence: “The United States has suffered an equally devastating shift of wealth and income to the Finance, Insurance and Real Estate (FIRE) sectors in the wake of Ronald Reagan’s tax cuts for the wealthy, anti-government deregulation, Bill Clinton’s ‘Third Way’ takeover by Wall Street.” I categorically reject that supply-side economics had anything to do with promoting predatory financialization and de-industrialization.
The purpose of the Reagan reduction in marginal income tax rates was to employ a supply-side approach to the problem of stagflation–the worsening trade-offs between inflation and employment, not to cut taxes for the rich. Demand-side approaches had failed. A few of us had a supply-side solution, and President Reagan and Congress agreed to give it a chance. It certainly worked. The Phillips Curve and worsening tradeoffs between employment and inflation disappeared.
The purpose of the reduction in marginal tax rates was to increase the earnings of labor and investment by reducing their tax cost. It worked. In place of the neoliberals’ prediction of a rise in inflation in response to tax rate reduction, inflation collapsed.
Hudson himself favors reducing the cost of labor and capital by subsidizing health care, education, and public transportation. This would provide the same living standard at lower wage rates, thus making US labor more competitive. Following his logic, if he is consistent he favors lower rates of tax on income as they also produce the same real income with lower wage rates. Indeed, they produce higher real incomes because of the incentive effects.
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