From THE SWORD AND THE DOLLAR: Imperialism, Revolution, and the Arms Race, by Michael Parenti, St. Martins Press, 1989


Let us consider in more detail what it costs to maintain "our" military-industrial global empire. If you are an unemployed worker whose plant has just moved to South Korea or Brazil or Indonesia in pursuit of higher profits, the first thing that might come to mind is the number of jobs "our" empire has cost us. As early as 1916, Lenin pointed out that at an advanced stage capitalism would export not only its goods but its very capital, not only its products but its entire production process. Today, most giant American firms do just that, exporting their capital, their technology, factories, and sales networks. It is well known that General Motors has been closing down factories in the USA; less well known is that GM has been spending billons of dollars abroad on new auto plants in countries where wages are far less than what American autoworkers are paid. This means bigger profits for GM but more unemployment for Detroit.

Over the last twenty years, American firms have tripled their total outlay in other countires, with the fastest growth rate being in the Third World. Nor is the trend likely to reverse itself. American capitalism is now producing abroad eight times more than it exports. Many firms have shifted all their manufacturing activities to foreign lands: all the tape recorders, radios, bicycles, VCRs, typewriters, television sets, and computers. One out of every three workers employed by US multinational companies are now in foreign countries. US companies continue to export US jobs to other countries at an alarming rate: 900,000 between 1980 and 1985, 250,000 of these in 1985 alone. [This book was published in 89 and the export of jobs has accelerated since 85...HR] Thus do the working people of the United States pay the hidden costs of empire.

Multinationals do not have to pay US income taxes on profits made in other countries until these profits are repatriated to the USA---if ever they are. Taxes paid to the host country are treated as tax credits rather than mere tax deductions, that is, write-offs from the taxes that would normally have to be paid to the US Treasury rather than from the income that is taxable. The miultinational can juggle the books among its various foreign subsidiaries, showing low profits in a high-tax country and high profits in a low-tax country so as to avoid paying substantial taxes anywhere.

Management's threat to relocate a plant is often sufficient to blackmail US workers into taking wage cuts, surrendering benefits, working longer hours, and even putting up money of their own for new plants and retooling---all of which represent a net transfer of income from workers to owners.

Americans are victimized by economic imperialism not only as workers but as taxpayers and consumers. The billions of tax dollars that corporations escape paying because of their overseas shelters must be made up by the rest of us. Additonal billions of our tax dollars go into foreign-aid programs to governments that maintain the cheap labor markets that lure away American jobs---$13.6 billion in 1986, of which two-thirds was military aid. Our tax money also serves as hidden subsidies to the big companies when used as foreign aid to finance the kind of infrastructure (roads, plants, ports) needed to support extractive industries in the Third World.

Nor do the benefits of this empire trickle down to the American consumer in any appreciable way. Generally the big companies sell the goods made abroad at as high a price as possible on American marekts. Corporations move to Asia and Africa to increase their profits, not to produce lower-priced goods that will save money for American consumers. They pay as little as they can in wages abroad but still charge as much as they can when they sell the goods at home.

>From one-half to two-thirds of the major winter and early spring vegetales consumed in the United States are imported from poor countries, pricipally Mexico, where the land and labor cost a fraction of what they do in the USA. Yet these vegetables are not sold at cheaper prices than homegrown produce. Likewise, the General Electric household appliances made by young women in South Korea and Singapore who work for subsistence wages, and the Admiral International color television sets assembled by low-paid workers in Taiwan do not cost less than when they were made in the USA. As the president of Admiral noted, the move to Taiwan "won't affect pricing state-side but it should improve the company's profit structure, otherwise we woudn't be making the move."

We already noted how overseas investments have brought increasing misery to the Third World. Of interest here is how some of that misery comes home as a visitation upon the American people. We have heard much in our media about the "refugees from Communism"; we might think a moment about the refugees from capitalism. Driven off their lands, large numbers of impoverished Latinos and other Third Worlders have been compelled to flee into economic exile, coming to the United States, many of them illegally, to compete with American workers for entry-level jobs that are becoming increasingly scarce. Because of their illegal status and vulnerability to deportation, undocumented workers are least likely to unionize and least able to fight for improvements in work conditions. So they serve as a reserve army of labor, further depressing the wage market for American workers.

Not all immigrants are impoverished, unskilled workers. Harsh economic conditions in many nations tend to encourage the exodus of the younger and more educated without whom development is impossible. The result is "brain drain," as the rich nations siphon off the trained talent and skills of the poor nations, further adding to the differential between rich and poor countries and to the downward spiral of the Third World.

Othere injustices inflicted by the empire upon poorer nations come home to take a toll upon ordinary AMericans. For years now the poisonous pesticides and hazardous pharmaceuticals that were banned in this country have been sold by their producers to Third World nations where regulations are weaker or nonexistent. (In 1981, President Reagan repealed an executive order signed a half- year before by President Carter that would have forced exporters of such products to notify the recipient nation that the commodity was banned in the USA.) Wit an assured export market, these poisons continue to cripple workers in the American chemical plants where they are made, and then reappear on our dinner table sin the fruit, vegetables, meat, and coffee we import. These products also have been poisoning people in Third World countries, creating a legacy of sickness and death that is starting to backfire on us.

The absence of environmental protections throughout most of the Third World affects the health and welfare of Americans in orther ways (along with the well-being of other peoples and the earth's entire ecology). The chimical toxins and other industrial effusions poured into the world's rivers, oceans, and atmosphere by fast-profit, unrestricted multinational corporations operating in Asia, Africa, and Latin America, and the devastation of Third World lands by mining and timber companies and by agribusiness, are seriously affecting the quality of the air we all breathe, the water we all drink and the food we all eat. Ecology knows no national boundaries. The search for cheap farmland to raise cattle induces US companies to cut down rain forests throughout Central America. The nutrient-poor top soil is soon depleted and the land deteriorates from luch jungle into scraggly desert. Then the cattle-raisers move on to other forest. The tropical rain forests in Central America and the much vaster ones in the Amazon basis are being destroyed at an alarming rate and may be totally obliterated witin the next two decades. Over 25 percent of our prescription drugs are derived from rain forest plants. Rain forests are the winter home for millions of migratory North American songbirds--of which declining numbers are returning from Central America. Many of these birds are essential to pest control.

The dumping of industrial effusions and radioactive wastes also may be killing our oceans. If the oceans die, so do we, since they produce most of the earth's oxygen. Over half the world's forests are gone compared to earlier centuries. The forests are nature's main means of removing carbon dioxide from the atmosphere. Today, the carbon dioxide buildup is transforming the chemical composition of the earth's atmosphere, accelerating the "greenhouse effect" by melting the earth's polar ice caps and causing a variety of other climatic destabilizations. While the imperialists are free to roam the world and plunder it at will, we are left to suffer the immediate and long-term consequences.

Additonal ways that the empire strikes back home: the narcotics that victimize whole segments of our population are shipped in through secret international carels linked to past and present CIA operatives. Large-scale drug trafficking has been associated with CIA-supported covert wars in Cuba, Southeast Asia, and Central Aemrica. As of 1988, evidence was mounting linking the US-backed Nicaraguan counterrevolutionaries to a network of narcotics smuggling that stretched "from cocaine plantations in Columbia to dire airstrips in Costa Rica, to pseudo-seafood companies in Miami, and, finally, to the drug-ridden streets of our society.

The empire victimizes its own people in other grim ways. Thousands of Army veterans exposed to nuclear tests after World War II are now dying of cancer. Vietnam veterans who came back contaminated by the tons of herbicides spracyed on Indochina are facing premature death from cancer, while their children have suffered an abnormally high rate of birth defects (in common with the children of Vietnam). The US military has experimented on Americans with its chemical and bacteriological warfare methods. The Navy sprayed bacteria in San Francisco in 1950, an experiment that has since been implicated in the illness of several residents and death of at least one person. In 1955, the CIA conducted a biological warfare test in Tampa Bay area, soon after which twelve people died in a whooping cough epidemic. In the 1950s and 1960s, biological warfare tests were done in various cities including St. Louis and New York, using bacilli that were known to be infectious but supposedly not fatal.

Empire has a great many overhead costs, especially military ones, that must be picked up by the people. The Vietnam War cost $168.1 billion in direct expenditures for US forces and military aid to allies in Indochina. The war's indirect costs will come to well over $350 billion (for veterans benefits and hospitals, interest on the natinal debt, etc.). As the economist Victor Perlo pointed out, by the end of the war inflation had escalated from about 1 percent a year to 10 percent; the national debt had doubled over the 1964 level; the federal budget showed record deficits; unemployment had doubled; real wages had started on their longest decline in modern American history; interest rates rose to 10 percent and higher; the US export surplus gave way to an import surpolus; and US gold and monetary reserves had been drained. There were human costs; 2.5 million Americans had their lives interrupted to serve in Indochina; of these 58,156 were killed and 303,616 wounded (13,167 with a 100 percent disability); 55,000 have died since returning home because of suicides, murders, additictions, alcoholism, and accidents; 500,000 have attempted suicide since coming back to the USA. Ethnic minorities paid a disproportionate cost; thus while composing about 12 percent of the US population, Blacks accounted for 22.4 percent of all combat deaths in Vietnam in 1965. The New Mexico state legislature noted that Mexican Americans constituted only 29 percent of that state's population but 69 percent of the state's inductees and 43 percent of its Vietnam casualties in 1966.

Americans pay dearly for "our" global military apparatus. The cost of building one aircraft carrier could feed several million of the poorest, hungriest children in America for ten years. Greater sums have been budgeted for the development of the Navy's submarine rescue vehicle than for occupational safety, public libraries, and day care centers combined. The cost of military aircraft components and ammunition kept in storage by the Pentagon is greater than the combined costs of pollution control, conservation, community development, housing, occupational safety, and mass transportation. The total expenses of the legislative and judiciary branches and all the regulatory commissions combined constitute little more than half of 1 percent of the Pentagon's yearly budget.

Then there is the distortion of American science and technology as 70 percent of federal research and development (R&D) funds go to the military. Contrary to Pentagon claims, what the military produces in R&D has very little spin-off for the civilian market. About one-third of all American scientists and engineers are involved in military projects, creating a serious brain drain for the civilian sector. The United States is losing out in pricisely those industries in which miliaty spending is concentrated, to foreign competititors who are not burdened by heavily militarized economies. For instance, the US machine-tool industry once dominated the world market. But since so much of the industry has been absorbed by the military, foreign imports have increased six-folded and now account for more than a third of domestic civilian consumption. The same pattern has been evident in the aerospace and electronics industries, two other areas of concentrated military investment.

Benefits of military R&D to the civilian economy have been small and are declining as military technology becomes increasingly specialized and exotic. The rapid expansion of military research diverts rexources from the civilian economy and retards U.S. economic growth and competititiveness in world markets. The few industries that have benefited from military research would be far better off if the money had been spent entirely on commercial research.

The pattern of distorion will worsen if the Star Warriors have their way. The estimates for the Strategic Defense Initiative ("star wars") are stratospheric indeed, as much as several trillion dollars. The cost to the rest of the economy---as measured by the military aabsorption of scientific talent, the loss of export markets, and the competitive disadvantage of civilian R&D is even harder to calculate.

In his eight years in office President Reagan spent upwards of $2 trillion on the military. Sums of this magnitude crate an enormous tax burden for the American people who, as of 1988, carried a national debt of $2.5 trillion, or more than twice the debt of the entire Thrid World. Furthermore, Americans must endure the neglect of environmental needs, the decay and financial involvency of our cities, the deterioration of our transportation, education, and health-care systems, and the devastating effects of underempoyment upon millions of households and hundreds of communities.

In additon, there are the frightful social and psychological costs, the discouragement and decline of public morale, the anger, cynicism, and suffering of the poor and not-so-poor, the militarization and violence of popular culture and the potential application of increasingly authoritarian solutions to our social problems.

Poverty can be found in the rich industrial nations as well as the Third World. In the richest of them all, the United States, those living below the poverty level grew in the 1981-86 period from 24 million to almost 35 million, according to the government's own figures, which many consider to be underestimations---thus making the poor the fastest growing social group in the USA. In 1986, the House Select Committee on Hunger found that Kwashiorkor and marasmus diseases, caused by severe protein and calorie deficiences and usually seen only in Third World countries, could be found in the United States, along with rising rates of infant mortality in poor areas.

Those regions within the United States that serve as surpolus labor reserves or "internal colonies," such as Appalachia, poor Black and Latino communities, Eskimo Alaska, and Native American Indian lands, manifest sysmptoms of Third World colonization, including chronic underemployment, hunger, inadequate income, low levels of educaiton, inferior or nonexistent human services, absentee ownership, and extratction of profits form the indigenous community. In additon, the loss of skilled, higher- paying manufacturing jobs, traditionally held by White males, has taken its toll of working class White communites as well. So when we talk of "rich nations" and "poor nations" we must not forget that there are millions of poor in the rich nations and thousands of rich in the poor ones. As goes the verse by Bertolt Brecht:

There were conquerors and conquered. Among the conquered the common people starved. Among the conquerors the common people starved too.
As in Rome of old and in every empire since, the center is bled in order to fortify the periphery. The lives and treasure of the people are squandered so that patricians might pursue their far- off plunder.

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Michael Parenti has been a major voice among progressives for more than 30 years. He received his Ph.D from Yeale in 1964, and has since taught at several colleges and universities, including the State University of New York at Stony Brook and at Albany, Sarah Lawrence College, the University of Vermont, Brooklyn College of the City University of New York, and Howard University. The author of DEMOCRACY FOR THE FEW, POWER AND THE POWERLESS, and INVENTING REALITY:The Politics of the MAss Media-- -all published by St. Martin's PRess--Parenti regular appears on radio and television programs and lectures frequently at college campuses around the country.

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Michael Parenti, from The Sword and the Dollar / Economics of Imperialism / /