Friday, March 5, 2010

War and Inflation

A look at any debt graph from the last century will reveal a truth of life: Inflation follows war. In fact war is the ultimate example of "the broken window" theory where production is gratuitous and does not contribute to the growth of the society. At war the whole county is devoted to producing things that blow up. What economic model could possibly be worse. Every war the Americans have fought in the last century resulted in inflation and this effort in The Middle East will too.
But this has not always been true. War has been--for the winners--a very successful national investment. History is filled with examples of war as a tool for expansion and expropriation. For the more primitive, the enemy's fields feed the troops and the victims allow the soldiers sporting diversion. The more sophisticated extort from the defeated in reparations. But sometimes warriors hit the lottery: One Roman emperor found so much silver on a foray into eastern Europe that it alone supported the military and domestic efforts of Rome for the next generation. The conquistadors were a gold mine for Spain. But the Americans have broken new ground with war: They don't steal things from the defeated. In fact they usually give things to them. While the Russians were dismantling every plant in East Germany and sending it home to Mother Russia, the Americans were Marshalling money to rebuild West Germany into a shining example of the west and, incidentally, a fine economic competitor. Ditto the Japanese' cultural U-turn.
This is a new concept and the Americans are consistent. They invaded Kuwait, saved the Saudis (who hate them), rescued the Kuwaitis (who hate them) and saved the country's oil fields from the Iraqi sabotage and, as well, saved the planet from their smouldering pollution. In spite of their slavish almost pathological relationship with petroleum, the Americans stole not one drop but cheerfully returned it to their rightful owners, the nomadic tribe that happened to be there when it was discovered. They are now in an endless campaign against an enemy with the GDP of the Tutsi.
There must be some explanation for this behavior. Perhaps it is the American respect for private property. My advice is: Do not attack and kill people unless you are willing to steal from them.

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