If the disciples of Milton Friedman don’t crush you, the military Keynesians will

Uh-oh, or: Things we weren’t paying attention to because we were chasing after phantom evildoers, running up a crushing national debt, buying overpriced real estate with dodgy loans, and watching Britney Spears go mad

Here is one pronouncement you will not hear George W. Bush make in his finally final SOTU address tonight: We are now living in a post-American world. Too bad too, because it would have been sweet karma to hear it come from the lips of Dubya, poster boy for the crony capitalism, corporatism uber alles, evangelical nation-building, neoconservative imperialism, and American exceptionalism that has brought us to where we are today: second place.

That’s right. The world's richest political entity, according to the Central Intelligence Agency's World Factbook, is now the European Union. China is a close third. Japan is fourth.

In “Going Bankrupt: The US’s Greatest Threat,“ Chalmers Johnson considers the devastating effect of the insatiable US military-industrial complex and of our country’s enormous defense budgets. Simply put: the US economy has been hollowed out; it’s a rotted out shell.

It was believed that the US could afford both a massive military establishment and a high standard of living, and that it needed both to maintain full employment. But it did not work out that way. By the 1960s, it was becoming apparent that turning over the nation's largest manufacturing enterprises to the Department of Defense and producing goods without any investment or consumption value was starting to crowd out civilian economic activities.

Historian Thomas E Woods Jr observes that, during the 1950s and 1960s, between one-third and two-thirds of all American research talent was siphoned off into the military sector. It is, of course, impossible to know what innovations never appeared as a result of this diversion of resources and brainpower into the service of the military, but it was during the 1960s that we first began to notice Japan was outpacing us in the design and quality of a range of consumer goods, including household electronics and automobiles. [emph added]

Oh, and the money that was spent and is being spent. Trillions and trillions and trillions of dollars.

According to the US Department of Defense, during the four decades from 1947 through 1987 it used (in 1982 dollars) $7.62 trillion in capital resources. In 1985, the Department of Commerce estimated the value of the nation's plant and equipment, and infrastructure, at just over $7.29 trillion. In other words, the amount spent over that period could have doubled the American capital stock or modernized and replaced its existing stock. [emph added]

And this why we’re pretty much a nation of poorly educated burger flippers who drive over unsafe bridges on our way to work: “The fact that we did not modernize or replace our capital assets is one of the main reasons why, by the turn of the 21st century, our manufacturing base had all but evaporated.”

What’s more, while the Bush administration grew ever more surly and arrogant and isolated -- insanely convinced that they could create their own reality -- the technocrats in Brussels just smiled politely and kept the EU economies humming along. At the same time, a surging China forged ties with Venezuela and Brazil, Saudi Arabia and Iran, Kazakhstan and Uzbekistan, and India and Pakistan, as well as Japan and smaller Southeast Asian countries.

But Lou Dobbs will tell you -- five times a week for a full hour -- that the problem with our economy is that pesky porous border with Mexico. And Larry Kudlow will tell you -- five times a week for a full hour -- that the problem with our economy is the capital gains tax and the death tax. And Cramer will tell you -- five times a week for a full hour -- that the problem with our economy is … well, I’m not sure because he‘s incoherent.