Paul Krugman and Blindness About the Iraq War
By Dave Lindorff
Created Jul 9 2008 - 9:58am
In a New York Times column on Monday ("Behind the Bush Bust"), economics
columnist Paul Krugman mused on whether President George Bush could be
blamed for the nation's economic crisis. His conclusion was that, yes, to
some extent the crisis was Bush's fault, but he largely lets the current
administration off the hook, instead blaming Republican policies dating
back
10-15 years.
Oddly, Krugman does say that a key cause of economic problems has been
rising energy prices, but he then attributes these to "growing demand from
China and other emerging economies," and suggests that prices might have
been at least a bit lower had the US, after 9/11, adopted "higher gas
taxes
and fuel efficiency standards," a failing he attributes to Bush.
The gaping hole in Krugman's logic is the Iraq War, which the columnist,
incredibly, doesn't even mention. Yet clearly, the invasion and subsequent
war and occupation of Iraq which was purely the result of Bush/Cheney
machinations, has been a major, if not the major cause of oil price
increases.
By destroying Iraq's oil production, and by hindering much of Iran's
production (Iran, seen as an enemy by the US, has been frozen out of
capital
markets, blocking it from being able to modernize and even maintain its
own
huge oil infrastructure), and putting even Kuwait's and Saudi Arabia's
production at risk, the US war in Iraq has jeopardized about one-third of
the world's oil capacity--a fact not lost on oil speculators. Every rumor
of
a longer occupation or a wider war in the Middle East--especially a
possible
attack by the US on Iran--has pushed up oil prices further, as has every
attack on a pipeline.
It is no secret why crude oil, over the course of five years, has soared
four or five times in price. Demand has certainly not gone up by that
amount. It hasn't even doubled. What has happened is that the Middle East
has been thoroughly destabilized by American military action.
The rise in oil prices has been the major cause of the US dollar's
stunning
collapse, which in turn has limited the hand of the Federal Reserve, which
cannot risk lowering interest rates as much as it would like to stimulate
economic growth, for fear of further undermining the dollar. This in turn
has allowed the mortgage crisis to fester and grow worse.
At the same time, the massive amount of industrial production that has
gone
into the war effort--the building of planes, tanks, armored cars,
etc.--while perhaps producing some jobs, has been wholly inflationary in
its
effect, since this is production that cannot add to available goods and
services in the civilian economy. That means that there are more people
with
wages and salaries, chasing the same number of things to buy--a sure-fire
recipe for higher prices. Add to that the huge war budget, all funded by
debt, and you have even more downward pressure on the dollar.
Bush's and Cheney's war in Iraq has been, it should be clear, a huge
catastrophe for the US economy, and yet somehow Prof. Krugman managed to
miss it completely. You could read his column and not even know that the
country is and has been, for the past seven years, at war.
I'm not sure what to make of this oversight on Krugman's part. Is he
trying
to downplay the war, figuring it's soon to become a Democratic venture? Is
he unfamiliar with the argument that war is bad for economies?
One thing is clear: You cannot look at a nation at war and analyze its
economy without considering the impact of the war, which is what the
usually
astute Krugman has done here.
But let's make the point crystal clear, even if Krugman doesn't see it or
doesn't want to see it: The slumping US economy, and the cra****ng US
dollar,
which is heading towards Peso status as a trash currency, are clearly the
direct result of Bush/Cheney policies, aided and abetted by both Democrats
and Republicans in Congress, who have bought the story line that war is
good.
We will all be paying for this imperialist misadventure for years to come.
--
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"A little patience and we shall see the reign of witches pass over, their
spells dissolve, and the people recovering their true sight, restore their
government to its true principles. It is true that in the meantime we are
suffering deeply in spirit,
and incurring the horrors of a war and long oppressions of enormous public
debt. But if the game runs sometimes against us at home we must have
patience till luck turns, and then we shall have an op****tunity of winning
back the principles we have lost, for this is a game where principles are
at
stake."
-Thomas Jefferson
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