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&SENSE
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The Economics of Whitelash
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REAL WORLD ECONOMICS PAGE 12
COSTS OF
EMPIRE • Globalization and the End of the Labor Aristocracy
• Military Spending in the Swampland
• The Global Industrial Working Class
• U.S. Military Spending, Arms Industry, and Wars
• Is It Oil? The Issue Revisited
DOLLARS < From the Editors
&SENSE
REAL WORLD ECONOMICS
Costs of Empire
A t one time or another, almost the entire world has been colonized by one European pow-
or another European power. By the early 20th century, the British empire alone ruled near-
Dollars & Sense magazine explains the workings of ly one fourth of the world’s people. The map of the world, however, is no longer a mosaic of
the U.S. and international economies and provides
left perspectives on current economic affairs. It is
European colonial possessions. Most of the Americas became formally independent in the
edited and produced by a collective of economists, late 18th or early 19th centuries; most of Asia and Africa, in the mid to late 20th century.
journalists, and activists who are committed to social Formal colonial empires—characterized by the direct political and military control of the co-
justice and economic democracy.
lonial powers—gave way to informal empire over much of the world. Britain became the
the d&s collective dominant power in South America in the 19th century without recolonizing the entire region.
Betsy Aron, Nancy Banks, Autumn Beaudoin, The United States supplanted Britain and Spain as the dominant power in Central America
Sarah Cannon, Nina Eichacker, Peter Kolozi,
John Miller, Jawied Nawabi, Kevin O’Connell, and the Caribbean in the late 19th and early 20th centuries, with only some former colonies of
Alejandro Reuss, Dan Schneider, Zoe Sherman, European powers becoming formal colonies of the United States. By mid 20th century, the
Bryan Snyder, Chris Sturr, De’En Tarkpor
William Whitham, Jeanne Winner
United States had eclipsed Britain as the dominant power in the capitalist world.
The United States ruled its informal empire through a combination of military, political,
staff
and economic power. It plied local elites with promises of a cut of the riches extracted from
editors Alejandro Reuss, Chris Sturr
business and circulation manager De’En Tarkpor the “open veins,” to use the words of Uruguayan essayist Eduardo Galeano, of the dominat-
ed lands and peoples. It maintained a system of client governments reliable in their sup-
work study
Mary Rikka Guillen
pression of revolutionary political movements and maintenance of profitable conditions for
U.S. companies. And it asserted the right to intervene militarily in other countries—first
the d&s board
within its “sphere of influence” (or, even more demeaningly, “backyard”) of Latin America,
Gerald Friedman, John Miller,
Steven Pressman, Alejandro Reuss, and then across the world.
Abby Scher, Chris Sturr, De’En Tarkpor In her article “Globalization and the End of the Labor Aristocracy,” economist Jayati
associates Ghosh argues that imperialism has not disappeared, but changed shape. The direct military
Aziza Agia, Randy Albelda, Teresa Amott, conquest and control of economic territory by the great powers has given way (at least
Sam Baker, Marc Baldwin, Rose Batt, some of the time) to control through multilateral agreements and international institutions.
Rebecca Bauen, Phineas Baxandall,
Marc Breslow, Chuck Collins, James Cypher,
Economic territory may still mean the seizure of land, mines, or oil fields—but it also may
Laurie Dougherty, Laura Dresser, Janice Fine, mean privatization of public assets and services, or the extension of intellectual property
Ellen Frank, Tami J. Friedman, Sue Helper, Thea rights to new realms. Where the “labor aristocracy” of the imperialist countries once shared
Lee, David Levy, Arthur M acEwan, Mieke
Meurs, Marc Miller, Ellen Mutari, in the bounty of empire, the new incarnation of empire as “globalization” has helped grind
Amy Offner, Laura Orlando, Robert Pollin, away the incomes and status they once enjoyed.
Smriti Rao, Adria Scharf, Susan Schacht,
Chris Tilly, Ramaa Vasudevan,
Lest anyone think that the old hallmarks of dollar-gunboat diplomacy are now ancient
Thad Williamson history, Arthur MacEwan revisits a perennial question of U.S. foreign policy—“Is It Oil?”
design
MacEwan earlier addressed the question in the May/June 2003 issue of Dollars & Sense, in
layout Chris Sturr the wake of the U.S. invasion of Iraq (beginning the Second Iraq War). Today, he looks at the
front cover design Chris Sturr outcomes of the war in terms of control of Iraq’s oil reserves (especially timely given
printing Boyertown Publishing Trump’s statement, when speaking to the CIA in late January, that the U.S. should have kept
Dollars & Sense (USPS 120-730) is published bimonthly Iraq’s oil and “maybe we’ll have another chance”). MacEwan emphasizes—contrary to “con-
by the Economic Affairs Bureau, Inc., 89 South Street,
LL02, Boston, MA 02111, a non-profit corporation.
ventional wisdom,” even among progressive critics of U.S. foreign policy—that the primary
ISSN: 0012-5245. 617-447-2177. Fax: 617-447-2179. concern is not securing oil resources essential to American’s energy-hungry lifestyles, but
E-mail: dollars@dollarsandsense.org. Periodical postage
paid at Boston, MA, and additional mailing offices. rather securing control of those resources and profit for giant U.S.-based oil interests.
Speaking of profits for giant companies, James M. Cypher trains his sights on the corpora-
For subscription information, contact Dollars & Sense, 89
South Street, LL02, Boston, MA 02111. To subscribe, tions that profit directly from the United States’ gargantuan military spending. What Cypher
go to: www.dollarsandsense.org/subscriptions.Please calls the “Industrial-Military-Congressional Juggernaut” doles out defense dollars to a vast
allow 4–6 weeks for delivery.
complex of arms contractors and subcontractors—one nestled inside the next, like matryosh-
POSTMASTER: Send address changes to Dollars &
Sense, 89 South Street, LL02, Boston, MA 02111. All
ka dolls. Profits multiply as the markup on the inputs produced by a subcontractor become
articles copyrighted. Dollars & Sense is indexed in part of the costs of the contractor at the next level up—and to which it applies its own mark-
Sociological Abstracts, PAIS Bulletin, Alternative Press
Index, and The Left Index. Subscriptions: 1 year, $24.95; up. One arms system, meanwhile, may beget additional supporting systems—and additional
2 years, $39.95; institutions, $45/year; Canada, $33/ profits. The profiteering only stands to get more brazen, Cypher argues, under a Trump ad-
year; other foreign, $49/year (airmail), plus $20 for
institutions. Back issues available for $5.00 prepaid, or ministration that seems to be aiming for “more bucks for more and bigger bangs.”
on microfilm from UMI, 300 N. Zeeb Road, Ann Immanuel Ness shows us the opposite side of the equation. As capitalism penetrates
Arbor, MI 48106.
every corner of the world, it not only extracts profit but also expands the realm of capitalist
www.dollarsandsense.org relations of production—and with it the growth of the working class. While “first world”
workers have suffered mightily under conditions of deindustrialization, and are still strug-
gling to rebuild their capacity for struggle, “third world” workers are suffering under condi-
tions of subordinate industrialization and are, in various places, rising up with new
strength—as the formation of industrial unions and eruption of strike waves testifies.
An empire may have an impressive head of gold—but mind what its feet are made of. D&S
TH E R E GUL AR S
5 two cents
page 9 page 12
6 comment
Reflections on a Xenophobic Speech
7 comment
FEATUR ES DAPL Doesn’t Make Economic Sense
15 Globalization and the End of the Labor Aristocracy 9 making sense
J AY AT I G H O S H
Trump and the Wages of Whiteness
37 in review
Katherine J. Cramer, The Politics of
Resentment
Bully Pulpit Well, if that’s Abbott’s new stance, and in this sense the new regulation
Who would have thought that Texas’ he can get busy making phone calls to achieved its aim. “It has been success-
Republican governor, Greg Abbott, (former) contributors. According to ful at reducing acid rain pretty signifi-
whose campaigns have been bank- followthemoney.org, his top nine do- cantly and at improving air quality
rolled by big oil and financial donors, nors—six from the oil/gas industry from power plants,” Hendryx states in
would get his hackles up about corpo- and three from finance/insurance/ the interview, “There’s no question
rate involvement in politics? real estate—each gave $400,000 or about that.”
Well, it seems that, on February 14 at more to his last campaign (totaling However, decades later, we can
least, Abbott put catering to anti-trans over $4.5 million). It will take a little also see long-term negative effects.
prejudice ahead of ingratiating himself longer to contact the 80 business do- The cap on sulfur emissions led coal
to big-money interests, according to nors that gave at least $100,000 each companies to seek lower-sulfur coal,
reports in The Guardian (“Texas gover- (totaling over $16 million). found near the surface of mountains
nor warns NFL is ‘walking on thin ice’ No, we don’t really expect Abbott to in central Appalachia. The method
with bathroom bill threat,” Feb. 16, tell them off. He prefers the combination they used to get at that coal was
2017) and other news outlets. A of kissing up and punching down. – AR mountaintop removal. While “less
dangerous than underground min-
ing” for mine workers, more than 30
published studies, Hendryx argues,
show that mountaintop removal has
terrible health effects for people in
the towns surrounding the surface
mines. The air near mountaintop
removal sites has very small parti-
cles that lead to lung cancer, a prev-
alent cause of death in these areas.
Further, the nearby communities are
made up of middle- and lower-
income families in blue-collar min-
ing jobs. A seemingly positive policy
to improve air-quality in cities has
apparently had the unintended con-
sequence of benefiting relatively
wealthy urban communities at the
expense of poor rural communities.
Freakonomics’ market-friendly
National Football League (NFL) Dubner argues that “almost any regula-
spokesperson had indicated that the Coal and Class tion or piece of legislation will have
state’s proposed “bathroom bill”—re- In 1990, then-president George H.W. some unintended consequences.
quiring transgender people to use the Bush promoted an amendment to the Environmental regulation seems partic-
bathroom corresponding to the gender Clean Air Act, aiming to lower rain ularly susceptible.” But instead of con-
listed on their birth certificates—could acidity and reduce air pollution in U.S. cluding that lower-income communi-
cost the state the chance to host the cities. In an interview with ties in rural Appalachia would have
Super Bowl in future years. Abbott re- Freakonomics’s Stephen Dubner, been better off with less environmental
sponded with a rant on Fox News. “The Indiana University public-health profes- regulation, maybe we should conclude
NFL needs to concentrate on playing sor Michael Hendryx explains how he they would have benefited from more.
football and get the heck out of politics has spent the last decade identifying When one regulation closes a door for
.... We don’t care what the NFL thinks the unintended consequences of these corporations, they usually open a win-
and certainly what their political poli- amendments for poor communities. dow. The window of mountaintop-
cies are—because they are not a politi- The Clean Air Act Amendments of removal, with all its negative environ-
cal arm of the state of Texas or the 1990 were intended to improve air mental and public-health effects,
United States of America.” quality with a cap on sulfur emissions, should be slammed shut. – AB D&S
If you don’t like my term, come up Breger Bush shows, it’s more about
with something better. Please stop corporate capture of government to Protesters in Quebec,
using “neoliberalism.” promote ruling-class interests at the denouncing Premier Jean
—Mark Orton (via the D&S blog) Charest and his party as
expense of everyone else.) But the
“les néolibérals,” July 22,
system itself is very real and we need 2012.
The editors respond: a non-pejorative name for it.
This is something that we struggle You are surely right that the term Credit: Brian Lapuz,
with, but we have decided that it “neoliberalism” is off-putting to some CC BY 2.0 license.
makes sense to call the current form of people, and that’s why we’ve strug-
capitalism by the name that left econo- gled with whether to use it. But we
mists have tended to use, which is think the value of getting people fa-
“neoliberalism.” The term’s origins are miliar with the name that left econo-
academic, but non-academic publica- mists use for the current version (and
tions have been using it more and more era) of capitalism outweighs the
(for example, The Guardian, Salon, downsides of using it. D&S
originates is substantially dirtier than mono-nitrogen oxides, and air toxins its while socializing losses. Trump is
average—containing almost a quarter released during the burning of fossil bringing the same logic to the table,
more CO2 per barrel. fuels, are necessary to take into ac- socializing costs associated with pollu-
The CO2 content of the oil matters count. The benefits of GHG-abatement tion—and not counting them—while
tremendously. After all, it’s the leading policies will vary across carbon emis- privatizing profits from the pipelines.
greenhouse gas (GHG) contributing to sions sources due to the presence of Sure, there will be some tax revenue
global warming—the largest test we such co-pollutants. The U.S. National associated with the pipeline, an esti-
have collectively faced as a species. To Academy of Sciences has calculated mated $56 million annually in state and
think about this in economic terms, we that premature deaths attributed to local revenues divided between four
need to take a few more steps. While co-pollutant emissions from fossil fuel states, but that pales in comparison to
Energy Transfer Partners hired its own combustion impose a cost of $120 bil- the $4.6 billion in annual burden. The
economics firm to provide an economic lion a year in the United States, while economics don’t add up, but let us be
impact study of the pipeline, they left economists Brandon Taylor and James clear—the economics shouldn’t neces-
out crucial information. Substantial neg- Boyce find that the co-pollutants result sarily come first. People should have a
ative externalities from burning the fos- in the deaths of thousands per year. right to clean water and respect of their
sil fuels transported by the pipeline are OK, how about the jobs? Trump after ancestral lands. D&S
not priced into the analysis. While the all has vowed to bring back jobs—“a lot
private profits of the pipeline certainly M A R K P A U L is a postdoctoral associ-
look good, we are concerned about the
greater social costs associated with the
Putting Americans ate at the Samuel DuBois Cook Center
on Social Equity at Duke University. He
pipeline, particularly pollution. back to work holds a Ph.D. in economics from the
To calculate the cost, we need to University of Massachusetts Amherst.
think about the cost of CO2 emissions. through the fossil
The EPA and other federal agencies S O U R C E S : Brandon M. Taylor and James K. Boyce,
use the social cost of carbon (SCC) to fuel industry simply “Air Pollution Co-Benefits Associated with the Health
Climate and Family Security Act of 2014,” Political
estimate the climate benefits and costs
of rulemaking. The EPA’s estimate of doesn’t make sense. Economy Research Institute, November 2015 (peri.
umass.edu); “The Social Costs of Carbon,”
the SCC for 2015 is $36 (in 2007 dol- Environmental Protection Agency, 2017 (epa.gov);
lars). The SCC is an estimate of the eco- of jobs.” Not so fast. According to Energy “Federal Actions To Address Environmental Justice in
nomic damages associated with a Transfer Partners’ own estimates, the Minority Populations and Low-Income Populations,”
Federal Register, February 16, 1994; Harvey Siegelman,
small (one metric ton) increase in CO2 Dakota Access Pipeline will employ just
Mike Lipsman, and Dan Otto, “An Assessment of the
emissions in a given year (i.e., the dam- 40-50 permanent workers along the en- Economic and Fiscal Impacts of the Dakota Access
age caused by an additional ton of tire route. Surely those jobs matter for Pipeline in North Dakota, South Dakota, Iowa, and
carbon dioxide emissions). Applying the folks that get them. They’ll likely be Illinois,” Strategic Economics Group, Nov. 12, 2014
the SCC to the oil transferred via the well-paying jobs with benefits—the (economicsgroup.com); James K. Boyce, “Not Just for
Future Generations,” Dollars & Sense, March/ April 2016
pipeline provides the estimated $4.6 types of jobs the economy needs. But
(dollarsandsense.org); Ipsos Public Affairs, “Ipsos Poll
billion (2016 dollars) in annual burden with 7.5 million Americans currently un- Conducted for Reuters,” Ipsos, Jan. 17, 2017 (ipsos-na.
from pollution associated with the employed, and millions more underem- com); Mark Paul and Anders Fremstad, “The Dakota
pipeline. But won’t that simply be a ployed, this won’t make a dent. The pol- Access Pipeline imposes huge environmental and
burden on future generations? No. lution associated with the pipeline and health costs, creates a few jobs, and generates little
government revenue,” Duke University, Feb. 1, 2017
The case for climate policy is fre- the risk of contaminated drinking water,
(socialequity.duke.edu); National Research Council,
quently made on the grounds of the on the other hand, will. Putting “Hidden Costs of Energy: Unpriced Consequences of
impacts of the current generation’s ac- Americans back to work through the Energy Production and Use,” National Academies Press,
tions on future generations (or “inter- fossil fuel industry simply doesn’t make October 2009 (econ.umd.edu); Robert Pollin, Greening
generational equity”); but the impacts sense. According to research by econo- the Global Economy, MIT Press, 2015; “Standing Rock
tribe says it will take legal action against Dakota pipe-
of some people’s actions on other peo- mist Robert Pollin of the Political
line decision,” Reuters, Jan. 31, 2017 (reuters.com); “Let
ple of the same generation (or “intra- Economy Research Institute, investing in them eat pollution,” The Economist, Feb. 8, 1992 (econo-
generational equity”) is also critical. The a green-energy economy provides three mist.com); “Toxic 100 Air Polluters Index (2016 Report,
immediate net benefits from climate times more jobs than if the money were Based on 2014 Data),” Political Economy Research
policy for people living in polluted com- invested in the fossil fuel economy. Want Institute, 2016 (peri.umass.edu); “Dakota Access, LLC
Crude Oil Pipeline Project Iowa Informational Meetings,”
munities must be taken into consider- jobs? How about a green New Deal?
Energy Transfer Partners November 18, 2014 (energy-
ation. Harmful co-pollutants, such as The financial crisis and ensuing transfer.com); “Unemployment Level” FRED Economic
particulate matter, sulfur dioxide, banking bailouts ensured private prof- Data, January 2017 (fred.stlouisfed.org).
Other times, the structures of racial tion is constructed to clean up the tox-
inequality, through what Albelda and ins where white people live and dump
Drago call the “class struggle effect,” them where black and brown people
transfer income from all workers, in- live. (See Klara Zwickl, James K.
cluding white workers, to the owners Boyce, and Michael Ash, “Mapping
of capital. Racism hides the real shared Environmental Injustice” (November/
interests of workers across racial lines December 2015).) So the social wage—
Workers divided along and stands in the way of solidarity. all that public support for housing and
racial lines are less able Workers divided along racial lines are schooling and so on—came bundled
less able to organize collective actions with a psychological wage captured
to organize collective such as union organizing drives and through racial exclusivity. And we’ve
actions such as union strikes. (Du Bois considered this the seen how fiercely that psychological
more important implication of the psy- wage has been defended when there
organizing drives chological wage of whiteness.) Since are efforts to unbundle it from the so-
racial division weakens the position of cial wage. Efforts at school and residen-
and strikes. Du Bois workers as a class, all workers are paid tial integration have often been met
considered this the more less than they might otherwise—to with extraordinary levels of violence.
the benefit of employers. White work-
important implication of ers derive some compensation for the Erosion of the Three Wages
the psychological wage lost money wages (forgone because of What makes a wage worth some-
racial division) in the form of a psycho- thing? The wages of labor paid in
of whiteness. logical wage (created by racial divi- money are worth something because
sion). Nonwhite workers, meanwhile, we are all confident that the money
get attacked on both fronts. In most will be accepted elsewhere as pay-
times and places both things, job com- ment for purchases. One of the fights
petition effects and class struggle ef- of the early 20th century was
fects, are happening at once. eliminating company towns and pay-
Or consider the social wage and the ment in company scrip, ensuring that
psychological wage. Social Security payment to workers would be made in
was designed at its inception to cover a form that would be accepted else-
occupations performed by white peo- where. Social wages paid in money or
ple. The major jobs disproportionately vouchers are, similarly, worth some-
done by black people, domestic work thing because they can be exchanged
and agricultural work, were excluded as needed—e.g., the mortgage inter-
from the system when it was estab- est tax credit is money a recipient can
lished in the 1930s. U.S. housing policy then spend on anything, SNAP bene-
was very deliberately crafted to subsi- fits are accepted as payment for food
dize the housing of white people living at the supermarket. Other social wag-
in homogenously white neighbor- es are worth something because they
hoods. Not only were the federal mort- directly provide something of use—
gage guarantees that supported the the neighborhood park directly en-
construction of developments such as hances the neighbors’ quality of life.
››
Levittown, N.Y., not available to black Just as money can only be worth
W.E.B. Du Bois,
homebuyers, they were not even avail- something to you if you are confident
circa 1911.
National Portrait able to white homebuyers who chose that other people will recognize your
Gallery, to buy in proximity to black neighbors. money as having worth, whiteness
Washington, D.C. Public schools were originally designed can only be worth something if it is
to educate white children pretty much widely recognized by others as being
Credit: Addison N.
exclusively, and the combination of worth something. What system of cir-
Scurlock, public
domain. residential segregation and local culation validates that coin in which
school funding keeps access to quality the psychological wage is paid?
education highly unequal to the pres- Neoliberalism has given us stagnat-
ent. Environmental protection/sanita- ing money wages, it has demolished
D
Donald Trump’s surprise win,” by Laur
onald Trump’s election victory a Meckler, Wall Street Journal, Nov.
9, 2016
was “a whitelash against a chang-
“Donald Trump’s Victory Was Built
ing country,” Van Jones, black activist on Unique Coalition of White Voters,”
Nicholas Confessore and Nate Cohen, by
and former Obama administration New York Times, Nov. 9, 2016.
green jobs czar, told a CNN election-
“‘Forgotten’ white vote powers Trum
night audience. p to victory: Campaign unleashed prev
seen level of vitriol in US politics,” iously un-
His analysis was hardly unusual. The by Shawn Donna, Financial Times,
Nov. 9, 2016.
headlines of leading newspapers
made much the same point the next
morning. They attributed Trump’s vic- But it’s not possible to use exit-poll
tory in large part to “white voters,” “a data to tease out who voted for A Profile of Trump’s Supporters
coalition of unique white voters,” or a Trump in a way that gets at the inter- A Gallup telephone survey of 125,000
“forgotten white vote.” section of race and income. For in- adults conducted from July 8, 2015,
But the story of the presidential elec- stance, a majority of lower-income through October 11, 2016, tells us
tion is far more complex than these voters (with incomes less than much more about who supported
headlines suggest. To begin with, the $50,000) favored Clinton, not Trump. Donald Trump than what can be gar-
popular vote went to Clinton, not Edison Research doesn’t separate nered from exit-poll data. Using data
Trump. Nor should the election results these numbers by race. Surely minori- from that survey, Gallup economists
be read as a rebellion of the economic ties, the majority of whom live in Jonathan Rothwell and Pablo Diego-
dispossessed, for Trump supporters households with incomes less than Rosell isolate the factors that would
were on average better off, not worse $50,000, cast many of those Clinton lead someone to view Trump favorably.
off, than those who opposed him. votes. Nonetheless, this seems to fly Rothwell and Diego-Rosell found
Perhaps the most significant factor in the face of attempts to attribute “mixed evidence” that economic dis-
characterizing those who voted for Trump’s victory to support from the tress had motivated Trump’s support,
Trump was that they were people who economically insecure. and concluded, “Trump’s popularity
saw their relative positions in society What’s more, Trump’s percentage of cannot be neatly linked to economic
declining or under threat of declining. the white vote was no higher than hardship.”
What best explains the “whitelash” Romney’s had been in 2012. To begin with, by standard eco-
of November 8 is the changing eco- Admittedly, Trump did much better nomic measures Trump supporters
nomic fortunes of white men without among low-income voters and whites are doing better than those who op-
a college degree relative to women without a college degree than Romney posed him. The average (or mean)
and to minorities, and eroding race had. Washington Post Wonkblog au- household income of Trump support-
and gender privilege. thor Jeff Guo estimated that for the ers was $81,898—about $2,600 above
counties of nine “rustbelt” states the national average—compared
Who Voted for Whom? (Illinois, Indiana, Iowa, Kentucky, with $77,046 for those who didn’t
Most every television network and ma- Michigan, Ohio, Pennsylvania, West support him—about $2,200 below
jor newspaper provided an instant anal- Virginia, and Wisconsin) each 10% the national average. Trump support-
ysis of the presidential election based increase in the population of non- ers were less likely to be unemployed
on exit-poll data collected by Edison college educated whites correlated to and less likely to be employed part-
Research. From those data come the a 3-percentage-point increase in time than those who opposed Trump.
voting patterns we are all undoubtedly Trump’s winning margin. Finally, while In addition, Trump’s support was
familiar with by now: whites, men, and Clinton carried union households, higher than Clinton’s among skilled
those without a college degree voted Trump ate into the Democrats’ advan- blue-collar workers (in jobs such as
for Trump by large margins; white men tage among them, reducing it from 18 construction, installation, mainte-
and whites without a college degree, by percentage points in 2012 to eight nance and repair, and transportation)
even larger margins. percentage points in this election. that tend to pay better than service
By 2014 much had changed. White by political intervention. If you are look-
men no longer held the majority of ing for an underlying economic reason
those managerial and professional jobs for the “whitelash” of November 8, the
and just 15% of those jobs went to non- relative decline of these white men and
Today even white college educated Whites. White women the prospect of being left no better off
held 29% of those jobs, and minorities than others with the same years of edu-
cultural icons hold held another 25%. And by 2014 over a cation has much to recommend it.
third of employees (35.2%) worked in
less privileged managerial and professional jobs, more What Did Their Votes Get Them?
than double the 16.1% in 1960. Over Even if the Trump administration follows
positions than in the that period, the share of skilled blue- through on the nationalist rhetoric of his
past. A John Wayne collar and factory jobs dropped from
36.1% to just 16.5% of jobs. On top
campaign, delivering the promised pro-
tectionist trade policies and deporting
imitator hawked of that, the earnings of a white male
factory worker with a high school diplo-
immigrant workers will do little to im-
prove the lot of white men without a
beer in commercials ma no longer exceeded those of an college degree. Neither will Trump’s poli-
African-American man or a white wom- cies restore the social mobility that will
during last year’s an in a managerial or professional job enable their children to get the good
with a college degree. As of 2014, their jobs his supporters no longer hold, or
Super Bowl, but earnings were less than three-fifths of counteract their stagnant wages.
the earnings of white women and What will make white men without
Beyoncé starred in African American men who had gradu- a college education, and most workers,
the halftime show. ated from college and who worked in
managerial or professional jobs.
better off? Universal health care, af-
fordable higher education, more ful-
In absolute terms, white men re- some Social Security benefits, and full-
main better off than their parents and employment policies that will push up
grandparents had been. Many more their wages—the very policies advo-
now have college degrees, although cated by the Sanders campaign.
most still do not. What’s more, in 1960, Collective action in the workplace and
60% of white men without a college beyond—uniting people across lines
degree had also not finished high of race, nationality, ethnicity, and gen-
school. By 2014 that number was der, rather than restoring gender and
down to just 8%. In addition, the share race privilege—holds the promise to
of white men in manual and low-skill make that happen. D&S
sales and service jobs declined.
Moreover, white men—including J O H N M I L L E R is a professor of eco-
white men without college degrees— nomics at Wheaton College and a mem-
still earn more and have better jobs ber of the Dollars & Sense collective.
than African Americans, Hispanic men,
S O U R C E S : Jonathan Rothwell and Pablo Diego-
and white women with the same level
Rosell, “Explaining Nationalist Political Views: The Case
of education. of Donald Trump,” Gallup, Draft Working Paper, Nov. 2,
But that’s cold comfort for white
››
Beyoncé Giselle
men without a college degree. They no Favorable Views of Trump,” Gallup, July 22, 2016; Jeff
Knowles-Carter longer hold the privileged positions Guo, “Yes, working class whites really did make Trump
win. No, it wasn’t simply economic anxiety,”
performs at the that similarly educated white men held
Washington Post, Nov. 11, 2016; Max Ehrenfreund and
Super Bowl 50 in the past. College-educated white Jeff Guo, “A massive new study debunks a widespread
halftime show, women, African Americans, and theory for Donald Trump’s success,” The Washington
Feb. 7, 2016.
Hispanics of both genders now hold Post, Wonkblog, Aug. 12, 2016; Skye Gould and
Credit: Arne Papp, many good jobs that had been held by Rebecca Harrington, “7 charts show who propelled
Trump to victory,” Business Insider, Nov. 10, 2016; James
CC BY 2.0 white men with a college degree in the
Kwak, “The Baseline Scenario,” Narratives, Nov. 10, 2016;
past. Moreover, many people see this Stephen J. Rose, Bentley University, “The Economics of
change as having been brought about White Male Working Class Anger,” Nov. 10, 2016.
T W E N T Y- F I R S T C E N T U RY I M P E R I A L I S M H A S C H A N G E D I T S F O R M .
In the 19th century and the first half of the 20th century, it was explicitly related to colonial control;
in the second half of the 20th century it relied on a combination of geopolitical and economic control deriv-
ing also from the clear dominance of the United States as the global hegemon and leader of the capitalist
world (dealing with the potential threat from the Communist world). It now relies more and more on an
international legal and regulatory architecture—fortified by various multilateral and bilateral agreements—
to establish the power of capital over labor. This has involved a “grand bargain,” no less potent for being
implicit, between different segments of capital. Capitalist firms in the developing world gained some mar-
ket access (typically intermediated by multinational capital) and, in return, large capital in highly devel-
oped countries got much greater protection and monopoly power, through tighter enforcement of intel-
lectual property rights and greater investment protections.
These measures dramatically increased the bargaining power of capital relative to labor, globally and
in every country. In the high-income countries, this eliminated the “labor aristocracy” first theorised by
the German Marxist theorist Karl Kautsky in the early 20th century. The concept of the labor aristocracy
derived from the idea that the developed capitalist countries, or the “core” of global capitalism, could
extract superprofits from impoverished workers in the less developed “periphery.” These surpluses could
be used to reward workers in the core, relative to those in the periphery, and thereby achieve greater
social and political stability in the core countries. This enabled northern capitalism to look like a win-
win economic system for capital and labor (in the United States, labor relations between the late 1940s
and the 1970s, for example, were widely termed a “capital-labor accord”). Today, the increased bargain-
ing power of capital and the elimination of the labor aristocracy has delegitimated the capitalist system
in the rich countries of the global North. ››
MARCH/APRIL 2017 l DOLLARS & SENSE l 15
THE END OF THE LABOR ARISTOCRACY Instead, the United States looks significantly
weaker both economically and politically, and
Increasing inequality, the decline in workers’ there is less willingness on the part of other coun-
incomes, the decline or absence of social protec- tries (including former and current allies, as well as
tions, the rise of material insecurity, and a grow- those that may eventually become rival powers) to
ing alienation from government have come to accept its writ unconditionally. On the other hand,
characterise societies in both developed and the imperial overreach that was so evident in the
developing worlds. These sources of grievance Gulf Wars and sundry other interventions, in the
have found political expression in a series of Middle East and around the world, continues
unexpected electoral outcomes (including the despite the decreasing returns from such interven-
“Brexit” vote in the UK and the election of tions. This continued through the Obama presi-
Trump in the United States). The decline of the dency, and it is still an open question whether the
labor aristocracy—really, its near collapse—has Trump presidency will lead to a dramatic reduction
massive implications, as it undermines the social of this overreach (“isolationism”) or merely a
contract that made global capitalism so success- change in its direction.
The latter point is important, because there is
The slogans that recently resonated with the little domestic political appetite in the United
States for such imperial adventures, due to the
U.S. electorate, such as that of “making high costs in terms of both government spending
and the loss of lives of U.S. soldiers. The slogans
America great again” were somewhat self- that recently resonated with the U.S. electorate,
such as that of “making America great again” were
contradictory—looking towards an imagined in that sense somewhat self-contradictory—look-
past in which the American Dream could be ing towards an imagined past in which the
American Dream could be fulfilled relatively eas-
fulfilled relatively easily (at least for some), ily (at least for some), without recognising that
this was predicated upon the country’s global
without recognising that this was predicated hegemony and far-flung empire.
The global context of imperialism is a complex
upon the country’s global hegemony one, in which the contours shift constantly.
Recent political changes in various countries of
and far-flung empire.
the North have meant that global strategic alli-
ances are also much more fluid than at any time
over the past half century. The most talked-about
current examples are the changing attitude of the
ful in the previous era. It was the very foundation Trump administration towards the United States’
of political stability and social cohesion within traditional enemy, Russia, and the complicated
advanced capitalist countries, which is now international politics emerging in Europe, with
breaking down, and will continue to break down the Brexit vote and the emergence of right-wing
without a drastic restructuring of the social and political forces in a number of other European
economic order. The political response to this countries. But it is also evident in other parts of
decline has been expressed primarily in the rise of the world, notably in China, where traditional
right-wing, xenophobic, sectarian, and reaction- friends and foes are no longer so easily demar-
ary political tendencies. cated. Yet there is another sense in which the fun-
damentals of the imperialist process have not
21st Century Imperialism changed, even as the forms in which they are
The early 21st century has been a weird time for expressed are altered.
imperialism. On the one hand, the phase of “hyper- Defining imperialism broadly, as Lenin did—
imperialism”—with the United States as the sole as the complex intermingling of economic and
capitalist superpower, free to use almost the entire political interests, related to the efforts of large
world as its happy hunting ground—is over. capital to control economic territory—it’s clear
Falling Incomes.
In 25 advanced economies, 65-70% of households (540-580 million people) “were in segments of the income distribu-
tion whose real incomes were flat or had fallen” between 2005 and 2014. By contrast, between 1993 and 2005, “less
than 2 percent, or fewer than ten million people, experienced this phenomenon.”
In Italy, a whopping 97% of the population had stagnant or declining market incomes between 2005 and 2014. The
equivalent figures were 81% for the United States and 70% for the United Kingdom.
The worst affected were “young people with low educational attainment and women, single mothers in particular.”
Today’s younger generation in the advanced countries is “literally at risk of ending up poorer than their parents,” and in
any case already faces much more insecure working conditions.
These declines occurred “despite rising productivity, suggesting a disconnect between productivity and incomes.”
Productivity gains were either grabbed by employers or passed on in the form of lower prices to maintain competitiveness.
Declining wage shares are widely seen as results of globalization and technological changes, but state policies and
institutional relations in the labor market matter. According to the McKinsey report. “Swedish labor policies such as con-
tracts that protect both wage rates and hours worked” resulted in ordinary workers receiving a larger share of income.
Countries that have encouraged the growth of part-time and temporary contracts experienced bigger declines in
wage shares. According to European Union data, more than 40% of EU workers between 15 and 25 years have insecure
and low-paying contracts. The proportion is more than half for the 18 countries in the Eurozone, 58% in France, and
65% in Spain.
The other side of the coin is the rising profit shares in many of these rich countries. In the United States, for exam-
ple, “after-tax profits of U.S. firms measured as a share of the national income even exceeded the 10.1 percent level last
reached in 1929.”
Policy Matters
Government tax and transfer policies can change the final disposable income of households. Across the 25 countries
studied in the McKinsey report, only 20-25% of the population experienced flat or falling disposable incomes.
In the United States, government taxes and transfers turned a “decline in market incomes for 81 percent of all income
segments … into an increase in disposable income for nearly all households.”
Government policies to intervene in labor markets also make a difference. In Sweden, the government “intervened to
preserve jobs, market incomes fell or were flat for only 20 percent, while disposable income advanced for almost everyone.”
In most of the countries examined in the study, government policies were not sufficient to prevent stagnant or de-
clining incomes for a significant proportion of the population.
Effects on Attitudes
The deteriorating material reality is reflected in popular perceptions. A 2015 survey of British, French, and U.S. citizens
confirmed this, as approximately 40% “felt that their economic positions had deteriorated.”
The people who felt worse-off, and those who did not expect the situation to improve for the next generation, “ex-
pressed negative opinions about trade and immigration.”
More than half of this group agreed with the statement, “The influx of foreign goods and services is leading to do-
mestic job losses.” They were twice as likely as other respondents to agree with the statement, “Legal immigrants are
ruining the culture and cohesiveness in our society.”
The survey also found that “those who were not advancing and not hopeful about the future” were, in France, more
likely to support political parties such as the far-right Front National and, in Britain, to support Brexit.
Note: The report is based on a study of income distribution data from 25 developed countries; a detailed dataset with more information on 350,000 people from France,
Italy and the United States and the UK; and a survey of 6,000 people from France, the United Kingdom and the United States that also checked for perceptions about
the evolution of their incomes.
Source: McKinsey Global Institute, “Poorer than Their Parents? Flat or falling incomes in advanced economies,” July 2016 (mckinsey.com).
T he newly emerging economies are often thought to be more significant than they are, in part, because many analy-
ses compare incomes across different countries based not on nominal exchange rates, but rather on purchasing
power parity (PPP) exchange rates. PPP exchange rates seek to establish the relative purchasing power of each curren-
cy in terms of prices of a common basket of commodities.
The results, however, can be quite dubious, as they are based on the price of a basket of representative consump-
tion goods in the United States, which may not be so relevant to consumption elsewhere—especially not the poor in
the developing world. The basket of goods is unchanging over time, even though consumption patterns tend to shift
with technological change and evolving preferences. PPP exchange rates are also notoriously imperfect because of the
infrequency and unsystematic nature of the price surveys that are used to derive them.
In general, the countries where the PPP exchange rate is much higher than the nominal exchange rate are low-in-
come countries with low average wages. It is precisely because a significant section of the workforce receives very low
compensation that goods and services are available more cheaply than in countries where the majority of workers re-
ceives higher wages. Using PPP-modified GDP data may miss the point, by treating the poverty of the majority of wage
earners in an economy as an economic advantage.
O N S E P T E M B E R 1 1 , 1 9 4 1 , T H E U . S . WA R D E PA RT M E N T C O M M E N C E D
construction of its new headquarters, the Pentagon: With each of its five sides running the length of
three football fields, encompassing 4 million square feet of work space, it remains even today the world’s
››
largest office building. Placing it where President Roosevelt wanted meant that the edifice would be con- U.S. Geological
structed on the Potomac River’s flood plain, largely over a swamp in an area known as Hell’s Bottom, Survey
requiring the sinking of 41,192 pilings—approximately one piling for each person to be housed in the topographical
map covering the
Pentagon—to keep the giant, fortified edifice from sliding into the swamp. area around the
President Trump has repeatedly boasted of his intentions to drain the Pentagon swamp—as one commen- Pentagon in
tator put it, “taking down the Military-Industrial Complex one tweet at a time”—emphasizing the need to Virginia, soon
alter the long-known propensity of the U.S. Department of Defense (DoD) for coddling military contractors after the road
network was built.
and facilitating the cozy, “revolving door” employment opportunities provided for high-ranking retired mili- Mapped 1913-
tary officials. During the 2016 presidential campaign, he committed his administration “to conducting a full 1915, revised
audit of the Pentagon” to eliminate duplicate personnel and to uncover profligate contracting procedures. 1941-1942, edition
of 1945. Public
But is there reason to expect that the increasingly secret, increasingly remote, increasingly unanalyzed domain.
National Security State—the Pentagon’s “State within the State”—will experience a major reconfiguration?
This is the deeply embedded State which exercises its “relative autonomy” through the coordination of the
National Security Council (NSC), the chairman of the Joint Chiefs of Staff, and the 17 intelligence agencies
which define and project global U.S. military power. The Trump administration will operate the NSC in an
unprecedented manner, with the President’s top political advisor, “alt-right” militarist Stephen Bannon, as a
voting member of the key Principals Committee of the Council. The Principals Committee exercises sweep-
ing powers over the nature and scope of U.S. foreign policy decisions by framing and recommending strata-
gems to the President. That the Industrial-Military-Congressional Juggernaut (IMCJ)—which constitutes the
institutional base on which the National Security State was erected—
EMPIRE
tion defies credibility. If anything, there is every reason to anticipate that
in the Pentagon’s lucrative and murky wetlands, wherein the giant
“prime” military contractors and their subcontractors dwell, the swamp
will increase in depth and opacity. ››
MARCH/APRIL 2017 l DOLLARS & SENSE l 25
M I L I TA R Y S P E N D I N G More broadly, the Pentagon’s Command,
Control, Communications, Computers, Intelligence,
Plumbing the Depths Surveillance and Reconnaissance (C4ISR) programs
Like so many of the details surrounding the IMCJ, have historically overrun their scheduled costs by
the annual total number of contracting firms cannot 67%, space programs by 89%, and drone programs
be accurately determined. The fact that a single by 109%. Meanwhile, the Lockheed Corporation
“multiple awards” contract—issued by the Navy on has spread F-35 production activities through 35
June 20, 2016—went to 608 firms indicates that a U.S. states, claiming that the vast project now main-
very large number of U.S. corporations are directly tains, directly and indirectly, 146,000 jobs. Even if
tied to the IMCJ. The total number of U.S. corpo- the administration cuts back a bit on the rate of price
rations feeding at the Pentagon trough—directly or increases for the planes, this will be no more than a
indirectly—is unknown, because the DoD does not Presidential showman tactic—the small sums saved
track the thousands of subcontractor firms. The will be redirected toward other programs.
Defense Contract Management Agency stated that
in 2014 they were supervising over 20,000 direct (or The Secret $100 billion B-21 Raider
“prime”) contractors, meaning that the total num- More important at this juncture, in terms of public
ber of firms involved could easily be around 60,000. policy, are the contractors’ current marketing tac-
Notably, there are military contractor “enclaves,” tics. Combined with the military doctrines and
such as San Diego, Calif., where $45 billion in mili- strategic policies pursued by the National Security
tary spending in 2016 functioned, according to State, they set the present and future course of the
economist Lynn Reaser, as the “most important and Pentagon steamroller. For one example, there is the
largest economic catalyst,” accounting for 20% of case of the forthcoming B-21 Raider, a follow-on
the regional economy. Yet a review of the daily con- contract to the B-2 stealth bomber.
tracts issued by the DoD clearly demonstrates that The stealthy, drone-toting, missile-laden, long-
contracts were spread across almost all of the United range B-21 Raider nuclear bomber project was
States in 2016. quietly announced by the Pentagon on October
In the 1970s and early 1980s, a steady stream of 27, 2015: Virginia-based Northrop Grumman
research focused on how the IMCJ functioned, and Corporation received the “prime” contract award—
for whom. In the post-9/11 era of constant war, crit- with an estimated full-development price of $100
ical scrutiny of the IMCJ (save the occasional reveal- billion (including all support systems) according to
ing broadside) has waned. A culture increasingly the Senate Arms Services Committee chairman.
marked by militarism—the glorification of or Meanwhile, the anticipated delivery date (rumored
unconscious deference to all things military—has to be 2025), as well as the quantity (thought to be
created a new ideological climate wherein an analyt- 100, but maybe 150), both remain unknown to
ical critique of U.S. military power projection and U.S. citizens.
the economic and structural role of the National More than a year later, little if anything is known
Security State is most unwelcome. Even when it regarding this fantastic artifact except that steps
does occur, it is largely overlooked. toward development and production had been initi-
However, once in a while some outsized travesty ated by several subcontractors, including Janiki
perpetuated by the IMCJ briefly draws critical Industries near Seattle—a location represented by
attention. Over the past 15 years, the $400 billion members of important military-related subcommit-
F-35 fighter plane contract has become the stan- tees in the Senate and House. Likewise, production or
dard reference point used by critical observers, engineering has begun in several other states or con-
including many on the left, to illustrate the IMCJ’s gressional districts represented by powerful members
affinity for cost overruns. In December 2016, of the armed services committees: major subcontrac-
then-president-elect Trump unexpectedly dispar- tors in these states/districts include Orbital ATK
aged the F-35 contract and, in February 2017, he (Ohio), BAE Systems (New Hampshire), Pratt &
wrangled a promise from its contractor, Lockheed Whitney (Connecticut), GKN Aerospace (Missouri),
Martin Corporation, to push the price down from Rockwell Collins (Iowa), and Spirit Aerosystems
an astronomical $102 million per plane to a merely (Kansas). For Northrop Grumman, the B-21 con-
elephantine $94.6 million. tract is particularly attractive because the company
Profit Pyramiding
“C ost plus” means, in the first instance, that “profit pyramiding” will be rampant: the pyramiding process allows the third
tier contractors to pass their profits through as “costs” to the second tier, while the second tier contractors do the
same, on up to the “prime” contractor on the B-21 (Northrop Grumman). Thus, should the Pentagon agree to a “reasonable”
profit margin of perhaps 5% over cost on widget X, which is an input to widget Y, which is an input to widget Z, Northrop
can then turn around and incorporate all three widgets into its costs (including the subcontractors’ profits at each stage),
finally tacking on its own approved markup of 5%. Ignoring the impact of all-but-inevitable cost overruns, a “modest” ap-
proved profit margin of 5% on the $100 billion contract will not amount to $5 billion, but rather to $15 to 20 billion.
The difference between the acknowledged rate of profit which Northrop Grumman will show and the actual rate
(which will include all that gleaned by the subcontractors) will be obscured by the Pentagon, never to be known by
the U.S. taxpayers—who have long been conditioned to accept the Industry-Pentagon precept that the idea of “war
profiteering” is a crank fantasy. Consider, finally, that “profit”—according to the standard economics textbook explana-
tion—is the “reward” for the risks that successful competing firms must face. By definition, “cost-plus” contract have no
risks; rather, the contractor is rewarded for all so-called “reasonable” cost allowances, however conjured.
››
reserved for civilian leaders: these include the necessitate hundreds of billions to operate.
appointment of Generals James Mattis as Official U.S. Air Force
Operation would likely require establishment Artist Rendering of
Secretary of Defense, H.R. McMaster as the of a new Unified Combat Commander in the Northrop
National Security Advisor, Keith Kellogg as Chief ’s (CINCs) mission area for Space. Grumman B-21
the NSC’s Chief of Staff, and John Kelly to Currently there are six area Combat “Raider”Heavy
Bomber (February
head the Department of Homeland Security, Commands, such as the new U.S. Africa 2016). Public domain.
the third largest cabinet department. Holding Command and the U.S. Central Command
a military history Ph.D. degree from the (covering the Middle East).
University of North Carolina, counterinsur-
3. A massive build-up of ships deployed by
gency expert McMaster (known as the
the U.S. Navy—from 272 to 350—will cost
“Inconoclastic General”) seeks to expunge the
an estimated $120 billion (excluding cost
Vietnam Syndrome. Arising from the U.S.’s
overruns). This is considered the largest single
prolonged (1954-1975) Southeast Asian mili-
expenditure of the anticipated Trump build-
tary debacle, the term encapsulates the pro-
up and would constitute a major national jobs
found reluctance of the U.S. citizenry to send
creation program to revitalize an infrastruc-
military personnel into deadly combat, and to
ture of naval construction shipyards, depots,
only support engagement-at-a-distance by
and auxilary facilities. The Navy is charged
sanctioning a minimal fighting force backed
with sustaining its presence in 18 maritime
by a maximum level of advanced military
regions where, ostensibly, the U.S. has “critical
technologies—such as “network-centric war-
national interests.”
fare” operations. Based on his interpretation
of the Vietnam War and experience in the Iraq 4. An increase of 90,000 active duty mili-
military campaigns, McMaster strongly advo- tary personnel for the U.S. Army will require a
cates prioritizing unfiltered military expertise 20% increase in the Army’s budget, or about
(rather than the views of civilian advisors mes- $118 billion over the next four years, using
merized by “shock and awe” visions of techno- current per soldier costs as the basis of the
cratic warfighting) in the guidance and execu- calculation.
tion of U.S. Grand Strategy—the coordination
5. An increase of 300 fighter aircraft (now
and deployment of all national resources in
including the “escort fighter” plane for the B-21
pursuit of U.S. hegemony via “power
Raider nuclear bomber) over the current base-
projection.”
line of 900. The U.S. Air Force budget would
2. President Obama, upon signing his last have to leap upward, considering that a
(FY 2017) National Defense Authorization “generic” F-35 fighter currently may cost about
Act in December 2016, opened a path to $150 million. Even at half that price, the 300
greatly extend the arms race in space by autho- new aircraft would cost $22.5 billion (once
rizing the Pentagon to begin research, devel- again excluding cost overruns). On top of this
opment, testing, and evaluation (RDTE) for a amount would be the estimated $100 billion to
space-based missile system. A 2012 report by develop the B-21 Raider. And, of course, all
the National Academy of Sciences concluded planes come with massive support costs: operat-
that a minimal space-based weapons system ing costs per hour routinely reach $58,000. ››
MARCH/APRIL 2017 l DOLLARS & SENSE l 29
M I L I TA R Y S P E N D I N G Security State are now held by a troika of war-
lords. Living under the sway of “military meta-
Simply summing the costs of the items men- physics,” these “crackpot realists” (to use the ter-
tioned above reveals potential new outlays of minology of sociologist C. Wright Mills) back
$560.5 billion, or over $140 billion per year over a warfighting programs across the Middle East and
four year period. Contract delays and funding North and Central Africa. As Mills noted in
debates might conceivably hold this to a $70 bil- 1958: “In crackpot realism, a highflying moral
lion per year jump in the base (or discretionary) rhetoric is joined with an opportunist crawling
military budget: This would translate into a 13.4% among a great scatter of unfocused fears and
increase over FY 2017—which would be man- demands. … The official expectation of war also
dated through congressional special appropriations enables men to solve the problems of the eco-
at President Trump’s urging. nomic cycles without resort to political policies
Larger annual base budget outlays necesitate that are distastful to many politicians.”
more spending for retirement funds (including Going forward into Trumpland, instead of
health care) as well as for Veterans Affairs. With draining the Pentagon’s swamp the available evi-
interest rates almost sure to rise, and with President dence suggests that U.S. society is headed down
Trump using deficits to finance the forthcoming the military drain as “defense needs” starve out the
arms buildup, the share of the national debt attrib- few skeletal social programs that have survived
utable to national security spending will rise, as decades of neoliberal attack. D&S
will annual interest payments.
J A M E S C Y P H E R is a Dollars & Sense associate
The Bottom Line and a professor of economics in the Doctoral Pro-
For 2017, based on President Obama’s last mili- gram in Development Studies, Universsidad
tary budget, total U.S. military related spending Autónoma de Zacatecas (México).
(including the special warfighting account
known as the Overseas Contingency Opertions
S O U R C E S : C. Wright Mills, The Causes of World War Three (Simon
budget, nuclear bomb building, retirement and and Schuster, 1958); Dan Graizer, “Senators Vote to Keep Bomber
Veterans outlays, International Affairs, Price Secret,” The Defense Monitor, July-August 2016; Dave Majumdar,
Homeland Security, and interest payments “Lockheed Martin, General Dynamics, Northrop Grumman, Boeing
and Raytheon: America’s 5 Top Defense Contractors,” The National
attributable to past military expenditures) will Interest, Nov. 10, 2016 (nationalinterest.org); David Williams, “Presi-
be $1.04 trillion in FY 2017, or more than 5% dent Obama signs defense bill that could spur new space-based
of current GDP, according to the January-March arms race,” Los Angeles Times, Dec. 23, 2016 (latimes.com); Defense
Contract Management Agency, “Director, Defense Contract Manage-
2016 Defense Monitor.
ment Agency,” 2014 (dcma.mil); Linda Weiss, America Inc.? Innovation
But this calculates only the direct effects of and Enterprise in the National Security State (Cornell University Press,
military spending: The indirect or “induced” 2014); Mandy Smithberger, “Pentagon’s 2017 Budget was Mardi Gras
effects of secondary and tertiary rounds of spend- for Defense Contractors,” Defense Monitor, January-March 2016;
Marianna Mazzucato, The Entrepreneurial State (Anthem Press, 2013);
ing, using the calculating methods adopted by the Michael Shear, et.al., “Trump Joining List of Critics of Fighter Jet,” New
San Diego regional economic impact study, sug- York Times, Dec. 13, 2016; Northrup-Grumman Corporation, “An-
gest that, pre-Trumpland, about 8% of U.S. GDP nouncement of Long-range Strike Bomber Contract Award,” Oct. 27,
2015 (northropgrumman.com); San Diego Military Advisory Council,
is dependent in some way on the Pentagon- “Press conference & luncheon attended by Mayor Kevin Faulconer,
financed programs, past or present. Adding in California Governor’s Military Council, military commanders &
direct foreign arms sales of $40 billion per year defense industry leaders,” 2016 (sdmac.org); Sidney Freedberg, “Bow
Wave Time Bomb: B-21, Ohio Replacement Costs Likely To Grow,”
(which would not exist without the comparative
Breaking Defense, Aug. 4, 2016 (breakingdefense.com); Steve Vogel,
adavantage created by Pentagon largesse) would “The Battle of Arlington: How the Pentagon Got Built,” Washington
modestly raise these estimates. Post, April 26, 1999 (washingtonpost.com); U.S. Department of
President Trump’s administration could easily Defense, “Contracts Press Operations Release No: CR-124-16” (de-
fense.gov); President Trump, “Presidential Memorandum-Rebuilding
push up total military spending (including all U.S. Armed Forces” (whitehouse.gov); H.R. McMaster, “Kicking the
direct and indirect effects) by 1 or 2% of GDP, Vietnam Syndrome,” Hoover Daily Report, Feb. 17, 2003 (hoover.
excluding warfighting scenarios. Unfortunately, org).H.R. McMaster, “The Human Element: When Gadgetry Becomes
Strategy,” World Affairs, Winter 2009 (worldaffairsjournal.org).
new high-cost warfighting scenarios are extremely
likely: The leadership positions of the National
Dollars & Sense: You’ve written that there are more industrial
workers in the world today than ever before. Can you explain
how that growth has occurred and how it has reshaped the
world’s industrial working class in recent decades?
Immanuel Ness: Yes, there are two major factors. The first is
the deindustrialization of the traditional industries in North
America and Western Europe—garment manufacturing, elec-
tronics, automobiles and other heavy industry—and the relo-
cation of those industries in the global South—Africa, South
Asia, and South East Asia, as well as to some extent Latin
America. As a consequence, the latter regions have become
major centers of production and export. And as part of that,
the number of manufacturing workers there has grown
dramatically.
The second factor is that, within industrializing countries
like India, China, Bangladesh, and Indonesia, there has been a
dramatic urbanization forced by the end of productive farm-
ing in rural areas. Many of the working peasants have been
moving into urban centers where there are concentrations of
industry. So while many in North America and Western
Europe would say “the industrial working classes is virtually dead,” I would make the case that there are in
fact more industrial workers on the planet today than anytime in human history.
Roughly speaking, the industrial working class has grown over the last 50 years from somewhere around
200 million to nearly a billion people. Of course, that doesn’t include other workers outside of manufac-
turing. The process has been unrelenting, and is bringing a number of Marxist arguments about capitalist
globalization to fruition: Workers are engaged in very significant industrial struggles in places like New
Delhi, Shenzhen, Cairo, and beyond.
D&S: Can you take us through some of the
COSTS OF
ways that you see labor struggles playing out in
EMPIRE
the global South in this context, especially in the
countries that you focus much of your research
on—China, India, South Africa?
IN: There are many different theorists who study global industrialization and capitalist expansion from Immanuel
Wallerstein, to Giovanni Arrighi, to William I. Robinson and others. Robinson has described the current world economic
system as being focused on the expansion of capital through the support of “deterritorialized” nation-states.
I would argue that there are leading imperialist powers—the United States, especially—that engage in economic
forms of imperialism and ensure that it takes place through military expansion and intervention. But the nature of
this form of imperialism is financialization. I think that very clearly, something critical has happened—where finan-
cial institutions have penetrated transnational corporations. At one time, corporations had subsidiaries around the
world, now they are investing, on a global scale, in firms that are contractors. Much of the foreign direct investment
from global financial centers like Wall Street, the City of London, Tokyo, Hong Kong, and Frankfurt are to places like
the Pearl River Delta of China, around Hong Kong, major industrial centers in India, including the Delhi region as
well as Chennai, South Africa, Egypt, Vietnam, and to some extent Brazil and Indonesia. These are major develop-
ments of industrialization.
This capital flows, as the Marxist geographer David Harvey points out, in a molecular fashion, to places where
they are most profitable and where accumulation can take place at the fastest rate. And so, one major feature is that
transnational corporations have become “deterritorialized” in the sense that they really don’t care where they pro-
duce. They’re willing to invest, or to pull out investments and reinvest elsewhere, on the basis of profitability. The
traditional firms, as the writer and activist Naomi Klein has argued, are just logos. They don’t produce much of any-
thing, but they are determining what will be produced and how it will be produced—based on extremely low wag-
es—in Africa, Asia, and Latin America. This is a major factor in understanding modern imperialism, which has a capi-
talist economic form. It is an extension of classical theories of imperialism, from J.A. Hobson to Lenin. There is a form
of financialization that starts from the early 20th century, when German banks were investing in Russia, and now we
have this taking place on a global scale. And in many ways, it is contributing to a politicization of working-class peo-
ple around the world.
››
Hong Kong. There you had 40,000 workers who period, in terms of non-payment of wages. But,
A poster from the
were making athletic shoes for Adidas and other wages have gone up appreciably, over a period that Association of
companies, who went on a strike that lasted about I would say started around 2009 and is continuing Mineworkers and
a month between May and June 2014. That was a to this day. In the platinum sector, this contributed Construction
Union (AMCU) in
very important transformation. to the formation of a major union, the Association South Africa
Many people outside of China would say, of Mineworkers and Construction Union (via Twitter,
“Well, you know, the Chinese workers are com- (AMCU), which went from literally no workers to @_AMCU).
pletely oppressed and they don’t really engage in 1,000 workers and now probably represents well
activity because of the single state union, the over 100,000 workers. And probably growing dra-
FTU.” But in fact, there is a lot of grassroots matically in the years to come.
organizing that’s going on which tangibly One aspect of this is, of course, economism
improves conditions, because in China wages, [labor struggles focused on economic demands
especially minimum wages, are negotiated on a like higher wages], but there are also demands for
municipal level. So, major changes are taking political change. In South Africa, there is a chal-
place in China, which is leading to higher wages, lenge to the Tripartite Alliance government—
improved working conditions, improved health- composed of the African National Congress
care. A lot of people don’t want to admit it, but (ANC), South African Communist Party (SACP),
this is a very important development even within and Congress of South African Trade Unions
a single-party union. (COSATU)—which came into existence in 1994.
Of course, in South Africa, we had the epic It did allow democratic freedoms, but did not at
experience—also in early 2014, the entire period all allow for any kind of redistribution of wealth,
from January to June 2014—where mine workers so whites continued to maintain the vast majority.
in the platinum sector went on strike demanding And perhaps this will lead to a major movement
dramatic increases in wages. Of course, workers in the years to come. ››
MARCH/APRIL 2017 l DOLLARS & SENSE l 33
GLOBAL INDUSTRIAL WORKING CLASS turning workers into owners, when in fact it
forces workers to expend even more in working
In India, this is taking place a lot more slowly, for these companies.
but there are interesting formations of unions I think the lesson is that, in the global South,
across different industries and different models the major feature of struggle is spontaneity. For
of unionization that are extremely interesting— instance, in many unions in the global South—in
even though many would argue that the condi- China, India, South Africa, Indonesia, and so
tions of Indian workers are actually worsening in forth—you have a lot of strike activity going on.
the contemporary era. But, no question, workers You have a lot of militancy taking place. And the
are going on strike and are also protesting. real lesson that we can learn is that, for instance,
There’s just a need for a political vehicle for that Uber drivers can go on a strike by not picking up
to take place. passengers for a period of time.
In the global South, these are spontaneous
D&S: Of course, people in the global North are movements and, as a consequence, it’s really
acutely aware of the changes of the composition of important to recognize there’s a need to build
employment away from manufacturing, away from institutional power. These spontaneous move-
industry into services and so forth. Do you see a ments in places like South Africa and India are
possibility of revitalization of labor movements, taking place inside and outside unions—even in
China to some degree, though we don’t know
While many in North America and Western what can happen with respect to the internal
Europe would say “the industrial working classes functioning of the FTU in China. Workers are
willing to form new unions, or switch from one
is virtually dead,” I would make the case that union to another. For instance, you have, in both
South Africa and India, a lot of unions that are
there are in fact more industrial workers on the vying for leadership over the auto sector. The
planet today than anytime in human history. same thing is true with respect to South Africa,
where you have workers who have switched from
the National Union of Mine Workers to the
AMCU in the mining belt. So that, the one lesson
presumably now centered outside of manufactur- would be that you need to take this spontaneous
ing, in the global North? And are there lessons to power and turn it into some kind of mobilization.
be learned by workers and the labor movements in There are lessons that still need to drawn in the
the global North from workers, often struggling global South as well as the North because—while
under highly unfavorable conditions, in the global unions are good—many of them are ossified and
South today? represent, in most cases, older struggles that took
place generations ago.
IN: Well, I’d like to preface this by saying that I
actually think that the major movements of the D&S: Finally, you alluded to some of the strug-
future will take place in the global South, where gles that are taking place today as basically econo-
85% of the working class is situated. In the global mistic in their demands, by which we mean cen-
North we are, in some ways, beneficiaries of the tered on questions like wages, benefits, hours, and
exploitation of global South workers. But there is so forth. You also posed the question of the pos-
no question that the new industries that are being sibilities of broader politicization of labor strug-
formed in services, technology, and so forth are gles. What do you see as the potential for labor
creating high levels of exploitation. This exists, movements to develop a broader political agenda
for instance, in the restaurant and retail sectors, in up to and including questions of challenging—on
telecommunications, where you have call-center a systemic level—imperialism, financialization,
workers in the global North that are highly and capitalism itself?
exploited, and so forth. And certainly with respect
to the rise of “for-hire” transportation. The IN: That’s a very broad question, certainly. I would
growth of companies like Uber is ostensibly go back to the point that unions are forming.
COSTS OF F or our “Economy in Numbers” in this special Costs of Empire issue, the Dollars & Sense collec-
EMPIRE
tive has compiled statistics on U.S. military bases, defense expenditures, the arms industry,
and recent wars. Avid magazine readers will recognize the style as an homage to “Harper’s Index,”
which Harper’s Magazine has been publishing for over thirty years. So, with a tip of the hat to
Harper’s, here are the facts, by the numbers. D&S
S O U R C E S : David Vine, “Where in the World Is the U.S. Military,” Politico, July/August 2015 (politico.com); Stockholm International Peace Research Institute (SIPRI),
SIPRI Military Expenditure Database (sipri.org); National Priorities Project (nationalpriorties.org); SIPRI Arms Industry Database (sipri.org); SIPRI Arms Transfers Database
(sipri.org); Neta C. Crawford, “US Budgetary Costs of Wars through 2016: $4.79 Trillion and Counting: Summary of Costs of the US Wars in Iraq, Syria, Afghanistan and
Pakistan and Homeland Security,” Watson Institute, Brown University, September 2016 (watson.brown.edu); Watson Institute, Brown University, “Human Costs of War: Direct
War Death in Afghanistan and Pakistan (Oct. 2001–July 2016) and Iraq (Oct. 2001–April 2015),” August 2016 (watson.brown.edu).
K atherine Cramer, professor of politi- return their fair share in services. Just ment so powerful today and so focused
cal science at the University of look at the empty streets and shuttered on government at all levels?
Wisconsin-Madison, thought she was stores of declining small towns! In short, Bitter resentment of government
perfectly suited for her project of inter- rural people, were “deserving”; those might seem plausible in a state like
viewing upstate Wisconsin residents on others were “undeserving.” Louisiana, given its inequality, corrup-
their political views. Wisconsin born and Cramer explored this resentment. tion, and poor public services (see my
bred, she felt deeply connected to her Did rural areas really pay more in taxes review of Arlie Hochschild’s Strangers in
state. So she was quite stunned by the than they got in benefits? In fact, the Their Own Land in the November/
open hostility she encountered. If she opposite—but that was irrelevant, December 2016 issue of Dollars & Sense).
was a professor, the locals demanded, since the locals regarded much govern- But in squeaky-clean Wisconsin? While
how come she was here upstate with ment spending as “waste.” Was it the the British Equality Trust rates Louisiana
her tape recorder, rather than teaching 2008 collapse and Great Recession? No. among the worst states on both in-
her students? Who was teaching her Small towns had been declining for equality and social and health problems,
students in her absence? It often took decades; maybe only a bit more after it rates Wisconsin among the best.
Cramer several visits to gain trust. 2008. Was it an ideological preference Wisconsin boasts excellent schools and
Upstate Wisconsin, north of for low taxes and small government? health services statewide. Until Scott
Milwaukee and Madison, is mostly rural, No. They would gladly pay taxes for Walker, it was a reliably progressive
overwhelmingly white, and accounts for new school computers, but not on sala- Democratic state. What happened?
about half the population of the state. ries for those lazy undeserving school To me, it feels almost like a gather-
From 2007 to 2012, Cramer interviewed teachers! Yes, even local school teach- ing religious movement, a rebellion
some forty different groups, many re- ers were regarded as agents of against evil oppressors sometimes dis-
peatedly. These were people who met “Madison”! Was it racism? Cramer did guised as school teachers, postal clerks,
regularly, around the coffee machine in hear some openly racist remarks—di- and firemen. Is it in some twisted way a
a service station, in the back room of a rected at “lazy” residents of an upstate response to growing national inequal-
café, and so on. There was even a group Native American reservation. Negative ity? There’s at least one small glimmer
that met to play a special Wisconsin dice remarks about “those people in of hope: In the Wisconsin primary of
game, at which Cramer excelled. The Milwaukee” may have meant racial mi- April 5, Bernie Sanders got significantly
interviewees ranged from working class norities, but more often designated the more votes than any other candidate,
loggers in the north, to middle-class despised urban elites, especially gov- including Donald Trump. D&S
small-business owners. Over half were ernment bureaucrats. Cramer did dis-
men, and many were older or retired. cover one striking fact: in upstate com- P O L LY C L E V E L A N D is an adjunct
They appeared to be stable, established munities the pay, benefits, and job professor of economics Columbia
community members, sometimes politi- security of public employees signifi- University’s School of International and
cal leaders. Cramer’s interviews bridged cantly exceeded those of private sector Public Affairs..
COSTS OF
other oil “majors” based in U.S.-allied
EMPIRE
huge proven oil reserves, not in the
same league as Saudi Arabia, but in countries were not getting a share of
group of oil producing countries just the profits that were generated from
behind the Saudis. It might appear, then, the exploitation of Iraqi oil. Profits from
that the United States wanted access to oil exploitation go not only to the oil
Iraqi oil in order to meet the needs of our companies—ExxonMobil, Shell,
B Y A R T H U R M ACE WA N highly oil-dependent lifestyles in this Chevron, British Petroleum, and the
country. After all, the United States to- other industry “majors”—but also to the
A round the time that the United day, with just over 4% of the world’s companies that supply and operate
States invaded Iraq, 14 years ago, I population, accounts for 20% of the equipment, drill wells, and provide oth-
was in an auditorium at the University world’s annual oil use; China, with er services that bring the oil out of the
of Massachusetts Boston to hear then- around 20% of the world’s population is ground and to consumers around the
Senator John Kerry (D-Mass.) try to jus- a distant second in global oil use, at 13%. world—for example, the U.S. firms
tify the action. As he got into his Even after opening new reserves in re- Halliburton, Emerson, Baker Hughes,
speech, a loud, slow, calm voice came and others. They were also not getting
a share of the Iraqi oil action. (Actually,
from the back of the room: “O – I – L.” Protecting U.S.-based when vice-president-to-be Dick Cheney
Kerry tried to ignore the comment. But,
again and again, “O – I – L.” Kerry simply firms’ right to access was running Halliburton, in the period
before the invasion, the company man-
went on with his prepared speech. The and security around the aged to undertake some operations in
speaker from the back of the room did
not continue long, but he had succeed- world comes at a high Iraq through a subsidiary, in spite of
federal restrictions preventing U.S. firms
ed in determining the tenor of the day. cost, in money and lives. from doing business in Iraq.)
Looking back on U.S. involvement in
Iraq, it appears to have been largely a
failure. Iraq, it turned out, had no cent years, U.S. proven reserves amount After the Troops
“weapons of mass destruction,” but this to only 3% of the world total. In the aftermath of the invasion and
original rationalization for invasion of- Except in extreme circumstances, since most U.S. troops have been with-
fered by the U.S. government was soon however, access to oil is not a major drawn, things have changed. “Prior to
replaced by the goal of “regime change” problem for this county. And it was not the 2003 invasion and occupation of
and the creation of a “democratic Iraq.” in 2003. As I pointed out back then, the Iraq, U.S. and other western oil compa-
The regime was changed, and Iraqi dic- United States bought 284 million bar- nies were all but completely shut out
tator Saddam Hussain was captured rels of oil from Iraq in 2001, about 7% of of Iraq’s oil market,” oil industry analyst
and executed. But it would be very had U.S. imports, even while the two coun- Antonia Juhasz told Al Jazeera in 2012.
to claim that a democratic Iraq either tries were in a virtual state of war. In “But thanks to the invasion and occu-
exists or is in the making—to say noth- 2015, only 30% as much oil came to the pation, the companies are now back
ing of the rise of the so-called Islamic United States from Iraq, amounting to inside Iraq and producing oil there for
State (ISIS) and the general destabiliza- just 2.4% of total U.S. oil imports. the first time since being forced out of
tion in the Middle East, both of which Further, in 2015, while the United States the country in 1973.”
the U.S. invasion of Iraq helped propel. has had extremely hostile relations with From the perspective of U.S. firms,
Yet, perhaps on another scale, the Venezuela, 24% of U.S. oil imports came the picture is mixed. Firms based in
invasion would register as at least a par- from that country’s nationalized oil in- Russia and China have developed oper-
tial success. This is the scale of O – I – L. dustry. It would seem that, in the realm ations in Iraq, and even an Indonesian-
of commerce, bad political relations based firm is involved. Still, ExxonMobil
The Profits from Oil between buyers and sellers are not nec- (see box) has established a significant
At the time of the U.S. invasion, I wrote essarily an obstacle. stake in Iraq, having obtained leases on
an article for Dollars & Sense titled “Is It For the U.S. government, the Iraq oil approximately 900,000 onshore acres
Oil?” (available online at dollarsandsense. problem was not so much access, in the and by the end of 2013 had developed
org). I argued that, while the invasion sense of meeting U.S. oil needs, as the several wells in Iraq’s West Qurna field.
may have had multiple motives, oil—or fact that U.S. firms had been frozen out Exxon also has agreements with the
more precisely, profit from oil—was an of Iraq since the country’s oil industry Kurdistan Regional Government in
northern Iraq to explore for oil. Chevron countries—are engaged in Iraq, they cost. The best estimate of the finan-
holds an 80% stake and is the operator and their U.S. government supporters cial cost to the United States of the
of the Qara Dagh block in the Kurdistan have not gained the full legal rights war in Iraq is $3 trillion. Between the
region of Iraq, but as of mid-2014 the they would desire. In 2007, the U.S. 2003 invasion and early 2017, U.S. mil-
project was still in the exploratory government pressed the Iraqi itary forces suffered 4,505 fatalities in
phase and there was no production. No government to pass the “Iraq the war, and allied forces another 321.
other U.S. oil companies have devel- Hydrocarbons Law.” The law would, And, of course, most of all Iraqi
oped operations in Iraq. The UK- among other things, take the majority deaths: estimates of the number of
headquartered BP (formerly British of Iraqi oil out of the hands of the Iraqi Iraqis killed range between 200,000
Petroleum) and the Netherlands- government and assure the right of and 500,000. D&S
headquartered Shell, however, are also foreign firms to control much of the oil
A R T H U R M A C E W A N is professor
significantly engaged in Iraq. for decades to come. The law, however,
emeritus of economics at UMass-Boston
While data are limited on the opera- has never been enacted, first due to
and a Dollars & Sense Associate.
tions of U.S. and other oil service firms general opposition to a reversal the
in Iraq, they seem to have done well. 1972 nationalization of the industry, S O U R C E S : BP Statistical Review of World Energy,
For example, according to a 2011 New and recently due to continuing dis- June 2016 (bp.com); Al Jazeera, “Western oil firms
remain as US exits Iraq,” Jan. 7, 2012 (Aljazeera.
York Times article: putes between the government in
com); Conor Friedersdorf, “Remembering Why
Baghdad and the government of the Americans Loathe Dick Cheney,” The Atlantic, Aug.
The oil services companies
Halliburton, Baker Hughes, Kurdistan Region. 30, 2011 (theatlantic.com); Paul Ausick, “U.S. Oil
Weatherford International [found- U.S. foreign policy, as I elaborated Companies With the Most Exposure to Iraq,” 24/7
ed in Texas, now incorporated in in the 2003 article, has long been de- Wall St., June 12, 2014 (247wallst.com); Andrew E.
Switzerland] and Schlumberger Kramer, “U.S. Companies Get Slice of Iraq’s Oil Pie,”
signed not simply to protect U.S.-
[based in France] already won New York Times, June 14, 2011 (nytimes.com); Iraq
based firms in their international oper- Daily Journal, “What is ExxonMobil Doing in Iraq?”
lucrative drilling subcontracts and
are likely to bid on many more. ations, but to establish the right of the Jan. 31, 2017 (iraqdailyjournal.com). U.S. Energy
“Iraq is a huge opportunity for firms to access and security anywhere Information, Administration (eia.gov); icasualties.
contractors,” Alex Munton, a around the world. Oil firms have been org; Joseph Stiglitz and Linda Bimes, The Three
Middle East analyst for Wood Trillion Dollar War (Norton, 2008).
especially important in promoting and
Mackenzie, a research and con-
gaining from this right, but firms from
sulting firm based in Edinburgh,
said by telephone. “There will be finance to pharmaceuticals and many Questions about the economy?
an enormous scale of investment.” others have been promoters and ben- Ask Dr. Dollar!
eficiaries of the policy. Submit questions by email (dollars@
The Right to Access Whatever else, as the Iraq and dollarsandsense.org) or U.S. mail (c/o
Dollars & Sense, 89 South St., LL02,
While U.S. oil companies and oil ser- Middle East experience has demon-
Boston, MA 02111).
vice firms—as well as firms from other strated, this right comes at a high
TILLERSON IN IRAQ: IS WHAT’S GOOD FOR EXXONMOBIL GOOD FOR THE U.S.?
E xxonMobil’s presence in Iraq is the work of former CEO Rex Tillerson, now Donald Trump’s pick for U.S. secretary of
state. In 2009, many Iraqi oil fields were opened for development following years of violence. The government was
desperate to increase oil production and revive its war-torn economy.
Iraq sits on more than 143 billion barrels of proven oil reserves, the 5th biggest in the world, and Tillerson was quick to
spot the opportunity. ExxonMobil committed to a $50 billion joint venture to develop a giant oilfield called West Qurna,
located in the south of the country. The venture has been a success—the field produced 377,000 barrels of oil per day in
2015, up by about 150,000 barrels per day since 2010, according to ExxonMobil.
But it hasn’t all been smooth sailing for the company. Two years after the Qurna deal, ExxonMobil found itself in hot
water. Tillerson made a controversial move, signing a deal to explore for oil in the semi-autonomous Kurdistan Region in
northern Iraq. The Iraqi government in Baghdad deems any deals with the Kurdistan Region illegal, and is in a long-run-
ning dispute over how to divide revenue from oil fields under Kurdish control.
The move was also in defiance of U.S. policy at the time. The New Yorker reported in December 2016 that Tillerson didn’t
ask for State Department permission, but called officials after the fact to say: “I had to do what was best for my shareholders.”
S O U R C E S : Iraq Daily Journal, “What is ExxonMobil Doing in Iraq?” Jan. 31, 2017 (iraqdailyjournal.com); Steve Coll, “Rex Tillerson, From a Corporate Oil Sovereign to
the State Department,” The New Yorker, Dec. 11, 2016 (newyorker.com).
This new edited volume is a response to this question from the editorial collective
of Dollars & Sense. (Profiles of the BRUMC congregation and the D&S collective
were the basis of “Church Economics Prize,” the February 13, 2015 episode of the
PBS program “Religion and Ethics Newsweekly” (available at pbs.org).)
It’s absolutely clear that the congregation’s question—why the economy doesn’t
seem to work as well for (at least many) ordinary people as it once did—is
among the most urgent questions in the United States today. In the course of
the 2016 presidential election campaign, the message that the economy had
been “rigged,” serving only a small group of wealthy and powerful people,
resonated with millions. That should not be surprising, after decades of wage
stagnation, rising income inequality, declining job security, and increasing
personal debt.
Second, it’s necessary to come up with solutions—to the multiple problems we confront—that are rooted in a spirit
of solidarity and compassion for each other, across lines of race and ethnicity, nationality and immigration status,
gender and sexuality. As the BRUMC congregation put it in its initial letter, we must strive to promote “civil liberty
and economic justice, for all.” This means that our answers to current grievances must reject the scapegoating of
the marginalized, disenfranchised, and downtrodden, and instead seek solutions consistent with the
admonition, from the gospels, to “love thy neighbor as thyself.”