Chapter 5 through Chapter 7, The Trillion Dollar War

The Three Trillion Dollar War, Stiglitz & Bilmes 

The Macroeconomic Effects Of The Conflicts 
a. oil prices from $25 a barrel to $90
b. higher cooking fuel prices in Indonesia
c. more expensive bus fares in Ethiopia
d. lead to larger trade deficits & inflationary pressures
e. higher interest rates: lower investment, lower consumer spending
f. declines in share prices
g. slowing of the economy
h. “Today, no serious economist holds the view that war is good for the economy. The economist John Maynard Keynes taught us how, through lower interest rates and increased government spending, countries can ensure that the peacetime economy operates near or at full employment.”(115)
i. “But money spent on armaments is money poured down the drain: had it been spent on investment-whether on plants and equipment, infrastructure, research, health, or education-the economy’s productivity would have been increased and future output would have been greater.”(115)
j. “The question is not whether the economy has been weakened by the war. The question is only by how much.”
k. “It is enough to say that if America went to war in the hope of securing cheap oil, we failed miserably,”(116)
l. “Exxon-Mobil and other oil companies have been among the few real beneficiaries of the war, as they profits and share prices have soared.” 
m. “We conclude, accordingly, that a significant proportion of the increase in the price of oil resulted from the war.”(117)
n. “As oil prices reach $100 a barrel, and as futures markets continue to predict that high prices will persist years into the future, we feel that $5 to $10 a barrel for just seven or eight years is really too conservative,”(117-118)
o. “Higher oil prices mean people have less money to spend on everything else. Since oil prices started their ascent, American families have had to spend about 5 percent more of their income on gasoline and heating than before. Even governments-especially those on the state and local level, which must limit spending to revenues-have had to cut back other spending to pay the higher prices of oil imports.”(118)
p. increasing spending on goods made in America would increase wages and profits which would then be spent in America
q. $187B in damage to GDP-higher costing oil imports
r. our economy had been operating well below its potential

Government Spending, p. 120
a. government spending on war doesn’t stimulate the economy the same way as domestic spending
b. “What would the country’s output have been if even part of the money that was spent on building military bases in Iraq was spent on building schools in the United States? Such expenditure switching would have led to higher output in both the short run and the long.
c. “Earlier we described how reduced spending by consumers on U.S.-produced goods as a result of higher oil prices reduced the economy’s output.”(120)
d. $1000 spent on Nepalese workers to perform services in Iraq doesn’t have the same multiplier as $1,000 spent on university research 
e. switching $800B to domestic investment to domestic investment would increase the GDP $320B
f. savings by private households didn’t increase to make up for deficits
g. “David Walker, Comptroller General of the United States has warned that there are “striking similarities” between America’s current situation and the factors that brought down Rome, including “an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government.”(123)
h. “private investment has a far greater multiplier than the Iraqi war expenditures”(123)
i. “The money spent on Iraq could have been spent on schools, roads, or research. These investments yield high returns.”
j. growing deficits crowd out private investments, p. 123
k. “There is no free lunch-and there are no free wars. In one way or another, today and in the future, we will pay for the war.”(125)
l. “Wage increases have been moderate and corporate profits have surged.”(125)
m. consumption has been lower, weakened economy
n. the Federal Reserve kept interest rates low
o. Americans borrowed against their houses & consumed above their means
p. “the full ramifications of the “subprime” mortgage crisis are still unfolding, p. 126
q. higher oil prices
r. “We as a country have been living off of borrowed money and borrowed time.”(126)
s. “The war, whatever its initial aims, has not increased stability and security in the Middle East.”(128)
t. “On the contrary, the threat seems to have increased, as evidenced by the number of recent terrorism incidents.”(128)
u. “Disruptions at airports have become worse, not better. The bombings and attempted bombings in Bali, Spain, and the United Kingdom in recent years show again that the impact reaches around the world.”(128)
v. “Insecurity is, of course, bad for the economy-businesses dislike risk and work hard to keep it under control. Risk is bad for investment and growth.”(128) 
w. “Globalization has brought enormous benefits to the world. It has meant the closer integration of the countries of the world as goods, services, and labor move more freely across borders, largely as a result of lower transportation costs and communication costs, but also because of the reduction of man-made barriers.”(128)
y. “American firms, especially those that have become icons, like McDonald’s and Coca Cola, may also suffer, not so much from explicit boycotts as from a broader sense of dislike of all things American.”(129)

The Full Tally
a. more than $4T in economic costs, costs have also been imposed on other people!

Chapter 6, Global Consequences 
a. “The global consequences of the invasion of Iraq are far-reaching. Iraq has borne the brunt of the damage, but the breakdown in most areas of central government there means it is difficult to secure reliable numbers with which to perform the type of cost analysis we have done for the United States.”(132)
b. “Iraq was a dysfunctional yet viable country,”(132)
c. “the war has essentially ruined the country’s economy, society, and sovereignty.”(132)
d. higher oil prices, $1.1T cost to the world economy
e. 4.6M people uprooted from their homes, 133
f. largest migration since the creation of Israel in 1948
g. the majority of Iraqi children are not attending school
h. Syria, will no longer accept Iraqis without Visas
i. Billions to take care of refuges
j. 7,697 Iraqi soldiers dead, the US government doesn’t keep track
k. $172B in Iraqi lives
l. “the Iraqi economy is poorer as a result of the loss of its young men.”(135)
m. civilian casualties, death penalty punishments, cholera-from inadequate water supplies, sanitation, food safety, and hygiene practices
n. “Before the war, choler was extremely rare in Iraq”(137)
o. “the overall quality of water & sanitation is very poor, a factor known to facilitate greatly cholera contamination.”
p. increase in fatalities of 654,965
q. “By destroying the economic and political infrastructure, the American occupation meant that there was less reason for the country to hold together.”(139)
r. Iraq, humiliating defeat in the Gulf War in 1991
s. “The country has a thriving middle class, and most Iraqis had high hopes for the future once their nation was freed from the burden of an embargo.”(140)
t. more unemployment, fewer hours of electricity each day
u. 59% of Iraqis view economic conditions as poor
v. Bush wanted to privatize the country’s assets, abolished many tariffs, capped corporate & income tax @ 15%
w. privatizing Iraq’s businesses-breaks international law
y. little foreign investment besides oil
z. need to focus on creating jobs @ small businesses
1. most of reconstruction $ went to high priced American contractors
2. imported Nepalese workers instead of hiring Iraqis, led to resentment
3. the administration wanted to privatize Iraq’s oil sector
4. “Suffice it to say, no matter what assumptions one makes, it is hard to imagine a bleaker situation than the current one.”(144)
5. “The Iraq war has contributed to a clash of civilizations,”(144)
6. USA provided the majority of the troops for the conflict
7. long trail of disability and health care costs that other countries will have to bear themselves, p. 145
8. “Afghanistan has become the largest supplier to the global heroin market.”(146)
9. suicide bombings which used to be rare and other violence have become commonplace, 146
10. 200,000 troops “needed” for stability” in Afghanistan
11. UK-pivotal role in the strategic, military, and political aspects of the Iraq conflict
12. Britain facilitated every aspect of the war, p. 148
13. “British citizens have little clarity about how much is actually being spent.”(149)
14. “It should not be the case that this information has to be discovered through Freedom of Information requests.”(149)
15. “The UK will face a significant cost in providing disability benefits for its disabled servicemen and women as a consequence of the Iraq and Afghan conflicts.”
16. “The government is also using private health care providers to treat returning servicemen where the waiting times for NHS treatment are too long. It is not clear how widespread this practice is, but there is evidence that it may add billions of pounds in costs to the medical bill for British veterans.”(151)
17. “there are costs to the UK civilian economy through such impacts as higher oil prices, possible recession effects and the need for higher defense spending which has to be financed through either higher taxation or reduced public spending in other areas.”(153)
18. similar social costs in UK to USA, 154
19. until 2005, UK was a net oil exporter
20. “As it is, the UK joins the United States as one of the big losers from the war.”(155)
21. British forces in Afghanistan will increase
22. cost of operations in Afghanistan will rise 39%
23. social costs-$20 Billion pounds, 18B pounds without social costs
24. “Those who have gained are, by and large, dictators in the oil-producing countries-including some who have been quite open about using their increased wealth to advance an agenda that is anti-American and in some cases anti-Western.”(157)
25. “Indeed, it is hard to think of anything else that the United States could have done that would have been, on a global scale, so much against its own interests.”(157*)
26. Europe, Japan, USA, and other OECD-importing countries have more expensive oil imports
27. $194B, best case for Europe, $590B-realistic/moderate estimate
28. “Our long-standing friends in Europe and Japan are among the global losers. But net, the world is a loser-and by a considerable amount.”(159)
29. “America’s occupation has helped feed extremism throughout the Islamic world and beyond. This growth of extremism has made the task of leaders in moderate Islamic republics all the more difficult.”(160)
30. “America’s standing in the world has never been lower.”(160*)
31. “citizens of many countries saw America in Iraq as a greater threat to global peace than Iran.”(160-161)
32. “In short, all over the world, the US was viewed as a greater danger than the countries President Bush included in his “axis of evil”(161)
33. “Today, there is a serious lack of confidence in American leadership.”(162)
34. “This book has emphasized the costs of the war in Iraq: the economic costs as well as the opportunity costs-the diversion of funds that could have been used in so many other and better ways. In the long run, though, the squandering of America’s leadership role in the international community, and the diversion of attention from critical global issues-including issues like global warming and nuclear proliferation in North Korea that simply won’t go away on their own, and that cannot wait to be addressed-may represent the largest and most long-standing legacy of this unfortunate war.”(163)

Chapter 7, Exiting Iraq 
1. “Unfortunately, five years after the invasion,with hundreds of billions having been spent and thousands of casualties, things are not much better. In 2007, Iraq ranked 178th out of 180 countries in terms of corruption. Only Somalia and Myanmar (formerly Burma) were worse.”(164)
2. “On the political front, Iraq now has a religious government-whereas it had secular governments for eighty years prior to the U.S. invasion.”(165)
3. “Staying longer may not make things better; it could make them worse.”(166)
4. “Whereas clean water, electricity or quality medical care are in short supply in the rest of the country, the bases are islands of fully functioning amenities. They include sports facilities, department stores, fast food restaurants, a Hertz Rent-a-Car, movie theaters, air conditioning, satellite Internet access, cable television, and international phone service.”(168) 
5. staying another 2 years, $600B
6. “Finally, there are the political costs-the continuing decline in American standing around the world and the increasing disillusionment of American citizens with foreign entanglements.”(169)
7. “Despite a massive effort, stability in Iraq remains elusive and the situation is deteriorating.”(169)
8. “In short, five years into the war, we have not created a safe and stable Iraq.”(170)
9. “It makes no sense to send even more young Americans to die in vain.”(172)
10. we haven’t done much to rebuild Iraq!
11. “We should accept some responsibility for what we have done; but there are many ways to help Iraq, including support for multinational reconstruction efforts (probably not managed by Halliburton or other U.S. contractors with a demonstrated record of failure.”(173)
12. “Staying in Iraq in order to maintain our credibility, or so that those who have already died will not have died in vain, or so that we can finally repair the damage for our invasion, are three of the more obviously fallacious reasons offered for remaining.”(173)
13. “The reality of the Middle East is not dominated by the increasing popularity of extremist factions such as Hezbollah, Hamas, and the Muslim Brotherhood (in Egypt).”(173-174)
14. “With voter sentiment more than two to one against the war, Republican leaders had every reason to want the issue off the table. Instead, the president remained adamant about staying in-even as one after another member of his own party urged a major change in course.”(176)
15. “Americans will need to be told the ugly truth: there is no easy way out of the tragedy that has unfolded in Iraq.”(176)
16. high number of disaffected, unemployed, and armed Iraqi soldiers
17. the deployment of troops to protect the oil ministry reinforced cynicism about motives
18. “We wanted to promote democracy, but we knew that America was not popular in the Middle East. Similarly, the Bush administration never fully grasped that a majority of citizens-the Shiites-might not only favor a radical Islamic government (of the kind that we were opposing in Iran and Afghanistan), but even see itself as an ally of Iran.”(177-178) 
19. “With a supply that responds to actions, killing one enemy could actually increase the number of enemy soldiers.”(178)
20. “In any country, it is noble to fight for one’s freedom against the occupier.”(179)
21. “The United States has not been able to create jobs, get the economy working, or maintain law and order.”(180)
22. “If good individuals are treated badly (e.g. tortured), then there is little incentive to be good.”(181)
23. “That is, as more people join the insurgency, the likelihood of success for the American vision of a united Iraq diminishes.”(181)
24. “Every society is likely to react strongly against outsiders who are insensitive to cultural mores.”(182)
25. “Will matters be substantially better upon our departure two, or six years from now, enough better to justify the deaths and casualties in the interim?”(184)

Ch. I through IV of The Trillion Dollar War

The Three Trillion Dollar War 
1. US invasion of Iraq-terrible mistake
a. 4,000 troops dead
b. 58,00 wounded
c. 7,300 wounded in Iraq
d. 100,000: with serious mental health disorders
e. life is worse for Iraqis than under Hussein 
f. roads, schools, hospitals, homes, museums-destroyed
g. citizens have LESS access to electricity and water
h. trillions added to the national debt
i. drove up oil prices
j. war weakened our economy
k. decision to go to war based on a false premise 
l. toll on our fighting men & women
m. Saudia Arabia & Kuwait paid for the 1st Gulf War
n. 200,000 veterans of the Gulf War, spent $50B in GulfWar disability benefits
o. “going to war is a big business,”(xi)
p. extremely shoddy government accounting
q. men were sent into battle without proper body armor and had to sift through dumps 
r. “Our resources are not infinite.”(xiii)
s. moral duty for governments to provide adequate health care & disability payments for those who risk their lives for their country
t. shoddy outpatient facilities, endless red tape, long delays in getting financial compensation
u. “What is, to use the economist’s jargon, the opportunity cost?”(xv)
v. 3T, 50 years of Social Security
w. 1T= 8M houses, 15M high school teachers, 120M in Head Start, 530M children could have healthcare, 43M 4-year scholarships
y. investments in education, technology & research > stronger position to meet future challenge:s: clean energy, 
z. 2T, 33 years worth of aid to developing countries

1. 8B to end illiteracy, 2 weeks of fighting the war
2. $18.4B in reconstruction funds went to military activities
3. middle class families could have gotten healthcare or tax cuts
4. we are less secure, less prosperous, & less prepared to face future threats
5. awful quality of life in Iraq
6. high unemployment
7. mass exodus from the country
8. huge #s displaced
9. collapse of the middle class
10. soaring violence
11. winners: America’s oil & defense industries
12. role for government and for markets
13. no link between al Qaeda and Iraq
14. information obtained through the Freedom Of Information Act (FOIA)
Ch. 1 Is It Really Three Trillion?
a. 2003, invasion of Iraq
b. “Mission Accomplished banner” 
c. wanted a democratic Middle East, peace between Israel&Palestine
d. us-greatest threat to global peace
e. a lot of refuges (p.5)
f. Iraq’s middle class-destroyed!
g. more expensive than Vietnam, 2x the cost of the Korean war
h. 10x as much as 1st Gulf War, 1/3 more than Vietnam, 2x the cost of WWI, WWI WAS more expensive
i. taxes on the rich have fallen
j. NEC said $200B for war, Wolfowitz-postwar reconstruction could pay for itself through increased oil revenues
k. American rebuilding of Iraq-1.7B
l. $ for Defense, Foreign Affairs, Veteran’s medical costs
m. without invading Iraq, we could have relied on our standing army
n. cost per troop has increased
o. $27B no-bid contract to Blackwater to guard in Baghdad
p. private security guards, $445K, sergeant, $51K to $69K
q. private contracting firms drive costs up of troops
r. the potential for profiteering & corruption is high (13)
s. overpayments to Halliburton, p. 13
t. “In America, corruption takes on a more nuanced form than it does elsewhere. Payoffs typically do not take the form of direct bribes, but of campaign contributions to both parties.”(15) 
u. Halliburton’s stock, up 229% since the war began
v. General Dynamic (134%), Raytheon (117%), Lockheed Martin (105%), Northrop Grumman (78%)
w. $25 > $100 per barrel of oil, 2nd reason war costs so much
y. 3rd, “reset” of equipment & weaponry
z. 5 years of fighting, 19,000 dead Iraqi insurgents, more insurgents than at the outset, more enemies of the US throughout the Middle East

Costs Not Counted
1. life, worth $7M, lives are $500K with the military
2. 4,000 dead, $28B worth of productive capacity lost
3. wounded, injured soldiers: 2x the amount
4. disability pay, family stress, broken marriages, 
5. 20% of active members needed mental health treatment, 40% of reserves needed it

A Faulty System of Accounting, p. 18
1. cash accounting, neglects future obligations
2. accrual accounting, used by a grocery store
3. $500B a year to Department of Defense, where does that $ go?
4. fastest increase in military spending in 40 years
5. state governments have to pay for veteran healthcare
6. use of emergency funds makes a mockery of the budgetary process
7. difficult to understand what the war was actually costing
8. more than $3T cost, conservative assumptions
a. long term liabilities must be considered
9. equipment is worn out or destroyed
10. Social Security disability, subsidized loans, etc. are part of the equation
11. soaring energy costs
12. weaker economy
13. lower tax revenues
14. less than 8% of the budget was interest-Clinton, now more than 10% of the budget will be interest
15. social & economic costs
16. diverted gov. expenditures from schools, roads, research, and other areas that would be good for the short & long term health of the economy
17. only includes cost to the USA, not the world (3T figure)

Ch.2 The Costs To The Nation’s Budget
a. upfront appropriated cost, over $200B
b. combat operations, transporting troops, deploying, feeding, supplies, training of Iraqi forces, purchasing & repairing weapons, munitions, supplementary combat pay, providing medical care to troops on active duty and returning veterans, reconstruction, payments to Jordan, Pakistan, Turkey
c. $645B, 3/4 for Iraq, 10x the Bush Administration’s early estimates
d. $138 a month per American, $100 going to Iraq
e. high costs of medical care & disability
f. support troops are in danger
g. 37% of soldiers from Iraq & Afghanistan has sought medical treatment
h. 48% of veterans will seek treatment by the VA
i. $388B for disability compensation
j.6-10x, wearing out equipment, faster than normal
k. deferring the maintenance of equipment and the replacement of equipment until after the Iraq war is bad policy, (p.44)
l. regular salaries out of regular defense, the rest come out of supplemental appropriations
m. 3% of GDP to 4.2% in 2008 
n. Pentagon’s budget has increased by more than $500B
o. misleading, deficient, an inadequate accounting @ the Pentagon, 46
p. Pentagon’s base costs are much higher-intelligence funding, recruiting, and compensation
q.2006, more convict felons could join the army
r. more “category 4” lowest aptitude score troops
s. applications to West Point & the US Naval Academy, 10-20% less than their prewar levels
t. experienced troops, $150K for re-enlistment
u. wants to recruit 92,000 new troops by 2012
v. overall lack of planning
Costs To Other Branches Of Government
a. Department of Labor (insurance & worker’s compensation), HUD, Dept. Agriculture, Dept. Small Business-saddled with costs
b. disability for US contractors is extremely expensive
c. $10K to $21K to insure a private security guard making $100K
d. contractors-high rates of death & injury in Iraq
e. veterans will have low incomes, will qualify for a lot of social services
f. the cost of energy has increased
g. other gov. agencies will have increased energy costs as well

Cost of Borrowing & Paying Interest on the Debt
a. no new taxes for high income individuals
b. 1) interest we have paid on money we already borrowed, what we still owe on what we borrowed, 3) what we will have to pay to borrow for future war operations
c. “There are no free wars”(55)
d. extra costs could increase total cost 50% or more

Ch. 3, The True Cost Of Caring For Our Veterans
a. many troops have had to serve longer than original commitment
b. Pentagon labels injuries as non-combat related
c. 1/3 of those deployed to Iraq war have been deployed 2 or more times & many have served in both Iraq & Afghanistan
d. 90% of medical costs incurred-can be attributed to Iraq
e. 100,000 soldiers treated for mental health
f. 52,000 have Post-traumatic-stress-disorder (PTSD)
g. 185,000 have sought counseling & readjustment services
h. 1/4 veterans applied for compensation for 8 disabling medical conditions
i. Traumatic Brain Injuries from explosive devices, more of these troops can be saved
j. 1/4 of soldiers with blast related injuries die
k. Veteran’s Benefits Administration & Veteran’s Health Administration
l. 23 pages of paperwork for medical validation vs. accepting veteran’s claims prima facie.
m. the government often with-holds veteran’s compensation
n. 2005, $34.5B a year in disability/veteran’s compensation
o. medical evaluation board > physical evaluation board
p. 12% of disability office claims-inaccurate
q. private health care, claims processed in 60 days versus 6 month’s backlog for VA
r. poor paperwork by VA
s. Pentagon’s poor accounting system
t. soldiers can be billed for equipment if it is lost
u. $4.3B annually to veterans of the Gulf War
v. $299B to $372B in disability benefits
w. the VA is vastly understaffed & they take a long time to train
y. Congress will move free care from 2 years to 5 years, probably...
z. VA-good for training medical students, good care for rehabilitation

Medical Care For Veterans
1. above a certain income level & not disabled, rationed out
2. post-traumatic stress disorder, acute depression, substance abuse
3. traumatic brain injury, PTSD, amputations, spinal cord injuries
4. PTSD, unemployable
5. mental health & substance abuse care-high priorities
6. emergency funding requested, for long term veteran’s care
7. high risk of unemployment, homelessness, family violence, crime, alcoholism, drug abuse. 
8. local & state governments have to bear burden of troop’s needs
9. veteran’s need government health care
10. substantial administrative costs for VA staff
11. the economic and social costs > budgetary costs faced by the federal government

Ch. 4 Costs Of War That The Government Doesn’t Pay
a. $1.7T to $2.7T in total costs
b. social costs are staggering
c. 1) loss of productive capacity + other hidden costs to the war
d. substantial costs: cost to veterans, families, communities 

The Economic Value & Loss Of Life
a. compensation for bodily loss in private industry can be very high
b. total soldier’s compensation: $500,000 in compensation, private comp. has been $8.5M plus
c. $4M in care for brain trauma, get $60,000 in veteran’s and Social Security, doesn’t cover it
d. someone killed in an environmental disaster, life is valued at $7.2M
e. value 4000 soldiers & 28M 
f. contractors, $50B

The Economic Cost of the Seriously Injured

& The Economic Cost of Mental Health Disability
a. 1/7 returning VA Veterans has a mental health issue
b. longer deployments, greater risk of mental health problems
c. PTSD patients suffered diminished well-being, physical limitations, compromised health status, permanent unemployment, days spent in bed, and episodes of violence
d. mental health disorders > poor physical health
e. large strain on veteran’s families
f. families have to give up their jobs to take care of the veteran’s
g. heavy financial burden on families with low incomes
h. family pays cost of care until extensive documentation secures government reimbursement
i. value of life: $7.2M, $500,000 for each soldier killed, 
j. National Guard: undersupplied
k. slow response time for National Guard
l. troops paid less than when in private employment, deployment implies wage reductions
m. members of the Army National Guard & Reserves may have to wait for their disability benefits to come through
n. National Guard normally functions as an insurance policy
o. weapons of mass destruction did not exist in Iraq!
p. we struck Iraq preemptively, strategic geopolitical position
q. “This war has not been good for the American economy or for the world economy, and we are likely to feel the ramifications for years to come.”(113) 

Monopoly Capital: An Essay on the American Economic & Social Order, Paul Baran, Paul M. Sweezy

Monopoly Capital: An Essay on the American Economic & Social Order, Paul Baran, Paul M. Sweezy
1. monopoly capitalism, system made up of giant corporations 
2. Big Business organized as corporations
3. small business is not independent of big corporations 
4. corporate-monopoly center
5. smaller-business sector, take on strategies/calculations of Big Business
6. Big Business, dominant element
7. corporations maximize profit, accumulate capital
8. smaller business, receiving end
9. Big Business creates crises
10. direct, hierarchial, bureaucratic relations in corporations
11. directions from top down
12. responsibility from bottom up
13. market relations are price relations
14. competitive price system tended to produce a state of equilibrium, p. 54
15. business cycles, disturbances in the normal course of development
16. attacks on traditional price theory
17. Keynes: General Theory Of Employment
18. a monopolistic price system was substituted for a traditional competitive system, p. 56
19. wide range of prices attractive to corporations
20. similar corporations, if one lowers prices, effect will be felt by others
21. cartels
22. antitrust laws to prevent formation of cartels
23. corporations act in group interest
24. Marx: “the executive power of the state is simply a committee for managing the common affairs of the entire bourgeois class.”(64)
25. low profits in agriculture, > price supports & acreage controls
26. “the function of the state is to serve the interests of monopoly capital.”(66)
27. “With every advance of monopoly toward greater economic power and more general social acceptance the federal government becomes more subservient to it, more dependent on it, more disposed to favor it with grants and privilege, protection, and subsidy.”
28. corporations aren’t that technologically progressive & organized efficiently
29. incentive to cut costs faster than rivals
30. if a new instrument, material, or machine can help save money, customers want it, p. 70
31. producers make more profits by helping others make more profits, p. 71
32. increasing productivity > more profits for corporations
33. innovation originates in a handful of corporations,
34. workers need to be paid well to keep consuming 
35. “The system will cease to be capable of generating sufficient purchasing power to keep the mechanism of growth in operation,”(75)
36. labor productivity has increased, 75
37. more organized workers command higher wages, p. 77

"Imperialism & Capitalism," Joseph A. Schumpeter, p. 83-130

“Imperialism & Capitalism,” Joseph A. Schumpeter, p. 83-130

1. expansion is required
a. inclinations toward war & conquest
b. many wars waged without reason
c. social structures tend to maintain themselves
d. many individuals gain socially & economically from war
e. imperialism is of a primitive character
f. “more civilized” countries can pursue imperialism
g. 1750s, capitalism becomes significant
h. a profit based economy developed
i. capitalist classes overthrew the dominant classes of the time
j. the bourgeoisie led the movement
k. workers started to be able to assert themselves politically
l. clerics, legal scholars & physicians were the traditional intellectual class
m. the “professional” became a class
n. people were freed from old institutions 
o. democratization, individualization, rationalization (p. 89)
p. rationalistic decisions were needed for their survival > the rest of life was considered rationally because of economic rationalism
q. constant application, attention, and concentration of energy are the conditions for survival
r. excess energy goes into industry, art, science & the social struggle
s. energy for war became energy for labor
t. “A purely capitalist war therefore can offer no fertile soil to imperialist impulses.”(90)
u. should we condemn capitalism or just condemn imperialism?
p. 90
q. “But modern pacificism, in its political foundations if not its derivation, is unquestionably a phenomenon of the capitalist world.”(92)
“threat of attack became an avowed occasion for war.”(93)
“today imperialism is carefully hidden from public view,”(93)
“every expansionest urge must be carefully related to a concrete goal.”(93)]
r. “the industrial worker created by capitalism is always vigorously anti-imperialist.”
-Are they really? Are workers really concerned about imperialism?
t. the capitalist age has “methods for preventing war.”(94)
u. pre-capitalist power structures remain (p. 94-95)
v. the US was the least likely to be imperialist, then Teddy Roosevelt promoted imperialism, p. 96
w. many people will gain from war in a capitalist economy, p. 97
x.the national economy is impoverished by war, p. 98
y. the war profits aren’t a big enough motivation for capitalists to go to war

z. actual free trade areas: no forcible expansion into such areas, p. 99

1. profit is in the division of labor among nations
2. protectionism is not an essential characteristic of capitalism
3. barriers hurt exports
4. the economy becomes a weapon for the political struggle, 102
5. tariffs hurt consumers
6. tariffs help specific industries, 103
7. before 1914, banks had excess capital
8. protectionism leads to trusts
9. monopoly capitalism: big banks + cartels are one 
10. organized capital profits hugely from wars of aggression
11. foreign workers are underpaid
12. capitalism overproduces, then needs somewhere to put the excess of products
13. monopolies are behind protective tariffs
14. capitalism and imperialism don’t have to lead into each other, 118
15. tariffs-from the monarchy
16. unnatural advantages in capitalism.... 
17. the bourgeois became one of the power instruments of the monarchy, p. 119
18. modern nationalism developed, p. 120
19. the Hanseatic League & Venice could only maintain themselves with fortified bases, warehousing privileges, and protective treaties
20. “established habits of thought and action tend to persist, and hence the spirit of guild and monopoly at first maintained itself, and was only slowly undermined, even where capitalism was in sole possession of the field.”(121)
21. autocracy was needed to protect economic interests
22. “Capitalism did bring about many changes on the land, springing in part from its automatic mechanisms, in part from the political trends it engendered-abolition of serfdom, freeing the soil from feudal entanglements, and so on-but initially it did not alter the basic outlines of the social structure of the countryside.”(121)
23. “the features and trends of autocracy-including imperialism-proved so resistant, why they exerted such a powerful influence on capitalist development, why the old export monopolism could live on and merge into the new.”(121-122)
24. the ruling class of the Middle Ages did not become the capitalist class, landowners were a different class
25. “The nobility entered the modern world in the form into which it had been shaped by the autocratic state-the same state that had also molded the bourgeoisie. It was the sovereign who disciplined the nobility, instilled loyalty into it, “statized” it, and, as we have shown, imperialized it.”(123)
26. “The bourgeoisie did not simply supplant the sovereign, nor did it make him its leader, as did the nobility. It merely wrested a portion of his power from him and for the rest submitted to him.”(123)
27. “It is in the state that the bourgeois with its interests seeks refuge, protection against external and even domestic enemies. The bourgeois seeks to win over the state for itself, and in return serves the state and state interests that are different from its own.”(124)
28. “Because pugnacious sovereigns stood in constant fear of attack by their equally pugnacious neighbors, the modern bourgeois attributes aggressive designs to neighboring peoples. All such modes of thought are essentially non-capitalist.”(124)
29. “Nationalism is affirmative awareness of national character, together with an aggressive sense of superiority. It arose from the autocratic state.”(125)
30. the autocracy molds the bourgeois into a nationalistic type of policy, p. 126
31. “The alignment of capitalist interests should make him utterly reject military methods, put him in opposition to the professional soldier.”(126-127)
32. “Nationalism and militarism, while not creatures of capitalism, become “capitalized” and in the end draw their best energies from capitalism.”(128)
33. (Imperialism) “It would never have been evolved by the “inner logic” of capitalism itself.”(128)
34. “The only point at issue here was to demonstrate, by means of an important example, the ancient truth that the dead always rule the living.”(130)

Imperialism: A Study, p. 65-109

Imperialism: A Study, p. 65-109

• 1. China/Japan War, profitable for Europe’s financial houses
• a. railway/mining companies > profitable business for companies that raise capital
• b. more armaments, more public debts,
• c. war, revolution, anarchist assassination: manipulates the market
• d. quarrel between USA & Great Britain over Venezuela...
• e. non-economic factors: patriotism, adventure, military enterprise, political ambition, philanthropy
• f. “Finance manipulates the patriotic forces which politicians, soldiers, philanthropists & traders generate; the enthusiasm for expansion which issues from these sources, through strong & genuine, is irregular and blind; the financial interest has those qualities on concentration and clear sighted calculation which are needed to set Imperialism to work.”(66)
• g. “the final determination rests on financial power.” (67)
• h. newspaper: “facts & opinions of the business classes.”
• i. “the general body of the Press comes more & more under the conscious or unconscious dominion of financiers.”(67)
• j. the press will not oppose the organized financial classes (67)
• k. the press is strongly biased toward imperialism (68)
• l. parasites on patriotism
• m. false motives: good government, promote Christianity, stop slavery, elevate the lower races

Chapter V, Imperialism Based On Protection

• 1. increased military spending: insurance premium for business
• 2. increased hostility against foreign nations, characteristic of imperialism
• 3. trade SHOULD be a mutual benefit to the nations involved
• 4. imperialism would make an individual bankrupt

1. 71

• 1. markets may not be worth what they cost
• 2. keeping nation’s finances separate doesn’t make sense
• 3. roundabout trade: crucial
• 4. seizing colonies: not free trade
• 5. tariffs: not free trade
• 6. spheres of influence create monopolies (p. 72)
• 7. Protectionism is not Free Trade! (Obviously)
• 8. rubber trade, increase supply, keep cost down
• 9. bounties to sugar producers, artificially cheap sugar in Britain
• 10. “Open Door” shouldn’t require military action
• 11. it is costly, dangerous & laborious to open non-Western, pre-industrial nations to trade
• 12. France, Russia, Germany, USA could develop tropical nations
• 13. Britain is overwhelmed with its commitments

The Economic Taproot Of Imperialism, p. 76

• 1. national force is used to secure new markets
• 2. poor & precarious markets
• 3. Germany, Belgium, US: advanced with great rapidity
• 4. protectorates/annexation: protects colonial investment
• 5. new markets can take the overflow of goods
• 6. investors want annexation
• 7. secure food & raw materials for Mother Country
• 8. imperialism is said to be a necessity (p.78)
• 9. militarism can overtake liberty & equality (p.79)
• 10. economic forces are the driving force of imperialism
• 11. USA: natural resources + skilled + unskilled labor force + genius for invention & organization
• 12. protectionism allowed US industry to mature
• 13. concentration of wealth among the captains of industry
• 14. goods could be produced faster than they could be consumed > falling price
• 15. trusts develop out of cut-throat competition
• 16. US manufacturing capacity may outpace consumption p. 82
• 17. oil, steel, sugar, railroads, banking: have to spend more at home or expand abroad
• 18. isolationism is abandoned, imperialism is undertaken
• 19. surplus goods are dumped in foreign markets
• 20. Messrs, Rockefeller, Pierpont Morgan, Hanna, Schwab were behind the Republican Party of Teddy Roosevelt
• a. “manifest destiny” and “mission of civilization” are misleading
• b. financiers need to expand to employ more capital
• c. China, Pacific, S. America: new markets for the US
• d. Cuba, Philippines, Hawaii: desirable, tiny portion of appetite
• e. advance of capitalism at home in USA must expand (p. 85)
• f. over-production leads to depressions
• g. Germany overproduced, must sell in E. Africa, West Africa, China
• h. German protectorates were established, p. 86
• i. improvement of methods of production > centralization of financiers
• j. over production, under-consumption
• k. under-consumption leads to high unemployment
• l. saving: capital lies idle
• m. wages are based on cost of living?
• n. wages are not based on the efficiency of the labor.
• o. the rich never spend enough to prevent overproduction
• p. the surplus income of the rich is automatically saved
• q. millionaire’s incomes rise faster than their spending
• r. trusts: narrow/dam up channels of investment
• s. Imperialism is required to sell surplus of goods abroad
• t. if labor earned more, the surplus could be sold domestically
• u. higher taxes would give workers more public benefits
• v. the poor have many unsatisfied material wants
• w. an intelligent progressive community with a lot of educational/occupational opportunities would purchase those extra goods
• y. there doesn’t need to be under-employment & over-production
• z. producers have a hard time selling their products (p. 92), need advertisers

Progressive Society p. 93

• 1. would want more inventive/operative energies of producers
• 2. would not be “a false economy of distribution.”
• 3. would not be “a chronic economic waste.”
• 4. better distribution: full employment, high consumption at home
• 5. “Imperialism is the root of this false economy.”
• 6. social reformers want to raise consumption for the masses
• 7. excessive incomes = a suicidal economy
• 8. the rich have a consuming power they do not use
• 9. public taxes & public spending need to increase
• 10. “unearned elements of income should be taxed.”
• 11. Trade Unionism/Socialism: enemies of imperialism (p. 96)
• 12. Imperialism crushes trade unionism & misuses socialism
• 13. the State could meet the working class’ economic needs p. 97
• 14. expansion of foreign trade/empire is not necessary
• 15. quantitative vs. qualitative growth, p. 98
• 16. Denmark/Switzerland: 1) strong public education, 2) developed agriculture, 3) applies science to manufacturing,
• 17. Britain: 1) neglected agriculture, 2) allowed population to grow, 3) fell behind in education, 4) didn’t adapt to new technology

Imperialist Finance, p. 100

• 1. Imperialism: private interests use public payrolls to expand business outside of the home country
• 2. 3/4 of the $ goes to naval/military operations
• 3. education, civil government are neglected
• 4. public $ goes to landowners
• 5. incredible expenditures on S. African war
• 6. profitable markets for surplus goods
• 7. bribes or concessions to less benefitted interests
• 8. 1) interest, 2) trade profits, 3) employment
• 9. public spending should increase, p. 103
• 10. taxation should be mostly on unearned income
• 11. a straight tax on citizens would not allow Imperialism to function, p. 104
• 12. resources were extracted from S. Africa with tax dollars
• 13. Free Trade cheapened labor, p. 105
• 14. the Liberal Party favored protectionism
• 15. both parties were sold out & the people were ignorant
• 16. Imperialism thrives on indirect taxation
• 17. many elites are Protectionists
• 18. the masses see history with dim eyes
• 19. the Liberal party didn’t promote peace, retrenchment, and reform
• 20. Liberal party, buffer between conservatives and socialist union movements
• 21. the Liberal Party won’t renounce Imperialism
• 22. land reform would infringe on right’s of landowners

Imperialism, A Study, p. 40-64

Imperialism, A Study, p. 40-64

• 1. colonies are economically & politically dependent on Great Britain
• 2. Cape Colony, Natal: lacking in self government
• 3. other colonies: Australia, Canada, Newfoundland, the Channel Islands, Gibraltar, Malta
• 4. semi-tropical colonies: labor is exploited
• 5. Canada & Australia, some self government
• 6. new imperialism: annexation of tropical countries
• 7. Australia & Canada don’t want to depend on British manufactured goods.
• 8. Laos, Niger Coast Protectorate, North Borneo: do about 1,000,000 pounds of trade a year
• 9. Lancashire, cheap textiles, Birmingham, cheap metals, Sheffield: gunpowder, spirits, tobacco

Chapter III, Imperialism As An Outlet For Population

• 1.populations want a fuller & easier subsistence
• 2. as population increases, its harder to find good employment
• 3. surplus immigrants would like new land
• 4. traders, engineers, overseers are needed abroad in imperialism
• 5. British soldiers are then needed to protect British subjects
• 6. Britain has a lower population density than prosperous industrial parts of Germany
• 7. seizing new territory is expensive
• 8. if the theory that Britain is over-populated is true, and Britain’s inhabitants need imperialistically held land to settle on, why are there such few migrants to Britain’s actual colonies?
• 9. Canada, Australia, S. Africa: most heavily populated colonies
• 10. imperialism is an insignificant factor in employment
• 11. no substantial emigration to properties acquired after 1870 except the Transvaal & the Orange River
• 12. “The new Empire is even more barren for settlement than for profitable trade.”(50)

Chapter IV, Economic Parasites Of Imperialism

• 1. a small market has been obtained
• 2. rich men seeking advantage of the commonwealth
• 3. sectional interests overwhelm holistic interests
• 4. bad for the nation as a whole, good for certain business interests
• a. risks & embarrassments of foreign policy
• b. costly wars
• c. social & political reforms in Britain were halted
• d. sectional interests: enemies of the commonwealth
• e. a defensive policy might work just as well
• f. a socialist country & a laissez faire democracy would know Imperialism is not in its best interest
• g. which commercial & social interests benefit from Imperialism?
• h. enormous profits for the manufacture of war-related items
• i. new markets for exports are acquired
• j. a pushful policy is good for certain industries
• k. Manchester, Sheffield, Birmingham, compete in textiles, hardware, machinery, spirits, guns,
• l. railways, canals, public works, factories, mines, improvement of agriculture stimulate manufacturing
• m. Parliament is influenced by small business interests
• n. service careers set up in India for wealthy elites
• o. “vast system of outdoor relief for the upper classes.”(56)
• p. military, clerical, academic, Civil Service opportunities are generated

II, 56

• 1. internationalization of capital
• a. growth in income from external investments
• b. taxes can be evaded abroad
• c. insurance companies, investment trusts, land mortgage companies: profitable returns on international investments
• d. 15% of Britain’s total wealth was invested abroad
• e. investment in railways, banks, telegraphs, and public services owned or managed by governments
• f. * interest exceeds profits on import/export trade
• g. *foreign & colonial trade are growing, income from foreign investment is growing
• h. the public purse is used to advance private investments + safeguard and improve existing investments (60)
• i. Britain, France, Germany, US:
• j. Britain: creditor country, US, France, Germany are advancing on the same path
• k. France tried to take over Mexico because French citizens held Mexican securities
• l. Egypt became a British province
• m. Tel-el-Kebir: battle to protect Britain’s economic interests in Egypt
• n. imperialism is injurious to the public purse & the citizen
• 1. enormous expenditures on armaments
• 2. diplomatic audacity
• o. investing/speculative classes endorse imperialism
• p. banking, broking, discounting, loan floating, company promoting
• q. Rothschild’s financed many wars
• r. investors heavily endorse imperialism
• s. Philippine island investments put $ into JP Morgan’s pockets, p. 65

Chapter II, The Emergence Of Southern Europe, 20 to 37.

Chapter II, The Emergence Of Southern Europe, 20 to 37.

1. last 3,000 years of the pre-Christian era, S. Europe gradually emerged as a well-populated region of developed agriculture, industry, trade, politics, rich culture.
2. S. Europe influenced/aided by Asia/Egypt
3. north, flat expanse
4. Asia Minor: Middle, land bridge
5. Germany/Rhine: rainy weather
6. S. route, seaway along Mediterranean, important part in economic emergence
7. Mediterranean, 2,200 miles in length
8. oarsmen needed to counteract winds
9. Europe had minerals which Near Eastern peoples lacked
10. Cyprus, copper, Elba: iron, Spain: silver, gold, copper, iron
11. Greece: silver & lead
12. Bohemia: tin 
13. Black Sea, shipping of furs from Russian forests
14. Troy, 2400 BC, collect loot or levies from the people crossing the Dardenelles
15. 2000-100Bc, trade routes became longer
16. Mediterranean: winter, summer: only seasons
a. water: problematic, less than 2 inches of rain per month
b. goat, sheep, hog: figure largely into the rural economy
c. meat & dairy: small place in diet
d. lowlands couldn’t feed a large population
e. grains, olives, vines: staple crops
f. terraces had to be erected for hill-side farming
g. olive oil, the butter & lard
h. water, tea, coffee, beer, wine. 
i. waterworks had to be built for Mediterranean cities
j. artificial irrigation was required
k. colonies were established on the Black Sea coast

Crete
1. fairly large island 
b. temperate climate
c. fertile, well watered soil
d. large forests for shipbuilders
e. copper & clay
f. shellfish > dye was extracted 
g. imported Spanish metals & British tin
h. overthrown about 1400 BC

Phoenicia
1. narrow belt of the Syrian coast
2. natural resources, good location (better than Crete!)
3. cedar, cyprus & oak trees
4. Carthage, took control of W. Sicily
5. built warships, hired mercenaries
6. Africa: gold, ivory, ebony, ostrich feathers, precious stones, slaves-brought across Sahara or by ships
7. Phoenicians added industry to commerce
8. copied Mesopotamian/Egyptian methods & patterns
9. Tyrian purple, expensive, for royalty

Greeks
1. not the 1st people to occupy the S. part of the Balkins
2. lived in small city-states, ports, nests of warriors
3. disturbance between 1200 and 1000 BC, Greeks come to Aegean
4. herded & grew grain
5. exploited mineral deposits
6. depended on “mother cities” for capital goods
7. produced oil, wine, manufactured goods, exchanged for grain
8. Corinth/Athens: depended almost entirely on imported food
9. Athens depended on Egypt & S. Russia
10. Seythian alliance to get grain
11. public officials needed store houses to feed the population

Land Problems, 
1. land was divided into small & large estates
2. small farmers needed to borrow for seeds, animals, equipment, pest killers
3. higher interest rates for small farmers
4. aristocrat/bourgeois: common enemy in farmer’s class struggle
5. Solon the Lawgiver cancelled many debts
6. farmers produced goods
7. large estates/temples: freedman, slaves & women worked

Slave Labor
1. Greek industry relied heavily on slave labor
2. Near East/ Europe: a lot of slavery 
3. common part of labor structure
4. POWs, people captured by pirates, children of slaves worked as slaves...
5. slaves could have simple rural training or developed professional skills
6. slaves might till at a farm or work at the oar of a galley
7. slaves could work as policeman, domestic servants, craftsman, salesman or clerks
8. p. 32 slaves could marry & own property
9. slaves could get a portion of owner’s receipts, emancipation or both

Commerce & Currency
1. Greek foreign trade was virtually all sea trade
2. a lot of risks involved in shipping trade
3. stated weight of copper unit
4. Lydia in Asia Minor minted coins
5. King Croesus, author of innovation
6 Mt. Laurium near Athens was rich in silver/lead ore
7. lead was used for roofs, pipes, & domestic utensils (poisoning...)
8. slaves extracted the silver/lead, state owned mine, private industries paid a royalty to the state
9. coins changed the nature of wealth
10. easier to store, accumulate, consume, invest, lend, 
11. money changer, banker, valuables were stored with him 
12. city-state: city with a small rural area around it
13. cities were rivals
14. geography, history, competition
15. Athens built up an anti-Persian confederation
16. Peloponnesian War (431-404) attack on Athens

Hellenistic Period
1. Philip of Macedon absorbed the peninsula
2. Alexander the Great conquered Asia Minor, overthrew Persian empire
3. Alexander’s empire was a military creation
4. Egypt, Asia, Macedon
5. Greek exports declined, couldn’t import enough food
6. Alexander, economic & intellectual metropolis of the whole Hellenic world
7. Greeks handled Chinese goods!
8. large boats were built, postal services were created, harbors were improved, lighthouses were erected, pirates were suppressed
9. Persians allowed water supplies to fall into disrepair
10. Alexander took Persian emperor’s gold, gave large bonuses to soldiers, 
11. built new cities, administration and luxuries
12 Ptolemies, new kings of Egypt, installed Greek efficiency experts to increase productivity
13. prosperity didn’t last consistently
14. kings of Egypt/W. Asia fought each other, tried to ruin each other’s economies
15. peasants felt over-taxed
16. the Romans came east and conquered