Rescuing America - From the Pentagon

Writing in today's Asia Times Online, regular Grist contributor and PhD Jonathan Rynn explains how America's decline is being driven, in large part, by his nation's profligate defence spending.

"When New York City wanted to make the biggest purchase of subway cars in US history in the late 1990s, more than US$3 billion worth, the only companies that were able to bid on the contract were foreign. The same problem applies to high-speed rail today: only European or Japanese companies could build any of the proposed rail networks in the United States.

The US has also ceded the high ground to Europe and Japan in a broad range of other sustainable technologies. For instance, 11 companies produce 96% of medium to large wind turbines; only one, GE, is based in the United States, with a 16% share of the global market. The differences in market penetration come down to two factors: European and Japanese companies have become more competent producers for these markets, and their governments have helped them to develop both this competence and the markets themselves.

But Europe and Japan's dominance in renewable technologies is really based in a broader domain of competitive competence. They dominate the most fundamental sector of the economy, namely the production of machinery for manufacturing industries in general (often referred to as the mechanical engineering sector). The European Union produces almost twice as much industrial equipment overall as the United States, according to data compiled by the EU, Japan produces almost as much as the US, with about half the population. The split among the EU, US, and Japan, which together produce most of the world's machinery, is 52%, 27% and 21%, respectively.

The different niches of an economic ecosystem, such as the various machinery and equipment sectors, thrive as a self-reinforcing web of engineers, high-skill production workers, operational managers and factories. As of 2003, Europe's manufacturing sector made up 32% of its nonfinancial economy, while the manufacturing sector of the United States comprised only 13% of its nonfinancial sectors. The decline of American machinery and manufacturing sectors, in conjunction with the on-again/off-again nature of American renewable energy policy, explains why Europe and Japan are so far ahead of the United States in the transition to a more sustainable economy. And America's decline can be traced to one overriding factor: a military budget that comprises nearly half of the world's military spending. For decades, as the late Professor Seymour Melman showed in many books (such as After Capitalism) and in numerous articles, the Pentagon has been draining not just money but also the engineering, scientific and business talent that Europe and Japan have been using for civilian production. As Melman often pointed out, the US military budget is a capital fund, and American citizens can use that fund to help finance the construction of the trains, wind and solar power, and other green technologies that will help us to avoid economic and environmental collapse.

That economic collapse, if it comes, will be caused by two major factors: the end of the era of cheap oil, coal and natural gas; and the decline of the manufacturing and machinery base of the economy. Both problems can be addressed simultaneously, as Europe and Japan are showing, by moving the economy from one based on military and fossil fuel production to one based on electric transportation and the generation of renewable electricity."