Capitalism Lost: What America has Forgotten

by Fabius Maximus, with apologies to John Milton’s Epic

Summary:   To recapture our greatness we must first remember what we did right to become great.  Such as heavy investment in America by the government.   Instead we spent on projects like Apollo (expensive, but no gain) and our mad unprofitable empire.  It’s not too late to get back on the smart path.

{Apollo} had accomplished its original purpose, and the return {to the moon} was not seen as so valuable to be worth that kind of money by the political system. …. other endeavors were different. For example, the opening up of the New World. There clearly was once people got over here, a reason to come back.
— Glynn S. Lunney (NASA flight engineer for the Apollo program), quoted in Before This Decade Is Out, edited by Glen E. Seanson (2002)

The great tragedy of the effort was that the best of American technology and billions of American dollars were devoted to a project of minuscule benefit to anyone. One can speculate endlessly on what might have happened had all that effort and money been devoted to an earthly reject of more obvious benefit to the world, such as medical research or the development of alternative energy sources. … Americans {went to the moon} but they arrived at parties to celebrate the lunar landing in Toyotas, Datsuns, Volkswagens, and Renaults.
—Dark Side of the Moon – The Magnificent Madness of the American Lunar Quest by Gerald J. Degroot (2006)

Our reign as a superpower after WWII resulted from our peers’ devastation and slow rebuilding. The combination of technology developed from 1928 – 1945 and little competition gave America an incredible surge of income. Properly invested it could have boosted our economy into the 21st century. That’s the pattern of history. Wise accumulation and investment of economic surpluses provide the foundation for national greatness, just as much for the irrigation systems of ancient Mesopotamia as today.

Unfortunately we decided instead to emulate ancient Egypt, investing in projects of national greatness generating little value: NASA and DoD.  Apollo was our largest single civilian investment program since 1960, an operational success which produced almost no return in terms of national income or productivity.

Even Apollo is dwarfed by our primary vanity project: the Department of Defense.   By comparison the Pharaohs look like star hedge fund managers (the pyramids still generate income for Egypt).   Even after the collapse of the Soviet Union due to its incompetent management (not the arms race or Reagan’s Star Wars), we continued to plow America’s capital surplus in an insanely large military.

‘What are you saving this superb military for if we can’t use it?”
— SecState Albright to Colin Powell (chairman of the Joint Chiefs) about Bosnia, in her book Madam Secretary (2003)

And so we did use it. Ever more frequent interventions around the world, in effect building a mad unprofitable empire. Much of which consisted of weak tyrannical satraps hated by their people for some combination of religious and ethnic animosity, corruption, and their reliance on support of the USA.

The savings of a great nation each year gets flushed away to little or no purpose.   As we grow weaker, we channel what little savings we have (or can borrow) into the military while our national infrastructure rots away.   Anyone who travels in China and America sees the result (for an example see Two pictures show an important difference between China and America). Other nations build supertrains and fiber-to-the-home; we build F-22s and F-35s (when they’ve eventually working, they’ll be useful if Martians attack — but not useful in the 4GWs we actually fight).

F-22 Raptor which flies well when the pilots are breathing.

There is a system for rationally allocating capital, whether done by the private or public sector. It’s called capitalism. Presidents from Jackson to Eisenhower understood the important of government infrastructure to boost national productivity (for examples see “The Myth of Rugged American Individualism“, Charles A. Beard, Harper’s, December 1931). We understood it, but forgot.

It’s not too late to remember this lost wisdom. We have millions of unemployed workers in construction and manufacturing industries. The government can borrow at record low real long-term interest rates. We have a nation of infrastructure that must be rebuilt eventually. Why not now?

This was what many people recommended early in this downturn (me too; see Stabilize the economy, 7 October 2008).  It’s not too late to start.

The 21st century lies ahead of us.   Let’s build an America able to compete in it.

Spend now, while the economy remains depressed; save later, once it has recovered.  How hard is that to understand?   Very hard, if the current state of political debate is any indication.  All around the world, politicians seem determined to do the reverse.  They’re eager to shortchange the economy when it needs help, even as they balk at dealing with long-run budget problems.— “Now and Later“, Paul Krugman, op-ed in the New York Times, 20 June 2010

For more information about fiscal policy

This was bipartisan thinking before the GOP adopted Lenin’s insight that “the worse, the better”. For details see Economists discuss the impact of the stimulus on our recession, 6 October 2009.

For a guide see Everything you need to know about government stimulus programs (read this – it’s about your money), 30 January 2009

Bridge over Chesapeake and Dleware Canal, completed in 2000.

More by Fabius Maximus

Analysis and Opinion articles.