Economic Update with Richard D. Wolff

Episode: Military Spending and Debt

Date: January 23, 2020
Host: Richard D. Wolff
Guest: Bob Henley (Investigative Journalist)

Overview

This episode delves into the intertwined topics of military spending, public debt, and their impacts on society and the economy. Richard D. Wolff opens with a sweeping analysis of recent unrest in France, particularly the Yellow Vest movement, as a lens to examine class struggle and state responses to economic crises. The main focus of the episode, however, is the United States’ approach to funding war—primarily through debt—and the consequences this approach has for wealth inequality, social priorities, and the broader health of American society. In the second half, Wolff is joined by journalist Bob Henley, who offers further insights into the systemic relationship between militarism, debt, inequality, and social control.

Key Discussion Points & Insights

1. The French Yellow Vest Movement — Lessons for Working People (00:10–14:20)

• Backdrop: Wolff highlights France's economic struggles and the emergence of the Yellow Vest movement, which began in response to a fuel tax tied to environmental measures.
• Key Dynamics:
  • The movement transcended opposition to the tax, reflecting broader dissatisfaction with austerity, persistent aftershocks of the 2008 financial crisis, and policies favoring the wealthy.
  • Despite the government’s expectation that protest momentum would fade, actions escalated, culminating in a general strike against proposed pension reforms.
• Outcome & Message:
  • President Macron was forced to withdraw his plan to raise the retirement age, marking a victory for public protest.
  • Memorable quote:
    “Every working class in every country ought to think long and hard about what the French workers did and what they could accomplish, because the same imposition on working people ... is going on elsewhere.” (13:23–14:00)

2. How Wars Are Paid For — The Myth of Invisible Costs (14:20–17:30)

• US War Funding: Wars are typically financed through borrowing rather than immediate taxation.
  • Borrowing pushes fiscal pain into the future, making the true costs of war less visible and suppressing opposition.
  • The costs become a burden for future generations, either through taxation or broader economic consequences.
    • Quote from Wolff:
      “If you made the people in a society ... actually pay with taxes for what a war costs, they’d be a lot less pro war than they might otherwise be. So you kick the can down the road, you borrow to postpone the pain, but it just postpones it. It doesn’t remove it.” (14:50–15:35)
  • Massive public resources are diverted to military contractors while domestic social needs go unmet.

3. Debt as a Tool of Social and Economic Control (17:32–19:10)

• Bob Henley’s Analysis:
  • Debt serves as social control, enabling short-term gains but creating long-term obligations.
  • US debt servicing is projected to reach $700–$800 billion per year—rivaling or surpassing military appropriations.
  • Debt holdings benefit the wealthy—those able to invest in government debt reap interest, often tax-free.
    • Henley:
      “The people that take advantage of that are people that park their wealth there where they can enjoy the profits and interest payments, often tax free. ... So the bigger the debt is, what happens? The bigger the machine is of the concentration of wealth.” (18:20–19:00)
  • Both at the federal and municipal level, debt is reinforcing existing inequality.

4. The ‘Forever War’—Professional Military, Public Disconnect, and Hidden Costs (19:46–21:00)

• Change in Military Service:
  • Shift to an all-volunteer military (since the Nixon era) disconnects the broader public from the human costs of war.
  • Emergency funding mechanisms obscure the true financial cost of ongoing conflicts.
    • Henley:
      “We relied on a voluntary military which meant ... America was disconnected from the stresses and strains of our military and their families. ... If that duration is suspended forever in animation, then you have a further notice war and a professional class that is making their living by keeping the war going. And hence, surprise, surprise, we don’t win them.” (20:10–20:55)
  • Professionalization leads to perpetual conflicts without public scrutiny or accountability.

5. Cumulative Debt: War, Financial Crisis, and Systemic Vulnerability (21:00–23:34)

• Wolff points to how the 2008 financial crisis produced a new wave of debt, with low interest rates encouraging borrowing at every level (corporate, individual, government).
• The combination of war debt and financial crisis debt creates unknown vulnerabilities.
  • Wolff:
    “The combination gives you what the IMF, the World Bank and other institutions are saying these days, which is we have no idea what kind of vulnerability this load of debt subjects us to.” (22:03–22:20)
• Collapse in household wealth: $20 trillion lost, especially among African American families, undermines social stability and increases fragility for the next downturn.

6. Social Ramifications: Life Expectancy, Healthcare, and Systemic Disconnect (24:19–25:37)

• Wolff and Henley discuss declining US life expectancy for three years running, signaling deep societal distress.
  • Henley criticizes the Affordable Care Act for catering to industry profits, with one in four Americans delaying necessary care due to cost (Gallup).
  • 137 million Americans struggle with medical debt.
  • The official discourse (“great economy”) is disconnected from these realities.
    • Henley:
      “If we were a developing nation, the World bank be huddling with us and say, well, you know, you’re not doing so well because that’s considered an indicia of being a going concern as a country improving a lot of your people.” (24:32–24:55)

7. The Ties that Bind: Militarism, the Economy, and Social Policy (25:38–27:00)

• Martin Luther King Jr.’s Warnings:
  • MLK is quoted and discussed as having warned against the destructive interaction of racism, materialism, and militarism.
  • King’s critique: When profit and property outweigh people, the resulting “giant triplets” cannot be conquered.
• The Perpetuation of the War and Medical Industrial Complexes:
  • Military bases in every state ensure political support for high military budgets—a model now mirrored in the medical sector.

8. The New Economic Draft — Student Debt and the All-Volunteer Army (27:01–28:39)

• Student debt ($1.7 trillion) is now leveraged as a recruitment tool for the military.
• Henley:
  “The military is using ... the student debt crisis ... to drive young people to volunteer into the military so they can avoid the debt shackles. ... We need to see this debt as the new slavery.” (27:35–27:51)
• The lack of congressional oversight enables endless conflict, with recent deaths abroad (e.g., in Niger) going practically unnoticed.

Notable Quotes & Memorable Moments

• Richard D. Wolff:
  “You fight these wars usually with poor people as your soldiers. We call that the economic draft. Everybody knows about it.” (19:20)
• Martin Luther King Jr. (quoted by Bob Henley):
  “When machines and computers, profit motives and property rights are considered more important than people, the giant triplets of racism, materialism and militarism are incapable of being conquered.” (15:58–16:20)
• Bob Henley:
  “We need to see this debt as the new slavery.” (27:51)

Timestamps of Important Segments

• 00:10 – 14:20: France’s Yellow Vest movement, economic austerity, and lessons for labor.
• 14:20 – 17:30: Mechanisms for funding war, the invisibility of costs due to debt.
• 17:32 – 19:10: Debt as social control, wealth concentration, and municipal debt.
• 19:46 – 21:00: Professional military & public detachment from war.
• 21:00 – 23:34: America’s layered debt crisis; consequences for household wealth.
• 24:19 – 25:37: US decline in life expectancy, healthcare cost burdens.
• 25:38 – 27:00: MLK’s critique, the military and healthcare industrial complexes.
• 27:01 – 28:39: Student debt’s role in military recruitment; congressional oversight failures.

Concluding Thoughts

This episode pulls back the curtain on the methods used to fund American militarism and the far-reaching consequences of debt-based government finance. It exposes how these systems primarily benefit the wealthy, deepen economic inequality, and undermine the social and political health of the nation. The discussion calls for systemic change and greater public engagement, encouraging listeners to draw lessons from international labor movements and to recognize the interconnected ways debt, war, and social priorities shape our lives.