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Neither Katrina Nor Terrorism Will Bring Down America, But "Free Trade" Will
AmericanEconomicAlert.org ^ | Tuesday, September 20, 2005 | William R. Hawkins

Posted on 09/26/2005 8:31:05 AM PDT by Willie Green

For education and discussion only. Not for commercial use.

What if a terrorist bomb had caused the levee breaks that flooded New Orleans rather than hurricane Katrina? Would such an act of war, as opposed to nature, have brought America to its knees? Or are there other, more dangerous threats pending?

Improving port security has been a high priority since September 11, 2001, with nightmare scenarios of a weapon of mass destruction being slipped into a crowded harbor. According to calculations from GlobalSecurity.org, an attack using toxic industrial chemicals or a radiological weapons could cause 350 deaths, contaminate the affected area for months, and require the evacuation of hundreds of thousands of people. This is not as bad as the situation in New Orleans where the flood water turned toxic, and the area affected covered 80 percent of the city. And the death toll in the city and along the gulf coast is higher.

The New Orleans port complex is the largest in the U.S. by tonnage and the fifth-largest in the world. Since the earliest days of the republic, New Orleans has been one of the most strategic spots in North America. It is the gateway to the Mississippi River, the main link between the American Midwest and the outside world. Its loss to international trade in grains, coal, oil and other raw materials could slow the economy of the U.S. heartland.

A scenario prepared for the Congressional Research Service by Jonathan Medalia last January looked at the detonation of a 15-kiloton nuclear device in a major port. Casualties would be much higher than a chemical attack or a hurricane, but the property damage estimate of up to $500 billion may not be that far from what it will ultimately cost to clean up and rebuild New Orleans and the other damaged areas along the coast. In his address to the nation September 15, President George W. Bush outlined plans to spend at least $200 billion in Federal money on immediate relief and the rebuilding of infrastructure, but much more will be needed to restore destroyed homes and businesses.

Yet, despite the damage and dislocation from Katrina, the country as a whole continues to operate in a normal fashion. Americans have rushed to donate to the evacuees; manpower and resources have been deployed to the area from across the country; and survivors are being relocated to communities both near and far; all indications of a sound civil society. Motorists are paying more for gasoline, but the vast majority of Americans are otherwise going about their business as usual. A half-hearted suggestion from some quarters that pro football games should have been postponed the weekend after the disaster fell on deaf ears. The New Orleans Saints, riding an emotional high of determination rather than despair, then went on to upset the Carolina Panthers.

More importantly from the perspective of America's enemies, U.S. military operations around the world were not disrupted.

Two weeks after the flooding, the U.S. Coast Guard reported many of the affected ports and waterways in the region were reopening, with some restrictions, as was New Orleans international airport. Expectations are that Gulf Coast oil terminals will shortly reopen, and gasoline pipelines are already back in operation.

New Orleans Mayor Ray Nagin said the central business district may reopen within days, and that about 180,000 people may return to the city within a week or two, when power and sewer systems are restored. Many retailers should be open by then and two hospitals are expected to be back in operation. Federal officials, however, are warning against a too rapid attempt to return to "normal" because preliminary sampling by the Environmental Protection Agency and the Centers for Disease Control show high levels of contamination from the flood waters creating a significant health hazards. There is also limited potable water and electricity; and a continuing threat from new storms. Yet, the mayor is confident that New Orleans will come back bigger and better than ever.

The reaction to the destruction of a major American port, should send a message to any terrorists planning a major attack on any other city that their ambitions are futile. The modern nation-state is well-nigh invulnerable to isolated disasters, whether natural or manmade. This is especially true for the United States, a country that spans a continent with 294 million people and a gross domestic product of $12 trillion.

Historian Warren Chin traces this development to the Industrial Revolution, which he argues "may well represent one of only three revolutions to have affected the domain of war over the last fourteen thousand years....States now possessed almost limitless mean with which to wage war" and, one can add, survive and recover from war. Wars became longer because individual battles became less decisive against nations that could mount a defense in depth. The ability to materially support a protracted war meant that victory went to the side best able to sustain its efforts, both economically and politically. The two world wars of the 20th century are the ultimate examples of this principle, but a number of other conflicts also fit the pattern.

If nations can survive strategic bombing, trench warfare, naval blockades and the other extremes of total war, the chances that the comparatively puny efforts of terrorist cells can bring down an otherwise healthy society are small.

What history shows can bring down a national society over time is the steady pounding -- day in, day out; year in, year out -- of economic rivals stealing away the wealth and production capabilities that give a country the means to weather disasters and wars. Historian Paul Kennedy has argued that a critical element in determining victory is "the way in which a state's economy has been rising or falling relative to the other leading nations in the decades preceding the actual conflict. For that reason, how a Great Power's position steadily alters in peacetime is as important...as how it fights in wartime." In its response to foreign economic storms, the Bush Administration is failing on a grand scale and is not learning from its mistakes. The "trade war" with rising powers like China is far more important that the "war on terror."

While many conservative pundits and members of Congress are complaining about spending $200 billion for reconstruction, they continue to ignore a trade deficit that will likely send over $720 billion out of the country this year, on top of last year's $618 billion deficit. The loss of national industry and over two million manufacturing jobs since 2000 dwarfs the economic impact of Katrina.

Harvard sociologist William Julius Wilson is one of the leading experts on the urban poor whose desperate images and sometimes violent behavior during the Katrina crisis have sparked a new debate on poverty in America. In his book, When Work Disappears: The World of the New Urban Poor, Wilson writes, "The problems of joblessness and social dislocation in the inner city are, in part, related to the processes in the global economy that have contributed to greater inequality and insecurity among Americana workers in general."

Wilson's data indicates that while there had been progress in reducing poverty in the 1970s, this trend was reversed in the 1980s -- despite general economic growth. "A neighborhood in which people are poor but employed is different from a neighborhood in which people are poor and jobless," he argues, adding, "Many of today's problems in the inner city ghetto neighborhoods -- crime, family dissolution, welfare, low levels of social organization, and so on-- are fundamentally a consequence of the disappearance of work."

The movement of blue collar jobs to low wage overseas factories, plus the influx of illegal aliens to compete with American blacks for urban work (especially construction) are social problems that an administration obsessed with the rhetoric of economic sophistry have ignored. The Federal government had already failed New Orleans long before the hurricane season started.

The trade policy levees which protected the American economy from the toxic flood of foreign imports have not just broken, they have been torn down by a succession of administrations. Acolytes of "free trade" have seen the flood as a cleansing process that only a few transnational corporations deserve to survive by outsourcing the construction of their ark. Luddite Americans, those who still cling to a middle class, patriotic ideal of a vibrant national economy, are left to drown, with no recovery effort in the offering.

This suicidal mind set must be rejected and removed from public policy thinking. In its place must come a new commitment to rebuilding the nation's economic strength across the board behind trade policies that support domestic production against the machinations of foreign rivals. National survival depends on building strong defenses against threats, whether natural or manmade.


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; Government
KEYWORDS: biggovernment; bobsweeney; communism; corporatism; depression; despair; doom; dustbowl; eeyore; globalism; grapesofwrath; greenwithenvy; joebtfsplk; protectmeplease; socialism; thebusheconomy; willielogic
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To: Alberta's Child
The biggest problem facing inner-city ghetto neighborhoods today is not a "disappearance of work," but a complete social breakdown...

I lived in Milwaukee WI through the 80's. It wasn't a chicken vs. egg thing, but rather they happened simultaneously.

41 posted on 09/26/2005 7:46:06 PM PDT by Last Dakotan
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To: traviskicks
Agreed. Let's have more free trade, more prosperity and less unions!

The union jobs in manufacturing were gone twenty years ago for the most part. Now I see 7.50/hr mom and pop foundry jobs leaving too.

42 posted on 09/26/2005 7:52:19 PM PDT by Last Dakotan
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To: Mase
Maybe it is confusing to you because in reality Sony does not buy US Bonds directly but rather the Japanese central banks do.

Your $50 for a CD player (plus millions of others) leaves the Japanese (or Chinese for that matter) with a surplus of US dollars which would drive the value of the dollar down in a free market. Instead they buy US Treasuries to sop up these dollars. US politicians, both Republican and Democrat fuel this market by deficit spending and borrowing.

43 posted on 09/26/2005 7:59:55 PM PDT by Last Dakotan
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To: RFT1

You will be attacked soon on FR. Free Trade to some on here is more holy than the bible and word of God.


44 posted on 09/26/2005 8:05:12 PM PDT by chris1 ("Make the other guy die for his country" - George S. Patto)
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To: chris1; RFT1
[chris1 to RFT1] You will be attacked soon on FR. Free Trade to some on here is more holy than the bible and word of God.

Or more like the Koran. See my tagline.

45 posted on 09/26/2005 8:13:42 PM PDT by A. Pole (" There is no other god but Free Market, and Adam Smith is his prophet ! Bazaar Akbar! ")
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To: Mase
If I buy a drill made in China from Home Depot and use my Amex card, which I pay off every month, how does that create any foreign obligation?

Every dollar we send overseas has to evetually be redeemed in its own currency or exchanged for US made goods and services. It may temporarilly come back to underwrite the debt, or it may buy property within the US; but, the more we do that the further we debase the currency.
46 posted on 09/26/2005 8:25:00 PM PDT by ARCADIA (Abuse of power comes as no surprise)
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To: realconservativesreadkirk
As to trade balancing, it will, and it will be painful

Oh...so we must endure pain, because we've been bad little citizens and built our own economy that benefits us, not other countries.

Bad us. Bad citizens. Take that! Free trade down your throat to show you that you've been BAD and you must be PUNISHED with pain.

How quaint. Economics as B&D farce. That's the gig you want to sell to voters?

Won't last long. One more election cycle or so. CAFTA was the result of bribes and criminal manipulation.

Won't be long. No one except masochists votes to inflict worthless pain on themselves.

47 posted on 09/26/2005 8:34:42 PM PDT by Regulator (But then, maybe you're a masochist - my advice? Move to L.A.!)
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To: devane617
Well hell! They got lots of work now. Let's see how they perform.

They won't have as many jobs as the illegal aliens will.

URL Source: http://www.latimes.com/news/opinion/commentary/la-op-latino25sep25,0,6499962.story? coll=la-news-comm

48 posted on 09/26/2005 9:36:53 PM PDT by janetgreen
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To: Mase

Have an economist explain it to you


49 posted on 09/27/2005 1:26:08 AM PDT by dennisw (You shouldn't let other people get your kicks for you - Bob Dylan)
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To: Toddsterpatriot; 1rudeboy; expat_panama

Free trade ping.


50 posted on 09/27/2005 3:47:29 AM PDT by Mase
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To: dennisw
Have an economist explain it to you

It seems pretty simple, why can't you?

51 posted on 09/27/2005 3:48:42 AM PDT by Mase
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To: Willie Green
"Capitalism bad. Socialism good."

More liberal crap.

52 posted on 09/27/2005 3:53:08 AM PDT by Junior (Some drink to silence the voices in their heads. I drink to understand them.)
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To: bobbdobbs
If they held on to the money, we'd get the goods and they'd get unredeemed IOU's. Dollars are not goods or services, they are IOU's.

Hey slick, send me your worthless IOU's. I'll find something they are useful for.

53 posted on 09/27/2005 4:12:47 AM PDT by raybbr
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To: Mase
If they do choose to buy our debt instruments, they contribute to our low interest rates which have stimulated our incredible economic growth. It requires a lot of capital to grow a $12 trillion economy 4.4% a year. This is also a source for the low mortgage rates responsible for our housing boom.

Good. We finally got one of you guys to admit that foreigners run our economy.

54 posted on 09/27/2005 4:19:23 AM PDT by raybbr
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To: Last Dakotan

Foreign central banks bought 98% of treasury issuance last year.


55 posted on 09/27/2005 4:35:07 AM PDT by junta (It's Jihad stupid!)
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To: hombre_sincero

Just out of curiousity, do you agree or disagree with the Marx quote you posted?


56 posted on 09/27/2005 5:27:47 AM PDT by 1rudeboy
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To: junta; Toddsterpatriot
Foreign central banks bought 98% of treasury issuance last year.

Do you have a source for this? Or is it unadulterated BS?

57 posted on 09/27/2005 5:38:35 AM PDT by 1rudeboy
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To: A. Pole

Funny tagline.


58 posted on 09/27/2005 6:02:08 AM PDT by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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Comment #59 Removed by Moderator

To: bobbdobbs
Actually, that's my standard offer. You send me all your worldly possessions, I'll send you an IOU.

I am not as willing as a free trader to simply give up my assets.

The terms of the agreement are that you'll never come back to me with the IOU for redemption.

Are those the same terms that the foreigners who are receiving billions of our dollars have agreed to? I doubt it. They have the option of redeeming them why shouldn't I?

You can pass it around to anyone else you want, but no one can come back and redeem it with me.

Huh? The same as the last point. Why would I be as greedy and simple as to accept those terms? The Chinese surely aren't?

After all, redeeming the IOU with me would be the completion of the trade, the balancing of trade, which you anti-traders insist doesn't occur.

They do expect at some point to be able to redeem them. Unless you are just simply going to declare those IOU's null and void. Is that the future of capitalism?

60 posted on 09/27/2005 6:18:38 AM PDT by raybbr
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