Empire of Illusion

by Chris Hedges

  The defense industry is a virus. It destroys healthy economies. We produce sophisticated fighter jets while Boeing is unable to finish its new commercial plane on schedule and our automotive industry goes bankrupt. We sink money into research and development of weapons systems and starve renewable energy technologies to fight global warming. Universities are flooded with defense-related cash and grants yet struggle to find money for environmental studies. The massive military spending, aided by this $3 trillion war, has a social cost. Our bridges and levees collapse, our schools decay, our real manufacturing is done overseas by foreign workers, and our social safety net is taken away. And we are bombarded with the militarized language of power and strength that masks our brittle reality.

  Mellman coined the term permanent war economy to describe the American economy. Since the end of the Second World War, the federal government has spent more than half its tax dollars on past, current, and future military operations. It is the largest single sustaining activity of the government. The military-industrial establishment is especially lucrative to corporations because it offers a lavish form of corporate welfare. Defense systems are usually sold before they are produced, and military industries are permitted to charge the federal government for huge cost overruns. Huge profits are guaranteed. Foreign aid is given to countries such as Egypt, which receives some $3 billion in assistance but is required to buy American weapons with $1.3 billion of it. The taxpayers fund the research, development, and building of weapons systems and then buy them on behalf of foreign governments. It is a circular system that little resembles the paradigm of a free-market economy.

  There is rarely any accounting to the client (i.e., the government and people of the United States) if work is shoddy or produces flawed weapons systems. The U.S. Coast Guard, in one of many examples, undertook a five-year, $24 billion modernization program called “Deepwater.” The Coast Guard spent $100 million to lengthen by thirteen feet the 110-foot Island Class patrol boats. They shipped the boats to the Bollinger Shipyard outside of New Orleans. The eight boats, when they returned, had such severe structural problems that they all had to be retired from service.

  The Pentagon, Mellman noted, is not restricted by the economic rules of producing goods, selling them for a profit, then using the profit for further investment and production. It operates, rather, outside of competitive markets. It has erased the line between the state and the corporation, and it subverts the actual economy. It leeches away the ability of the nation to manufacture useful products and produce sustainable jobs. Mellman used the example of the New York City Transit Authority and its allocation in 2003 of $3 billion to $4 billion for new subway cars. New York City asked for bids, and no American companies responded. Mellman argued that the industrial base in America was no longer centered on items that maintain, improve, or are used to build the nation’s infrastructure. New York City eventually contracted with companies in Japan and Canada to build its subway cars. Mellman estimated that such a contract could have generated, directly and indirectly, about 32,000 jobs in the United States. In another instance, of 100 products offered in the 2003 L.L. Bean catalogue, Mellman found that ninety-two were imported and only eight were made in the United States.

  The defense industries, like all corporations, rely on deceptive ad campaigns and lobbyists to perpetuate their lock on taxpayer money. The late Senator J. William Fulbright described the reach of the military-industrial establishment in his 1970 book The Pentagon Propaganda Machine. Fulbright explained how the Pentagon influenced public opinion through direct contacts with the public, Defense Department films, close ties with Hollywood producers, and use of the commercial media to gain support for weapons systems. The majority of the military analysts on television are former military officials, many employed as consultants to defense industries, a fact they rarely disclose to the public. Barry R. McCaffrey, a retired four-star army general and military analyst for NBC News, was, The New York Times reported, at the same time an employee of Defense Solutions, Inc., a consulting firm. He profited, the article noted, from the sale of the weapons systems and expansion of the wars in Iraq and Afghanistan he championed over the airwaves.2

  The grip of corporations on government is not limited to the defense industry. It has leeched into nearly every aspect of the economy. The attempt to create a health-care plan that also conciliates the corporations that profit from the misery and illnesses of tens of millions of Americans is naïve, at best, and probably disingenuous. This conciliation insists that we can coax these corporations, which are listed on the stock exchange and exist to maximize profit, to transform themselves into social-service agencies that will provide adequate health care for all Americans.

  “Obama offers a false hope,” says Dr. John Geyman, former chair of family medicine at the University of Washington and author of Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It. “We cannot build on or tweak the present system. Different states have tried this. The problem is the private insurance industry itself. It is not as efficient as a publicly financed system. It fragments risk pools, skimming off the healthier part of the population and leaving the rest uninsured or underinsured. Its administrative and overhead costs are five to eight times higher than public financing through Medicare. It cares more about its shareholders than its enrollees or patients. A family of four now pays about $12,000 a year just in premiums, which have gone up by 87 percent from 2000 to 2006. The insurance industry is pricing itself out of the market for an ever-larger part of the population. The industry resists regulation. It is unsustainable by present trends.”

  Our health-care system is broken. There are some 46 million Americans without coverage and tens of millions with inadequate policies that severely limit what kinds of procedures and treatments they can receive. Eighteen thousand people die, according to the Institute of Medicine, every year because they can’t afford health care.

  “There are at least 25 million Americans who are underinsured,” Geyman says. “Whatever coverage they have does not come close to covering the actual cost of a major illness or accident.”

  The corporations that run our for-profit health-care industry would be shut down if single-payer, not-for-profit health-care was provided for all Americans. The for-profit health-care industry, like the defense industry, has vigorously fought to protect itself through campaign contributions and lobbying. They have placed profit before the common good. A study by Harvard Medical School found that national health insurance would save the country $350 billion a year. But Medicare does not make campaign contributions. The private health-care industries do.

  “The private health insurance companies and the pharmaceutical industry completely and totally oppose national health insurance,” says Stephanie Woolhandler, one of the founders of Physicians for a National Health Program. “The private health insurance companies would go out of business. The pharmaceutical companies are afraid that a national health program will, as in Canada, be able to negotiate lower drug prices. Canadians pay 40 percent less for their drugs. We see this on a smaller scale in the United States, where the Department of Defense is able to negotiate pharmaceutical prices that are 40 percent lower.”

  We cannot improve the system by expanding government oversight or improve for-profit health care by requiring doctors and hospitals to prove they provide quality medical services. Proposals to require insurance companies to use more income from premiums for patient care or link payment with reported quality are unworkable. Nor will turning record-keeping from paper to electronic data blunt rising costs.

  “There isn’t an enforcement mechanism,” Geyman says bluntly. “Most states have been unable to control rates or set a cap on rates.”

  “The only way everyone will get insurance is with national health insurance,” says Woolhandler, who is a professor at Harvard Medical School. “People with catastrophic illnesses usually lose their jobs and lose their insurance. They often cannot afford the high pre
miums for the insurance they can get when they are unable to work. Most families that file for bankruptcy because of medical costs had insurance before they got sick. They either lost the insurance because they lost their jobs or faced gaps in coverage that meant they could not afford medical care.”

  Our health system costs nearly twice as much as national programs in countries such as Switzerland. The overhead for traditional Medicare is 3 percent, and the overhead for the investment-owned companies is 26.5 percent. A staggering 31 percent of our health-care expenditures is spent on administrative costs. Look what we get in return. And yet the reality of the health-care system is never discussed because corporations, which fund the main political parties, do not want it discussed.

  The Democratic Party has been as guilty as the Republicans in the abdication of real power to the corporate state. It was Bill Clinton who led the Democratic Party to the corporate watering trough. Clinton argued that the party had to ditch labor unions, no longer a source of votes or power, as a political ally. Workers, he insisted, would vote Democratic anyway. They had no choice. It was better, he argued, to take corporate money and do corporate bidding. By the 1990s, the Democratic Party, under Clinton’s leadership, had virtual fund-raising parity with the Republicans. Today the Democrats raise more.

  The legislation demanded by corporations sold out the American worker. This betrayal was accompanied with a slick advertising campaign that promoted the laws, used to destroy the working class, as the salvation of the American worker. The North American Free Trade Agreement was peddled by the Clinton White House as an opportunity to raise the incomes and prosperity of the citizens of the United States, Canada, and Mexico. NAFTA would also, we were told, stanch Mexican immigration into the United States.

  “There will be less illegal immigration because more Mexicans will be able to support their children by staying home,” President Clinton said in the spring of 1993 as he was lobbying for the bill.

  But NAFTA, which took effect in 1994, had the effect of reversing every one of Clinton’s rosy predictions. Once the Mexican government lifted price supports on corn and beans grown by Mexican farmers, those farmers had to compete against the huge agribusinesses in the United States. Many Mexican farmers were swiftly bankrupted. At least 2 million Mexican farmers have been driven off their land since 1994. And guess where many of them went? This desperate flight of poor Mexicans into the United States is now being exacerbated by large-scale factory closures along the border as manufacturers pack up and leave Mexico for the cut-rate embrace of China’s totalitarian capitalism. But we were assured that goods would be cheaper. Workers would be wealthier. Everyone would be happier. I am not sure how these contradictory things were supposed to happen, but in a sound-bite society, reality no longer matters. NAFTA was great if you were a corporation. It was a disaster if you were a worker.

  Clinton’s welfare reform bill, signed on August 22, 1996, obliterated the nation’s social safety net. It threw 6 million people, many of them single mothers, off the welfare rolls within three years. It dumped them onto the streets without child care, rent subsidies, or continued Medicaid coverage. Families were plunged into crisis, struggling to survive on multiple jobs that paid $6 or $7 an hour, or less than $15,000 a year. And these were the lucky ones. In some states, half of those dropped from the welfare rolls could not find work. Clinton slashed Medicare by $115 billion over a five-year period and cut $25 billion in Medicaid funding. The booming and overcrowded prison system handled the influx of the poor, as well as our abandoned mentally ill. We have 2.3 million of our citizens behind bars, most of them for nonviolent drug offenses. More than one in one hundred adults in the United States is incarcerated. The United States, with less than 5 percent of the global population, has almost 25 percent of the world’s prisoners. One in nine black men between twenty and thirty-four is behind bars. This has effectively decapitated the leadership in the inner cities, where African Americans have traditionally had to react more quickly to confront social injustices.

  The Clinton administration, led by Lawrence Summers, signed into law the Financial Services Modernization Act of 1999, which ripped down the firewalls that had been established by the 1933 Glass-Steagall Act. Designed to prevent the kind of meltdown we are now experiencing, Glass-Steagall established the Federal Deposit Insurance Corporation. It set in place banking reforms to stop speculators from hijacking the financial system. With Glass-Steagall demolished, and the passage of NAFTA, the Democrats, led by Clinton, tumbled gleefully into bed with corporations and Wall Street speculators. They used institutions like Fannie Mae and Freddie Mac as a welfare gravy train. And many of the architects of this deregulation, economists such as Summers, remain in charge of the nation’s economic policy.

  “When times are prosperous, we do not mind a modest increase in ‘welfare,’” wrote Robert N. Bellah:When times are not so prosperous, we think at least our successful career will save us and our families from failure and despair. We are attracted, against our skepticism, to the idea that poverty will be alleviated by the crumbs that fall from the rich man’s table. . . . Some of us often feel, and most of us sometimes feel, that we are only someone if we have made it: can look down on those who have not. The American dream is often a very private dream of being a star, the uniquely successful and admirable one, the one who stands out from the crowd of ordinary folk, who don’t know how. And since we have believed in that dream for a long time and worked very hard to make it come true, it is hard for us to give it up, even though it contradicts another dream that we have—that of living in a society that would really be worth living in.”3

  The cost of our empire of illusion is not being paid by the corporate titans. It is being paid on the streets of our inner cities, in former manufacturing towns, and in depressed rural enclaves. This cost transcends declining numbers and statistics and speaks the language of human misery and pain. Human beings are not commodities. They are not goods. They grieve and suffer and feel despair. They raise children and struggle to maintain communities. The growing class divide is not understood, despite the glibness of many in the media, by complicated sets of statistics, lines on a graph that chart stocks, or the absurd, utopian faith in unregulated globalization and complicated trade deals. It is understood in the eyes of a man or woman who is no longer making enough money to live with dignity and hope.

  Elba Figueroa, forty-seven, lives in Trenton, New Jersey. She worked as a nurse’s aide until she got Parkinson’s disease. She lost her job. She lost her health care. She receives $703 a month in government assistance. Her rent alone runs $750 a month. And so she borrows money from friends and neighbors to stay in her apartment. She laboriously negotiates her wheelchair up and down steps and along the sidewalks of Trenton to get to soup kitchens and food pantries to eat.

  “Food prices have gone up,” Figueroa says, waiting to get inside the food pantry run by the Crisis Ministry of Princeton and Trenton. “I don’t have any money. I run out of things to eat. I worked until I physically could not work anymore. Now I live like this.”

  The pantry occupies a dilapidated, three-story art deco building in Old Trenton, the poorest neighborhood in the city. The pantry is one of about two dozen charities in the city that provide shelter and food to the poor. Those who qualify for assistance are permitted to pick up food once a month. Clutching pieces of paper that show the number of points they have been allotted, they push shopping carts in a U-shaped course around the first floor. Every food item is assigned a number of points. Points are allotted according to the number of people in a household. The shelves of the pantry hold bags of rice, jars of peanut butter, macaroni and cheese, and cans of beets, corn, and peas. Two refrigerated cases have eggs, chickens, fresh carrots, and beef hot dogs. “All Fresh Produce 2 pounds = 1 point,” a sign on the glass door of the refrigerated unit reads. Another reads: “1 Dozen EGGS equal 3 protein points. Limit of 1 dozen per household.”

  The swelling numbers waiting outside homeless she
lters and food pantries around the country, many of them elderly or single women with children, have grown by at least 30 percent over the last year. General welfare recipients struggle to survive on $140 a month in cash and another $140 in food stamps. This is all many in Trenton and other impoverished pockets now have to survive. Trenton, a former manufacturing center with a 20 percent unemployment rate and a median income of $33,000, is a window into our unraveling. And as the government squanders taxpayer money in fruitless schemes to prop up insolvent banks and investment houses, citizens are thrown into the streets without work, a place to live, or enough food.

  There are now 36.2 million Americans who cope daily with hunger, up by more than 3 million since 2000, according to the Food Research and Action Center in Washington. The number of people in the worst-off category—the hungriest—rose by 40 percent since 2000, to nearly 12 million people.

  “We are seeing people we have not seen for a long time,” says the Reverend Jarrett Kerbel, director of the Crisis Ministry’s food pantry, which supplies food to 1,400 households in Trenton each month. “We are seeing people who haven’t crossed that threshold for five, six, or seven years coming back. We are seeing people whose unemployment has run out, and they are struggling in that gap while they reapply, and, of course, we are seeing the usual unemployed. This will be the first real test of [Bill] Clinton’s so-called welfare reform.”

  The Crisis Ministry, like many hard-pressed charities, is over budget, and food stocks are precariously low. Donations are on the decline. There are days when soup kitchens in Trenton are shut down because they have no food.

  “We collected 170 bags of groceries from a church in Princeton, and it was gone in two days,” Kerbel says. “We collected 288 bags from a Jewish center in Princeton, and it was gone in three days. What you see on the shelves is pretty much what we have.”