ROI, GO FIGURE PART 1

ROI, GO FIGURE
by Greg Forest
June 23, 2011

You hear a great deal from Wall Street and Washington about the goodness, strength and purity of our capitalist system. Capitalism drives not just our economy, but the whole world’s. Even Communist China has to put on its Big Boy Capitalist Panties (BBCP) when dealing in international trade. It wasn’t some benign form of communism or socialism that brought China to its present global trade dominance. The old socialist adage, “From each according to his abilities to each according to their needs,” does not fit the picture when China is dealing with it’s trade partners (or it’s own citizens I might add). China has become a wolf in capitalist clothing and appears to be doing a pretty good job at it, judging by their economic growth and global market share.

When it comes to capitalism and, while I am dishing out acronyms, look at one of those acronyms that is core to the foundations and principles of capitalism – Return On Investment or ROI.

In theory, an investor looks at the amount of the investment, the risk involved and the payoff amount and schedule, when deciding where to place their bets in businesses, markets and economies. Plugging numbers into their spreadsheets, the savvy investor will decide whether the ROI warrants the risk. Capitalism 101.

As citizens and taxpayers, would it not behoove us to look at the capital we have invested in government programs to see what our ROI is? What is the payoff for the investment we have made in these programs? In real terms, are we, as a nation of owner/investors in our government, getting a decent ROI? A simple question and, surprisingly, apparently there are simple answers. Let’s take a look briefly at some of the big dollar investments we have made and their return. In some instances we can look at investments that were not made,or bad investments and their result too. Let’s go figure.

Banking
In the era of banking deregulation, starting with the repeal of the Glass-Steagall Act during the Clinton administration, America decided to lower, if not eliminate, our investment in banking oversight and regulation. A great deal of money would not have to be invested by U.S. taxpayers because the banking industry could be trusted to regulate itself. Even now, with global economies reeling from the greatest theft in economic history, we are continuing this policy to let the banks run rampant, permitting the fox to guard the hen house.

Every night on the news we can see how well that is working out for us. Our citizen investment strategy, or lack of one, has caused the greatest losses in history, not just to the U.S. economy, but to millions of individuals and small businesses. Its a global issue that becomes quite personal when you see your retirement savings evaporate or are being thrown from your job or home. Reeling the bankers in through the only legal method, a stiffer regulatory environment, would seem to be an investment that is sorely needed but is almost universally opposed by our politicians, particularly of the Tea Party stripe. Go figure.

War On Drugs
Of all the boondoggles in tax history, this one is near the top of the list. When Richard Nixon declared his War On Drugs June 17th, 1971, it may have been with good intentions but created one of the greatest legal and public health money traps in our history.

In the Nixon era, drug and substance abuse were a fraction of the problem we face today. We now have by far the largest prison population in the world, and a great deal of those prisoners are in the system for non-violent drug offenses. Today more drugs are available than ever and at cheaper prices. Without delving into the past and the total bill of government waste over decades, just this year taxpayers are putting over $23+ billion into this bad investment.

Smart investors, like Wachovia Bank, (who got a $160 million hand slap in fines – a great ROI on their part to avoid jail time for laundering billions), clean up. The private prison management companies are also getting a great return on their political contribution investments.

The War On Drugs is, like all things American, all about money. Money for the laundering banks, money for the drug cartels, the prison industry, money for law enforcement trying to battle a public health problem in a criminal paradigm, and money for black extra-governmental programs that must be funded on the sly and off the books away from the prying eyes of Congress or the public.

Drug and gun running were primary sources of funding during the Iran/Contra Affair and there is a reason that opium production has skyrocketed to record levels since our occupation of Afghanistan. There is a lot of money in it for everybody. CIA included.

The War on Drugs exemplifies good money thrown after bad, over $1/2 trillion and counting with no positive results. Of course, at the top of the list of those opposing drug policy change, are the wealthy and violent drug cartels. Go figure.

Homeland Security/TSA
Since September 11, 2001, big bucks have been expended to assure our safety from a growing group of nebulous enemies, “the terrorists.” How an act that essentially guts the Constitution can even have the word, “Patriot” in it is a mystery to many Americans, myself included. Yet the Act was passed in the House by 357 to 66.

Thanks to our Congress doing their patriotic duty, it is now perfectly legal to take a U.S. Citizen (designated an enemy combatant) from their home in the dark of night, with neither warrant nor charges filed, without notification to family or legal counsel, throw a black bag over his or her head and ship them off to some Third World country for “rendering.” I thought “rendering” is what you did to pig carcasses, not U.S. Citizens. How naive of me.

This is a process well known in despotic countries as “disappearing.” Although I have yet to see black helicopters in my neighborhood, the legal framework is there. Welcome to our Brave new World. What the Constitution expressly forbids is now the rule of law. Go figure.

We rejoice in the death of Osama bin Laden but seem to overlook his avowed mission – to use low-tech, low cost tactics to bait the U.S. into an overreaction in the Middle East that would drive us to military exploits assured to bankrupt us.

Like a rube at a carnival we fell right into the trap and are now trying to figure out an exit strategy for three wars that were never truly necessary. George Bush announced the demise of the Taliban and Obama is trying to figure out how to get them a seat at the table. And, when all is said and done, the Taliban will probably not only have a seat at the table but will be at the head of said table. Our government still calls this, “Mission Accomplished.” Go figure.

Texas, and its politically Luddite legislature, has been called a lab for bad policy but the new “Grope No Child’s Behind” act, targeting TSA abuses, has great resonance with me. Yeah, like the government is going to respond by making Texas a “no fly zone.” I would love to see the FAA try that. Yee haw. Bring it on.

While being harassed by an incompetent TSA agent on my last airline trip, I mentioned to the agent that for all the billions spent and wasted hours of inconvenience to travelers, not one serious terrorist has been apprehended, tried and convicted through the efforts of the TSA. The agent replied that I was wrong, there were many but it was “classified information.”

My rebuttal was, if this were true, TSA management would be screaming it from the rafters to offset all the bad press they’re getting. They would love to say, “We caught Abdullah Mohammed Smith with ten pounds of C4 and detonators in his briefs before boarding a flight to . . . ” In the announcements of great TSA accomplishments in combating terrorism, I hear only crickets chirping. What investor would allow corporate management to tell stockholders that information regarding the companies successes or failures are “classified?” Go figure.

Military & Intelligence Budget
If any people know about the cost of a military, it is the U.S. citizen. I suspect we must be gearing up for interstellar war as the arsenal we now possess is more than adequate to kill everyone on this planet many times over.

The military budget is always the elephant in the room that is prohibited from entering the dialog when discussing budgetary cutbacks. No amount of military might can keep us safe when the foreign policies of our government demand a global aggressive militaristic stance to keep bucks flowing into the coffers of the defense industry. It is not the defense industry tooling up to support policy but policies being dictated by the industry to drive our foreign relations. The cart is pulling the donkey. Military foreign policy is like a drunk urinating in your front yard. When you scream, “get out of my yard!”, the drunks yells back, “you damn freedom- hating terrorist!” and proceeds to burn your house down. Perhaps the whole neighborhood.

NATO was brought into being to keep the Soviet Union in a defensive posture and to “contain” the spread of communism in Europe. In the 21st Century there are very few communists left on the planet and none in Eastern Europe. This arch enemy of decades needed to be replace with a new villain. Thus the War on Terror – the perfect defense industry product. Again the title of the war is oxymoronic – the War on Terror is actually a War for Terror. The defense industry wants the U.S. public terrorized and fearful of these nasty terrorists. What does the media fill our heads with night after night? Visions of terror coming from all directions including terrorist immigrants, terrorist gays, terrorist mortgage owners, and even terrorist teachers and public service workers.

Over a half century has passed since we defeated Germany, lets pull our troops out of Europe. NATO is an organization whose time has passed. I cringe to see Obama using NATO as his fig leaf for military expansion into Libya. “Hey, we’re not fighting Libya, NATO is. We are merely NATO members upholding our obligations to the treaty and our fellow member nations.”

The military industrial apologetic argument goes something like this, “You are safer now. A strong military has protected us from further events like 9/11.” Two rebuttals come to mind quite quickly. The first is the apologetic statement needs a small addendum, at the end of the sentence they need to add, “yet.” American foreign policy assures we will be a target in the future. We love making enemies.

I have a wooden spoon I spent $1,000 to acquire. You may laugh at buying a spoon at such great cost but it is manufactured to military specifications, has the word, “Quantum” in it’s name and protects each and every reader of this sentence. Each morning I wave the spoon towards the sky, facing each of the four points of the compass. Since deploying Astronomical Quantum Spoon Technology (AWST), the Earth has been protected from destruction by asteroid collisions. No major asteroid will hit the Earth while AWST technology is deployed. I cannot shirk my responsibilities for even one day or I invite disaster. I must remain ever vigilant and constant expensive upgrades to my spoon are of course necessary. My only concern is that I have no counterpart in the Southern Hemisphere covering our backs from the parts of the universe I can’t wave the spoon at from here. AWST must be deployed to southerly foreign shores to cover all the bases. If you disagree, you are aiding and abetting the asteroids.

And The Sad Part of It Is . .
Looking at the priorites and problems of America’s investments over the years, fixing these problems is, well, problematic. Currently our economy is described as in a, “jobless recovery.” Now there is an Orwellian term if there ever was one. So where is the “recovery” part of the economy? There are two business sectors currently feeding said recovery – banking and defense.

What would it cost to reign in the military industrial complex? Jobs. And not just jobs. In the case of the defense industry, scaling back on the military would mean the loss of what are many of the very few good blue collar jobs left. By design the banks and military contractors keep us off balance and not just tied to foreign policy but to the economy too. If we were to defund the military or scale back banking abuses to any degree, it will help tank the economy and cost thousands of jobs. The U.S. economy is designed to collapse without these industries. A sweet deal for these businesses but a toxic investment with little or no ROI for the rest of us.