A Monstrous Error

It would be a monstrous error to consider the democratization of Eastern Europe the result of the Reagan/Bush Administration's defense or foreign policy. The trillion dollar defense buildup, the confrontations with the "evil empire," supporting the rebels in Afghanistan, the arms negotiations et al had nothing to do with Mikail Gorbachev's decision to introduce constitutional freedom and liberty into Eastern Europe. The U.S.S.R as the constant enemy was the foil for the Reagan/Bush build down of the Federal Government.

Defense Poor

We became defense poor so we couldn't afford the Federal Government anymore. The propaganda was that Reagan was cutting government spending when if fact he increased government spending to unprecedented levels. In an earlier age this was known as a "big lie." Reagan/Bush not only incurred debts of historic proportion but they encouraged a Japanese run upon our economic hegemony, by refusing to hold the Japanese accountable for trade practices that were contrary to U.S. law and international agreements, (dumping of electronics and pirating and counterfeiting U.S. machine tools among other things). The Reagan/Bush administration severely admonished the Toshiba Corporation for selling advance electronics technology to the Soviet Union our political enemy but continues to allow the Japanese, our economic rivals, to buy our high technology corporations with the huge profits they have amassed from the mismanagement of U.S. economic interests. Sales to the Soviets do not effect our economy, (they don't even affect our political hegemeony and to boot the Soviet Union has been a source of high tech purchased by the United States), sales to the Japanese displace American workers and products from the market place. If we view the recent events in Eastern Europe as directly affected by U.S. foreign and defense policy we will have plunged our head into the sand.

Gorbachev's Popularity

I believe it was Winston Churchill who remarked that the Russians get credit for stopping what no other nation would start. Gorbachev is riding a wave of unprecedented popularity because the Soviet Union is ceasing the oppression of their satellite states and for introducing some reforms at home. In reality it can be said that Gorbachev has just recognized the political consequences for the end of World War II. We are today where we should have been in 1945 and 1946. The people of Eastern Europe are little better or worse off than they were in the 1950s and the combined military might of Russia and its client states is such that they could have put off reform indefinitely as the Rumanians would like to do now. Yugoslavia has been a more or less liberal communist regime since the 1950s. Is Yugoslavia a portent of the new Eastern Europe? I think not. I believe the model for the new Eastern Europe is Japan. Japan has an oligarchy firmly in control of the country. It is not a Mexican democracy, but its not a Minnesota democracy either. Japan has strong central policy planning of its economy.

Oligarchy

The process of accomplishing Japan's policy is decentralization and great emphasis is placed upon the wisdom of the worker in the work place, but the overall direction and tempo and pace of Japanese economic policy rests in very few hands in government and industry. Japanese industry is organized into voluntary oligopolies with the government leading the process through the Ministry of Finance and through MITI, the Ministry of International Trade and Industry. MITI is the post war equivalent of the Japanese War Production Board. As we know from the T. Boone Pickens episode the Japanese corporate society is closed. Japan's corporate leaders are pals. They don't like surprises. They prefer consensus management for which in the United States they would be prosecuted under a whole passel of laws.

The Greatest Effort

We had a War Production Board in the United States during World War II and we mobilized the greatest industrial effort the world had ever seen. The industrial capacity of World War II put the United States in the forefront of the world's economies and placed us in the leading role in world affairs. Since 1980 that role is now in serious jeopardy. Our postwar economy enabled us to mount the Marshal plan, the most farsighted and altruistic effort ever mounted between the leading nation of the world, its allies and enemies. Today we are defense poor. We don't have to be but that is what happens when taxes are cut and spending is increased. The Republicans like to chide the Democrats as the big spenders—tax and spend, the Republicans say. There is a measure of truth in the charge. The record, however for the Republicans is pretty grotesque—borrow and spend! Keep the nation off balance for decades to build down the Federal Government. The Republican position is not defensible without calling a Constitutional Convention to change the basic structure of the government. To keep manipulating the Federal budget to achieve political and ideological goals is unconscionable. It deprives the citizen/sovereign of the right to self-determination. It entrenches the imperial presidency and it has immeasurably weakened our defense preparedness. We fought and won World War II with a nominal income tax rate of 90%. We attained world leadership and the greatest value in our economy (the dollar bought more than any time in history, before or since) in 1972 with a nominal income tax rate of 70%. With a nominal income tax rate of 28%, we as a nation are destitute—raising the debt ceiling to the 3 trillion range and no end in sight—till Mr. Gorbachev, to everybody's surprise including the CIA's, came into the picture.

Japan has a willing workforce free of civil strife, which contributes enormously to the efficiencies of Japanese industry. The Japanese workforce is well educated, loyal, and dedicated. They do not share in the fruits of their productivity to the extent they could since the oligopoly has determined that Japan is to be an exporting nation not a consumer nation, so the fruits of Japanese labor are not as readily available or at the same price as they are say in New York. (Some years ago I visited Raleigh, North Carolina. The area around Raleigh produces an enormous amount of strawberries but they are not available to the local population since they can be sold in New York at a greater price.) The informal controls the Japanese government and industry holds over Japanese politics and economics is not all that different from that exerted by socialist/communist countries over their people. The repression is absent, democracy is present and this is put to work by Japanese industrialists to boost the productivity of Japanese industry. The Japanese Ministers of Finance and MITI with an oligarchy can and do direct the Japanese industrial development and together with the oligarchical leaders of Japanese industry decide what's good for Japan. High level japanese bureaucrats can retire at age 50 and look forward to an important position in one of the Japanese industrial giants. Apparently our Pentagon scandal couldn't occur in Japan.

I can't think of a better model to imitate for a country that wants to retain the economic and political control of it's industrial base and recruit the willing workers necessary to make it work in a socialist society. Japan offers a ready model of state central control of policy and the decentralization of the authority to carry it out. Socialism in Eastern Europe is not being threatened. Socialism is an economic property of societies. It can be contrasted with communism and capitalism. Democracies can, at least in theory, be socialist, communistic, or capitalistic. What the Soviet Union and its client states have demonstrated over the period of the Cold War was that central planning of all aspects of the economy, planning, production, and distribution can not be managed profitably. The Soviets have demonstrated they can plan and produce nuclear and conventional weapons. They proved they could supply an insurgency, as in Vietnam, to the level where the United States had to beat a hasty and ignoble retreat. (We more or less demonstrated the same potential in Afghanistan.)

Nikita Khruschev, the progenitor of what we see in Eastern Europe today, beat his shoe on the lectern at the General Assembly at the United Nations and addressing the United States said, "We are going to bury you." He hit a nerve in the U.S. accustomed to thinking of the Soviet Union only in military terms. In the U.S. view he was saying he was going to be at our funeral. He didn't mean that at all. He knew what the Soviet potential was for war goods, he was projecting their success in the military and in space to the civilian sector of the Soviet economy, not unlike those in the good old U.S.A. who think the Defense Department is the source of U.S. prosperity. To quote the Bob Dillon song of the sixties, "You don't have to be a weatherman to know which way the wind is blowing."Japan and West Germany have demonstrated that the United States can be severely damaged if not defeated, not militarily (political hegemony) but economically (economic hegemony). This fact can not have escaped the attention of the geopoliticians of the Kremlin. Why waste all the money on a military when all you need is favored nation trading status, run up a surplus and buy the United States. The Eastern Europeans are going to have to hurry since Japan seems capable of exercising economic superiority over the U.S. by itself. The Reagan/Bush administrations have called this sell out of the U.S. to satisfy its debts 'foreign investment' in America. Some how it makes us strong to have Japan more and more in control of our economic destiny.

The Peace Dividend

Soon we shall be talking about a "peace dividend." Remember that Reagan got us into our current debt mess (domestic and international) by reducing taxes and increasing spending. He increased defense spending to the point where it more than offset savings from cuts in domestic programs and propelled us into annual debt in creases in the hundreds of billions of dollars—some reduced spending. The arrival of the peace dividend, if any would be a good time to reduce spending and in crease taxes in order to liquidate the national debt and at least slow the takeover of the United States by Japan. (One thing the Bush administration could do in any event is to keep the Japanese out of the residential housing market. Let them buy Rockefeller Center but stop their purchase of whole neighborhoods of residential dwellings which now causes the housing market to recede from the reach of ordinary middle class Americans.) Instead of dismantling the Defense Department (as many would like to do) keep the R&D function going, but shift it national interest industries that directly support our economic hegemony. The DOD has a great engine going; there is no reason to stop it now, only redirect it. Since what is needed is a National Institutes of Manufacturing and Industrial Science and Technology (NIMIST), this could be a joint effort of all the Services—and the higher executive leadership of this organization should be put through the hoops of an expanded and enlarged Industrial College of the Armed Forces.

Only Competitors

We need a White House that remembers its constitutional responsibilities for foreign affairs and oversees the international trade of the United States in terms of our national interest vis-a-vis our economic hegemony. We have to remember that in the economic sphere we do not have allies and enemies we have only competitors. Japan is a competitor. France is a competitor, Ditto West Germany, Sweden, Denmark, Great Britain, et al. We have no economic enemies and no economic friends. "It's nothing personal. It's just business."

We have trading partners. Japan is a trading partner. Will Japan mount a Japanese version of the Marshal plan for Eastern Europe? I think not. I think Japan will help, but always with market share in mind. Who can blame them—its the only game in town.

Let's End World War II First

Gorbachev recommended a 35-nation European Summit, including the United States and Canada. We should propose a Congress of New York, or London or Paris or Moscow to convene the combatants of World War II and conclude that war before we initiate any new business. All the boundaries and sovereignties resulting from World War II should be confirmed before word one is said about any new accommodations. The unification of Germany should not be a matter of discussion at this time. The plans for the development of the European Community should continue a pace and there should be no talk (except peaceful exchanges and trade) of political divisions without all the allies and their former enemies at the same table. World War II was not a European war. The repercussions and consequences of World War II were not felt in Europe alone, but all over the world, I presume that is why it was called a World War. It is up to the nations of the world to solve the subsequent problems and lay the ground work for what the Republican aspirant to the White House in the Roosevelt era, Wendell Wilkie, called "One World." The luck of the economic draw has given us another chance. A directed portion of the peace dividend plus reasonable taxes should give us the wherewithal. And its time we stopped fooling with our form of government and start to run our affairs according to substantive policy, taking into account our national interests, both domestic and international and stop playing games with the budget. It would be interesting to see the top 1000 names of the recipients of interest from the national debt. Why do we need a welfare program for the wealthy? That is what the national debt is. We ought to be ashamed of ourselves. Lets grow up and be responsible citizens of the modern world. Gorbachev is supplying the opportunity.

. . . Ted Sudia . . .

© Copyright 1989
Institute for domestic Tranquility