War and the economy

European leaders have pledged to raise NATO military spending to 5% of GDP by 2035. That is, all except Spain which is trying to stabilize their economy through growth and tax measures.

There is a bit of a fudge in the numbers:

… spending an extra 1.5% on related items like cyber security and adapting roads and bridges for military vehicles.

The reclassification of infrastructure and state-level cyber security spending that was likely going to happen anyway is a strange way to fudge defence spending. The 5% number is partly a narrative trick in an attempt to mollify Trump and partly a recognition that the world has suddenly become more dangerous thanks to far-right governments around the world, especially in the USA.

In addition to the spending on non-productive assets (military spending), the largest hit to the global economy is the constant risk of something bad happening along with the occasional escalation of bad things actually happening.

This is not good for energy production or material exports from Canada either, in case anyone thought that there was a silver lining to American imperialism. The restructuring of trade in inputs of goods from Canada has meant that increased prices in oil reduce, not increase, reliance of Canadian products.

Oil at $80 means American fracked oil is profitable again. While steel and aluminum in the face of war is supported through domestic production subsidies.

Add to this the real and specific statements that the Americans do not want our inputs means that Canada is even more likely to have a hard time here and have liberal politicians "forced" to go along with the Americans.

All the institutions that might have been able to stop the slow ratcheting towards war have been undermined by the far right and the USA. Regional conflicts have stretched over borders, more sophisticated and expensive weapons continue to be used, and anxiety is high within leadership as tactics of war shift back to the 1700s goal of boldly "taking out" political and military leaders along with sabotage.

Political leadership tend to think things stay like they were at the start of the conflicts. That having the upper hand on big, expensive, and destructive technology means that "victory" in war is easier. This is the classic mistake that the Americans make every time they engage in this kind of activity.

Unfortunately, the rules change every time a war is launched and the current conflicts will be no different. What looks like a conflict between nations with very unequal technologies will turn into something else as the losing side looks to different strategies and tactics.

The current war program is supported by massive capital spending in the private sector. Massive and expensive weapon systems, communications technology, and weaponized space. There is lots of money capital can make here while pushing for restructuring of the world, with a goal of wealth transfer. And, they seem to be getting their wish with the announced 5% of GDP being spent on nothing useful, with the requisite profit skimmed off the top.

The analysis is that these kinds of conflicts do not have lasting or permanent effects on stock valuations and can be beneficial to capital.

But, that is not how the war will unfold. New technology begets new tactical responses. It creates a world of risk that we have not even contemplated yet.

All the while, the economy is being destroyed for working people. Deregulation, shifting spending away from social supports, climate change, increased precarity of food supplies, risks to global product supply chains, and energy prices. All of these have direct impacts on the real economy needed for survival.

There are fools with their hands on the trigger and the rich see no benefit from not firing.