Imperial Waste

Imperialism is a big gigantic waste of money. Let’s start with that.

A couple of news items caught my attention this week that illustrate this point, but before getting on to them, we first need to make a bit of a detour and try to determine imperialism’s roots.

It’s harder than it might seem. For instance, historians have a real problem explaining late nineteenth century imperialism, in which European powers conquered large parts of the globe, most notably in Africa. All sorts of explanations have been generated, but few stand up to a lot of scrutiny.

Particularly implausible are the theories of socialist thinkers, the most famous of which is Lenin’s Imperialism: The Last State of Capitalism. The socialists’ idea was that capitalism generates lots of surplus capital that it can’t get rid of because it is suppressing the wages of its own workers and so denying itself investment opportunities at home. Instead, capitalism exports its surplus, for which it needs colonies – thus imperialism.

The problem was that, like a lot of Lenin’s stuff, the theory was total hogwash. First, capitalist economies had no shortage of investment opportunities at home; and second, they didn’t need colonies to invest abroad. The British, for instance, invested far, far more in Latin America, which they never conquered, than in Africa, which they did.

Furthermore, imperialism was, generally speaking, loss-making. Colonies had to be defended and administered, but they tended to be economically undeveloped, and so didn’t generate much revenue. There was a reason why the Brits were so happy to let the Canadians become self-governing – they were fed up having to pay for a frozen piece of wasteland that only produced some fur and lumber.

So, imperialism doesn’t make a lot of sense from the point of view of the national interest, broadly defined. But it does make sense to certain minority interests within an imperial society. There are medals and promotions to be won by the military; there are contracts for the military industrial complex; and there’s also money to be made by all sorts of other entrepreneurs willing to hang on the imperialists’ coattails. If these people and groups have outsized political influence – through control of the media, financial support to politicians, or whatever – they can distort politicians’ and even the entire population’s understanding of the national interest. And thus the nation gets dragged into foreign endeavours that enrich and empower a few but do nothing at all for the people as a whole.

Which brings me on to this week’s new stories, both of which involve staggering waste of government money on military and imperial adventures.

The first story concerns the Canadian navy’s program to build a new generation of warships. This was originally budgeted as costing $14 billion. Now the parliamentary budget officer has announced that the cost has leapt to a mind-blowing $77 billion, and that the total could go up even more if the project experiences further delays (which, let’s face it, is quite likely).

Going over-budget is hardly unusual in the world of defence procurement, but a leap from $14 to $77 billion is more than a bit off the charts. Imagine what you could do with $77 billion. Apart from putting it back in taxpayer’s pockets, think of what you could do for healthcare, education, or the condition of the country’s indigenous people, many of whom don’t even have access to drinkable water. And then think of what benefits you’re going to get from $77 billion worth of warships. Or rather, think of how you would suffer if you didn’t have those ships. Would anyone invade Canada? Would the world collapse into chaos? Would any of you not directly involved in building or manning them even notice??? No, no, and no.

This is a scandalous and appalling waste of the nation’s wealth. Yet it’s passed almost unnoticed. We live in a world of pandemic economics, in which money appears to grow on trees, budget deficits have ballooned to simply incomprehensible proportions, and the loss of $70-odd billion just slips by without causing so much as a blink of an eye. Clearly, something isn’t right.

And then there’s story number two. This is the latest report from the Special Inspector General for Afghanistan Reconstruction (SIGAR), a person whose work I have mentioned many times before. SIGAR audits the money spent by the United States in Afghanistan, and it’s a litany of waste and corruption on a scale that … well, I’ve already used the word mindblowing, so I won’t say that it blows the mind, but you get the point, it involves a lot, a real, real lot, of money flushed down the toilet in Afghanistan for no obvious benefit.

Anyway, SIGAR’s latest report, which came to me in an email, says the following:

–This report is the result of a congressional request of SIGAR to summarize all capital assets in Afghanistan paid for by U.S. agencies that SIGAR has found in its prior work to be unused, not used for their intended purposes, deteriorated or destroyed.

— The capital assets reviewed for this report were funded by DOD, USAID, OPIC, and the State Department to build schools, prisons, a hotel, hospitals, roads, bridges, and Afghan military facilities.

— Of the nearly $7.8 billion in capital assets reviewed in its prior reports, SIGAR identified about $2.4 billion in assets that were unused or abandoned, had not been used for their intended purposes, had deteriorated, or were destroyed.

— By contrast, SIGAR found that more than $1.2 billion out of the $7.8 billion in assets were being used as intended, and only $343.2 million out of the $7.8 billion in assets were maintained in good condition.

— Most of the capital assets not used properly or in disrepair or abandoned are directly related to U.S. agencies not considering whether the Afghans wanted or needed the facilities, or whether the Afghan government had the financial ability and technical means to sustain them.

— This waste of taxpayer dollars occurred despite multiple laws stating that U.S. agencies should not construct or procure capital assets until they can show that the benefiting country has the financial and technical resources, and capability to use and maintain those assets effectively.

Quote:

— “SIGAR’s work reveals a pattern of U.S. agencies pouring too much money, too quickly, into a country too small to absorb it,” said Special Inspector General John F. Sopko. “The fact that so many capital assets wound up not used, deteriorated or abandoned should have been a major cause of concern for the agencies financing these projects. The lesson of all of this is two-fold.  If the United States is going to pay for reconstruction or development in Afghanistan or anywhere else in the world, first make certain the recipient wants it, needs it and can sustain it.  Secondly, make certain before you spend the money there is proper oversight to prevent this type of waste.”

I’m a great fan of SIGAR, but there’s something about his work that really frustrates me. He’s been saying this stuff for years, but nothing ever changes. The money keeps flowing, and keeps getting squandered. There should be ‘proper oversight’ SIGAR says, but surely by now he’s got to have woken up to the fact that it’s not going to happen. It’s like all he can say is, ‘do all this stuff better’, but can never bring himself to say, ‘Stop doing it! It’s a gigantic boondoogle.’

To be fair, that’s not an auditor’s job, and I guess that he can’t go beyond his legal remit. But you see what I’m saying. This isn’t something you can solve by introducing better processes. It’s rotten to the core.

Unfortunately, it continues, and continues, and continues. And so it is that our profligate military and imperial adventures impoverish us all, while bringing us absolutely diddly squat in return for our money. Back in the day, I was taught that the essence of democracy is accountability. Judging by this, we’re not democracies at all.

But I’ll give the final word to two-times winner of the Congressional Medal of Honor, General Smedley Butler. ‘War is a racket’, he said.

How very true.

21 thoughts on “Imperial Waste”

  1. “First, capitalist economies had no shortage of investment opportunities at home; and second, they didn’t need colonies to invest abroad….

    there are contracts for the military industrial complex; and there’s also money to be made by all sorts of other entrepreneurs willing to hang on the imperialists’ coattails”

    So, despite no shortage at home there seems to be still enough money to be made to sustain the colonies for the industrial and financial elites – or how should I interpret your statements?
    And maybe the non – shortage at home was due to the fact that the MIC at the time preferred easy money though government defense contracts which a sprawling empire surely was in need of to issue.

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    1. Case in point is the US spending more on defense than the next 10 countries in that category combined. Not too many (if any) US politicians noting that, relative to improving the domestic situation in their country.

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  2. As to Canada: it seems to me that the Ukrainian Lobby has much influence on the decisions regarding any defensive stance towards Russia.

    The members of this group of immigrants – having lived in NE BC close to the Alberta border I have met a lot of those of absolutely Russophobe folks – are pushing towards building a hard front against Russia.
    They base this on the simple fact that Russia is a constant threat as it has it borders so uncomfortably close to present and future NATO members, and the simple fact that is so awkwardly close to Canada across the Pacific and Arctic oceans.

    And of course there is a a history of invasions by the Russians, the USSR and Putin…not that I personally know of, but there has to be a reason of this Russophobia …. aah yes, there was the problem with starving Ukranians in Canada caused by Stalin after he invaded Alberta…

    Threatening Canadian sovereignty of course (which in many instances it failed to maintain versus the lovely caring member the USA, which always is helpful to get Canadian products that it itself cannot produce as cheap as possible) must be the reason why Canada instead of building Icebreakers to monitor the future commercial routes through the Arctic ocean and support the native settlements there and prospective economic ventures creates a fleet against some imaginary threat by likely Chinese and of course certainly Russian invaders threatening Vancouver, Vancouver Island, the town of Kitimat, Prince Rubert, Bella Coola etc. etc. and the settlements and towns of the Haida Gwai

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  3. “Imperialism is big gigantic waste of money. Let’s start with that.”

    What, the highest phase of the capitalism? You betcha! Glad that you finally understand that, Professor. Now’s time to take the next logical step – start advocating for another socio-economic system 🙂

    “For instance, historians have a real problem explaining late nineteenth century imperialism, in which European powers conquered large parts of the globe, most notably in Africa”

    […]

    They don’t though. Really. At least here in Russia. It all goes back to the general crisis of the Viennese system of the international relations, logical development of the capitalism not only in Europe, but across the globe… and financial crisis of 1873, which became a pivotal moment by dealing a tremendous blow to the (preferred by Britain) “free trade liberal paradigm”, and instead spurring a cascading wave of protectionist measures through the planet. Which, naturally, exacerbated previous strong trends of various strains of nationalism and greater power competitions, effectively burying the Viennese system after its last “proper” congress in 1878 and replacing it with… nothing, really.

    OTOH (personally, I find it hilarious in a hindsight) it’s precisely post 1870s period that became so enmeshed in the collective popular conscience as the go-to “Victorian Period”, despite the fact, that becoming a proper “Empire” with vast(er) tracks of land across the globe and whatnot, was, in fact, a swan song of the British imperialism, destined from now on only to decline.

    “The problem was that, like a lot of Lenin’s stuff, the theory was total hogwash”

    What a stark, intelligent rebuttal, I say! Your credentials as (real) Left-bashing retrograde are well preserved, Professor! You also, apparently, either misread, or have memory problems related to Lenin’s work contents. Now, pretend that you read the point I made above, and write an equally brilliant retort.

    “But it does make sense to certain minority interests within an imperial society… [T]here’s also money to be made by all sorts of other entrepreneurs willing to hang on the imperialists’ coattails.”

    Yes. Why that’s not the reason number one for you to list is… understandable 😉

    “If these people and groups have outsized political influence – through control of the media, financial support to politicians, or whatever – they can distort politicians’ and even the entire population’s understanding of the national interest.”

    […]

    🙂

    Again, what socio-political system are you advocating to replace the capitalism with, Professor? Feudalism? Or, maybe…

    “Reconstruction (SIGAR), a person whose work I have mentioned many times before. SIGAR audits the money spent by the United States in Afghanistan, and it’s a litany of waste and corruption on a scale that…”

    Wait-wait-wait!.. But dem, honest pundits and journos working for the Free Western Media ™ told me, that “corruption” is what happens only to the bad-guy authoritarians, and that librul democracies are totally immune to that… UNLESS filthy [enemy of the day] foreigners deliberately try to blemish the holy body politic with their dirty money.

    Or, as it turns out, if you are France. Well, at least pure Anglo-Saxons are immune to that, amirite, eh? Eeeeh?

    Liked by 1 person

  4. $77 Bn for new ships: it’s true that if spent on health, education, infrastructure, or even just bringing clean drinking water to every Canadian, this kind of money would make a tremendous difference. But it’s not really an either/or proposition: if it were genuinely important to the people making the decisions, we would have old frigates (or no frigates), clean water and well-administered budgets. Instead, it’s either some new frigates or more new frigates, and little or no oversight.
    I’m not sure about classifying Canada as an imperial/imperialist society, though we fill the role of spear-carrier often enough; you find boondoggles and expensive hobby-horses and misdirection in every country.
    As for SIGAR you have posted about this often enough; how would you contrast this with the aid given to Afghanistan by the USSR? Certainly it would have been nowhere near the same scale, but was it better aimed, more relevant, better administered? How were the motives different? (I would know the answer to this if I had read your book, of course!)

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    1. As for Soviet aid to Afghanistan, some money was wasted on projects that made little economic sense – this is pretty typical of top-down central planning. Some projects, on the other hand, were reasonably successful, e.g. Mazar-i-Sharif natural gas plant. Overall, a mixed package.

      There appears to have been relatively little corruption for the simple reason that the Soviets never let the Afghans get direct hands on the money – the loans sat in an account in Moscow. Whenever the Soviets delivered something or did some work, they then subtracted the relevant amount from the account. That way, Afghans were cut out of the process. Also, the Soviets oversaw most of the construction etc themselves, making it hard to steal stuff. That said, there were corruption opportunities. For instance, there was a scheme by which the Soviets delivered the Afghan government consumer goods to resell at a profit – these goods could easily be misdirected. Likewise, deliveries of fertilizer, which went through Afghan officials, could be misappropriated.

      Probably, though, probably less corruption than at present with the Americans, in large part because the sums of money involved were much smaller.

      Liked by 1 person

  5. The idea that capital taking profit (surplus value) creates a growing imbalance between stuff being produced and stuff being sold seems solid to me. The imbalance can be mitigated by debt, but not forever.

    But that, as I remember, is not the main cause of imperialism, according to Lenin. Monopolies, financialization, cheap natural resources, cheap labor, dividing the world (geopolitics). These sorts of things. Still seems relevant.

    Afghanistan has a good location (geopolitics), and massive production of opium, with the possibility to direct the flow of it (natural resources, and, again, geopolitics). These are the benefits. The cost – $8 billion, was it? – that’s nothing.

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  6. One of the more idiotic notions floating around the Cdn govt when we got involved in Afghanistan was “whole of government”. This presumably meant that every single department ought to be doing something in Afghanistan; presumably including Fisheries and Oceans. So lots of money expended on making sure that the Dept of Somethingorother could tick that box.
    Another half-witted notion was that the the West had somehow let Afghanistan down after the Soviets left and that we should — somehow — be making up for that. Or ensuring that we didn’t let it down again. Or something.
    Many of the people advocating these meaningless mantras could probably find Afghanistan on a map given enough opportunities.

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    1. Interesting. I had always thought of our involvement as a case of PM Chrétien reluctantly going along because he could not see any way to keep Canada out of it without massive US retaliation.

      I had not realised that there were people in the government who were that enthusiastic. They, clearly had not been reading their Kipling.

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    2. Patrick, I shouldn’t wonder why the initial and main reason for “the West’s” presence in Afghanistan does not show up in your ‘short and sharp’ summary? Doesn’t need to decades after? The West’s negligence surfaced in inner elite security circles dominantly?

      West had somehow let Afghanistan down after the Soviets left

      Did it, or did it get it there and had to correct that mistake later?

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  7. Professor, I do not believe that Lenin’s theory of imperialism was hogwash. In fact, the mark of a solid theory is its ability to explain and predict, both of which Lenin accomplished (by explaining the roots of WWI and predicting future developments of rapacious finance capital. The Wall Street “wolves” of today are acting exactly as Lenin predicted.

    I’m afraid I have no training in economics, so I am not able to debate you properly on this point. But I would just mention one example that supports Lenin’s argument, namely how Britain destroyed India’s textile industry because it was too competitive. Would you not consider this an example of an imperialist nation trying to forcibly export its capital to a colonized nation?

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  8. The Dutch East India Company was the most profitable in history, so yes, imperialism does pay, hansomely. Part of the game is to keep stuff out of ‘others’ hands so it can’t be used against you either militarily, politically, financially, economically, culturally, linguistically and religiously. Imperialism is much much more than just about profit.

    Only one word for Canada & defense that sums it up even back in the 1990s: Upholder.

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    1. To add to this – there was another important company responsible for directing the course of Canadian history – and not necessarily for the better especially for the indigenous people.

      Prof. Robinson it well know a lot about Russian history but seems to be lacking in knowledge as to the importance of the HBC and its leading members. He also seems to have forgotten that the crown itself and members of the HoL were involved in the company.
      ( After King Charles II granted the Royal Charter to HBC in 1670, Prince Rupert, His Royal Highness James, Duke of York, and John Churchill, Duke of Marlborough, were the first three men, respectively, to hold the title of Governor of Hudson’s Bay, Company. http://www.hbcheritage.ca/people#governors)

      Of course, it is likely that the country itself did not receive aside taxes any benefits, but it soldiers and public servants were there in the service to keep that quite wealthy company afloat and protect it.

      https://www.canadiangeographic.ca/article/untold-story-hudsons-bay-company

      “From 1738 through 1748, company imports to England from Rupert’s Land totalled more than £270,000. That’s more than £31 million in today’s currency. As historian David Chan Smith has calculated, from 1730 through 1750 this translated into more than one million beaver pelts.”

      After the fur trade lost its importance, so did the company loose in influence and eventually the lands it “owned” – basically stole from the indigenous people who had no concept of land ownership in western Canada (Rupert’s Land) were sold to the Dominion of Canada.

      Robinson seems to have forgotten the simple fact that while the peoples of the colonising nations do not gain substantially if at all from the effort, but it is the merchants, financiers, arms dealers, industrialists that benefits, then as now, from the exploitation of the colonies as much as from driving the colonising governments into debt.
      The best current example is the MIC in the USA and the finances the Military and so called “security agencies” swallow into a big black hole.

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      1. Excellent example, Peter. In that same part of the world, we had one of Russia’s few examples of trying to emulate England’s colonial successes, I’m referring to Governor Baranov and the Sitka colony, of course, in Alaska. In 1804 Russia set up the Russia-America Trading Company whose goal was also, if I am not mistaken, to make a ton of money on animal pelts; money which would benefit both the private company and the Russian government itself (via taxes). And also was not intended necessarily to benefit the locals, which is why the Tlingit people got so upset about it and kept trying to burn down the fort.

        Russians being such gentle souls [sarc] did not necessarily intend to exterminate the indigenous, but did expect them to follow orders and be ruled by benevolent masters from the other side of the Bering Strait! When you set up a colony, it is also necessary to set up a government to rule over the indigenous so that the latter will eventually come around and start cooperating to help you make tons of money for your investors.

        Russia never really succeeded as an imperialist/colonist power at the same level of England, I believe this Sitka thing was just an isolated example. However, it illustrates the same proposition, namely that the whole point of imperialism/colonialism is to make a ton of money. For somebody, at least. And when the government works hand in hand with private companies in this manner, then the goal can be accomplished quite successfully. Always at somebody’s else’s expense, of course.

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  9. Canada specializes in Runt Class warships. None of which actually go to sea. Instead, they undergo a process resembling being constructed but are never completed. On the other hand, the cost of Runt building continues exponentially.

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    1. “”The government should pay people to dig holes in the ground and then fill them up.”
      People would reply. “that’s stupid, why not pay people to build roads and schools”
      Keynes would respond saying “Fine, pay them to build schools. The point is it doesn’t matter what they do as long as the government is creating jobs”.”

      – R. F. Harrod in The Life of John Maynard Keynes (1951)

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  10. > make certain the recipient wants it, needs it and can sustain it.

    I’m certain the recipient does all that. Wants the money, needs the money and can sustain their bank account.

    The asset they could care less about though.

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  11. Prof. Robinson is essentially taking Hobson’s line, of course (and Lenin largely just plagiarized Hobson’s work). Few empires pay for themselves, and those that do tend to be be genocidally violent. However, I don’t think that this gets the economics quite right.

    Where I agree: imperialism tends to be very costly to the imperialist country. And generally the main (but not the only) beneficiaries are a few corrupt opportunists backed by domestic financial interests, living off the Government teat — think of Cecil Rhodes. But that is not the whole story, as much muddled thinking about imperialism is the result of a misunderstanding of 1) how money is created, and 2) real terms of trade. Let us tackle the second item first.

    With exports the cost of imports, optimizing real terms of trade is about taking action to get as much in return for your exports as possible.
    In fact, the implication of fully acknowledging that exports are a cost (and imports a benefit) is that a net export position (i.e., exports exceeding imports) is a costly one, and one that policy-makers can only justify against well-defined benefits. Yet, imperialism can be promoted by politically-motivated support for export lobbies, as there is no need for the country as a whole to benefit for them to do so — in that sense Lenin’s view almost holds.

    And then, imperialism is also the “cost of doing business” — there are lots of resources that are needed to develop a country and favoured firms, and many of these resources can be extracted through imperial ventures (think US control over Middle-Eastern oil for many decades, Canadian lumber and fish to support British ships and workers, India’s raw cotton used in British textile mills, or Britain”s former exploitation of the Argentinian economy through a succession of caudillos). Generally, these costs are socialized (picked up by the Crown) while the profits are privatized (by a profiteering few and their picked men in Parliament). But other beneficiaries are particular groups of workers in the imperialist country — take workers in US arms manufacturing, or British textile workers in the first half of the 19th century. I think it would have been impossible to have the reforms in labour conditions that gradually occurred in Britain in the 19th century without imperialism (viewed here as a kind of gunboat mercantilism). So, although the country as whole may lose out, a number of groups benefit importantly. Hence the support for the imperial project.

    In addition, all this has to be understood against the backdrop of state money creation. Most people incorrectly believe, and most politicians pretend, that: “The government has to either tax or borrow to get funds to spend, just like any household has to somehow get the money it needs to spend.” But of course this is utter nonsense: taxpayers have rather little to do with it. The Canadian dollar is the creation of the Government of Canada. The funds we need to pay taxes must come from government spending (or government lending). And the government, as a currency issuer, cannot, from inception, collect more of its own currency than it spends. So while our politicians truly believe government needs to take our funds either by taxing or borrowing for them to be able to spend, instead, the truth is: WE NEED THE GOVERNMENT’S SPENDING TO GET THE FUNDS WE NEED TO PAY OUR TAXES. (By corollary, government deficits equal non-government surpluses, dollar for dollar, to the penny, allowing people to save.)

    A sovereign government that issues its own currency faces no inherent financial constraints. It cannot produce a financial imbalance. It can buy ANY resources that are for sale in terms of its own currency by using key strokes. All taxes do is 1) create demand for the currency and 2) help control inflation.

    What this means is that the dollar figure, in itself, for building destroyers or whatever is immaterial (literally). There is no trade-off in FINANCIAL terms between spending on warships and spending on, say, green growth. There IS however a trade-off in terms of the REAL RESOURCES given over to shipbuilding as opposed to other expenditures. It certainly may be true that resources could possibly be reallocated to potentially more economically beneficial purposes (remembering that the shipbuilding puts money in our pockets too).

    Government needs to use its sovereign power to move just the right amount of resources to serve the public purpose while leaving enough for the private purpose. However, that balance is entirely POLITICAL, not driven by financial need.

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  12. “The first story concerns the Canadian navy’s program to build a new generation of warships. This was originally budgeted as costing $14 billion. Now the parliamentary budget officer has announced that the cost has leapt to a mind-blowing $77 billion, and that the total could go up even more if the project experiences further delays (which, let’s face it, is quite likely).”

    It’s good that you point this out but it is at best half the story. Who gets the money? Those are the people to look to for explanations, the politicians are clearly figureheads.

    Like

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