Video: Economy becomes central issue

By Military analyst
msnbc.com
updated 1/22/2008 4:19:52 PM ET 2008-01-22T21:19:52
COMMENTARY

Most folks are more emotional than logical, and never more obviously so than during a political campaign. Experts and analysts are like everybody else in this regard, and one needs to look for proof no further than the pre-primary certainty, even hysteria, about Obama’s impending victory in New Hampshire. The polls, and the experts who interpreted them, were glaringly wrong.

In exciting situations, the majority of people often fall prey to emotions that cloud reasoning, and few are more deleterious to logical thinking than the ease and comfort of relying on a single factor to explain or predict events.

We have been subjected to the electoral circus for more than a year already, and for much of it, the majority of experts prophesied that the mess in Iraq was the single most important issue in America, and that would decide the outcome of the campaign. American society is complex, but, it was said time and time again, the sheer import of the war in Iraq was so significant that it would dominate all other issues.

With the economy teetering on the edge of a recession, it’s not surprising that many experts have changed their minds and have now concluded that the economy, and not Iraq, will be the issue that makes the difference in the election. On the surface, it seems both persuasive and simple.

But using single-factor analysis is not only simple. It’s also simple-minded. The war in Iraq is important. And so is the economy. And so are a host of other factors, many of which will never yield to easy analysis. More significant is this truth: In a complex world, many of these things are related.

It doesn’t take a Ph.D in international relations to realize that the economy and national security are related in ways that make solutions to problems in either sphere very difficult indeed. For example, as unemployment increases and wages fall, the tax revenues collected by state, local and federal governments drop. Housing prices fall, too, because slipping incomes produce reduced demand for new residences.

A cyclical effect
As a result, assessments, on the basis of which counties collect real-estate taxes, also drop. People buy less, and so revenues from sales taxes also slide. The potential is great for a long and difficult period of slow or even negative economic growth, and government revenues will suffer.

Meanwhile, the U.S. dollar has been deflating over a long period of time and is now as weak as it has been in decades. One of the nasty results of a weak dollar is that crude oil, already expensive because of increased worldwide demand, gets even more expensive because it trades in U.S. dollars, which buy less and less as the currency weakens. Expensive energy tends to drive the economy even deeper into recession.

But defending the Republic costs money, and if the government has less of it because of the recession, it has few options other than deficit spending and raising taxes, both of which will make things even worse.

Furthermore, crude oil comes principally from nations that aren’t friendly to the U.S. Insufficient crude oil is coming from Iraq, and it’s hard to see when that will improve. Saudi Arabia is ostensibly our friend but is at least ambivalent. Iran and Venezuela, two huge producers, are extremely hostile to us. And anyone who thinks that Russia, another big producer, is friendly toward us has not been paying much attention. Expensive energy is very dangerous to our national security.

Many of the candidates are now inserting the word “change” into every sentence, even though they know that there is no substance to either the word or the concept. It is merely an emotional appeal to an electorate that is concerned and increasingly disaffected. But no matter who gets elected, our increasing problems will be solved only by a president who recognizes that our security and our economy are intertwined, and that simple solutions are not likely to fix either one.

Jack Jacobs is a military analyst and a retired U.S. Army colonel. He earned the Medal of Honor for exceptional heroism on the battlefields of Vietnam and also has three Bronze Stars and two Silver Stars.

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