New Undeclared Arms Race

The Pentagon has released the summary of a top secret Pentagon document, which sketches America's agenda for global military domination.

This redirection of America's military strategy seems to have passed virtually unnoticed. With the exception of The Wall Street Journal , not a word has been mentioned in the US media.

There has been no press coverage concerning this mysterious military blueprint. The latter outlines, according to the Wall Street Journal, America's global military design which consists in "enhancing U.S. influence around the world", through increased troop deployments and a massive buildup of America's advanced weapons systems.

While the document follows in the footsteps of the administration's "preemptive" war doctrine as detailed by the Neocons' Project of the New American Century (PNAC), it goes much further in setting the contours of Washington's global military agenda.

It calls for a more "proactive" approach to warfare, beyond the weaker notion of "preemptive" and defensive actions, where military operations are launched against a "declared enemy" with a view to "preserving the peace" and "defending America".

The document explicitly acknowledges America's global military mandate, beyond regional war theaters. This mandate also includes military operations directed against countries, which are not hostile to America, but which are considered strategic from the point of view of US interests.

From a broad military and foreign policy perspective, the March 2005 Pentagon document constitutes an imperial design, which supports US corporate interests Worldwide.

While the "war on terrorism" and the containment of "rogue states" still constitute the official justification and driving force, China and Russia are explicitly identified in the classified March document as potential enemies.

"... the U.S. military ... is seeking to dissuade rising powers, such as China, from challenging U.S. military dominance. Although weapons systems designed to fight guerrillas tend to be fairly cheap and low-tech, the review makes clear that to dissuade those countries from trying to compete, the U.S. military must retain its dominance in key high-tech areas, such as stealth technology, precision weaponry and manned and unmanned surveillance systems." (Ibid)

While the European Union is not mentioned, the stated objective is to shunt the development of all potential military rivals.

I'm not sure what part of Europe he's speaking of in the following paragraphs but here in France I have seen no sign of public opinion supporting the "war on terrorism" as Bush defines it. It may certainly be true of the right-wing government.

European public opinion is now galvanized into supporting the "war on terrorism", which broadly benefits the European military industrial complex and the oil companies. In turn, the "war on terrorism" also provides a shaky legitimacy to the EU security agenda under the European Constitution. The latter is increasingly viewed with disbelief, as a pretext to implement police-state measures, while also dismantling labor legislation and the European welfare state.

In turn, the European media has also become a partner in the disinformation campaign. The "outside enemy" presented ad nauseam on network TV, on both sides of the Atlantic, is Osama bin Laden and Abu Musab Al-Zarqawi. In other words, the propaganda campaign serves to usefully camouflage the ongoing militarisation of civilian institutions, which is occurring simultaneously in Europe and America.

It may be time for me to begin concentrating on European news.

Read Michel Chossudovsky's article America's Agenda for Global Military Domination.

The Wall Street Journal article 'Rumsfeld details big military shift in new document' by Greg Jaffe follows it.


I read the entire original article and my impression is that, while there is certainly something to worry about, the article "feels" to me as though it's predicting much more gloom than is likely to happen.

Leaving aside the obviously morally wrong side of it, and concentrating on the feasibility, I find several points rather problematic. I also wonder at the accuracy of some of the statements, for instance:

He claims western Europe was desperate for the new 10 poorer members to join the EU as it's going to need lots of money to build a super military power. I don't understand his reasoning because in reality, the inclusion of these 10 members, far from being an added monetary asset, is in fact a huge drain on the richer members. Not only because the free trade agreements mean the the produces from the poorer members flood the market of the richer ones, but also simply because every EU member has to contribute into an EU fund (think of it as a federal gov revenue) and the EU gov in turn redistributes this money where it's most needed, which is obviously the poorer countries. 

Posted by WhyNot
3/20/2005 04:29:00 am  
Getting the poorer countries in might just increase the revenue base over time.

There is a worry that these poorer countries get money flowing from the richer countries (like France) due to the current EU formulas. The irony is that the poorer countries are able to implement progressive tax reforms, and are generating INCREASES in tax revenue by adopting the flat tax system.

It seems flat tax is delivering on its promise of simplifying, cutting red tape, encouraging investment and spending (which then gets taxed again) and unemployment rates are dropping in these countries as they get unfettered access to the EU.

I imagine France would be a little annoyed with unemployment over 10% having to contribute to the likes of Slovakia with a flat tax of 19% or all personal, corporate and sales tax.

Romania will be in soon with a tax of 16%. I understand POland are toying with the idea of a flat tax.

It seems the EU was counting on all countries maintaining socialist governments with high tax rates. The last thing socialist France and Germany want to do is support other countries when they have bigger problems (limited socialism?)

Given France and Germany's efforts to introduce the concept of "tax harmonisation" has failed (Gee, I wonder why a country would surrender the right to set their own tax rate) it may be a case of "if you can't beat 'em, join 'em. To me, that would be a good thing. It will simplify compliance, and reduce non-productive work. It might even shrink the tax bureaucracies.

Still, I think the issue is not the flat tax rates and fiscal reforms, but the lower salaries of the "poorer" countries. I'm supposedly salfe from the EU mess in NZ, but Supreme Ruler Helen Clark watns to model NZ on Sweden and get the tax rates up towards 60%. I am looking with interest on how flat tax fares for these countries.

Never-the-less, the orginal post was about the fact the US have lots of documents to plan how they can stay strong in the world. No surprise there, as most major powers have a genuine need to understand what the landscape might be like in 50 years.

Not to do so would be to say that we can never again have a world war, a global economic collapse, or an increase in terrorism. The world would likely be a little more stable if all countries at least had a democratic process, freedom of information, a reasonable standard of living and an environment of opportunity.

Americas heavy handed approach may not be the best way, but I'm sure any potential terrorist will be impressed that a couple of countries were decimated. They'd have to be wondering what levelling Los Angeles might prompt. Perhaps the end of Iran?

I hope the age of supporting totalitarian regimes is ending. In a world of limited choices, I still want America to be a world power rather than some United Federation of Arab States, unless they can prove they allow freedom of speech, they allow a Mike Moore or Ann Coulter equivilent.

And how dangerous is the European military? I saw an article recently (a March issue Economist) that talked about plans of EADS, Thales/Ralcal and other Defence companies quietly merging away to gain more muscle. The landscape could change yet again. But I'm sure the Pentagon already know that.


Posted by ZenTiger
3/20/2005 07:19:00 am  
Wow, ZT, thanks for all this great info and viewpoints - a good many of which I agree with. I'll have to digest it, and most likely reply in separate comments to address the many issues (in fact, I had lots more points I wanted to raise about the article, but found from experience that it's best to address them separately, and so I thought I'd just bring up one to start with).

For right now though, being some 11 hours time-zone offset from you, it's 7:30am here and I still haven't gone to bed, so I'll dream on this and will try to do your great comment justice later, as I am really interested in many of the issues you bring up.

Thanks again, and please come back to discuss the issues - I look forward to it immensely, especially since you seem to be a lot more cluey about economics than I am, and I hope to learn something :-) 

Posted by WhyNot
3/20/2005 07:42:00 am  
I'll concentrate here on the off-topic part of the issue.

What does "flat tax rate" mean? Does it mean the income tax rate is the same percentage regardless of income, as opposed to the sliding scale currently in vigor in most western countries?

You mention it cuts red tape down, and I can imagine it does. But what REAL cost savings does this generate? What fraction of state revenues are lost because of the difference of flat versus sliding scale taxes? In other words, does it really affect the State coffers?

You mention it increases investment and spending. How exactly? Is it because the rich get richer still and therefore invests more? If so, how is it actually beneficial to the overal population? I understand that all economies work on a capitalist economic model, even if ignorant right winger idiots keep calling the EU a socialist system, and that incentive for entrepreneurs to invest in building job-generating ventures is essential. On the other hand how far do we go, and how beneficial is it to the end user, i.e. the thousands of workers who work to fatten the wallets of the few at the top?

For instance, take a comparison look between the US, France, UK and Sweden:

The ratio of earnings between a CEO and the lowly worker in the US is 475:1, in Britain 24:1, in France 15:1, in Sweden 13:1.

Clearly, the Sweden model is the most "socialist" orientated of the lot.

On the other hand, in the US today the richest 1 percent holds 38 percent of the wealth and they are redistributing it ever more to their advantage. Meanwhile one American adult in five is in poverty — compared with one in fifteen in Italy (which is not exactly one of the "richest" countries of the EU).

So, what conclusions can we draw out of this? Unless one advocates that ppl who can't survive should stop complaining and silently die, like Kender does, it seems there is a balance that has to be reached. Simply saying "the more free and unchecked" the investors are, the more they generate business, thus jobs, clearly does not work. There is virtually no poverty in Sweden even it is the most "socialist" of all EU countries. And conversely, the US sports a greater poverty level than just about any EU country.

On the other hand, it is clear that overburdening investments fires back on the job creation, and thus ultimately on a sustainable economy and finally poverty level. But even then, since you mention the unprecendeted levels of unemployment in France, let's take a look at that particular picture:

For the last 3 years, for the first time in decades, we've had a right wing gov at all 3 levels: president, gov itself (Rafarin and ministers), and Parliament house. They've cut back on social benefits non-stop while doing just like in the US, i.e. giving tax breaks to the investors and freezing the workers wages. Result? Highest unemployment rate in decades.

So, it seems the economic machine is indeed not as simple as to say "give the rich investors tax breaks to pump up the economy and eradicate poverty". It's obviously a lot more complex than that.

But you're right to talk about the "EU mess". It IS a mess, but then again what else can we expect: there has never been anything like this in history - countries uniting instead of seceding. It will take a long time to sort itself out, but seeing what it's achieved so far, I am rather hopeful. 

Posted by WhyNot
3/20/2005 05:46:00 pm  
Howdy WhyNot. Tis late in my neck of the woods, and I don't have time to do your reply justice. I'll try to get back tomorrow.  

Posted by ZenTiger
3/21/2005 01:24:00 pm  
I've started a discussion on my blog about flat tax.


There are studies available to indicate a properly implemented tax structure would save millions of hours of unproductive work tracking accounts. Why is this important?

Consider a flat tax rate of 10% on income, sales and company profit. The concept of such a tax is that it is inherently fair and predictable. You know you are going to give up 10% when you earn and 10 percent when you spend. Companies are going to give up 10% of their profits.

If there are no personal deductions, there are no loopholes. Its a done deal. No returns are necessary. No paper work. No keeping receipts. Just the occasional audit.

For a business, there is still a tracking function. However, the nature of deductions would fundamentally change. After sales tax, you add up money out, and money in for the year and the difference is profit. You pay 10% on profit. Done. No depreciation schedules, no offsets against future payments, no corporate welfare etc. However, with a rate of 10%, much less incentive to spend money trying to avoid it when there are so few loopholes to exploit in any case.

For a business, each worker they pay transmitts tax and (for retailers) each sale they make transmitts tax. With the personal rate equal to the company tax rate, there is no difference earning money as dividends or as wages. Most of the avoidance schemes rely on getting all money earned subject to tax at the top bracket into a lower bracket, or creating costs as earnings.

People get upset that someone on $200,000 will only pay $20,000 tax on income. Then 10% tax on what they spend. They want them to pay, say, 50% tax or $100000. This person who stands to lose $100,000 is suddenly interested in tax minimisation schemes because the tax feels unjust. It is unjust. It might be FAIR but that is different from being JUST.

Three things about this argument
1. People on $200,000 a year, in the US make up less than 2% of the population. Statistically, it aint a lot of people to worry about.
2. People on over $200,000 per year are now in the bracket where the tax take would seem to be unjust, and resort to tactics that mean they avoid paying tax in any event. If you say the problem is that people on $1 million dollars don't pay tax, then 10% flat, no deductions is going to make a big difference.
3. In the US, due to the complex tax laws, about half the average income can be offset against allowable deductions, so much revenue is not collected anyway. The folk at the bottom of the heap are less tax savvy and fail to claim most of what they legally can. Some-one on $50,000 is typically paying 20% tax if they have a mortgage and take advantage of the deductions.
4. A flat rate of 10%, with no deductions would (IMHO) actually increase the likelihood of people paying in any event.

The other issue about corporates and people on $200,000 plus turnover / salaries need not be solved through legislation (look how effective it has been to see why). That is a whole topic in itself, and comes down to a different set of drivers.

The tax rate discussion can also include what the best strike rate is. I think 10%, the mainstream thought is 13-20%. Studies show a flat tax of 20% could be introduced and make no difference to the government revenue, but with all of the efficiency bonus.

In theory, the lower tax rate, the higher the compliance and the greater the spending. Because the government pick up sales tax on spending, the greater the tax take. 

Posted by ZenTiger
3/24/2005 10:35:00 am  
For the largest part of the population filing a tax return couldn't be any simpler as we need nothing more than a W-2 to caluculate our taxes. How is the flat tax going to benefit us? I disagree that most at the bottom of the heap are failing to claim what they legally can.
A flat tax may or may not stop cheating and tax dodging. I imagine those making the most will continue to explore ways to cheat the system in order to avoid paying higher taxes. I do not believe that humanbeings are inherently good.
I'm no expert but I can't for the life of me see how a flat tax will benefit anyone but those in the higher income bracket. This is not to say I'm against it, yet. I don't know enough and my opinion is just that. I'll let the rest of you thrash this out while I watch from the sidelines. 

Posted by Dianne
3/24/2005 02:42:00 pm  

Thanks for the lengthy explanation on flat rate. Although I did ask what it was, I already knew, as you must have noticed yourself - I only wanted to make sure about the terminology. I'd have been more interested in your responding to the many other points of my previous comment which are so much more important than flat tax rate.

But I'll abide by your wish, and make an effort to respond to this most boring subject.

For starters, in a nutshell, I disagree on virtually everything you say.

Also, a sideline here, you include "personal deductions" (or rather lack of) in your tirade explaining why flat rate is better than sliced bread, seemingly inferring they go together. Errr.... what is the connection  between flat/sliding scale tax rates and personal deductions?

As far as I know, there is NO connection whatsoever. They are 2 completely separate issues.

You keep saying (meaning you had said before, and I had asked you to clarify, but you didn't) that flat rate would rid of the inefficiency of the tax system. I assume you mean by that a lot of money is wasted by the gov when implementing a sliding scale versus a flat tax rate. I challenge you in providing me some figures here. What kind of *waste* are we talking about? Is it like, wow, by switching over to flat rate, the total amount of tax money needed in the State coffers will be halved because it makes the paperwork so much more efficient? Or is not in fact an infinitesimal proportion of the tax money collected?

See ZenT, I may not have a degree in economics (only in Electronics and Computing), but I ran my own IT business for 10 years in Sydney, and had an accountant doing my books for me. She was a very nice lady and friend as well, and explained a lot to me about taxes, brackets, deductions, loopholes, depreciation schedules (oh that was a good one: 1/2 my equipment was on a fixed scheme, the other 1/2 on a degressive one) and other economic factors in the global equation.

I'm not quite as dumb and ignorant as you might think when it comes to understanding business and economics :-) 

Posted by WhyNot
3/24/2005 06:44:00 pm  
I was not trying to imply you were dumb. I'm also not claiming to understand economics either! Just working it all out as I go, which is probably why I am meandering all over the place :-)

Flat tax could be treated as a sep. issue to deductions (as you point out), but my reasoning behind tying both together, and my reasoning that we would save money by creating efficiencies, is the two different ways deductions are used:

1. To reduce taxable income
2. To get an offset against income that was taxed at a higher scale.

I think a (low) flat tax rate takes pressure off those factors being so important, and offers something against businesses accepting deduction reform.

As you point out, you had two types of depreciation to track your assets. What if it been just a simple entry of "cost" against profit. Instead of an hour setting up the schedules, discussing the options with your accountant etc, its 2 minutes work, and easy for the average punter to understand. I believe that, multiplied by every business, the time savings would be huge.

I'll try to dig up the original paper that started my thinking off on this, as it had a few of those statistics you are *interested* in.

An argument I often hear from the left is that the rich evade paying taxes. Yet the statistics I have seen indicate the top few percent pay something like 40% of the tax take (in the US I think this was). This would be largely to the progressive scaled tax rates and the possibility the rich are not evading tax after all? If true, this would seem to bolster Dianne's point that the rich will end up paying less tax. Which do you think it is?

As with a lot of things, we can find experts that disagree over the same topics, and some times it comes down to a matter of what factors you believe are the most important. This is why I am looking at the "flat tax revolution" in East Europe with interest. Progressive tax scales was an important concept for Marx, and it is interesting the communist countries are the first ones to try flat tax, as they throw off the communist baggage that has kept their economy down.

Now I realise that I haven't replied to your points of interest from the first post - sorry, I've defintely been sidetracked by the flat tax thing, and to keep this in perspective - I think the flat tax thing isn't the most critical (or interesting) thing to talk about. I just happen to be "wasting" a huge amount of time trying to sort out my accounts at the moment (I have a [small] IT business in Sydney and one in NZ) and this stuff is pissing me off!


Posted by ZenTiger
3/24/2005 10:14:00 pm  
Hi Dianne. Thanks for the input. I don't think you need to be an expert to have an opinion - it hasn't stopped me :-) because we can at least report our experience with tax, which adds reality to the discussion.

"I imagine those making the most will continue to explore ways to cheat the system in order to avoid paying higher taxes."

Well, that was my entire point about revising the way deductions are treated.

"I do not believe that humanbeings are inherently good."

Well, I guess this is the fundamental difference why we come at problems from the way we do.

What do you believe Sarah, WhyNot and Greg? Are people inherently good?
3/24/2005 10:32:00 pm  
"Are people inherently good? "

I think they are inherently selfish and self centered, just like any other animal. Just look at young kids: it's pretty clear they are only concerned with themselves - it's all about me me me.

Sentiments like putting oneself in other's positions, caring for and about others (outside the instinctive nurturing feelings ppl have for their children - but once again, this applies to all animals), voluntarily give away (time/money/effort) to alleviate someone else's misfortune/pain/distress probably, etc etc, potentially exist in us at birth, to various degrees, but they are not predominent. In fact I'd say they are very much dormant.

It is through our social environment, conditioning and education that they develop. That's what I believe anyway. But I'm willing to be proven wrong.

"Well, I guess this is the fundamental difference why we come at problems from the way we do"

But if you agree with Dianne that "most of us will continued to try to cheat", which you seem to, since you say your ideas about revising the tax system is the entire point, then you are saying that you too thing ppl are inherently me me me, doesn't it? 

Posted by WhyNot
3/25/2005 04:48:00 am  

Which do you think it is? ”

Ok, first, I'm not against the idea of a flat rate in principle. But before we can afford that, the minimum wage would have to increase hugely. my MAIN concern is not efficiency, it is that all ppl can live decently. I put human rights above efficiency.

Right now, here for instance, if you're on the SMIC (= minimum wage), your tax rate is around 10%, whereas if money pours from the sky into your pockets, you're taxed at a much higher percentage (dont'know what it is here, but from memory it was 49% in Oz). Obviously, for the same amount of money to end up in the State coffers, a flat rate would mean a figure in between, i.e. the SMIC worker will be in an even worse position than before. And THAT  is my main concern. As I said, it's not too bad here - you can make it on the SMIC - but you can't in the US. All my friends there, when I lived there, who where on the SMIC (well, the equivalent of it in the US) worked a full time day job AND a part time night job to be able to survive. That SUCKS in my books.

It all boils down to this: say the minimum wage is $1,000/month. Say tax is 10%. Left $900. Now say $900 lets you make 2 ends meet, and all you have left over after paying rent/food/etc is $50, which you can either blow at the restaurant, or spend 10 years never going out in order to have a deposit for a bank housing loan. Doesn't sound very attractive, does it? And yet that would at least be "acceptable" in terms of human rights. (Now, there are many places in the world, the US in particular, where instead of having a $50 surplus you have a $300 deficit. Been there.)

Now say you earn $20,000 a month. That's only 20 times the SMIC, and still a long way from the REALLY huge salaries some ppl get. Say the tax rate is 50%. You have $10,000 left over. Once the necessities of life are covered, i.e. $850, you have a net surplus of over $9,150. Isn't that enough, for goodness sake? Are you unhappy because your net spending power is only 183 times greater than the bulk of the population? You're "effectively" 183 times richer, but no, that's not enough, you want to be the full 343 times richer?

Is there no end to the greed of ppl? What is wrong with you ppl? And you tell us that you believe ppl are inherently good? You gotta be kidding, right?
The issue of deduction is a tricky one. Yes it is true that the higher in the social scale (financially wise) you are, the more you rip off the system. I see it all the time. If you're a top executive, you get a co car, a cell phone, a house rented for you, you eat at the restaurant every day, etc, etc, under the pretext that it is needed for your work. Which means 2 things: 1) the Co pays only a fraction of these expenses because it claims them as deductible, so the state coffers are being ripped off, 2) the excecutive has even less real life expenses than the SMIC worker, since a good chunk of the $850 needed for basic survival are paid for him (and by the State, i.e. everyone else's taxes, at that!) and add to his already nifty $9,150 spending power.

On the other hand, I can see the justification of deductions for the small starting businessman. Still, all in all, I agree with you that the bulk of tax deduction expenses should be abolished.

it comes down to a matter of what factors you believe are the most important”.

Precisely, and for me no doubt the most important factor is the ppl at the bottom of the barrel in our society should have a bare minimum of a decent lifestyle. The rest is icing on the cake. 

Posted by WhyNot
3/25/2005 06:00:00 am  
As you say, in Australia, the top rate is 48%. Then 1.5% medicare levy is added. Then 10% GST on purchases. Plus 10% must be set aside for superannuation. On top of that, you pay Rates and Water. Effective tax rate is over 60%.

Agreed that by the time you get to those rates you will have covered your basic cost of living.

But at that point, paying tax is where the government says "give me more than half your money and watch me waste it."

If people can legally minimise a 60% tax rate, they will do so, not necessarily because they are bad, but because they feel the tax take is unjust. (I think that is the point that differentiates me from your comparison)

Have a situation where some people are on benefits as a lifestyle choice; and gamble and smoke ahead of looking after their children (I'm not saying that's the case, but that is a perception) then you get the attitudes we have today.

The extremes at both ends are only a few percentage points. The middle class (including people on $80,000 per year) are paying the bulk of tax and finding it unjust. They are getting lumped in with the hugely well off and suffering for it.

But I agree in principle: it is possible that every-one in the entire world can be provided a decent standard of living. It hasn't happened yet by a long shot, so I'm looking hard at what we need to change. 

Posted by ZenTiger
3/25/2005 06:49:00 am  

"Then 10% GST on purchases "

This affects everybody, Zen, and in fact it hurts the low-income much harder than the high-income ppl because it is not even a "flat rate", it is a "same amount for everybody" scheme by which the $1,000/month worker pays as much tax as the $500,000 CEO on every produce and service they pay for, from buying groceries to paying the plumber to fix the clogged up toilet.

So, not a very very good argument to prove how it gives the rich a hard time. In fact, it should be abolished in my opinion, and the lack of revenues made up by increasing direct tax, i.e. income tax.

PS: for those who wonder, GST stands for Goods and Services Tax, i.e. what is called TVA in France and VAT in England - i.e. indirect tax.

"Plus 10% must be set aside for superannuation"

Again, same thing for the lowly worker. And it hurts a lot more when you have only $50 left over at the end of the month to lose 10% of your measly income than it does when you have 10,000 left over. So again, why are you guys complaining for christ's sake?

PS2: again, for those who wonder, superannuation is an Oz scheme that has to do with retirement funds.

"and gamble and smoke ahead of looking after their children (I'm not saying that's the case, but that is a perception)"

Look Zen, don't give me that bullshit. If you don't know what living on minimum wage is like, go try it for yourself. Sure, there is the occasional "dole bludger" as they call it in Oz. But then again you have the equally occasional rip-off artist CEO. If your "perception" is that the bulk of minimum wage workers who can't pay their electric bill at the end of the month is because they gamble their earnings at the local casino, you're clearly completely out of touch with reality. 

Posted by WhyNot
3/25/2005 04:36:00 pm  



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