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The Economic Soft Power-Military Hard Power Linkage

by Greg on April 5, 2010

By Joe Buff

Defense Tech Futurist and Submarine Warfare Novelist

The following is an editorial by Joe Buff, an award-winning writer specializing in undersea warfare fiction and non-fiction. He is also currently working as a producer on turning one of his novels into a major motion picture.

Engagement by talking, alone, has yet to prove its effectiveness on the international stage. To thrive economically, a maritime nation needs a strong navy. The high cost of sustaining that navy is worth it.

Businesses and consumers depend on merchant shipping that demands protection from security threats. These range from piracy (think of Somalia), to terror (possible al Qaeda takeover of a liquid natural gas carrier or another crowded cruise ship like the MS Achille Lauro), to spillover from regional wars (the costly “Tanker War” in the Persian Gulf in the 1980s, growing out of the Iran-Iraq War), to attacks against trans-oceanic territory (Falklands Crisis), to defeat or containment of invasions of allies and trading partners (Kuwait, Bosnia, Georgia) and preferably deterrence of such invasions (Israel, Taiwan), not to mention deterrence of nuclear rogue states (Iran, North Korea), and more.

This economy-navy linkage creates a national structural feedback loop, which can be positive or negative. A case study of the positive effect is the Peoples’ Republic of China. Her burgeoning shipping in the Gulf of Aden is being protected from pirates by her new blue water navy, encouraging more Chinese investment in Africa, helping to pay for an ever more capable navy.

A case study of the negative is the U.K., whose weak economy since World War II caused the Royal Navy to shrink, encouraging Argentina to invade the Falklands (Malvinas). The resulting costly naval campaign to retake the islands was prohibitively expensive, with lasting ill effects on the British economy and submarine construction skills.

The U.S. has reached its own tipping point here. Nowhere is this more evident than the zero-sum game between federal bailouts of private industry, and the Navy’s 30-year shipbuilding plan. This highly charged political process unfolds against a backdrop of disturbing headlines such as “China Testing Ballistic Missile ‘Carrier-Killer,’” “Pak Navy to Acquire Seven Submarines to Meet Challenge Posed by India,” and “Russian Defense Minister Says Russia to Help Vietnam Build Submarine Base.”

The recent U.S. rescue of insurance giant AIG, due to its excessive use of overly risky securities vended by Wall Street, cost American taxpayers roughly $200 billion. That single bailout could have otherwise been used over time to pay for dozens of additional nuclear powered fast-attack subs and Littoral Combat Ships, plus a handful of nuclear aircraft carriers fully equipped with air wings, along with much needed R&D on a replacement for the ageing strategic deterrent subs.

Enlightened self-preservation of our democracy demands structural checks and balances against “anything goes” capitalism going too far. Such accountability to the country by financial corporations is an essential foundation of good government under the U.S. Constitution’s charge to provide for the common defense. It is one place where stronger regulation will not become the creeping communism some voters fear, but rather will form a high bulwark protecting world freedom from tyranny.

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{ 7 comments… read them below or add one }

Randall April 5, 2010 at 9:11 pm

Couldn't agree any more.

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Stefan April 5, 2010 at 6:18 pm

Financing a Navy to defend American interests is obviously a fundamental responsibility of government, and should be taken seriously.

But this analysis of the problem is far off-target. Government severely distorts the marketplace through a plethora of incentives, assurances, subsidies, and regulation. The most perverse of these are perhaps the federal home loan banks, which combined with extremely low interest rates and currency inflation are directly responsible for the incredible bubble (and subsequent collapse) in housing.

Tighter, more invasive government regulation of the financial sector is exactly the last thing we need. It is the best way to ensure we have another crisis and another round of punishing bailouts.

Government needs to get its tendrils out of our economy and refocus on its only legitimate role: protecting the individual rights of Americans by adequately funding and supporting institutions like the U.S. Navy.

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ohwilleke April 5, 2010 at 11:00 pm

The evidence better supports as Navy as a form of luxury good purchased by affluent nations than as a cause of the affluence. In all but the most bellicose or threatened states, GDP is a good indicator of military spending, and some of that spending in countries wealthy enough to afford it goes to a navy. And naval power as a cause of economic power is, if anything, diminishing.

North Korea has one of the "problematic" naval forces in the world, yet this has done nothing to advance the North Korean economy. Taiwan's purchase of naval assets is something it has been able to do only after it secured economic prosperity. Germany surely does not owe its economic might to its reasonably ample navy. And, Russia and the United States alone have a real commitment to a global as opposed to a regional naval force; Russia has seen its economy flounder, the American have fared better; the navy was not a likely cause of either event.

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elizzar April 5, 2010 at 7:02 pm

Some points – 1) The Falklands aren't the (Malvinas), they are the Falkland Islands. Enough said … possessing a British population and part of our national identity longer than the USA has had Texas as a member state.
2) Yes, before the Falkland War our navy had been on a downward / shrinkage cycle. In many ways the best thing to happen was the 1982 War, as it proved the worth of both a strong navy and especially a decent expeditionary force. The War revitalised our Navy which had become a virtually North Sea ASW-only force.
3) Also the UK economy was in the doldrums in the late 1970s / early 80s due to Labour mismanagement and union ties (how history repeats) and it was the Tories (who I have many issues with) who were starting to sort it out. Many lessons were learnt from the conflict about armaments (the needs for a naval gun in the missile age), construction (steel over aluminium, fire drills / doors) and the strength (real and threatened) of submarine presence – contrary to the above the decision was made to only have nuclear submarines following the War (no diesel-electrics) – it was a failure of the current Labour government to implement the building 10+ nuclear hunter-killer program (and 32+ surface escort) suggested in the 1998 SDR leaving us with the submarine design problems we have had, and which now seem (temporarily?) sorted in the Astute and follow-on Trident programs.
Saying all that I see definite parallels in the USA / UK naval experience in terms of cost inflation, tied / protected shipyards, poor capability designated requirement from MoD / Pentagon, which ultimately either lead to vast class price rises, or (and in particular in the UK) cutting of the number of ships ordered (and capabilities cut) – the Type 45 program in the UK being a prime example (6 ships built of 12 planned, and ship-to-ship and ship-to-shore attack capability cut).
One cannot have a war-time military and pay only peace-time expenditure for it.

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elizzar April 5, 2010 at 7:15 pm

Sigh, try again after first post auto-deleted …
I would suggest the Falklands War was in fact a positive thing for the Royal Navy, in that it showed the benefit of having multiple capabilities (not just a North Sea ASW force) … the expeditionary side of the current RN is probably second only to the USA in the world. Many other lessons of ship building and operation were also learnt. There was also the switch to a full;y nuclear submarine force post-Falklands. In fact it can also be argued that the UK gained as a country from winning the war, as the economy recovered and grew under the Tories (compared to the collapse seen in Argentina).
The problems in the RN lie with the MoD and politicians, and similarly to the USA with the nature of the shipyards and companies building the ships, leading to the situation of the 1998 SDR ship levels not being implemented – rising costs are met with order cuts rather than more money (6 Type 45s instead of 12, 6(7?) Astutes instead of 10) and this seems a trans-Atlantic phenomenon.
I cannot help but feel this is mostly due to the Cold War 'peace dividend' philosophy of cutting defence spending, at a time where our forces have been engaged in 8+ years of war in two theatres. Our government paid out more than £90 billion shoring up our banks – this is roughly three years of defence funding, and 3-4 times the supposed black hole in procurement. And within one year, the bank chiefs were paying themselves millions in bonuses again. It really does make you sick.

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Joe April 5, 2010 at 11:34 pm

AIG got the money, but where did the money go? AIG did not buy the securities they insured them against future loss. Where did the money go and why? Much like the belief that the Iraq war was launched because of oil. Who made the case for the Iraq War and why…as soon as israel needs the us to prevent an invasion let me know…1973 is ancient history.

Politics and economics is like oil and water. The same rules govern both ie fluid dynamics, but they do not mix.

200 billion? 100 weeks of iraq war. Discounting of course the long term care requirements of individuals on permanent disability due to roadside bombs amortized over the life of that individual or carrier.

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Cole April 5, 2010 at 11:49 pm

Joe, since you hail from Dutchess County, NY, I would suggest that all google the Wikipedia for that county and then look at footnote 12 with its recent data. It shows a median household income of $81,578 attempting to afford a median house costing $334,900. In constrast, nationwide, households making just $18,367 less income need only finance a $192,400 home. for a substantial mortgage and tax savings.

Now you don't even live in a eastern county on the sea, where no doubt housing and labor costs are far higher. I read a recent article that speculates that California civil servant pensions may be underfunded by half a trillion!

So please explain to me why using tax dollars to continue funding naval construction in inflated venues makes long term economic sense? Sailors must live in expensive areas as well. So doesn't the future lie in LCS with smaller crews and more unmanned subs, UAS, and manned helicopters to fight realistic sea battles. We have more than enough carriers for any blue water future threat.

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