Banking and the Military
The refrain of Gil Scott-Heron’s song “Work For Peace” says over and over again, “the military and the monetary, the military and the monetary, they get together when they think its necessary”.
This was so true long ago that the classic book on the military industrial complex, “The Iron Triangle” by Gordon Adams in 1981, shows how truly interconnected the two industries were. While Michael Useem’s book the “Inner Circle” shows that corporate interlocks average about 15%, Gordon Adams goes on to show that 15% pertains to the corporate interlocks just between the big banks and the big defense contractors. Further, a corporation like Citibank gets 60% of its profits from overseas and has 40% of its directors on defense boards also. Talk about freeloading, let the Marines insure your profits.
Now its worse than ever. American corporate profits went from 7% to 12% of GDP in the last forty years. Financial sector corporate profits went from 6% to 30% of all corporate profits. Doing the math, Financial profits GDP has gone from 0.4% to 3.6% of the entire economy, a nine fold increase.
Bad as is was back then, its almost ten times as bad today. No wonder Barack Obama let Wall Street fund his first campaign and pick Timothy Geithner, with his Goldman Sachs connections, as treasury secretary. When the president ordered the breakup of Citibank, Geithner wouldn’t let him do it. See the second to the last slide on my Accurate Economic Model paper on my academic website:
Dr. Peace, Dr. Bob Reuschlein,