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Terrorist Cost to Society

Goal of Terrorists: Raising the Cost to Society, Asymmetric Warfare Conference, TELOS January 14, 2017 Professor Robert Reuschlein, EE, CPA, MBA, Ed.D. Real Economy Institute,

“Goal of Terrorists:  Raising the Cost to Society”

by Professor Robert Reuschlein


Asymmetric Warfare raises the cost to society of warfare. Those in the military industrial complex believe that warfare can enhance themselves and their society. This belief led to the Iraq War. Those employing asymmetric warfare believe they can punish the military society’s population enough to make them give up. This was the strategy that won the Vietnam War. The asymmetric warrior (aka “terrorist”) believes a militaristic society will implode when enough pressure is put on them. These so- called terrorists are even more right than they realize. The eight years of the Reagan Military Buildup tripled the national debt (quadrupling if you add in the 4 Bush years).  The eight years of the second Bush military buildup wars led to the Great Recession, particularly the Iraq $66 billion surge in fiscal year 2008. Blowback was immediate and internal, and unemployment escalated for two years from July 2007 to October 2009. This is exactly what Osama Bin Laden wanted out of the Western response to his provocations, saying in an alleged 2005 speech: “So we are continuing this policy in bleeding America to the point of bankruptcy.” In my empire economics speech, I will outline the true cost of militarization on America, depleting our capital and research resources leading to economic and social decay, including high crime. Empire stagnation includes the stagnation of the political process in America. Militarization lead to the direct depletion of the manufacturing sector even faster than the more obvious and visible trade treaty losses of factories. In the decade after 2001 terrorism has quadrupled. Goading us into attack has been a goal of the terrorists.

Alleged Osama Bin Ladin 2004 Speech Goals

BANKRUPTCY  “The Mujahideen bled Russia for ten years, until it went bankrupt and was forced to withdraw in defeat. So we are continuing this policy in bleeding America to the point of bankruptcy.”

PRIVATE COMPANIES  “Leaders cause America to suffer human, economic, and political  losses without their achieving for it anything of note other than some benefits for their private companies”

POLITICS  “Resemblance it bears to the regimes in our countries, half of which are ruled by the military and the other half which are ruled by the sons of kings and presidents.”

Empire “Opportunity Cost”

Military Spending is both wasted manufacturing & lost capital investment. Military Spending takes away from the productive stream of the economy key research and capital resources.

Such resources normally keep manufacturing competitive producing new products constantly being tested by the consumer and business marketplaces.  Military Spending converts such resources to a national service that does not enhance the economy.  90% of military spending is for this national service.  A small part of the 10% spent on research returns as civilian spinoffs.

Military Spending is like a junk food diet, filling but not nourishing, Fat & Carbs without Protein to build muscles.

Military Spending National Economics

The following four correlations from studies best illustrate the nonproductive nature of military spending:

R=-.997 Manufacturing Productivity (G7+Sweden, Denmark)(1960-1978, Sivard Reuschlein)

R=-.993 Capital Investment (NATO 4+Sweden)(1960-1979, Sivard Reuschlein)

R=.999 Productivity (3+2 factor) US Model (1920-1996, Reuschlein)

R=-.97 Economic Growth vs Net Military Burden (1941-1948 World War II, Reuschlein)

Evidence Military Hurts and Deficit Helps Economy

The four proofs on the prior slide show:

That by R the odds favor 1 billion to 1 that military spending hurts the economy

That by R2 the odds favor 100 million to 1 that military spending hurts the economy

By the R=.999 model, and WWII R=-.97, only deficit spending offsets the negative impact of military spending in short run.

Military Spending Regional Economics R=.97

  • No major component of US federal budget is more unequally and politically distributed among the 50 states than military
  • This gives overwhelming political clout to those in charge of the military budget, especially presidents and congressional
  • Those regions and states that get more or less than their pro rata (tax load) share of the military budget gain or lose economically &
  • Military spending depletes the productive economy and redistributes to the regional “warfare” economy: “middle class” welfare

Where Does Socio-Economic Decay Come From?

Low military spending leads to a rich and prosperous society with greater equity.

High military spending leads to reduced manufacturing & capital investment, which leads to economic decline, social decay, and high income inequality.

I will contrast the economic model of two societies: the emerging growth society and the stagnant empire society to show the forces of stagnation. These forces have favor “sideways” occupations over growth, and caused health & crime problems.

Crime, Murder and the Military

Using combined data from 1973-75, 1984, 1991 always indexed against the US, I was able to put all these countries on one graph.  Focusing on the G7, leaving outliers Britain and France out, the correlation was R= .996.  Later I noted that Britain and France correlated well (R= .93) with New England and Virginia, the four hundred year old mature societies.  Japan, Germany, Italy, Sweden and the United States are all about 150 year-old societies.  The older countries and colonies were at 40% crime levels relative to their military spending compared to the younger societies.

Social Correlations with Military Spending

In rank order from high to low, here are some of the leading developed world international social factor correlations with military spending, largely from the 2010 book “Spirit Level”:  Social Class Mobility R= -.923; Factory Productivity R= -.868, Prisoners R= .852, Teen Births R= .818, Homicides R= .803, Work Hours R= .794, Mental Illness R= .789, Income Inequality R= .765, Press Freedom R= -.763, Obesity R= .753, Infant Mortality R= .679, Unsustainability R= .548, Recycling R= -.482.

Economic “Pie” Model

In the control/empire stagnant society when a person earns a bigger share of the pie, someone else is more likely to lose and become unemployed or homeless (left out).

In the achievement/growing society, when someone earns a bigger share of the pie, it doesn’t usually hurt others because it is from the ring of growth, not from the ring of basic needs. Also, to achieve the new frontier of growth, all people’s ideas are needed and valued more, so inequality is lessened.

Characteristics of Empire Versus Emerging Societies

An Empire Society features Power and Control, growth is Stagnant and Sideways, with heavy Lawyering to mend fences and a strong Service sector.  The empire society is Win Lose with a lot of rich poor inequality.  Militaristic sports dominate like American Football with language about the bomb, blitzing, and in the trenches.  Drug Use, Crime Debt and lotteries will proliferate in an effort to mitigate the pain of chronic underachieving.

An emerging great power will feature Achievement and Growth, moving Forward, lots of Engineering and Manufacturing.  The nature of the emerging society is more equal and Win Win.  Baseball was the national sport in emerging low military America and post World War II low military Japan with the non-militaristic goal of reaching home plate. Success, Satisfaction Saving are other hallmarks,


Empires decline because they divert economic achievement resources to power projection.  Military spending and manufacturing capital draw from a common resource pool so as one increases the other decreases.  Low military high growth societies incentivize new product creation and achievement.  High military spending low growth societies incentivize market share nitpicking & control.  High Military Spending States give us 80% of US key political leaders, especially presidents.

Banking and the Military

American corporate profits went from 7% to 12% of GDP in the last forty years.  Financial profit share went from 6% to 30%.  Financial profits GDP has gone from 0.4% to 3.6% of GDP, a nine-fold increase overall.  The industrial triangle book of Gordon Adams showed that major banks and major defense contractors had corporate interlocks of 15% between just those two industries, the same percent for ALL interlocks in other companies.

Economic Pattern of War

The high growth period creates a new world peck order of nations and these two wars test that new peck order.  Wealth is maximized at the end of the period, when the major war occurs.  The second largest war happens half way through the high economic growth period. The current high growth period is 1994-2021.  Opponent is often a small power.  Examples:  Iraq 2003, Korea1950, Spain1898, Mexico1846.

The largest war happens at the end of the high growth period just as wealth peaks and three years into the low growth period with the last cooling. Opponents are usually #1 power vs #2 power.  China 2025? Vietnam (Russia proxy) 1965, Germany 1917, South 1861, Britain 1812

Current History, Great Recession

Bush military buildup is similar to the Reagan military buildup.  One difference is the much smaller tax cut under Bush (Less Deficit Lift).  Repeal of Glass-Stiegel made crash worse under Bush (Derivatives grew 10 times since repeal).  Real Estate problems developed under both military buildups.  The role of the military buildup is almost completely ignored.  I publicly predicted a recession in January 2007, predicting disaster for the $70 billion Iraq Surge.  It takes about six months to deploy troops in Iraq, and sure enough, the unemployment rate started going up in July 2007 and worsened continuously for two years.  The Financial collapse made conditions worse, but the military buildup started the downhill slide which exposed the weaknesses of the financial structure.  The 2008 military budget is twice the increase of years before and after.



There will be no recovery from the collapsing nature of empire until the military is reduced.

The US industrial Midwest swing states that decide presidential elections will all benefit greatly from reduced military.  The PARASITIC Financial and Military industries can’t be allowed to kill the industrial “goose that laid the golden egg.”

For original power point with charts and graphs at Telos 2017 Conference: 29_slide_5p._2017

Please cite this work as follows:

Reuschlein, Robert. (2018, February 25), “Terrorist Cost to Society” Madison, WI: Real Economy Institute.  Retrieved from:,2018154542.aspx

Dr. Peace, Professor Robert Reuschlein, Real Economy Institute

Nominated Vetted 2016, and Given Odds for the Nobel Peace Prize 2017

Possible Favorite in 2018 Nobel Peace Prize November 5th.
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