The U.S./Israeli war in Iran demonstrates that humanity has created an insane economic operating system.
Insane Economics Point 1: The global economy is hitched to an energy source that is finite, unequally distributed, and difficult to obtain.
The most obvious element of a less-than-ideal system is the dependence on oil. As I’ve written before, the energy-richness of oil made it possible for humanity to make such miraculous technological advances that few ever question what we may have lost as a result. The environmental costs are the most evident, along with the human tragedy of all the deaths associated with oil-related wars.
In addition to casualties and destruction of our living Earth, the war in Iran shows we’ve also sacrificed security by building an economy so heavily dependent upon this one energy source. Iran has the geographic location to control the Strait of Hormuz and choke off a large percentage of the flow of global oil. Not only is this driving up the cost of fuel for vehicles and shipping of nearly everything we purchase, but the world industrialized agriculture system is heavily reliant on fertilizers derived from fossil fuels. We have now entered a global fertilizer shortage, and food prices will spike. The fact that a vast percentage of global food supply is also linked to this one energy source is another weak link in the overall system.
Fully deescalating ongoing conflict in the Middle East and increasing global security is almost certain to require diversifying global energy sources and reducing reliance on fossil fuels. Countries like China and India are making strong progress doing exactly that and as a result are less affected by the current war in Iran.
Meanwhile, the Trump administration is spending public money to keep us trapped in a high-cost gas situation. Earlier this week, the administration announced it would give nearly $1 billion in taxpayer money to a French oil company to make sure it didn’t build two offshore wind farms. The deal requires the company to instead invest that billion dollars in oil and gas; they are now planning a Liquified Natural Gas plant in Texas. At an energy conference in Houston on Monday, Trump’s Interior Secretary Doug Burgum said, “The era of taxpayers subsidizing unreliable, unaffordable and unsecure energy is officially over.” Later that same day, in a “you can’t make this up” turn of events, one of America’s largest oil refineries exploded, forcing thousands of nearby residents to shelter in place and spiking gas and diesel prices nationwide. Cancelling the renewable energy facilities also nearly guarantees higher electricity costs for people in New York and North Carolina.
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Insane Economics Point 2: Oil isn’t the cheapest energy source, not by a long shot.
As a lifelong climate activist, I can’t even count how many times I’ve been told we can’t move beyond fossil fuels because alternatives are too expensive. But the fact is, the price we pay at the pump doesn’t come close to the actual cost of a gallon of gasoline.
The U.S. federal government gives between $29 and $35 billion in direct subsidies to fossil fuel companies each year. We don’t pay that at the pump, but we do when we pay taxes.
Even discounting the cost of war, according to FracTracker Alliance, the U.S. military spends approximately $81 billion protecting global oil facilities, primarily in the Middle East. Again, our tax dollars pay for this.
Environmental externalities like the costs to try to clean up oil spills, and increasingly destructive extreme weather events driven by climate change are hard to calculate. Just consider the recent record-breaking flood in Hawaii; roads, and homes destroyed, hundreds of people requiring rescues. The disaster cleanup, insurance losses, and tax-funded relief is estimated to exceed $1 billion. One way or another this money will come from the public rather than the industry pumping out the emissions.
Some estimates calculate when these externalities are factored in, we are actually paying about $15 per gallon of gas. We’re told gas is cheap to keep us asleep at the wheel and subservient to the status quo.
Insane Economics Point 3: War is good for destructive industries and the current economic system overall.
All war, and the current Iran war in particular, benefits the military-industrial complex. The Iran war is costing U.S. taxpayers over a billion dollars per day. That money is churning great profits for the mega-corporations that make missiles, bombs, and other tools of war. Modern warfare is heavily reliant on drones and Trump’s sons have pumped tremendous amounts of money into military tech firms that produce drones and already have contracts with the Pentagon.
Moreover, a new wrinkle in the global Capitalist economy is prediction markets in which people (often anonymously) place bets on predictions related to world events, including war. A handful of anonymous investors have made millions of dollars predicting government actions related to this war in Iran. The timing of some of these bets smell of insider trading within the U.S government.
While schoolgirls are being blown to pieces and Iranian families are being poisoned, this economy is raking in profits for the well-positioned.
On the macro level, this war will wind up making the U.S. economy look stronger. We judge the health of our economy based on whether the Gross Domestic Product (GDP) is growing. GDP measures the monetary value of goods and services flowing through an economy. It measures the amount of money flowing through the system but not whether the expenditure of that money is beneficial.
Increased fuel prices boost GDP unless they get so high people stop buying fuel or other inflated items. And, in war, every bomb and plane that gets built, every building that must be rebuilt, clean-up efforts, even body bags and funeral services temporarily boost GDP.
Point 4 – The U.S. Economic System’s Special Form of Insanity:
Although we exist within a global, oil-dependent economy, there’s a unique version of economic insanity in the United States. By the end of this week, we will have spent $25 billion on this war.
Months ago, the Trump administration and republican members of Congress passed a budget bill that has left approximately 10 million more Americans without health insurance, skyrocketed premiums for millions more, and taken food assistance away from millions, including children, while simultaneously giving enormous tax cuts to the richest Americans. And yet, the Trump/Project 2025 regime just announced it plans to ask Congress for an additional $200 billion to fund their war on Iran.
We are told the U.S. cannot afford health care for all citizens. We are told there’s not enough money to fully fund Supplemental Nutritional Assistance for low-income children facing food insecurity. Yet we are told we can afford $2 billion a day to bomb children elsewhere.
According to Center for American Progress, the price of one 30,000 bomb is enough to provide Medicaid coverage to 625 low-income Americans for a year. The cost of one THAAD missile would provide free school lunch for a year to 15,050 children. Twenty-five billion dollars could pay for the following
· 3,106,000 people covered by Medicaid for a year
· 29,614,000 school kids getting free lunch for a year
· A year of childcare for 1,780,000 children of working parents
· Free tuition for 2,865,000 to get two-year associate degrees at a community college.
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Realizing that spiking gas prices is a political problem for a wildly unpopular president going into the mid-terms in November, there is talk of using US marines and vessels to try to open the Strait of Hormuz and get global oil supplies flowing again. Those costs, too, will be paid for with tax dollars.
In truth, much of the war spending will likely just be added to our already staggering national debt, since Trump added almost $8 trillion to the debt in his first term. This just further makes the case that ours is a unique version of economic insanity.
So, what do we do about this? How can we have an impact on an entire economic system? I’ve been working on those kinds of questions my entire adult life and I know it is a lot to face. However, over those decades I have never sensed a moment more poised for tackling the status quo that keeps us all trapped in a broken and brutal economic system. So many more people are aware that the system itself is rigged against most of us.
Here are actions I recommend:
· First, attend No Kings 3 tomorrow (Saturday the 28th). Here’s a link to an interactive map showing events all across America.
· Second, get involved in November’s midterm election by supporting democratic and progressive candidates for the U.S. House and Senate so that we can take back control of Congress and put some checks on this regime. You can help on campaigns in your own district or even phone bank for key candidates across the country.
· Third, and this is important and often overlooked, let those democratic and progressive elected officials know that just getting into office isn’t enough. Fixing what’s broken isn’t just about who’s in power; it’s about having people in power who are willing to use that power to step out of, and challenge, the status quo and redesign institutions and systems.
People sometimes get angry with me for criticizing my own species, and I sometimes get called unpatriotic when I criticize the U.S. That’s backwards thinking. I point out the flaws because I care enough about my country and humanity to want us to do, and be, better.
Special Note:
I’m excited to announce, I’ll be discussing all this and more with the brilliant Christopher Armitage in a Substack Live, next Thursday, April 2nd, at 4:30pm Pacific. Christopher is an Air Force veteran, security consultant, and accomplished author. He is doing great work laying out strategies for solving the mess we find ourselves in. I appreciate that Christopher combines deep historical knowledge, clear-eyed honesty, and introspection.
These Live Chats are for TRANSCEND’s paid subscriber community. I know so many of my readers will greatly appreciate Chris’s wisdom and strategies for building a better nation/world, I’m offering a 50% discount to make it super easy for all of you to participate.
Much love,
Cylvia
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