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Sunday, December 30, 2007 | Science : Economics | print version Print | Comments

Document Monkey, Business

by Michael Shermer, New York Post

Reposted from:
http://www.nypost.com/seven/12302007/postopinion/postopbooks/monkey__business_524631.htm?page=0

FOR A BETTER ECONOMY, WE NEED TO FIGHT OUR BETTER INSTINCTS

By NICOLE GELINAS

December 30, 2007 -- The theme of Michael Shermer's new book is a graceful paradox. Decades of study of behavioral psychology, neuroscience and genetics, layered over more than a century of evolutionary studies, proves that we're not completely rational in making economic choices. But an understanding of our fascinating limitations, which Shermer provides, makes us freer than we were before we knew of them.

People and their governments make decisions based on "folk economics intuitions" - intuitions that are often false. One such intuition is that modern economies are so complicated that they can't run themselves; they need direction from above. Shermer includes tales from mercantilist Europe right up to present-day controversies over monopoly at Microsoft to illustrate how easy it is for intelligent people to think that powerful officials must do something about a seeming market imbalance, that it won't simply work itself out.

Click here to continue:
http://www.nypost.com/seven/12302007/postopinion/postopbooks/monkey__business_524631.htm?page=0


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1. Comment #105066 by Radesq on December 30, 2007 at 1:45 pm

 avatarIs economic Darwinism akin to social Darwinism? The article highlights what seem like some useful observations - but I think the conclusions that it seems to be drawing about the utility of unfettered capitalism are just plain wrong.

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2. Comment #105074 by Animavore on December 30, 2007 at 2:06 pm

 avatarSo... nothing new in other words. Didn't Coke beat Pepsi in an independent test? (feel free to correct me if I'm wrong as I'm not sure.) And won't the governments always have to take care to supply jobs to the poor ie. by preventing greedy companies outsourcing? The connection with evolution is tenuous. Like god belief (almost) if you look for evolution in everything you'll find it in clouds forming or dumps (scrapyards) piling.

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3. Comment #105077 by notsobad on December 30, 2007 at 2:08 pm

 avatarEvolutionary biology supports laissez-faire .. some people here are going to have a hard time accepting this one.

And cola is a shitty drink no matter who makes it.

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4. Comment #105082 by Solarium Solaris on December 30, 2007 at 2:14 pm

 avatarThis entire argument is strange to me. Economics and evolution are separate subjects, and I don't see why any sort of biological law must determine our markets.

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5. Comment #105084 by Roger Stanyard on December 30, 2007 at 2:21 pm

Notsoband: "Evolutionary biology supports laissez-faire .. some people here are going to have a hard time accepting this one."

Up to a point, Lord Copper. Pragmatism in the face of evidence might be a better policy option that ideology. You've only got to look at Th American mobile phone system or its terrestrial television to see you can do better than blind laissez faire.

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6. Comment #105087 by robotaholic on December 30, 2007 at 2:27 pm

 avatarI like Michael Shermer- he runs http://www.skeptic.com/ and he's into debunking stupid supernatural things like psychics and witchcraft

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7. Comment #105089 by Animavore on December 30, 2007 at 2:32 pm

 avatar'I like Michael Shermer- he runs http://www.skeptic.com/ and he's into debunking stupid supernatural things like psychics and witchcraft'

Yeah like he did with yer one on Bullshit by Penn and Teller.

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8. Comment #105100 by sidfaiwu on December 30, 2007 at 3:01 pm

 avatar
Is economic Darwinism akin to social Darwinism? The article highlights what seem like some useful observations - but I think the conclusions that it seems to be drawing about the utility of unfettered capitalism are just plain wrong.


I share your skepticism, Radesq. Evolution is such a successful theory, it is tempting to apply the theory where is it simply doesn't belong. However, there may be some useful parallels that Shermer may bring to light. But to extend his already labored analogy a little further, do we really want an economic system that creates a few, powerful apex predators and a vast multitude of largely disposable prey? I certainly don't.

I also have another reason to be skeptical of Shermer's underlying hypothesis: He is a dedicated (to put it nicely) libertarian. I'll be on the lookout for confirmation bias and selective evidence when I read his book. I certainly will end up reading his book. Other than his libertarian streak, I'm a big fan of Shermer.

notsobad, I don't think evolution says anything about economics. From my understanding, it's all about genetic inheritance with modification, random mutation of genes, and natural selection, largely through survival and reproductive success. It says nothing about supply and demand curves, derivative pricing, or the like. You are right about one thing, though: cola is a shitty drink regardless of the manufacturer.

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9. Comment #105138 by LoneStarAssman87 on December 30, 2007 at 5:02 pm

Shermer touched on this subject briefly in his previous book, Why Darwin Matters. I have a few friends who are socialists, and I look forward to sharing this book with them!

Also, I hope no one who frequents this site is hypocritical enough to judge this book just from an article about it and instead reads the book and judge for his/herself. Readers of Dawkins/Harris/Hitchens/Dennett should know better than to do such a thing, after seeing these authors so often dismissed from the start.

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10. Comment #105141 by notsobad on December 30, 2007 at 5:17 pm

 avatar
Also, I hope no one who frequents this site is hypocritical enough to judge this book just from an article about it and instead reads the book and judge for his/herself. Readers of Dawkins/Harris/Hitchens/Dennett should know better than to do such a thing, after seeing these authors so often dismissed from the start.

That's a good point. Already in this thread we can see people dismissing the conclusions of this book just because they don't fit in people's frame of reference.
Who does that remind me of...

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11. Comment #105145 by SurfDude on December 30, 2007 at 5:54 pm

 avatarI will buy this book as I suspect the synopsis above is more than likely cherry-picking for convenience. I would be very surprised if Shermer hasn't fleshed out these points into something far more nuanced.

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12. Comment #105153 by cassdenata on December 30, 2007 at 6:59 pm

What utter tripe. Maybe the article, from a newspaper with a track record of having a right-wing bias, misconstrues and oversimplifies his argument but this sounds ridiculous. This is the philosophy of the Free-Market-Jesus. Just allow corporations to regulate themselves and I'm sure they won't pollute the environment, waste resources and hoard money in to the hands of a select few. The concept of Externalities completely destroys the idea that the "Free Market is all we need" and requires top-down intervention. Here is a simple form of what an externality is. If I own a factory along the Mississippi river that makes widgets. At the end of the widget making, I create a pretty toxic waste. It would be completely economically beneficial for me to dump that waste in the Mississippi river. It would mot harm me because it flows downstream and I would be gotten rid of a costly waste. Now, the fisherman who have made a living in the Mississippi delta for years are no longer in business because all the fish has died from that waste and they have a right to that fish. There is no Magic feedback mechanism that will get the factory owner to play nice. This concept can apply to lots of other issues, not just environmental problems. While I agree that most of the market shouldn't be influenced by government intervention, there are many reasons why an organization that represents the greater society needs to step in.

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13. Comment #105160 by Styrer- on December 30, 2007 at 7:33 pm

Ignoramus that I am on this, I need to hear the expert on this important topic. Alone, I'm lost.

Professor Dawkins, you are required here.

Pray communicate.

Best,
Styrer

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14. Comment #105175 by Dr Benway on December 30, 2007 at 8:05 pm

 avatarA simple laizzes faire model fails to account for our capacity to shape the environment in which goods and services compete for market share.

Humans can alter the play of the economic game by tweaking the rules - e.g., by setting higher car fuel economy standards, causing SUVs to be less "fit" and changing the average size of all cars on the road.

Such environmental mods are a function of the government, but shouldn't be confused with direct, centralized control of the production and distribution of goods and services. We know that don't work.

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15. Comment #105181 by Axulus on December 30, 2007 at 8:30 pm

I don't think that Shermer is arguing that free market capitalism will lead to optimal environmental outcomes (a clear case of a market failure). I think he is going to talk more about scenarios tend toward economically efficient outcomes that we have an intuitive distrust of. Such things would likely include outsourcing and downsizing, international trade, employment levels, farm subsidies, and the like. He will probably explore where these intuitions come from evolutionarily speaking and show why they are misplaced.

That's my guess though. If he is arguing for free market environmentalism, I think there will be some serious flaws/biases in his argument.

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16. Comment #105190 by lpetrich on December 30, 2007 at 8:53 pm

 avatarSeems like capitalist Panglossianism to me -- something like the adaptationist Panglossianism that one sees all too often.

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17. Comment #105196 by Copernic on December 30, 2007 at 9:12 pm

Says Cassdeneta..."It would be completely economically beneficial for me to dump that waste in the Mississippi river. It would mot harm me because it flows downstream and I would be gotten rid of a costly waste. Now, the fisherman who have made a living in the Mississippi delta for years are no longer in business because all the fish has died from that waste and they have a right to that fish. There is no Magic feedback mechanism that will get the factory owner to play nice."

All sorts of agents would have a beef with this manufacturer. Local communities, individuals, competing corporations, affected businesses, consumer advocates, environmental advocates, etc. Each armed with a lawyer, blog, judge, or media outlet could make life miserable for the offender. So I don't follow.

"...why an organization that represents the greater society needs to step in."

Who is arguing that there is no agent that represents the common interest? Local, state, and federal entities are not magically poofed away when we start talking about how market forces act on human societies.

J

J

Other Comments by Copernic

18. Comment #105197 by tybowen on December 30, 2007 at 9:16 pm

 avatarExcellent article. And there is a very good reason not to just dump in a river. Public opinion. I won't buy anything from a company that I know haphazardly pollutes the environment. But with all the political pulls it becomes possible to sweep such actions under the rug. Then we are left with inferior quality goods because someone has high friends. I don't want anybody infringing on my freedom or the freedom of others. And that includes the freedom of company owners to "horde their money" if they want. They'll be out competed if they try, but they can do that if they wish.

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19. Comment #105202 by Copernic on December 30, 2007 at 9:45 pm

Shermer is arguing that economics is an emergent property of human social interaction.

Our ability to trade, judge fair deals, identify and exact punishment for cheaters, reward honest brokers, save for the near future, act "altruistically", reciprocate, etc are behaviors that, on a small scale, make for successful bands of humans. On a larger scale, they make for "economics". Regardless, they are the behavioral phenotype of an evolved brain.

He also notes where our evolved behavior can get us into trouble. We are built for operating in the small familial clans where we spent the vast majority of our evolutionary past. It is when we are asked to operate within communities of 10,000 - 6 billion people that we occasionally find ourselves in trouble. We are faced with hedge funds, slot machines, dollar cost averaging, mortgages, pawn shops, insurance policies. All based upon principles that we intuitively grasp via our evolved mind; time value of money, probability, risk/reward, fair trade, etc....but complicated enough that we often make judgemental errors that occasionally work against us.

It is through these exceptions to the rule, where we make our financial and fiscal policy mistakes, that shed light on the biological underpinnings of economics.

He is casting light on an area of study that has been floating around since Adam Smith and Thomas Malthus, that we can understand economics better by understanding human society, biology, and psychology.

Traditional and Classical economists turned this subject into the "dismal science" with their IS/LM models, perfect rationality assumptions, and demand curve shifts. All are empty when removed of the context of human nature.

As another poster mentioned, he touched on this in "Why Darwin Matters" and I've been excited about this release since he talked about it at TAM5.

J

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20. Comment #105228 by quill on December 31, 2007 at 12:02 am

 avatarI had no idea Michael Shermer had a background in economics, but in any case, I have to join others in denouncing these ideas of backward thinking. Social Darwinism may lead to a more materialistically productive society, but also by far a less ethical one.

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21. Comment #105258 by Rtambree on December 31, 2007 at 2:41 am

20. Comment #105228 by quill

>I had no idea Michael Shermer had a background in economics

Shermer also has a background in nuttery as he was once a hard core evangelical. Even these days as "atheist", he can still be found attacking Dawkins and Harris in his monthly Scientific American column for being too hardline.

His rationale is that the freedom/liberty to be religious trumps that of logic, science and evidence.

http://www.sciam.com/article.cfm?id=rational-atheism

His wholesale embrace of free market capitalism (against the evidence) shows he has simply rejected one form of religion for another.

Once again, it's the less capitalistic socialised countries of Scandinavia that produce the best standard of living, longevity, literacy, participation of women in politics, equality, low infant mortality, low crime rates, etc. They've found a better mix between capitalism and socialism.

Historically, the rich countries of west didn't get rich because of "free market" capitalism. They had highly protected markets, overseas colonies they exploited for resources by force, and they "successfully" used slavery until the 19th century. Even after slavery was banned, the British empire became the world's largest narco-traffickers to try to break into the Chinese market.

So you have both historical and contemporary evidence against his position, and yet Shermer blindly employs whatever cognitive self-delusions he needs to, in order to justify his position.

He should stick to denouncing water diviners, astrology, tarot cards, UFO abductions, 9-11 conspiracies, etc, etc.

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22. Comment #105272 by notsobad on December 31, 2007 at 3:55 am

 avatarAll those people dismissing the conclusion should re-read and comprehend the sentence "People and their governments make decisions based on "folk economics intuitions" - intuitions that are often false."

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23. Comment #105273 by GordonHide on December 31, 2007 at 3:57 am

Shermers ideas, if properly represented by this article, are self contradictory. he seems to want to support the free market by saying it is self regulating due to our evolutionary tendency to cooperate. Cooperation is shared decision making for the general good. Of course, good government is also shared decision making for the general good. The only real difference between these two sorts of market interference is that Shermer believes in the free market.

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24. Comment #105280 by briancoughlanworldcitizen on December 31, 2007 at 4:25 am

 avatarI would appreciate some help here : http://wdtprs.com/blog/2007/12/bp-morlino-still-stepping-up-to-the-plate/

A fairly interesting discussion going that "dysolution" pointed me too. Weigh in one and all!!!

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25. Comment #105295 by Ian Bamlett on December 31, 2007 at 6:56 am

 avatarBrian,

For a horrible moment I thought you had had some massive relapse when I saw, "In Christ, Brian C" as one of the posters; but was suitably relived when I saw you weighing in further down on the side of sanity.

I don't have your patience to debate these people but have posted my rather terse response.

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26. Comment #105296 by briancoughlanworldcitizen on December 31, 2007 at 7:01 am

 avatar"In Christ, Brian C" as one of the posters; but was suitably relived when I saw you weighing in further down on the side of sanity.

LOL ... yeah I saw that guy too! Thanks:-)

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27. Comment #105297 by al-rawandi on December 31, 2007 at 7:14 am

 avatarbriancoughlanworldcitizen ,


That is a link to a bunch of Catholic crazies. You want help how?

I went to a Catholic High School, there is no reasoning with these people around these issues.

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28. Comment #105299 by al-rawandi on December 31, 2007 at 7:22 am

 avatarbriancoughlanworldcitizen,

I dropped a comment as Alf.

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29. Comment #105303 by cassdenata on December 31, 2007 at 8:07 am

Copernic, based on the policies that most people who belong to the Free-Market-Jesus cult advocate, there would be no legal recourse for these actions. The local citizenry has no options and by the very nature of their ideas, the state and local government has no control over this issue, they can't regulate businesses.
Tybowen, you honestly believe that companies which are practicing unsustainable and wasteful business practices, will cause the public to stop buying goods. Especially in this global age, when we buy products from thousands of miles away. I guarantee you that you buy products made by companies that are doing some pretty nasty things. For instance, there is a huge swath of ocean downstream of the Mississippi river that is devoid of aquatic life due to the fertilizers introduced in the breadbasket of the US. So if you live in the US and eat food, you are supporting this business.

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30. Comment #105304 by briancoughlanworldcitizen on December 31, 2007 at 8:07 am

 avatarThanks guys, comments are closed. I hope we gave some people food for thought:-)

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31. Comment #105312 by digitalia on December 31, 2007 at 8:35 am

 avatarBrian: that thread is CLASSIC. I'm loving the back-n-forth with Father Lorenzo and this Jordan guy. "Father" dearest is doing alot to spread the notion of crazy within the church. His best argument seems to be "Don't believe everything you read in the Da Vinci Code!" jokes...

About this book, I'd like to check it out beyond whatever the NY Post is inferring here. Shame I haven't read any Shermer yet - any suggestions where to start?

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32. Comment #105326 by Steve Zara on December 31, 2007 at 9:10 am

 avatar
Thanks guys, comments are closed. I hope we gave some people food for thought:-)


Bother! I was in the process of coming up with something really brain-melting on the subject of souls, fertilized eggs, identical siblings, chimeras, neural development and cloning.

We clearly don't have much time to sit around and think in this fast-paced high-action world of militant atheism!

Excellent work on that blog.

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33. Comment #105331 by al-rawandi on December 31, 2007 at 9:33 am

 avatarAll,


I dropped a comment there, saying that "Janet" had a simple view of the world. She was going on about 'god is necessary because I don't understand all the complexity in nature'. She replied "I pray god keeps me that simple."

How do you debate someone who is proud of their stupidity? "You are an idiot"... "Yes I am." Not a lot of room for progress.

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34. Comment #105336 by al-rawandi on December 31, 2007 at 9:37 am

 avatarcassdenata,


Some good points. I don't agree with your indictment of the free market. The free market is the best example of an economy at work. Howevever I think you have mistaken the US for a free market. The US is a corporate welfare state. This stems from privately funded political campaigns.

Our entire foreign aid system is a fancy money laundering scheme. Give 1 billion to Indonesia and have them pay American firms for projects that never work. It is only one degree more complicated than giving the money directly.

However it seems that the #1 impediment to cleaning up our environment are the messianic Jesus whackos.

3 point plan.

1) Create safe, alternative fuels.
2) No private funding for campaigns.
3) Non-interventionist foreing policy.

Those are the antitheses of the Jesus crowd.

Other Comments by al-rawandi

35. Comment #105344 by briancoughlanworldcitizen on December 31, 2007 at 9:49 am

 avatar33. Comment #105331 by al-rawandi on December 31, 2007 at 9:33 am

Yeah I saw that, the religious mind at work. Stupidity is a virtue
Humility is claiming a relationship with the creator of the universe.
You must disprove my lunatic assertions.

It was quite something. It's useful work though, there are always a higher ratio of lurkers to posters, and to people mostly grounded in the real world (80%+ of Christians in my estimation) Fr. Renzo comes off as the spittle flecked lunatic he actually is. It's important to shed light on the genuine seething insanity beneath the mask.

Other Comments by briancoughlanworldcitizen

36. Comment #105346 by briancoughlanworldcitizen on December 31, 2007 at 9:51 am

 avatarWe clearly don't have much time to sit around and think in this fast-paced high-action world of militant atheism!

Excellent work on that blog.


Thanks Steve, it's fun isn't it?

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37. Comment #105349 by Steve Zara on December 31, 2007 at 10:05 am

 avatar
Thanks Steve, it's fun isn't it?


I have to confess I feel a guilty pleasure when the true nature of a particularly vile religious person is revealed by gentle questioning...

Q: "I'd like to ask your views on stem cell research"
A: "You evil blood-spattered baby killer!"

Other Comments by Steve Zara

38. Comment #105350 by al-rawandi on December 31, 2007 at 10:07 am

 avatarSteve,


Well put.

They have some curious & vile beliefs. Like condoms being abortion (and thus murder).

If condoms are murder, then I am a prolific serial killer.

Other Comments by al-rawandi

39. Comment #105353 by phil rimmer on December 31, 2007 at 10:18 am

 avatarI look forward to reading the Shermer. His (albeit cuddly version of) Libertarianism might just be skewing him on monopolies. Microsoft is one thing, but AT&T, Standard Oil and Du Pont were quite another. (Du Pont held the US government to ransom over munitions having bought up every last black powder mill.) Free markets mostly work brilliantly, but setting a few ground rules is reasonable.

I would love to hear his views on the US v. Sweden debate.

Other Comments by phil rimmer

40. Comment #105354 by al-rawandi on December 31, 2007 at 10:22 am

 avatarphil rimmer,


I like libertarianism. I agree, the free market only works when everyone gets a fair shake.

Today in the US people get hamstrung and then told "Hey it's the free market pal."

In the US we pay almost as much in taxes as Scandanavian countries, and we don't get dick in the way of services. Go figure.

Other Comments by al-rawandi

41. Comment #105356 by _J_ on December 31, 2007 at 10:24 am

 avataral-rawandi
If condoms are murder, then I am a prolific serial killer.

Show-off.

Other Comments by _J_

42. Comment #105357 by Rtambree on December 31, 2007 at 10:30 am

40. Comment #105354 by al-rawandi

>In the US we pay almost as much in taxes as Scandanavian countries, and we don't get dick in the way of services

Yes you do. You get a defense force bigger than the rest of the world's combined, to protect you from all the evildoers. And you get more flags than you can salute in a lifetime.

Other Comments by Rtambree

43. Comment #105359 by al-rawandi on December 31, 2007 at 10:32 am

 avatarJ,


Haha. It was more for effect.

Where is Diacanu when you need a dynamite drop in?

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44. Comment #105360 by briancoughlanworldcitizen on December 31, 2007 at 10:36 am

 avatar
Yes you do. You get a defense force bigger than the rest of the world's combined, to protect you from all the evildoers. And you get more flags than you can salute in a lifetime.


A defense force? Does the capacity to incinerate all life on earth qualify as defence?

Other Comments by briancoughlanworldcitizen

45. Comment #105361 by Rtambree on December 31, 2007 at 10:39 am

"Defense" is a nice euphemism when the last country to attack the USA was England in 1812.

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46. Comment #105362 by al-rawandi on December 31, 2007 at 10:39 am

 avatarI don't recall an instance where the US military actually defended me from anything.

The last chance they had (Katrina) all the soldiers were gone and (much like for our landscaping) we called in the Mexicans.

Mexican soldiers were defending the people of New Orleans.

Eisenhower warned of the 'military industrial complex'. Now it is a reality

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47. Comment #105363 by al-rawandi on December 31, 2007 at 10:40 am

 avatarrtambree,

You can bet the limeys will never pull a stunt like that again.

Damned red coats.

Other Comments by al-rawandi

48. Comment #105364 by Rtambree on December 31, 2007 at 10:44 am

>Eisenhower warned of the 'military industrial complex'. Now it is a reality

The military industrial complex serves the same function as Foreign Aid that you alluded to earlier - a means to transfer taxpayer revenue from the public to the private sector.

The war objectives are "won" when Congress signs those cheques worth hundreds of billions that go to defense contractors. Whatever happens next: win, loss, quagmire, etc is irrelevant. The "mission" has already been accomplished. People get distracted with the oil, but the real wealth is the US Treasury.

Other Comments by Rtambree

49. Comment #105366 by al-rawandi on December 31, 2007 at 10:48 am

 avatarTrue, we have invaded some places that didn't have any oil. That is why I get infuriated when republicans talk "smaller govt.". They have done more than anyone to expand govt.

The real problem in the US is we have two parties both representing the corpotocracy. These politicians are all bought and paid for. The other problem is that we let the stupid people vote.

I am trying to claim New Zealand citizenship by descent and be done with this nonsense. America is taking a dangerous course.

Other Comments by al-rawandi

50. Comment #105367 by Rtambree on December 31, 2007 at 10:51 am

Good luck with the citizenship application, Al-rawandi. Middle Earth is a beautiful country.

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