Pentagon Socialism: Militarising the Economy in the Name of Defense

Given his erratic behavior, from daily Twitter eruptions to upping his tally of lies by the hour, it’s hard to think of Donald Trump as a man with a plan. But in at least one area—reshaping the economy to serve the needs of the military–industrial complex—he’s (gasp!) a socialist in the making.

 

His plan is now visibly taking shape—one we can see and assess thanks to a Pentagon-led study with a distinctly tongue-twisting title: “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States.” The analysis is the brainchild of Trump’s adviser for trade and manufacturing policy, Peter Navarro, who also happens to be the key architect of the president’s trade wars.

 

Navarro, however, can hardly take sole credit for the administration’s latest economic plan, since the lead agency for developing it was also the most interested of all in the project, the Pentagon itself, in particular its Office of Defense Industrial Policy. In addition, those producing the report did so in coordination with an alphabet soup of other agencies from the Department of Commerce to the Director of National Intelligence. And even that’s not all. It’s also the product of an “inter-agency task force” made up of 16 working groups and 300 “subject matter” experts, supplemented by over a dozen industry “listening sessions” with outfits like the National Defense Industrial Association, an advocacy organisation that represents 1,600 companies in the defense sector.

 

Before jumping into its substance and implications for the American economy and national defense, let me pause a moment to mention two other small matters.

 

First, were you aware that the Pentagon even had an Office of Defense Industrial Policy? It sounds suspiciously like the kind of government organisation that engages in economic planning, a practice anathema not just to Republicans but to many Democrats as well. The only reason it’s not a national scandal—complete with Fox News banner headlines about the end of the American way of life as we know it and the coming of creeping socialism—is because it’s part of the one institution that has always been exempt from the dictates of the “free market”: the Department of Defense.

 

Second, how about those 300 subject matter experts? Since when does Donald Trump consult subject matter experts? Certainly not on climate change, the most urgent issue facing humanity and one where expert opinion is remarkably unified. The Pentagon and its contractors should, however, be thought of as the ultimate special interest group and with that status comes special treatment. And if that means consulting 300 such experts to make sure their “needs” are met, so be it.

 

A Slogan for the Ages?

 

Now for the big stuff.

 

According to Peter Navarro’s summary of the new industrial base report, which appeared as an op-ed in the New York Times, the key to the Trump plan is the president’s belief that “economic security equals national security.” When it comes to weapons manufacturing, the administration’s approach involves building a Fortress America economy that will depend as little as possible on foreign suppliers. Consider it just the latest variation on Trump’s “America First” economic strategy, grounded in its unapologetic embrace of nationalism. As a slogan, “economic security equals national security” doesn’t have quite the populist ring of “Make America Great Again,” but it’s part of the same worldview.

 

In a flight of grandiosity (and flattery) that must have made his boss swell with pride, Navarro suggested in his op-ed that the slogan might go down in the annals of history alongside other famed pearls of presidential wisdom.  As he put it:

 

McKinley’s . . . ‘Patriotism, protection and prosperity’ . . . catalyzed strong economic growth. Roosevelt’s ‘Speak softly and carry a big stick’ helped transform the Navy into a military force capable of projecting power around the world. And Reagan’s ‘Peace through strength’ inspired an unprecedented rebuilding of the military that brought the Soviet Union to its knees. . . . History will judge whether Donald Trump’s ‘economic security is national security’ joins the ranks of great presidential maxims.

 

The essence of the Pentagon’s scheme for making America safe for a never-ending policy of war preparations (and war) is to organise as much of the economy as possible around the needs of military production. This would involve eliminating what Navarro describes as the “300 vulnerabilities” of the defense economy—from reliance on single suppliers for key components in weapons systems and the like, to dependence on foreign inputs like rare earth minerals from China, to a shortage of younger workers with the skills and motivation needed to keep America’s massive weapons manufacturing machine up and running. China figures prominently in the report’s narrative, with its trade and investment policies repeatedly described as “economic aggression.”

 

And needless to say, this being the Pentagon, one of the biggest desires expressed in the report is a need for—yes, you guessed it!—more money. Never mind that the United States already spends more on its military than the next seven nations in the world combined (five of whom are US allies). Never mind that the increase in Pentagon spending over the past two years is larger than the entire military budget of Russia. Never mind that, despite pulling tens of thousands of troops out of Iraq and Afghanistan, this country’s spending on the Pentagon and related programs (like nuclear warhead work at the Department of Energy) will hit $716 billion in fiscal year 2019, one of the highest levels ever. Face it, say the Pentagon and its allies on Capitol Hill, the US won’t be able to build a reliable, all-weapons-all-the-time economic–industrial base without spending yet more taxpayer dollars. Think of this as a “Pentagon First” strategy.

 

As it happens, the Pentagon chose the wrong 300 experts. The new plan, reflecting their collective wisdom, is an economic and security disaster in the making.

 

Consider it beyond irony that some of the same experts and organisations now suggesting that we bet America’s future on pumping up the most inefficient sector of our economy—no, no, I didn’t mean the coal industry, I meant the military–industrial complex—are conservative experts who criticised the Soviet Union for the very same thing. They still claim that it imploded largely because Washington cleverly lured its leaders into devoting ever more of their resources to the military sector. That, they insist, reinforced a rigidity in the Soviet system which made it virtually impossible for it to adapt to a rapidly changing global economic landscape.

 

Our military buildup, they still fervently believe, bankrupted the Soviet Union. Other analysts, like the historian Lawrence Wittner, have questioned such a view. But for the sake of consistency, shouldn’t conservatives who claimed that excessive military spending did in the Soviets be worried that President Trump’s policy of massive tax cuts for the rich, increased Pentagon spending, and trade wars with adversaries and allies alike might do something similar to the United States?

 

What Would a Real Industrial Policy Look Like?

 

Industrial policy should not be a dirty word. The problem is: the Pentagon shouldn’t be in charge of it. The goal of an effective industrial policy should be to create well-paying jobs, especially in sectors that meet pressing national needs like rebuilding America’s crumbling infrastructure and developing alternative energy technologies that can help address the urgent dangers posed by climate change.

 

The biggest economic challenge facing the United States today is how to organise an economic transition that would replace jobs and income generated by dysfunctional activities like overspending on the Pentagon and subsidising polluting industries. The argument that the Pentagon is crucial to jobs production in America has been instrumental in blocking constructive changes that would benefit both the environment and true American security. Members of Congress are, for example, afraid to jettison questionable weapons programs like the F-35 combat aircraft—an immensely costly, underperforming fighter plane that may never be ready for combat—for fear of reducing jobs in their states or districts. (The same is true of the coal and petroleum industries, which endlessly play up the supposed job-creating benefits of their activities.)

 

Where could alternatives to Pentagon job-creation programs come from? The short answer is: invest in virtually anything but buying more weapons and waging more wars and Americans will be better off. For instance, Pentagon spending creates startlingly fewer jobs per dollar than putting the same taxpayer dollars into infrastructure repair and rebuilding, alternative energy creation, education, or health care. A study conducted by University of Massachusetts economist Heidi Garrett-Peltier for the Costs of War Project at Brown University found that, had the government invested in civilian activities the $230 billion per year wasted on America’s post-9/11 wars, that sum would have created 1.3 million additional jobs. A more equitable tax policy that required wealthy individuals and corporations to pay their fair share could similarly fund a $2 trillion infrastructure program that would support 2.5 million new jobs in its first year, according to a proposal put forward by the Congressional Progressive Caucus.

 

As for the president’s much touted, dramatically overblown claims about the jobs to be had from arms exports, the global arms market represents only a tiny fraction of the growing market for renewable energy technologies. If the goal is to produce jobs via exports, developing technologies to tap the huge future market in renewables, which one study suggests could hit $2.1 trillion by 2025, would leave weapons systems in the dust. After all, that’s about 20 times the current size of the total global arms trade, which clocks in at about $100 billion annually. But an analysis by Miriam Pemberton and her colleagues at the Institute for Policy Studies indicates that the United States spends 28 times as much on its military as it does on genuinely job-creating programs designed to address the threat of climate change.

 

Such actions would be a good start—but just a start—when it comes to reducing the dependency of the United States economy on guns and pollution. Of course, the Trump administration doesn’t have the faintest interest in any of this. (It would apparently rather cede the lucrative future market in renewable energy to China, with barely a fight.)

 

Still, the question remains: What would such a shift in priorities mean for the defense industrial base? If you accept the premise that the US government needs to run a permanent war economy (and also fight never-ending wars across a significant swath of the planet), some of the Pentagon’s recommendations might almost make sense. But a foreign policy that put more emphasis on diplomacy—one that also thought it important to address non-military dangers like climate change—wouldn’t require such a large military production network in the first place. Under this scenario, the alarmist argument that the US won’t be able to defend itself without stepping up the militarisation of our already exceedingly militarised economy suddenly becomes unpersuasive.

 

But let’s give the weapons sector some credit. Its CEOs are working assiduously to build up local economies—overseas. Saudi Arabia’s long-term economic plan, for instance, calls for 50% of the value of its weapons purchases to be spent on building up its own military industry. US weapons giants like Raytheon and Lockheed Martin have been quick to pledge allegiance to that plan, setting up subsidiaries there and agreeing to have systems like helicopters assembled in Saudi Arabia, not the United States. Meanwhile, Lockheed Martin is helping the United Arab Emirates develop the capability to produce robot-controlled machine tools that are in great demand in the defense and aerospace industries. And the F-35 program is creating production jobs in more than a dozen countries, including assembly plants in Italy and Japan.

 

Raytheon CEO Thomas Kennedy summed up this approach when he discussed his company’s growing partnership with Saudi Arabia: “By working together, we can help build world-class defense and cyber capabilities in the Kingdom of Saudi Arabia.” And keep in mind that these are the jobs from so many of those Saudi weapons sales that President Trump keeps bragging about. Of course, while this may be bad news for American jobs, it works just fine as a strategy for keeping the profits of US arms makers stratospheric.

 

Making the transition from Peter Navarro’s “economic security equals national security” to an economy far less dependent on over-the-top military spending would mean a major shift in budget priorities in Washington, a prospect that is, at the moment, hard to imagine. But if the Pentagon can plan ahead, why shouldn’t the rest of us?

Read more

Linking Aadhaar to Bank Accounts will Destroy the Banking System

Anupam Saraph

Anupam Saraph

anupamsaraph@gmail.com

Unique ID is not unique, does not certify anything, says UIDAI

In a shocking admission, the UIDAI (Unique Identification Authority of India) has admitted, in response to a RTI (Right to Information) query, that it does not certify the identity, address, date of birth, resident status or existence of any individual or any Aadhaar number. The admission that the UIDAI does not certify anything is a blow to every organisation and process that relies on the UIDAI for certifying the identity, address, date of birth, resident status or existence of any individual. It is now evident that not only is nothing identified, nothing is certified by the UIDAI. The UIDAI also admitted that the biometric data of an individual does not pull up a unique record. This is an admission that the biometrics does not uniquely identify any person. This completely demolishes the myth of providing a unique identity to Indians. The UIDAI has no idea about the identification documents used to assign an Aadhaar number to enrolment packets submitted by the enrolment agencies. This has damning repercussions for the genuineness of the entire Aadhaar database. In a previous RTI the UIDAI had admitted that the Aadhaar database or the processes of de-duplication had never been subject to verification or audit. Now an admission that even the data about the documents submitted for enrolment are not known to the UIDAI. Private agencies were paid for each enrolment packet they submitted. Private agencies also benefit by being able to use ghost identities that they may have created to claim subsidies, park black money, do benami (accounts and transactions undertaken using a ghost or a duplicate identity)transactions, and launder money. The RTI replies call to question the very basis of using the Aadhaar as a means to identify anyone, to use it to establish age, resident status, address or even existence of a person. It calls to question the use of Aadhaar in governance and financial systems. The UIDAI has refused information about the enrolment operators and supervisors registered with the UIDAI. Only 8 state governments and 12 PSUs (public sector undertakings) have been authorised by UIDAI to act as registrars for the purpose of enrolling individuals. These 20 registrars had hired enrolment agencies who hired these operators. The 20 Registrars put together do not have a geographical reach to the 707 districts, 600,000 villages and 5,000 towns and cities of India. With the information of enrolment operators being withheld, the entire enrolment process to create the world’s largest biometric database is called to question. The Supreme Court of India is hearing more than 22 PILs challenging the use of Aadhaar. The RTI replies make it evident that two successive governments have been taken for a complete ride by private interests controlling the Aadhaar ecosystem. The entire Aadhaar database is not worth the cost of the media used to store it and is the biggest technology scam since the invention of computers. It possesses the biggest risk to national security as every database in the country capable of identifying the citizens and beneficiaries is being replaced or destroyed by the Aadhaar database. Linking, seeding or using Aadhaar to construct or replace existing databases will make it impossible to protect the country’s economic, social, security and governance processes as they fail to identify threats, frauds, corruption, money laundering, and cyber war.

Destroying the banking system

Despite this fundamental defect with Aadhaar, on June 1, 2017, India’s Department of Revenue (DoR) issued a Notification mandating the linking of every bank account with an Aadhaar number before December 31, 2017. While lawyers have pointed out several illegalities, including the scope, of the notification of this subordinate legislation under the Prevention of Money Laundering Act (PMLA), the failure of the DoR to consistently protect national interest is unbelievable. This latest notification will enable the creation of benami bank accounts and allow benami transactions on such a huge scale that it will destroy the Indian banking system and hence the Indian economy. Aadhaar is the best state sponsored enabling mechanism for money launderers to enable benami bank accounts. Aadhaar can even help the money launderer to take over your bank accounts. Aadhaar is also the enabling mechanism to scale benami transactions. Here are just 4 ways in which linking the Aadhaar to PAN or a bank account will hurt you, destroy the Indian economy:

  1. The innocent will lose money, reputation and access to justice, dignity and livelihood as their Aadhaar numbers can act as mules for money laundering, their subsidy and other Aadhaar enabled payments can be easily compromised, their access to their own bank accounts be denied, or they can be framed for economic offences. Helpless citizens and businesses may also find themselves at the receiving end of covert human rights violations as even their access to money and existence is disabled by deactivation or blocking of Aadhaar leaving no recourse to survival.
  2. Linking Aadhaar to bank accounts or PAN converts India into the new tax haven for money launderers as it becomes easy to remotely create benami accounts and operate benami transactions while claiming complete legitimacy. This will destroy India’s economy and governance.
  3. Corruption will increase as it becomes easier when proceeds will not be traceable to the corrupt. It will be increasingly difficult to restore swarajya and impossible to ensure suraiya
  4. Banks will not be able to contain non-performingassets, fraud and financial misappropriation as the real users of banking services will be untraceable. The economy will be completely out of control as the black and white economies become indistinguishable.

We are in a policy vacuum as the NITI Aayog and the bureaucracy have failed to recognise the Trojan horse and protect national interest. Unless the RBI de-licenses the payments systems based on Aadhaar (AEPS) immediately and the government stays linking Aadhaar to PAN and bank accounts, our leadership will have failed to protect India from this fast colonisation of India by the private interests driving Aadhaar

Enabling benami bank accounts

dentify the real customers who own the accounts. The Panama Papers exposed data of thousands of benami accounts created through a Panamanian law firm, Mossack Fonseca. The Panama Papers exposed one modus operandi of hiding the real owners of the assets in tax havens. Prudent bankers recognise the importance of knowing who they bank with. Before it bowed to pressure from the Ministry of Finance in January 2011, the RBI had warned that the Aadhaar enrolment process does not have due diligence. It pointed out that for Aadhaar enrolment verification is not compulsory, as confirmed by the UIDAI in the Demographic Data Standards and Verification Procedure, and does not require document based verification. The RBI also highlighted that such use of Aadhaar as third party identification is against Prevention of Money Laundering Act. While resisting the use of Aadhaar, the RBI also raised the issue of the perceived misuse of such accounts for terrorist financing. Under pressure from the UIDAI and the Department of Revenue, Ministry of Finance, the RBI, through its circular dated January 27, 2011, allowed bank accounts to be opened exclusively on the basis of Aadhaar number. However the RBI required such accounts to be put to restrictions and be subjected to conditions and limitations prescribed for small accounts, so as to prevent money laundering. Not happy with the restrictions, the UIDAI pressed the RBI to lift these restrictions placed on accounts opened with Aadhaar numbers. On September 28, 2011, the UIDAI succeeded in getting the RBI to backtrack and suspend the restrictions of the PMLA on bank accounts opened solely through Aadhaar. The UIDAI also succeeded in causing the RBI further to accept eKYC (the electronic version of KYC administered by UIDAI) or remotely using information associated with an Aadhaar number as KYC. To put the problem in perspective, Aadhaar enrolment was completely outsourced to private parties by the UIDAI with the sole aim of building the worlds largest biometric database. No one in the Aadhaar enrolment process was required to identify anyone. At best they had to merely verify documents that were submitted for enrolment. Needless to say anyone in possession of your documents could enrol with minor changes in any demographic information or with different biometrics. Field stories of enrolments are full with descriptions of biometric jugaad including using combination of persons, use of biometric masks, biometric modifications, and other ingenious methods to maximise registrations. According to the IT Minister Ravi Shankar Prasad, 34,000 operators who tried to make fake Aadhaar Cards have been blacklisted. Even if each operator worked for a year before being blacklisted, assuming that each of them made about 100 cards a day, this amounts to over a billion cards. That is more than 95 percent of the database. The Aadhaar enrolment has been unlike that of any other identity document, easily scaling the creation of duplicate and ghost identities. While there is widespread belief that biometric authentication at time of opening a bank account prevents benami, it ignores the field realities of mobile phone SIM cards being issued on Aadhaar photocopies and used to open bank accounts, of having remotely “downloadable” accounts, and also plain simple use of photocopies of Aadhaar or parallel Aadhaar databases to open bank accounts. With Aadhaar, banks do not have any trace of the real customer. The real customer is simply masked by a benami owner using an Aadhaar number. Even your Aadhaar can be used, without your knowledge, by a perpetrator to open multiple accounts in order to use it to collect bribes, park black money, or siphon your subsidies. In the eyes of law enforcement, if these accounts are discovered, you will be the criminal. To compound the problem, UIDAI has no liability for benami bank accounts opened with Aadhaar. After the introduction of the Aadhaar to open bank accounts, the accounts and deposits have doubled in 5 years. No one knows who really controls these accounts.

Enabling benami transactions

Benami accounts get created when banks fail to identify the real customers who own the accounts. The Panama Papers exposed data of thousands of benami accounts created through a Panamanian law firm, Mossack Fonseca. The Panama Papers exposed one modus operandi of hiding the real owners of the assets in tax havens. Prudent bankers recognise the importance of knowing who they bank with. Before it bowed to pressure from the Ministry of Finance in January 2011, the RBI had warned that the Aadhaar enrolment process does not have due diligence. It pointed out that for Aadhaar enrolment verification is not compulsory, as confirmed by the UIDAI in the Demographic Data Standards and Verification Procedure, and does not require document based verification. The RBI also highlighted that such use of Aadhaar as third party identification is against Prevention of Money Laundering Act. While resisting the use of Aadhaar, the RBI also raised the issue of the perceived misuse of such accounts for terrorist financing. Under pressure from the UIDAI and the Department of Revenue, Ministry of Finance, the RBI, through its circular dated January 27, 2011, allowed bank accounts to be opened exclusively on the basis of Aadhaar number. However the RBI required such accounts to be put to restrictions and be subjected to conditions and limitations prescribed for small accounts, so as to prevent money laundering. Not happy with the restrictions, the UIDAI pressed the RBI to lift these restrictions placed on accounts opened with Aadhaar numbers. On September 28, 2011, the UIDAI succeeded in getting the RBI to backtrack and suspend the restrictions of the PMLA on bank accounts opened solely through Aadhaar. The UIDAI also succeeded in causing the RBI further to accept eKYC (the electronic version of KYC administered by UIDAI) or remotely using information associated with an Aadhaar number as KYC. To put the problem in perspective, Aadhaar enrolment was completely outsourced to private parties by the UIDAI with the sole aim of building the worlds largest biometric database. No one in the Aadhaar enrolment process was required to identify anyone. At best they had to merely verify documents that were submitted for enrolment. Needless to say anyone in possession of your documents could enrol with minor changes in any demographic information or with different biometrics. Field stories of enrolments are full with descriptions of biometric jugaad including using combination of persons, use of biometric masks, biometric modifications, and other ingenious methods to maximise registrations. According to the IT Minister Ravi Shankar Prasad, 34,000 operators who tried to make fake Aadhaar Cards have been blacklisted. Even if each operator worked for a year before being blacklisted, assuming that each of them made about 100 cards a day, this amounts to over a billion cards. That is more than 95 percent of the database. The Aadhaar enrolment has been unlike that of any other identity document, easily scaling the creation of duplicate and ghost identities. While there is widespread belief that biometric authentication at time of opening a bank account prevents benami, it ignores the field realities of mobile phone SIM cards being issued on Aadhaar photocopies and used to open bank accounts, of having remotely “downloadable” accounts, and also plain simple use of photocopies of Aadhaar or parallel Aadhaar databases to open bank accounts. With Aadhaar, banks do not have any trace of the real customer. The real customer is simply masked by a benami owner using an Aadhaar number. Even your Aadhaar can be used, without your knowledge, by a perpetrator to open multiple accounts in order to use it to collect bribes, park black money, or siphon your subsidies. In the eyes of law enforcement, if these accounts are discovered, you will be the criminal.

To compound the problem, UIDAI has no liability for benami bank accounts opened with Aadhaar. After the introduction of the Aadhaar to open bank accounts, the accounts and deposits have doubled in 5 years. No one knows who really controls these accounts.

 

Preventing disaster

If the government and the Supreme Court implement the wisdom of the three orders of the Supreme Court of India on the use of Aadhaar, they can yet save the country from disaster resulting from the private interests driving Aadhaar.

In its first order of September 23, 2011 the Supreme Court had indicated that “no person should suffer for not getting the Aadhaar card inspite of the fact that some authority had issued a circular making it mandatory and when any person applies to get the Aadhaar Card voluntarily”.

On August 11, 2015, the 3 member bench restricted the use of Aadhaar and indicated that it may not be used for any other purpose.

On October 15, 2015, a 5 member bench led by the Chief Justice had emphasised that “the Aadhaar card Scheme is purely voluntary and it cannot be made mandatory till the matter is finally decided by this Court”. It had restricted the voluntary use of Aadhaar to public distribution system (PDS) Scheme, the liquefied petroleum gas (LPG) distribution scheme, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), National Social Assistance Programme (Old Age Pensions, Widow Pensions, Disability Pensions), Prime Minister’s Jan Dhan Yojana (PMJDY) and Employees’ Provident Fund Organisation (EPFO).

In the meantime, following Mahatma Gandhi’s footsteps and refusing to link Aadhaar to anything may be the only option left for you.

Read more