The Great And Most Fortunate

The Great And Most Fortunate - not to mention Invincible - Spanish Armada set sail late in May in 1588 from the occupied port of Lisbon. Philip II was not pleased with Elizabeth I and was determined to put a stop to her activities by invading and conquering England. This would also disrupt some Dutch operations which were harming Spanish interests and prevent the British from attacking Spanish ships laden with gold and silver plundered from South America.

The slight problem was that the mission was an abysmal failure and helped to bankrupt Spain. Again. Yet Philip II later assembled more armadas which also failed. And his policies caused Spain to suffer more bankruptcies. Spain once had the largest empire on the planet, but it was based on flimsy economic foundations and poor policies and once decline set in Spain never really recovered.

Is Spain unique? No. Military adventures and associated expenditures have bankrupted or ruined country after country, and in even the more successful empires, the gains whilst impressive-seeming from some points of view, are always temporary.

It is possible that if someone is going to attack you, you might conclude that you had better attack them first rather than be slaughtered. This unfortunate and destabilizing behaviour seems to be inherited from some of our primate ancestors. However, it is not an iron law and it surely doesn't explain all modern military aggression, and even if it did, I think that rational leaders would look at the long-term costs and should conclude that wars don't pay.

In particular, the wars started by America since the end of World War II, seem to have been very bad value for money, even if to an increasing extent it was someone else's money. Looking at the fascinating and not much studied Bretton Woods money system, it is surely reasonable to conclude that whatever flaws it had (plenty), from America's point of view it was a very useful system and that it was brought down principally by the costs incurred by the Vietnam War.

It is possible to argue that the ending (officially in 1973) of the Bretton Woods agreement was one of the factors that allowed the recent, and now clearly disastrous, economic bubbles to form. However, it can also be argued that some of the seeds were planted by the agreement itself, in particular that Bretton Woods allowed the US to live beyond its means, a habit which once cemented in by the unique operation of the dollar, continues to this day.

In particular, America has used its special relationship with the world monetary system to build up a staggering and frightening military machine that it is all too willing to use overtly or covertly (by arms sales for instance). Few people think this is good for the world, and only a minority of Americans now appear to think it is good for America.

Why have such a huge and expensive military capacity? Which nation is going to attack the US mainland directly? The British tried it a couple of hundred years ago, but they seem to have been quite friendly lately. Mexico or Canada? Not very likely, since each nation is massively dependent on exporting goods and resources to the US, particularly energy resources.

Therein lies a clue. America's dependence on foreign oil imports is one of the reasons why it could argue that it needs a huge military. Interesting then to consider that the cost of running that military, not including the extra amount required for the wars in Iraq and Afghanistan (not to mention the war on terror and the war on drugs) is about the same as the amount that America pays for all its imported oil - very roughly half a trillion dollars.

The good news is that if the Fed's printing presses ever run out of ink or the Chinese stop buying US treasuries, Washington could always put the military on unpaid leave for a decade or two and use the money to pay the oil import bill. Any pennies left over could be used to buy some wind turbines and solar panels, thus delivering both fiscal prudence and energy security, which should please politicians and public of every stripe and help America avoid the fate of nations that fight too many wars.

The Seeds Of Trust

Do you ever have that feeling that we're missing something? I don't just mean the troubling fact that not many in power seem to understand that the 21st century is not going to be a re-run of the 20th, that what the Club of Rome was saying is coming true and that the threat of oil decline is as real as climate change. I mean something deeper than that, something that we must have understood - and had - in order to produce what we call civilisation or indeed any sense of security at all. It's something we don't have much of now - at least not the right kind, though we do mention it from time to time. That something is trust.

In one sense we have never had so much trust - our whole industrialised system requires a kind of unexamined trust at every level: you have to trust that the food you are eating is safe (though in fact it is generally not), that it will be in the supermarket tomorrow (it generally is), that water will be in the taps, that there will gasoline or petrol in the filling station when you need it, that your home heating system will work as the temperature sinks below zero, that the cash dispenser will spit out nice crisp dollars or euros when you need them (working until recently), that the phone system will work, that the Internet will work, that the health care system will work when you get ill or have an accident. Well, Ok, in America the last one is a stretch if you are poor or unemployed, but the other items most people in the rich world take more or less for granted.

However there are many other areas in which trust is also vital where we have become less willing to suspend our disbelief, and none more so perhaps, than that of trusting government, especially, though not exclusively, in America. According to the literature, there was a high point of trust in government around 1960 then a major slide from the late 60s with a few blips of recovery since then.

It is tempting to jump to conclusions when trying to explain the decline in trust - a fall which is widespread across all sectors of society and in regard to all levels of government (and other institutions), and can also be seen in the European Union (especially after the EU Constitution debacle). Trust, however, is one of the most complex and fragile of human relations. Some scholars, such as Adam Seligman, suggest that in pre-civilisation groups it wasn't so much trust but group sanctions that held society, such as it was, together.

On that reading, trust is a relatively new development, and if so, then from an evolutionary point of view, it is hardly surprising we have trouble with it. Be that as it may, we plainly need trust now in places where it is eroded. Unfortunately, it has been discovered that one way to increase trust is to scare people with the possibility of an external attack, real or imagined. This may be part of the explanation of all the recent upticks in trust in government in the last half century, including around the early 1960s, when Cold War tensions were heightened by the Bay of Pigs and Gulf of Tonkin incidents.

It has long been known that a population scared by an external threat tends to rally together, which means that those in power are bound to be tempted to use devices to achieve this end, since it is easier to control a population when it trusts those at the top. It may also be that trust has been manipulated for political purposes in the opposite direction, producing a short-term gain for one faction, but paradoxically causing harm to the greater body politic in the longer run, affecting anyone's ability to rule reasonably sensibly.

Why on Earth would those in power want to reduce popular trust in government? It seems that amplifying or attenuating political trust - or at least trying to - can be used by both parties in America to further their different aims. However, if certain political scientists are right, in aggregate, reduced trust favours those on the right. The reason may be that contrary to conventional wisdom, a more trusting attitude to government can be a cause of a person espousing more liberal or progressive policy views, rather than the other way around.

Since politicians have been trying by almost any means, fair or foul, to influence the people in their favour since the dawn of democracy, and indeed before, any talk of conspiracy theories is quite misplaced. It is rather a complex matter of group and social psychology, and whether it bubbles or ballots, manipulating humans is the name of the game.

This is unfortunate, but in any organised system there will be channels of control, and in any human system, trust will be a vital part of just about anything we do. In the end it is self-defeating to produce a cynical and untrusting populous, since eventually it produces general misery and affects economic activity, possibly to the point of ruination.

Whilst it may well be possible to produce both a gullible and cynical society, I think that all leaders would be well served by trying all honest means to increase the level of trust in society for its own sake. There are after all some countries in which conservatives are the ones who trust government more. Furthermore distrust is a dangerous seed to sow, since you never know quite know where it is going to pop up next and what unpleasant surprises it will bring. In hard times with the body politic in a state of high fever, trust is a vital restorative medicine that should not be used as a mere tool of political expedience.