Deep State Incarnate and the Pentagon’s Abuse of Power

Another milestone is coming up. On 31 August, all US troops are scheduled for removal from Afghanistan…after 20 years of warfare.

According to a Brown University study, the war cost about 174,000 lives…and US$2.26 trillion, with much of the money lost to corruption and incompetence.

Early whistle-blower

Which reminded us…

Long, long ago, we walked into a very ratty office…in a very ratty building…on what was then a very ratty street: East Capitol street in Washington, DC.

After many summers spent painting towers, hauling trash, cleaning bricks, and building houses…we had our first real job. At US$100 a week!

It was there, in the shabby offices of the National Taxpayers Union, that we met A Ernest Fitzgerald.

Ernie had worked for the Pentagon as a systems analyst, devising ways to improve efficiency and reduce costs. In 1970, he was fired on orders from Richard M Nixon, then-president of the US, who told his aides to ‘get rid of that son of a bitch.

I got fired for committing truth,’ Ernie explained in his Alabama accent.

The truth Ernie told was about a US$2.3 billion cost overrun on the Lockheed C-5A aircraft. And the people he told it to were those on the Joint Economic Committee.

Ernie was an early whistle-blower. He…and we…believed back then that government could do a better job of spending our money.

Selling costs

Cynicism…like a fine wine or cancer…takes time to develop.

The boy scout can believe that every penny of the Pentagon budget goes to keeping the US safe.

The old soldier begins to suspect that little of it does. He knows that expensive military adventures overseas probably make us less safe. And he has seen how deep the pockets of the ‘defence industry’ can be.

Maybe 10 cents on the dollar,’ he reckons, ‘are actually well spent.’

But back in 1974, we were new to the wily ways of Washington. We hadn’t yet learned that the real mission of the Fed is to spend as much as possible, as badly as possible…so as to provide as much loot as possible to those in a position to get it.

Over the years, we lost contact with Ernie. Recently, we learned that he died two years ago.

But how it must have galled him…to watch, for half a century, as the waste got worse and worse…to the point where not just a billion here and a billion there were misspent…but where hundreds of billions went AWOL.

He had seen it coming. He explained that the real business of the military suppliers was not to sell weapons…but to ‘sell costs’.

Many operated on cost-plus contracts. The more wars…the more weapons. The more weapons…the more money. The more the wars cost…the more the Pentagon’s suppliers make.

Wasted millions

As of this writing, US troops have already abandoned their huge Bagram base in Afghanistan, apparently leaving under cover of darkness, without informing their Afghan allies.

They’re leaving behind very expensive buildings…very sophisticated helicopters — apparently unusable…and thousands of civilian vehicles, taking the keys with them, as well as hundreds of armoured vehicles.

These things alone represent millions of dollars’ worth of spending — all of it now in the ‘waste’ category.

But calling it ‘waste’ misses the point. Former Air Force fighter pilot, Col John Boyd, further explained:

People say the Pentagon does not have a strategy. They are wrong. The Pentagon does have a strategy. It is: Don’t interrupt the money flow, add to it.

Every rusting aircraft and disabled tank added to the flow. They might not have been suitable to the Afghan climate, terrain, or infrastructure or to the Afghans’ operational or maintenance skills…but the suppliers still got their money.

John Sopko, Special Inspector General for Afghanistan Reconstruction, documented how money was wasted on machines that either didn’t work or couldn’t be maintained by the Afghans.

Money also just ‘disappeared’. In all, officials estimate a loss of as much as US$100 billion just to waste. But the figure is surely many times that amount.

We wasted a lot of money,’ Sopko reported to journalist Andrew Cockburn.

We spent $36 million on a building that was totally built, never used, and has been turned over to the Afghans. As far as we know, it’s empty.

It was a disaster ready to happen. And it happened. It wasn’t that people were stupid, and it wasn’t that people didn’t care; it’s just the system almost guarantees failure.

Grateful appreciation

And now, the ‘insurgents’ gain ground…reinforced with captured US supplies.

‘Thanks for the memories’ is the goodbye song sung by the arms industry.

Assume a 10% profit margin — either on fixed-cost, cost-plus, incentive, or sole-source/non-competitive bid contracts. That means they made out pretty well — with about a quarter of a trillion dollars in profits from the war.

Naturally, they are very grateful for the business. And they show their thanks by employing retired generals and DC insiders, who can help them make more.

Retired General Lloyd Austin, for example, now Secretary of Defence, was out of the army for four years before joining the White House team. During that time, he earned a retired general’s pension of about US$15,000 per month…

But he didn’t just ‘fade away’, as the US’ top commander in the Pacific during the Second World War, General Douglas MacArthur, recommended.

Instead, he became a director of Raytheon — the defence contractor to which he and his fellow officers had given so much business…and was awarded as much as US$1.7 million worth of stock.

He also joined private equity firm Pine Island Capital Partners, where the door revolves so fast, it must regularly come off its hinges. In addition to Austin, partners include Secretary of State Antony Blinken, and the ghastly warmonger, Michèle Flournoy, former Under Secretary of Defence for Policy.

Deep state incarnate

Flournoy is practically the armed wing of the Deep State incarnate. She’s been involved in every busybody group from the Council on Foreign Relations to Booz Allen Hamilton, the Atlantic Council, the Aspen Strategy Group, and the CIA’s External Advisory Board.

And while she worked with the Boston Consulting Group, its military contracts went from US$1.6 million in 2013 to US$32 million three years later.

Along with Blinken, Flournoy founded WestExec Advisors in 2017. Clients include Wall Street giants, tech companies, investment firms, and the big data miner, Palantir Technologies.

The following year, the aforementioned Pine Island Capital Partners was set up. In addition to Ms Flournoy, Blinken, and Austin, its ‘DC partners’ include a long list of ex-senators and retired military brass.

And not for nothing are they there. The firm raised more than US$200 million last year to fund a SPAC (special-purpose acquisition company).

Let us take a wild guess…the SPAC will buy a smallish defence contractor, whose technology the Pentagon will soon find indispensable.

And if there is no war underway in which to use it…they will start one!


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Bill Bonner,
For The Rum Rebellion

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Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries.

A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities.

Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally.

With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance.

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