Central Claim:

Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.

In the 1930’s, the Industrialized World was experiencing the worst economic downturn in modern history.


 In the 1930’s, the Industrialized World was experiencing the worst economic downturn in modern history.

After the stock market crashed in 1929, international trade was cut in half and the gross domestic product (GDP) – which measures the total value of goods and services produced in a single year – dropped by over 15% 1Citation.

To put it in a modern perspective, this was more than 15 times worse than the financial crash of 2008, which only reduced the GDP of the United States by less than 1%.

By 1933, one in four Americans were unemployed and millions more became homeless. Mass migrations were sparked across the country, leading to the creation of hundreds of shanty towns.

The exchange of money had essentially stopped, forcing millions into extreme poverty, hunger and desperation.

To combat the greatest economic crisis of his time, FDR implemented a massive stimulus package that became known as the New Deal. Although it helped slow the economic downturn, most economists agree that the stimulus was not large enough to push the economy into a full recovery. In fact, analysis by economists like Vernot show that the market was not even half way recovered to pre-depression levels before 1942.

It was not until the United States became involved in World War II that the real recovery began.

Some economists have estimated that the fiscal policies that were created as a result of World War II were responsible for 80% of the recovery from the Great Depression. Almost overnight, the American industrial landscaped was transformed into war production.

The massive scale of this transformation can be seen in the changes that took place in the American auto industry. In 1941 — one year before the U.S. entered World War II — there were over 3 million cars produced in the US. After the U.S. became involved in the War the following year, only 139 cars were made. {Rockoff, Drastic Measures, 29.}

The U.S. government needed to buy everything, from fuselages for war plans to weapons and supplies for the nearly 16 million soldiers who would eventually be deployed. The result was one of the largest consolidations of industry and government ever recorded — a merging so vast in its scale that pulled the country out of the greatest economic crisis of the modern era.

With this consolidation came the emergence of military companies that continue to collect hundreds of billions of dollars from us tax payers today. These companies exist in a space that is insulated from free market competition; and they’ve become so deeply embedded in the political system that they may be the hidden force that is not only influencing, but directing, an American foreign policy of preemptive military engagement.

Before World War II, Allan and Malcolm Loughead struggled to fulfill their dream of building a successful aviation company. Despite finding significant financing, their first two companies went bankrupt. [William Hurting. Prophets of War. Pg 22]

On their third try, they managed to partner with Jack Northrop — a talented aviation designer and engineer — and John Gross — a businessman who had a track record of growing companies. Using Gross’s sales experience and Northrop’s designs, they were able to sell enough planes to survive the Great Depression. But they continued to struggle in the private sector while companies like Panam were winning contracts with commercial airlines, and while the United States postal service turned down deals to buy their Electra airplane with concerns that it was too fast for their pilots.

Everything changed for them in 1938, when Great Britain was building up their airforce to combat the growing threat of Hilter’s forces. In a single contract, the Royal Air-force purchased 3.5 millions dollars worth of the Electra Airplanes, making it the largest aviation purchase up to that point in history. With this sale the Loughead brother’s doubled their workforce and opened new factories — they had finally found their target-market as an aviation company.

By 1939, the company had its best year ever. It posted 3 million in profit as it cemented its dependence on military contracts. Of the 356 planes it sold, 329 of them were for the military.

Nearly 80 years later, the Loughead brother’s company, Lockheed Martin, collects more tax payer money than the state department and the environmental protection agency combined. In fact, when you look at its books, it is hard to not to compare Lockheed to state run companies similar to the ones seen in oligarchies like Russia. But, as we we will see, the primary difference between state-sponsored companies and Defense giants like Lockheed is that they hold massiveness influence over the government policies that pay their bills, not the other way around.

In 2015, contracts from the United States Government accounted for nearly 80% of Lockheeds total revenue, which in 2015 was $51 billion.

The fact that a US expenditure of this size is going to a single company is shocking when you compare it to the military spending of entire countries. If Lockheed was the only defense company funded by the US tax payers in 2015, its $36 billion budget would make the United States the tenth largest military spender in the World.

Yet Lockheed is just one company among hundreds of others; and the United States currently spends more on the military than the next 10 countries combined. But how did we get here?

 

[wpdatachart id=1]
[wpdatachart id=3]