The War - Did We Sacrifice A Million Lives And A $Trillion Cash
Just To Hand Our Jobs To China?
By Nicholas C. Arguimbau
27 January, 2011
While the Tea Partiers and the liberals squabble over important domestic issues, America’s corporate and military titans, at the expense of America’s workers and taxpayers and with the blessing of Congress and the President, are creating China’s economic miracle. The military, at a cost of over $1 trillion, has paved the way for China to acquire and the U.S. to lose access to vast mineral and petroleum resources. The oil industry, with U.S. government assistance, is building a safe haven in East Asia from the imminent crash of oil everywhere else, by cornering the entire supply. And foreign investment, largely American, is giving China on average nearly one million new jobs a month while American unemployment soars.
This is a four-part series. Part One discusses why and how the oil industry could create a safe haven from its own collapse, and why it might choose China for the project. Part Two discusses how East Asia became "the right market" for the world’s remaining oil reserves, endangering everyone else. Part Three discusses how the US military has turned Afghanistan and Iraq into China’s good buddies. Part Four takes a broader view of what has happened and what if anything can be done about it. Enjoy.
Part I of IV - Thinking About The War
"The war is not China's war, but economically and socially, we can try to help."
Liu Xuecheng, China Institute of International Studies, Chinese Foreign Ministry, Beijing1
"Are you a prisoner?"
Hugo Chavez, speaking to Barack Obama, April 20092
The War in Iraq and Afghanistan has had many victims - one million dead Iraqis, thousands of U.S. and Taliban casualties, countless U.S. soldiers with PTSD bringing the war home to their families, two U.S. Commanders-in-Chief and as we shall see, it has had one victor - the growing Chinese empire.
There are two current explanations for the war - the official "fighting terrorism" explanation, and the popular explanation on the left and in Europe that the US is a dying imperialist nation attempting to save its bloated economy by taking control of the world’s remaining oil by force. If either explanation is correct, then "the world’s only superpower," as we were perceived and perceived ourselves a decade ago, has nothing whatsoever other than remarkably fast collapse of that status to show for its efforts - an outrageously expensive and demoralizing result. And as the "fighting terrorism" explanation has come to appear "thinner" every passing year, the world has come to perceive us, I think, as a nation of petulant children willing to kill to keep our SUVs running. That is a very sad end for the nation of Jefferson and Lincoln, the nation that pronounced:
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, the tempest-tost to me,
I lift my lamp beside the golden door.3
We weren’t all bad, you know, but the "dying imperialist" view leaves us no friends at all..
What if neither explanation is correct? I think you’ll agree if you read on that there has been one hands-down winner in this war: a winner of almost every battle, and that is China.. We shall see that China is working very hard at cornering the world oil market, and that the United States military, with some encouragement from the oil industry, has assisted China along its way immensely. I think the evidence shows that was probably not merely the effect but the intent of our trillion-dollar adventure in Afghanistan and Iraq, that the United States Government has accomplished EXACTLY what it set out to accomplish: a great victory for China but the final blow to American prosperity. Has our Government truly gone that low? That’s what the facts suggest.
But keep in mind the caveat of a great and good friend who read this essay in draft:
"I have learned over the years not to attribute to malfeasance that which can more easily be described as stupidity. Sometimes folks just do stupid things. So, is your article linking a bunch of stupid actions, or reflecting a larger truth? Damned if I know."
Maybe it doesn’t matter. Maybe we need a "regime change" to root out the majority of both parties who put Wall Street and the oil industry before the people but divert us into issues that divide us so we will vote perennially for the "lesser of two evils" until we are rendered penniless and powerless. Regardless, I hope you will enjoy a little saunter through Googlespace, and I think you will find a wealth of information through the links if you wish to pursue it.
Let’s try to take a look at the last decade with open minds. One thing is clear: that if the war of the last decade hasn’t been to some extent "about oil," that would be pretty surprising, because everything else has been to some extent "about oil."
Look around you. Unless you are in an exceptional place, the scene is dominated by petroleum. You see (under lights more likely than not poweed by fossil fuels), walls coated in petroleum-based paint, "organic chemicals ((aka petroleum derivatives) in your food, asphalt on your roof and under your car, which runs on "petrol," and is largely made of plastic; in the summer you wear polyester, a petroleum product, or cotton, which arguably uses more petroleum than polyester does;4 and in winter you warm yourself with oil or natural gas. And so on, ad nauseum. No wonder the world uses thirty billion barrels of the stuff per year, 200 gallons per capita.
The industry associated with this has under its control something under a trillion barrels of the "conventional" (easy to access) portion of this black goop, worth maybe eighty trillion dollars, and generating about 2.5 trillion dollars per year in gross income (but it might be $8 trillion next year). No one outside the industry really knows, because the industry doesn’t like to open its books, especially on the total supply figures (which it openly exaggerates) and no one has forced the issue.5 It’s important to keep in mind, though, that 90% of the oil is "owned" by countries rather than companies.6
Who else has that sort of wealth and income to command? The United States Government, about comparable to the oil industry in gross income. Who else? Maybe the U.S. banking industry So to understand what’s going on in the world, we’d better understand something about the behavior of these three entities. Let’s start with oil.
So your boss controls all the oil. What’s your plan for the great crash?
Imagine that you are a planner for the private oil industry. You know, and your client knows, whether or not you admit it publicly, that oil is running out fast. Conventional oil,7 with reserves you know to be under 1 trillion barrels, has to run out completely in about 30 years if the present rate of consumption continues, and if instead consumption drops in the frequently-observed approximate "exponential decay" form, then the quantities will have to drop by 3-4% per year. Without the discovery and rapid development of several Saudi Arabias, which is pretty much impossible just in terms of time, production has to go down at the same time as demand is increasing everywhere and particularly rapidly in China.8 The latest report on China says its demand for oil is rising at an "astonishing 28% per year,"9 although its more typical rate of increase is 10%/yr, which means doubling its already enormous demand every seven years. Your client has likely known the general situation since 1990 or before, but has done the best it can to keep the public unaware of the quantity of remaining oil and when production would peak.10 You know and your client knows that the myth of a long-lasting supply is what it is, and you also know that the post-oil human carrying capacity is widely seen to be and is likely actually to be AT MOST 2 billion, comparable to the preoil actual population.11 Anyhow, with one billion people (and rising) going hungry now, no one says we can feed and clothe and house 9.5 billion people on zero oil (how things will be about 2050), so things are looking a bit bleak.
Your client, however, is coming upon an extraordinary one-time opportunity. Although if things go as generally anticipated there will in a generation be no more oil and therefore no more oil industry, the industry has the greatest potential for investment the world has ever known. It comes from two sources: (1) oil prices are about to burst through the ceiling,12 giving the industry a greatly increased income from a gradually decreasing oil supply, (2) the formerly ever-rising costs devoted to oil exploration, drilling, pipeline construction, and refinery construction are likely to drop off long before the income stream ceases. So the industry is coming upon a time when it can invest trillions per year in a world in which the contraction of oil is causing contraction of economies and industries, virtually across the board, and shortly will be causing contraction of populations as well.
So what to do? Logically, the answer appears to be to concentrate all oil supplies in an area of population around 2 billion and proceed to concentrate investments in non-oil industries in that place, which will be shielded from collapse to the extent possible because (1) it will be assured dependable oil longer than any other part of the world, (2) its non-oil industries will have their foreign competition decimated or impoverished by the lack of oil elsewhere, and (3) the oil industry will be supporting an economy for as long as possible that is small enough in fact to do without oil once oil is gone. This may be the ONLY advice you can rationally give your client, because it is the only advice that would result in your client having the optimal conditions for investing its riches as its oil disappears, and for leaving the largest technically feasible human economy in the post-oil era.
But where? Given your client’s interests, the following criteria seem logical
(1) The place should be densely populated to minimize needs for oil as transportation fuel.
(2) The place should be self-sustaining for food to the extent possible without oil, a criterion seemingly at war with the first.
(3) As a general proposition, the place should have been in the past as little dependent upon oil as possible, so that there will be the fewest preconceptions about necessary or efficient or desirable allocation of the resource.
(4) To make your client happy, labor costs should be low and controllable.
(5) Environmental and health regulation of both the oil industry and other manufacturing industries should be minimal.
(6) Ideally, the place will have a government willing and able to make probusiness decisions smoothly, and to "manage" any opposition "efficiently."
(7) There should be a solid educational system allowing the population to be "brought up to speed" quickly.
(8) The place should be physically defensible from invasion by angry or hungry hordes.
(9) Should it prove necessary, the government should be capable and willing to take population-control measures.
This combination might likely assure that the maximum percentage of the oil with which the country is supplied can be used for expansion of a manufacturing economy and therefore assure maximum income to investors.
Looks like China, doesn’t it? China and some of its neighbors as appropriate. No one else comes close.
And China’s extraordinarily rapid economic expansion strongly suggests the assistance of outside investment from some source or sources with immense economic resources at a time that most economic entities everywhere are stressed. Looks like oil, doesn’t it?
But how? The private industry can take its own steps to the extent it is free to do so, to shift oil resources to China, but in fact those steps are fairly limited because at this time, 90% of the world’s oil reserves are publicly owned.13 So control of the nations owning oil and control of transportation corridors for oil is essential. It should be obtained by economic and political means where possible, but by military means where necessary.
What military means? The oil industry lacks direct military might. China lacks the ability to place ground forces in large numbers in oil-producing nations. Besides, to carry out a plan in which China obtains oil supplies at the expense of the rest of the world by overt military hostilities to the extent of "drying up" everyone else is hardly the way to win friends and therefore might undermine the whole project. This needs to be a militarily mighty nation other than China, with potential "cover" for its designs, which can be controlled in its actions by the oil industry, and which will not suffer so much from the gambit that it will refuse to cooperate. Sounds like the US, doesn’t it? Probably no one else.
And finally, you’ve got to be decisive - the people short-counted on the oil are going to have to fight, for their at least temporary survival. Once you have control of the oil fields, you have to provide them security and maintain control of the shipping lanes, a task more difficult if the potential competitors have any oil of their own. So the trick, logically, is to be quick and complete and decisive.
OK, that’s a plan. Corner all the oil, using your political control over the US as necessary, send it to China (and possibly adjacent Asian nations), starve everyone else of oil, stop investing in marginal oil and oil infrastructure, and put your excess cash from "peak oil" where you’re sending the oil. EVERYONE seeking to find a safe haven for living and investing in the era of collapsing oil might logically seek out the place where the oil is going to last longest, and go there. But the oil industry has a unique advantage -the ability to pick the spot itself. Once we look at it, it is hard to see how the oil industry could avoid having this or a very similar plan.
Of course your client doesn’t understand, and maybe neither do you (so it’s a story for another day), that this plan won’t work unless corporate sociopathy and the growth imperative are abandoned, because otherwise the oil reserve cushion will disappear overnight.
All of this is almost pure , unadulterated speculation. Is there any real evidence?
The author is a California-licensed lawyer residing in Massachusetts (e-mail firstname.lastname@example.org). He wishes to thank Ted Cady, Peter Goodchild, Peter Hollings, Lance Rodgers and Emily Spence for encouragement and valuable input. All rights reserved, in particular for republicatiion.
1. Tini Tran, AP News Service, "As U.S. fights, China spends to gain Afghan foothold ," US Independence Day, July 4, 2010, http://www.msnbc.msn.com/id/38076136/ns/world_news-south_and_central_asia/
2. Quoted in Lewis Seiler and Dan Hamburg, "Still the Land of the Free and Home of the Brave?" Urbana-Champaign Independent Media Center, November 21, 2009. http://www.ucimc.org/content/still-land-free-and-home-brave.
3. Emma Lazarus, "The New Colossus," http://www.libertystatepark.com/emma.htm
5. Nicholas C. Arguimbau, "Imminent Crash of the Oil Supply. . ." www.countercurrents.org/arguimbau230410.htm
6. Council on Foreign Relations -"National Security Consequences of Oil Dependency," Oil Drum December 5, 2006, http://www.theoildrum.com/story/2006/12/4/121714/354
7. See definition discussed in Nicholas C. Arguimbau, "Imminent Crash of the Oil Supply. . ." www.countercurrents.org/arguimbau230410.htm .
8. Nicholas C. Arguimbau, "Imminent Crash of the Oil Supply. . ." www.countercurrents.org/arguimbau230410.htm
9. Live Oil Prices, March 12, 2010, IEA says China oil demand increase is astonishing, http://www.liveoilprices.co.uk/oil/iea_oil_report/03/2010/iea-says-china-oil-dema nd-increase-is-astonishing.html
10. The OPEC nations traditionally inflate their reserves to justify increased sales and the governments traditionally use the OPEC figures for planning purposes Arguimbau, "Imminent Crash of the Oil Supply . . .," www.countercurrents.org/arguimbau230410.htm; only in 2010 an Oxford University study uncovered that as a result, planners had been knowingly assuming reserves implying a full decade of supply in excess of reality. Rowena Mason, "Oil reserves 'exaggerated by one third'," http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7500669/Oilreserves-exaggerated-by-one-third.html; and no one has ever followed through on the warnings of global petroleum investment banker Matt Simmons, recently deceased, that OPEC had to open its books. EnergyTechStocks.com, "Meeting the Challenge Matt Simmons: Force All Oil Producers to Give Transparent Data," (September, 2007) http://energytechstocks.com/wp/?p=245
11. See Pimentel et al, "WILL LIMITS OF THE EARTH'S RESOURCES CONTROL HUMAN NUMBERS," dieoff.org/page174.htm. See also Hayes, "REINDEER, CARS & MALTHUS: POPULATION, CONSUMPTION AND CARRYING CAPACITY." Population Press 1995, http://www.populationpress.org/essays/essay-hayes.html, Population, Carrying Capacity, http://www.umac.org/ocp/Carrying Capacity/info.html. Please note that these numbers are based upon "steady state" assumptions, but humanity has not shown itself capable of maintaining a steady state population for a reasonable time since prior to the agricultural revolution; additionally, humanity has done substantial damage to the planet in the last century, which will likely further reduce its carrying capacity for anywhere from centuries to millions of years, so this writer suspects that the true carrying capacity is substantially lower time. Nonetheless, a widely accepted estimate of carrying capacity, not the actual number, is the logically relevant figure when, as here, we are trying to ascertain what people are likely to do rather than what they ought to do.
12.See, for example, Deutsche Bank’s projection that crude oil prices will double in five years, http://climateprogress.org/2009/10/07/deutsche-bank-oil-to-hit-175-a-barrel-by-20 16-which-will-drive-a-final-stake-into-long-term-oil-demand-spurred-by-a-disrupt ive-technology-the-hybrid-and-electric-car-that-will-very/
13. Council on Foreign Relations -"National Security Consequences of Oil Dependency," Oil Drum December 5, 2006, http://www.theoildrum.com/story/2006/12/4/121714/354
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