How Bin Laden Bankrupted America

For a man who spent years living in caves, Osama bin Laden sure knows his Sun Tzu and the basics of jujitsu. Sun Tzu's famous dictum was "know yourself" and "know your enemy." Jujitsu is based upon using your enemy's strength against him, e.g., like Jack in "Jack and the Beanstalk," who used the giant's own size and anger to get him to crash from his own weight. Bin Laden understood that the way to beat America was to turn its power back upon itself. His early stated aim was to bankrupt America. He knew his own weaknesses, and he profoundly understood America's, how its pride and fears could trigger irrational, self-destructive reactions.

The genius of bin Laden's pinprick attacks, costing a few hundred thousand dollars, has left America reeling with two unending multi-trillion-dollar wars it doesn't know how to get out of. He knew that his own strength was mainly in his appeal to the minds of men, particularly to the lost dignity of Muslims trampled under the heel of their own dictators, Israel's occupation of the West Bank and Gaza, and America's military. Getting rid of the "far" enemy was the way to take on the "near" ones.

Instigating America to destroy Iraq was a triumph of genius. He must have known about the neoconservative cabal in Washington that was itching to start wars and destroy Iraq. In bin Laden's wildest dreams he then imagined that he could get an enraged America to destroy his enemies while, at the same time, isolating itself from allies and becoming seriously weakened. His prime Arab enemy, secular nationalist socialism, was embodied by the Ba'athist rulers in Iraq. Once destroyed, Muslim resistance could be channeled to religious fundamentalism as the only remaining force honest and profound enough to challenge Arab dictators and American soldiers successfully. In that sense he was allied with Israel, again an intelligent strategy of harnessing his enemies' strength, which, for different reasons, feared Iraq as the most modern, secular nation among the Arabs far more than it feared Muslim fundamentalists. Indeed, in Palestine, Israel built up Islamist Hamas at first as a counterforce to the secular PLO. Successful terrorists come from the well educated, not from fundamentalist fanatics.

Next was his hope that he might get America to destroy his Shi'ite enemy, Iran. He almost succeeded in this too. His prime aim, though, was to get America bogged down in endless, resource-sapping wars on the Asian landmass and disrupt oil flows that benefited his enemies.

Bin Laden understood how America's religious fundamentalists, who had inordinate power in Washington, could be encouraged to sustain religious wars. He "knew" them precisely because he understood his own Muslim fundamentalists, as indeed also the Israeli ones. All could work together in his scheming mind to wreck the global economy, which so benefited American power. In 2002 at a party in my home, I said to Peru's brilliant economist Hernando de Soto that, of course, bin Laden's objective was to drive America out of the Middle East. He replied to me, "Not just that, out of the whole Third World!"

The actual crash in America came about because of the wars, in several ways:

First, financing the wars with debt was the final straw that broke the camel's back. No one knew how much debt would break America, but doubling the national debt from $5 trillion to $10 trillion, with new trillions being borrowed now, finally did it. A government at war seeks political support. Spending billions for an unpopular war and its waste makes it far more difficult to deny billions for more welfare. That's why America is called a warfare-welfare state. Welfare began in Germany in the 19th century when Bismarck sought popular support for his military ventures. It was the trade-off.

Second, the destruction of Iraq, and Bush's constant threats to start bombing Iran, which could have closed down the Strait of Hormuz, brought about sky-high oil prices, which then busted world prosperity. Still, bin Laden might not have imagined that hedge funds would feed the speculation, and that Bush would not release oil from the petroleum reserve, which could have broken the price, because he wanted to keep it in reserve for war against Iran. Then the subsequent collapse of oil prices dried up a major source of foreign buyers for U.S. government bonds, which finance America's wars and reckless debts.

Third, all of Washington's attention was absorbed by the wars, leaving little time or energy for dull domestic issues such as debating reforms to the financial markets. Anyone who questioned the wars' costs was dismissed as unpatriotic. Lies are part of waging war, and losing discredits and exposes the leaders' lies. From discredited American leaders, it was a short step to discredited American financial markets.

Fourth was the toxic alliance of neoconservatives and religious fundamentalists. The neocons were academic Washington policy wonks who dreamed of ruling the world. The "fundies" provided electoral support, because they viewed America as doing God's work among the foreign heathens. Their extremists indeed wanted chaos in the Middle East to "hurry up" God's plans for Armageddon. Instead they served bin Laden's goals.

Fifth, war spending deficits were in effect a massive Keynesian pump-priming operation, bound in the end to leave an economic hangover. Wars make the economy boom with seeming prosperity, but they are actually incredible wastes of resources. Over $200 million for each new fighter plane, $1,000 a day for mercenaries, massive corruption and incompetence in the military occupation – even bin Laden could not have anticipated how costly the war would become.

All of this was indeed foreseen by the wars' many critics, but they could not break through in the major media against the powers and lies of the Bush administration.

Editor John Feffer forecast the wars' consequences precisely in 2002:

"The successful realization of bin Laden's secret strategy will happen not with a bang but with a whimper. Having failed to use the unipolar moment for the world's advantage, the United States runs the risk of following the examples of Russia and England and Turkey, all faded empires whose ambitions overreached themselves. In the worst-case scenario, the U.S. will become the sick man of North America, a victim of military hypertrophy, extremes of wealth and poverty, decay of civil infrastructure, and loss of competitive economic advantage."

At least Americans are told that Washington "succeeded" in preventing any more attacks on the homeland. Maybe, but the more likely reason there have been no further attacks was explained in a letter to the editor of Foreign Policy magazine [.pdf] by researcher Laura Garcés:

"But one could venture that Osama bin Laden has no reason now to expose himself and expend massive resources when he accomplished exactly what he wanted: billions of dollars of expenditures in launching wars, the total neglect of infrastructure, the loss of thousands of tourists who are wary of staying in line for hours dealing with airport. Decay and bankruptcy is what he sought, and fear is what he wanted to instill. Can anyone doubt that he succeeded?"

How Bin Laden Bankrupted America

The five ways