How future Value Creators Finance Today’s Privileged
The Iraq War differs from previous major conflicts by one decisive factor: it was not financed through tax increases, but through loans and tax deductions at the same time. This has created a massive transfer of wealth away from current and future value creators to a privileged elite in the United States of today.
1. Mortgaging Future Value Creation
Often, wars have been financed by the state asking its citizens/workers (the value creators) to contribute more in the "here and now" through war taxes. During the Iraq War, the U.S. chose a different path: they borrowed the money.
This means that the bill was not paid by those living when the war began; instead, it was pushed into the future. Every dollar spent in Iraq is, in reality, a claim against future value creation. When today’s and tomorrow’s workers in the U.S. and other Western nations produce value, a significant portion of this "harvest" is diverted to pay interest and installments on this war debt.
2. Corporations as "Super-Brokers"
In the Iraq War, we saw the emergence of "super-brokers" such as Halliburton (KBR), Blackwater, and Lockheed Martin. These companies functioned as intermediaries between the American taxpayer (the customer) and those performing the work (the value creators—everyone from soldiers to cooks and engineers).
Through so-called "cost-plus" contracts, these brokers were guaranteed a profit regardless of how much they spent. The more money they spent, the more they earned. This is a perversion of the broker role, where the broker no longer seeks efficiency but instead seeks increased volume to extract more value from the customer (the state/value creators).
3. The "Harvest" of the Privileged Sector
Where did the money go? The harvest from this war ended up largely within the privileged sector:
Owners and Investors: Shareholders in the defense industry experienced an enormous increase in value.
Political Actors: Many of the key architects of the war had close ties to the companies receiving the contracts. This creates a "revolving door" effect where politicians (the privileged sector) facilitate contracts from which they later personally profit through board positions, consultancy roles, or stock interests.
The Financial Sector: Since the war was financed with loans, major banks (also part of the privileged sector) have harvested astronomical sums in interest on the national debt.
4. The Breakdown of the Homogeneous Society
A homogeneous income distribution provides the most prosperity and the least crime. The Iraq financing functioned as a reverse redistribution machine:
The Value Creators: Are left with the debt and dilapidated public services because tax revenues must go toward repaying loans.
The Needy: Experience cuts to social benefits because "the state cannot afford them," while billions are funneled out to private contractors.
The Privileged: Have accumulated wealth that detaches them entirely from the rest of society, creating deep social and political divisions.
A Structural Imbalance
The Iraq War was, in practice, a gigantic PCP (Public-Commercial Partnership) where the risk was placed on future value creators/workers, while the profit was extracted immediately by a privileged elite. This is a textbook example of what happens when the broker role (employer/contractor) becomes too powerful and the harvest becomes too skewed.
When the privileged sector can use the power of the state to mortgage future labor for personal gain, the social contract is broken. The result can be an increased crime, social instability, and a weakening of collective prosperity - look to US.