Hanes HallbirnFriday,22 March 2013

The Snap:

Earlier this week, North Korea stepped up its anti-American rhetoric by threatening to attack U.S. military bases in Japan and South Korea. This latest threat follows on the heels of other seemingly puzzling events such as North Korea’s threats to launch pre-emptive nuclear attacks on the United States and South Korea, Pope Benedict’s sudden resignation, and Iranian President Mahmoud Ahmadinejad’s willingness to risk the ire of conservative Iranian clerics by hugging Hugo Chavez’s mom. On the surface, none of these stories seem to make much sense. After all, North Korea would face certain annihilation if it launched a nuclear strike, Popes only resign every several hundred years or so, and Ahmadinejad clearly knew that he’d face scruntiny for hugging a non-relative woman.

So the question is: Why have these things happened?

The Download:

I studied both Economics and Journalism in college. And while the latter topic is more useful in my so-called “career,” I find the former particularly helpful for understanding behaviors, wealth transfers and decision-making processes. Because the thing is, beneath every confusing situation is a very rational economic explanation — and the actions of Kim Jong-un, (the artist Catholic guy formerly known as) Pope Benedict and Mahmoud Ahmadinejad are no different.

All you have to do is follow the money, and then the ROI of these situations becomes crystal clear. I’ll cover each briefly below, along with a bonus reference to the war in Iraq.

North Korea’s bat-shit crazy saber rattling: Check out this interactive map listing countries that receive U.S. foreign aid. The United States doles out approximately $53 billion of it each year. But North Korea only picks up only a measly $3.5 million of that total — about .0067% of Uncle Sam’s foreign aid budget. And the North needs cash! After all, those poorly-produced videos of attacks on Washington aren’t going to make themselves. Seriously though, this is all a grand show designed to wrangle a little more of the U.S. government’s foreign aid budget.

Pope Benedict’s resignation: Whether the truth involves gay sex and blackmail or new crimes that would merit future lawsuits, this just stinks of financial risk mitigation. Somewhere in the Vatican, a really smart bean counter ran some numbers and determined that old Joseph Ratzinger had put the Church’s financial health at risk. And unlike molestations, this just can’t be forgiven, apparently.

Mahmoud Ahmadinejad’s hug: The New York Daily News sums this one up well: “For years, Iran’s relations with Venezuela have blossomed. Their bilateral trade exceeds $40 billion, while Iran has reportedly entered into more than 150 energy, development, commercial and financial agreements with Venezuela.” With the eyes of Venezuela’s incoming President upon Ahmadinejad, one thing is clear: if the old guy’s mom wants a hug, you give her a fucking hug. There are 40 billion good reasons to do so.

George Bush’s war in Iraq: If there was never really evidence of any weapons of mass destructions in Iraq, then there was never really any reason for Bush to send the United States into war, was there? Well, have you taken a look at the profits of major defense contractors lately? If not, go take a look. I’ll wait here (hint: the decade following September 11, 2001 has been referred to as the “golden decade” for defense firms). And while you’re at it, think through the benefits for oil & gas firms. Do you think any major Republican constituencies are pleased?

In summary, if a situation at first seems bizarre and confusing, take a moment to think through who is making (or keeping) cash because of it. Because it really is all about the money, sadly enough. Kim Jong-un, the Vatican and Mahmoud Ahmadinejad aren’t a whole lot different than those executives at Ford Motor Company who let people burn to death in Ford Pintos back in the 1970s, just because some cost-benefit analyses showed it yielded the best financial outcome.

Yep, Economics 101 is a shitty class.

Hat Tips:

American Progress, The Atlantic Wire, The New York Times, CNN, Huffington Post, Image Credit: Flickr

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