What Does the Economy Have to Do With National Security?

'There can be no question of the need to include the economic viability of our nation as a major element of national security because without capital, there is no business; without business, there is no profit; without profit, there are no jobs,' says Dr.

Most people in the United States would define national security as military readiness, homeland defense, and generally protecting American interests at home and abroad. They don't recognize that the economy has an effect on our national security. This is the key objective of the book "Economic Security: Neglected Dimension of National Security?" edited by Dr. Sheila Ronis for the Center for Strategic Conferencing, Institute for National Strategic Studies and published by the National Defense University Press in the fall of 2011.

Other questions she considered are: "How does the United States remain strong? What does that mean in a world of globalization? How do we even define what national security is in such a complex and interdependent world? Can we survive, let alone remain a superpower, if we no longer control any means of production? If we remain a major debtor nation? If we continue our dependence on unstable countries for our energy supplies? If we invest insufficient amounts of our resources in research and development, science and technology? Or if we perceive the training and education of people as a cost as opposed to an investment?"

This report was the result of a conference held on August 2425, 2010, by the National Defense University. The conference explored the economic element of national power. Over two days, several keynote speakers and participants in six panel discussions explored the complexity of this subject and examined the major elements that define the economic component of national security.

The panels and keynote presentations looked at the economic element of national power from different system views, including the role of debt, the government, industrial capability, energy, science, technology, and human capital -- create a systemic view of what could be done to improve an understanding of the economic element of national power. Selected papers from the conference that represent these views comprise this volume, edited by Dr. Sheila Ronis, Director of the Master of Business Administration/Master of Management Programs at Walsh College and President of The University Group, Inc., a management consulting firm and think tank specializing in strategic management, visioning, national security, and public policy. Dr. Ronis has chaired the Vision Working Group of the Project on National Security Reform (PNSR) in Washington, DC, which has been tasked by Congress to rewrite the National Security Act of 1947. As a Distinguished Fellow at PNSR, Dr. Ronis is responsible for the plan and processes to develop the Center for Strategic Analysis and Assessment, to provide the mechanism to conduct foresight studies and the development of the grand strategies that would follow -- the kind of studies that would look at an entire system, such as the economy and its relationship to national security.

Dr. Ronis begins with a definition of national security that "can include anything that adds to the strength of the Nation," such as "the strength of our nation's infrastructure, our strong societal and moral codes, the rule of law, stable government, social, political, and economic institutions, and leadership." It also includes "our nation's schools and educational programs to ensure a knowledgeable citizenry and lifelong learning -- a must for a democracy." Then, it also "requires investments in science, engineering, research and development, and technological leadership. We cannot be strong without a viable way to power our cities, feed ourselves, and move from one place to another. Most of all, a strong economy is an essential ingredient of a global superpower."

Without a strong market-based economy we would quickly lose our superpower status. We need to have a strong base of globally competitive products and services that produce jobs. The "economy must include sound government policies to promote responsible choices and reduce our debt, and grand strategies for energy and environmental sustainability, science and technology leadership (at least in some areas), human capital capabilities, manufacturing, and the industrial base."

"AndNational security goes to the very core of how we define who we are as a people and a free society. It concerns how we view our world responsibilities."

Dr. Ronis states that there can be no question of the need to include the economic viability of our nation as a major element of national security because "without capital, there is no business; without business, there is no profit; without profit, there are no jobs. And without jobs, there are no taxes, and there is no military capability. The viability of a nation's industrial infrastructure, which provides jobs for its people, creates and distributes wealth, and leverages profits, is essential. Without jobs, the quality of peoples' lives deteriorates to a point where society itself can disintegrate."

Chapter one is a transcript of the comments made by opening keynote speaker David Walker, U. S. Comptroller General and head of the Government Accountability Office (GAO) from 1998 to 2008, and Founder and CEO of the Comeback America Initiative. When he started at the GAO, it didn't have "a strategic, integrated, forward-looking, and outcome-based strategic plan." They put such a plan in place at GAO during his tenure, and he said, "It is the closest thing that exists to a strategic plan for the Federal Government, but the GAO is in the legislative branch. So we need one for the executive branch. It needs to be led by the OMB (Office of Management and Budget), and hopefully, eventually it will be."

He stated, "Things like savings, critical infrastructure, investments in basic research, educational outcomes, and healthcare outcomes are key leading indicators, and in all of these areas, we are below average for an industrialized nation." He contends that if the economic element of national power is neglected and misunderstood, nothing will be more dangerous to the Nation than the national debt and its unintended consequences for generations to come. Last year government represented 25% of the economy, above the recent average of 21%. "But if we do not reform our existing entitlement programs and other aspects of government, it will represent about 40% of the economy by 2040, and that does not count state and local governments."

He stated that the composition of the budget has changed dramatically in the last four decades. "Forty years ago, it was dominated by defense at 42%. Today, it is dominated by social insurance programs, which grow faster than inflation and grow faster than the economy even when the economy is growing. Forty years ago, when Congress came to town, they got to decide how 62% of the budget would be spent, of which today defense is about half of the discretionary budget. Now they decide how about 38% gets spent, and if we continue on our status quo, do nothing, let-it-ride policy, it will go down to 18% by 2040. This obviously is an imprudent and unsustainable course."

He points out that if you count our unfunded Social Security and Medicare debt, our total debt is $62 trillion, not the $14 trillion we hear about. He states that if the total debt is taken into consideration, we are worse off than Spain, and only three years away from becoming like Greece. His arguments are alarming and are critical for policymakers and every citizen to understand. In conclusion, he provides a common-sense approach to making the tough choices and changes we need to make before it's too late to get our financial house in order.

In chapter two, John Morton traces the historical roots of the economy and its role in enabling the superpower status of the Nation. Morton is a Distinguished Fellow and the Homeland Security Lead for the Project on National Security Reform. He is also the Strategic Advisor to DomesticPreparedness.com and a consultant to Gryphon Technologies. He states, "Today, America sustains that position primarily through two elements of its national power: its peerless military and its dollar currency, upon which the international monetary and economic system is largely based. A third element initially enabled that hegemony in the 1940s: the national economy -- that is, the Nation's industrial might. Much of that element is no longer present today." He presents a brilliant analysis of how American industry was the foundation of America's becoming a superpower from the Civil War to the present day and how the alliance of government, science, industry, academe, and the military forged the national security establishment, later called the defense industrial base. He proposes that the United States needs an economic grand strategy in order to continue Americas role in the world, which is based on its military and economic prowess and capability.

In chapter three, Keith Cooley explains his approach to an energy plan, which includes a grand strategy that, if enacted, will support the Nation's future. Cooley is CEO of the advisory firm Principia, LLC. He previously was president and CEO of NextEnergy, an accelerator for alternative energy businesses and technologies. He paraphrases the International Energy Association definition of energy security as simply "the assurance of the uninterrupted supply of energy at an affordable price, while respecting environmental concerns." His chapter addresses the notion of energy security as national security from four points of view that are, in his opinion, strategic priorities:

  • Priority 1: Creating strong civic, business, and political leadership to quickly implement needed changes that assure energy and national security for this country
  • Priority 2: Developing and sustaining an alternative energy capability
  • Priority 3: Migrating to alternative (sometimes called "clean") energy sources
  • Priority 4: Widespread increased dependence on domestic energy efficiency

He states, that "no 21st-century economy can be secured without a steady supply of energy. Without adequate energy to power contemporary civilization, there is no security at all."

He concludes by urging "action on energy security issues at the highest levels of government, industry, and civic engagement. We have many examples to draw lessons from both here and abroad that can inform our actions. But we must act; we must engage. It is the only path available for our survival."

In chapter four, Louis Infante offers his approach to energy security. Infante is the executive director, Government and Military, for Ricardo, Inc., an independent automotive engineering consulting company, where he is responsible for strategy development and enactment in the military and government markets. He advocates a National Energy Security Initiative administered by the Department of Energy and joined by every government department with responsibilities that will be affected by energy -- in essence, practically all departments." He describes a specific model that the U. S. could use to manage the complexities of its entire energy system.

"This initiative would include mechanisms to improve the research and development policymaking decisions and strategies to make them real." He recommends that "U.S. leadership must overcome barriers to establishment of a national policy on energy that prescribes an endgame and the plan to achieve it." He concludes that "the National Energy Security Initiative will provide the coordinating efforts in planning and technology R&D that can assure success in the redevelopment of the U.S. energy system. And it can start within DOD as a first application of success."

In chapter five, Myra Howze Shiplett, Wendy Russell, Anne M. Khademian, and Lenora Peters Gant address the complex set of issues of whether a nation can be an economic or military superpower without a plan to ensure it has people with the right knowledge and capabilities throughout its society. They point out, "In 2010, America was ranked 12th in the number of 24- to 35-year-olds with college degrees... among 36 developed nations" compared to sixth in post-secondary educational attainment in the world among 25- to 60-year-olds."

Also, a major problem is that "Nationwide, only about 70% of students earn their high school diplomas" with lower rates for minority students -- "only 57.8% of Hispanic, 53.4% of African American, and 49.3% of American Indian and Alaska Native students." They discuss the five steps needed for the "Architecture of the High School Educational Future" and a new kind of graduate education that will produce practitioners/scholars" with the skill sets needed for public service. They conclude that "A vibrant, growing economy that provides jobs for America's citizens is an essential component of our national security. A critical success factor for such an economy is a well-educated workforce, equipped to deal with the complexities of the 21st century The security of our nation demands this commitment."

In chapter six, Carmen Medina explores the many issues that surround what it means to have innovation as a major element of a nations economy. Carmen Medina retired from the CIA in February 2010 after over 30 years of service. Her last assignment was as Director of the Center for the Study of Intelligence, where she developed and managed CIA's first agency-wide Lessons Learned Program. First, she explores some definitions of innovation: "technology-based that leads to new industries," as opposed to "social innovation, which refers to changes in the way people behave," as well as agricultural innovation,"defined as the application of knowledge of all types to achieve desired social and economic outcomes." She states that "The capacity for innovation has been the primary catalyst of U.S. economic growth. Indeed, capitalism essentially is built on innovation and the concept of creative destruction. Going forward, innovation will be even more critical to U.S. economic prosperity."

Michele Nash-Hoff is president of ElectroFab Sales. She is the author of "Can American Manufacturing Be Saved?"

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