Secretary of State James Baker has introduced a curious new rationale for our changing Persian Gulf policies: jobs.
"An economic recession worldwide, caused by the control by one nation - one dictator if you will - of the West's economic lifeline will result in the loss of jobs for American citizens," the secretary tells us.Well, whatever the public relations appeal he anticipates in using this argument, the economics are essentially wrong. Far from saving jobs, the administration's new "offensive option" will probably mean more job losses and deepening recession.
With the gulf crisis, as we all know, crude oil rose in price from $18 a barrel to as high as $40 before settling at about $30 a barrel. This price rise contributes to a recession by draining off consumer purchasing power.
The joker is that oil prices rose not so much in response to the brutal invasion of Kuwait itself but because of the threat of general war in the region.
The invasion of Kuwait and the consequent sanctions cut off only a small portion of the world's supply of oil, an amount that Saudi Arabia readily made up. War, however, threatens the wholesale destruction of oil installations and a possibly long-term interruption of oil supplies.
A number of Western analysts have calculated that the optimum price for Hussein, if he could control the oil, would be about $25 a barrel.
Now $25 a barrel is significantly more than the $18 a barrel before the Kuwait invasion. But it is still much less in real terms than what we were paying a decade ago - not the stuff of recession.
There is one saving grace to our military escalation, which is already threatening to cost $30 billion a year. All that government spending, which so many want to reduce, would pour into the economy.
Between the people "employed" in the armed forces, those working in expanded defense industries and those using wartime incomes to purchase goods from our non-military companies, the unemployment rate would decline. It is now close to 6 percent, compared with 1 percent in World War II and about 3 percent during the Vietnam War.
If that is what Mr. Baker has in mind, he may be right after all that our policy is aimed at saving jobs.