Posted on 11/16/2009 2:32:27 PM PST by blam
Would The U.S. Start A War To Stimulate The Economy?
Politics / US Politics
Nov 16, 2009 - 08:08 AM
By: Washingtons_Blog
I've written two essays attempting to disprove "military Keynesianism" - the idea that military spending is the best stimulus. See this and this.
In response, a reader challenged me to prove that anyone would advocate military spending or war as a fiscal stimulus.
In fact, the concept of military Keynesianism is so widespread that there are some half million web pages discussing the topic.
And many leading economists and political pundits sing its praises.
For example, Martin Feldstein - chairman of the Council of Economic Advisers under President Reagan, an economics professor at Harvard, and a member of The Wall Street Journal's board of contributors - wrote an op-ed in the Journal last December entitled "Defense Spending Would Be Great Stimulus".
And as the Cato Institute notes:
Bill Kristol agrees. Noting that the military was "spending all kinds of money already," Mr. Kristol wondered aloud, "If you're buying 2,000 Humvees a month, why not buy 3,000? If you're refurbishing two military bases, why not refurbish five?"
***
This is not the first time that defense spending has been endorsed as a way to jump-start the economy. Nearly five decades ago, economic advisers to President Kennedy urged him to increase military spending as an economic stimulus...
Similar arguments are heard today. The members of Connecticut's congressional delegation have been particularly outspoken in their support for the Virginia-class submarine, and they haven't been shy about pointing to the jobs that the program provides in their home state.
The Marine Corps' V-22 Osprey program wins support on similar grounds. Despite serious concerns about crew safety and comfort, the V-22 program employs workers in Pennsylvania, New Jersey, Delaware and Texas, and a number of other states.
Professors of political economy Jonathan Nitzan and Shimshon Bichler write:
Theories of Military Keynesianism and the Military-Industrial Complex became popular after the Second World War, and perhaps for a good reason. The prospect of military demobilization, particularly in the United States, seemed alarming.
The U.S. elite remembered vividly how soaring military spending had pulled the world out of the Great Depression, and it feared that falling military budgets would reverse this process.
If that were to happen, the expectation was that business would tumble,unemployment would soar, and the legitimacy of free-market capitalism would again be called into question.
Seeking to avert this prospect, in 1950 the U.S. National Security Council drafted a top-secret document, NSC-68.
The document, which was declassified only in 1977, explicitly called on the government to use higher military spending as a way of preventing such an outcome.
[snip]
It would have to be a civil war. We’re the only country Obama hates enough to declare war against.
There is so much waste in the DoD that it’s not even funny. The US could spend 1/10th of the current budget and still have the most powerful military in the world. It’s all about efficiency. Of course, when politics come into play efficiency is thrown out the window.
We are not in any wars.
Some ignorant people think an 'overseas contingency operation' is a war, but no enlightened intelligent person does.
War spending doesn’t stimulate economic growth, only GDP and employment, meaningless statistics in the hands of idiots.
From the one that bows & apologizes?
He wants to go from the F-22 to bows and errors...
Never going to happen. One reason is that all members of Congress are going to protect their piece of the pie. That's why Snowe and Collins will always go down swinging for Bath Iron Works, Dodd and Lieberman for Electric Boat and Pratt & Whitney and Murray and Cantwell for Boeing. Believe me, if body bags were only made in Nevada, Dingy Harry would have us fighting on every continent. The other reason is that, if we, as conservatives don't allocate the money to what's important, Hussein would take every cent of DOD cuts and hand it to ACORN and CAIR.
Personally, I'd like to see $30 billion taken from DOD waste and used for NASA as well as incentives for private sector space initiatives.
Wars aren’t good for the economy. People weren’t better off during WWII. Everything created during war is for destructive ends.
I'd rather live on the moon than in any number of blue states.
I think there is ample evidence that military procurement provides a much bigger boost economically than distributing the same amount of money via social programs. The multipliers are larger because the money traverses many more levels, and generally is spent inside the US....
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What do you think some of the more wasteful aspects of the DoD are? Just asking because I know you’re a veteran.
“I know the big story is that WWII got the U.S. out of the depression”
The “war got us out of depression” myth perpetuates itself mostly because people don’t think things through, and partly because certain people desperately want to FDR to have been our savior. As for the former, they are under the old delusion elucidated 150 years ago by Bastiat as The Broken Window Fallacy.
Employment is up. GDP is up. People have wages, and assembly lines are humming. That must mean we’re back in business, right? No. There is the seen, but then there’s the unseen. We see guns, bombs, and tanks. We don’t see what would have been produced had the money not been spent on them. In the case of the broken window, you can talk all you want about the benefit to the glassmaker. But had the window not broken, the shopkeeper would have spent the window money anyway. Plus, he’d still have a window.
Jobs are not jobs. There is a difference between produc ing products customers want to buy and producing tanks the government intends to ship overseas and destroy. If you can’t understand that much, you have no business being an economist or a historian, in my opinion.
No.
Is war coming? Yes. Weak, aimless, irrational foreign policy will often provoke war, as will a policy of appeasement, simply because rather than appeasing or mollifying an enemy it convinces him that you are beatable.
He is much more likely to "go for it" if he sees what he reads or misreads as fear or weakness.
So, yes, war is almost certainly coming. Not the bandit-chasing warfare we're engaged in now, but open war.
Will the economy improve? Not directly. Destroying wealth does not help an economy, and pumping more money into your security overhead doesn't either.
But if war-time necessity causes the administration to drop some of their current ambitions, like the health-care thing, the carbon tax scam, if it forces them to focus on domestic energy production, or even to give a green light to energy independence for security reasons, then they would find themselves backing into a pumped up economy in spite of themselves.
Worked great for Argentina. Galtieri invaded the Falklands on Apr 2, 1982, and his ass was out of office by July 1.
“Someone’s been watching a few too many HBO re-runs of Canadian Bacon”
It’s not crazy conspiratorial stuff. And the point can be easily made without reference to shady top-secret documents. Government spending programs tend to perpetuate themselves. Military spending is no different. Vested interests are involved. They want to keep sucking on the teat, and bunk economics will be used to butress their efforts.
“I’d rather live on the moon than in any number of blue states”
Once you were up on the moon, you’d be free from terestrial control. That is, so long as you found an intelligent computer to lead your revolution. At least that’s what I gathered from reading “The Moon Is a Harsh Mistress”.
FDR was from the "never let a good crisis go to waste" school, and used it to try to turn the US into some variation of Mussolini's Italy or Stalin's Five Year wet dream.
In those days, everyone thought those were the wave of the future.
Not surprisingly, it took what ought to have been a two year crunch and turned it into a 10 year nightmare.
I agree that the war did not end the depression. The depression ended after the war, when the enormous manufacturing capacity we built to wage war with was turned to other uses. Oh, that, and FDR was long gone by that time and couldn't dream up any new Rube Goldberg government schemes.
As an aside, I think no one should be allowed to vote who hasn't read Bastiat.
cheers
“But if war-time necessity causes the administration to drop some of their current ambitions”
Why would it? Did the New Deal halt after Pearl Harbor? Did LBJ choose between Vietnam and the Great Society?
If our National Debt has taught us anything, it is that our government thinks it can do it all and then some.
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