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Military Spending is INCREASING Unemployment and REDUCING Economic Growth
I have written extensively
on the fact that this is not a normal cyclical recession, and we're not
in the type of "jobless recovery" which we've had a couple of times in
the last 50 years. Unemployment will continue rising in America for
some time, which will make a real, sustainable recovery very difficult.
The heads of two Federal Reserve banks are now saying something similar:
Janet
Yellen, president of the Federal Reserve Bank of San Francisco, and
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta,
warned that rising unemployment could crimp consumers, restraining the
recovery. Consumer spending accounts for about 70 percent of economic
activity.
But instead of doing anything to encourage a
sustainable recovery in employment - such as rebuilding America's
manufacturing base, or breaking up the too big to fails so that the
smaller banks have a chance to grow and lend more to individuals and
small businesses (see this and this) - the government has simply thrown money at the banks.
Moreover, contrary to what you might have heard, PhD economist Dean Baker pointed out yesterday that America's massive military spending on unnecessary and unpopular wars actually lowers economic growth and increases unemployment:
Defense
spending means that the government is pulling away resources from the
uses determined by the market and instead using them to buy weapons and
supplies and to pay for soldiers and other military personnel. In
standard economic models, defense spending is a direct drain on the
economy, reducing efficiency, slowing growth and costing jobs.
A
few years ago, the Center for Economic and Policy Research commissioned
Global Insight, one of the leading economic modeling firms, to project
the impact of a sustained increase in defense spending equal to 1.0
percentage point of GDP. This was roughly equal to the cost of the Iraq
War.Global Insight’s model projected that after 20 years the
economy would be about 0.6 percentage points smaller as a result of the
additional defense spending. Slower growth would imply a loss of almost
700,000 jobs compared to a situation in which defense spending had not
been increased. Construction and manufacturing were especially big job
losers in the projections, losing 210,000 and 90,000 jobs, respectively.The
scenario we asked Global Insight to model turned out to have vastly
underestimated the increase in defense spending associated with current
policy. In the most recent quarter, defense spending was equal to 5.6
percent of GDP. By comparison, before the September 11th attacks, the
Congressional Budget Office projected that defense spending in 2009
would be equal to just 2.4 percent of GDP. Our post-September 11th
build-up was equal to 3.2 percentage points of GDP compared to the
pre-attack baseline. This means that the Global Insight projections of
job loss are far too low...The projected job loss from this increase in defense spending would be close to 2 million.
In other words, the standard economic models that project job loss from
efforts to stem global warming also project that the increase in
defense spending since 2000 will cost the economy close to 2 million
jobs in the long run.
Note 1: Global Insight is:
Recognized as the most consistently accurate forecasting company in the world.
Note 2: A paper
published in 2007 by the The Political Economy Research Institute at
the University of Massachusetts, Amherst entitled "The U.S. Employment
Effects of Military and Domestic Spending Priorities" concludes:
We
present in Table 1 our estimate of the relative effects of spending $1
billion on alternative uses, including military spending, health care,
education, mass transit, and construction for home weatherization and
infrastructure repair...
As we see, defense spending creates 8,555 total jobs with $1 billion in
spending. This is the fewest number of jobs of any of the alternative
uses that we present. Thus, personal consumption generates 10,779 jobs,
26.2 percent more than defense, health care generates 12,883 jobs,
education generates 17,687, mass transit is at 19,795, and construction
for weatherization/infrastructure is 12,804. From this list we see that
with two of the categories, education and mass transit, the total
number of jobs created with $1 billion in spending is more than twice
as many as with defense.
Note 3: I honor the brave veterans and active-duty soldiers who
have served our country. They are not responsible for the policies of
the civilian leadership. Indeed, if you talk to soldiers, many will
tell you they think we are involved in wars we shouldn't be in.
Note 4: I am for a strong defense. That's not what this is about.
But we got into the Iraq war based on the false linkage of Saddam and 9/11, and false claims that Saddam had WMDs. Nobel prize winning economist Joseph Stiglitz says that the Iraq war will cost $3-5 trillion dollars.And experts say that the Iraq war has increased the threat of terrorism. See this, this, this, this, this and this.(Incidentally, torture also reduces our national security).
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I wholeheartedly agree with your assessment... these nuts have to be stopped...
http://paxarcana.files.wordpress.com/2008/04/mr_peanut_warning.jpg
We could flush 2 million jobs down the shitter tomorrow and hardly even notice (or count) it!
And while we may lose a couple of GDP points or 3... our exports of bullets and bombs and global instability will absolutely explode... (along with FOX and CNN's ratings...)
Bombs away I say...
More leftist claptrap.
No, it's called common sense, and you're called a right wing ideologue. With all the bitching on this site (correctly) pointing out the ruinous nature government spending is posing, it's about damn time someone mention where HALF that damn money goes. To protect scared little minded people, who claim to be so anti-government. When and if this country is invaded, it will be every truck driving, gun toting, freedom loving, beer drinking, joe six-pack using all the ammo they have been collecting taking target practice at the "evil doers" that will save you, NOT the government you purport to hate (except when you get scared the "terrorist" are coming and wet your pants).
Please read revised version of essay.
Dean Baker, a co-founder and co-director of the Center for Economic and Policy Research, loves to educate the peoples on the nefarious consequences of certain types of government spending. But not about all types. Just the types he doesn't like.
CEPR and Baker = leftist claptrap. Being against the absurd millitary industrial complex expenditures is not the leftist claptrap.
For example:
Barack Obama's big stimulus: The proposed $825bn economic stimulus package will do much to get the US back on track. But it needs to be even largerDean Baker
http://www.guardian.co.uk/commentisfree/cifamerica/2009/jan/19/barack-ob...
OK Let's quit defense spending. How many jobs would be lost if the Chinese decided they needed our farmland?
Maybe the MIC isn't the most efficient means of protecting ourselves, but the founding fathers said "provide for the common defense". They knew human nature.
Some costs are necessary. Everything can be made more efficient.
we have never been defensive, we have always been offensive. the bankers and the military industrial complex makes a lot more money off of the taxpayers when we have a large army and then this large army needs to be supplied and on and on it goes and then we are told constantly that in order to be patriotic we have to support the army unconditionally no matter what they do and where?
Please read revised version of essay.
You are a comedian....Chinese invading on surfboards oh gracious me!
Be more serious, if we continue on this path of massive government spending on lost wars, they will be able to buy our farmland. But why buy it when the stupid Americans will become sharecroppers on land owned by others.
The US spends more than the rest of the world combined on its military. It spends 9.5x what the Chinese spend. It spends 10.5x what the Russians spend. And that doesn't count the military spending of our close allies, such as Great Britain.
The idea that the Chinese will come take our farmland if we only spend 5 times as much on the military as they do is, franky, absurd.
But Iraq isn't a war - remember, that mission was accomplished already. You guys are, well, I dunno, just dicking around a sandbox with guns now.
http://mikebeckham.net/wp-content/uploads/2007/08/bush-mission-accomplis...
here's a ditty from my FB page today, posted by a dear and somewhat deluded friend: "....wants to thank all of the veterans who make our world a more peaceful and safe place."
I might send her your blog post, GW.
and I meant to preface my comment with the notion that we are also NOT safer and at peace because of said military spending.
Agreed. Another factor not captured by this article or mentioned anywhere else is that the Government and the Military Industrial Complex pays for many educations in engineering which are then not used in the military. So, we are not only taking from someone to pay for someone else's education, but those engineers are also under-utilized and could be doing work that actually makes lives better instead of working on means of destruction.
Depends.....on your definition of 'we'.
Certainly the Big Jefes at Defense contractors, Arms dealers, their families, the members of our debauched congress, the POTUS, the Royalty of the country, like Lord Blankfein, Jamie Dimon, Dick Fuld, Joe Cassano (he's hiding out in some well-protected enclave for sure)and countless other unindicted conspirators are far safer, and a lot of peace comes with mountains of wealth stored in vaults all over this planet.
No, i'm afraid those who benefit most from our military are splashing around if not lap dancing in the..well....laps of luxury.
Agreed. Especially when gigantic portion of it goes into building Iraq & Co' infrastructure that has never existed in the first place. Just giving those resources to our serving men and women would be so much more beneficial and honorable.
Wars are not won by being nice. (not that I am advocating for unneeded engagement in the first place. However once you fight, you ether go all in or don't go at all.)
http://www.globalresearch.ca/PrintArticle.php?articleId=15951