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Would Our Government Really Start a War to Try to Stimulate the Economy?
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.
Are they right about NSC-68?
Well, PhD economist Robert Higgs confirms the importance of NSC-68:
Previously
administration officials had encountered stiff resistance from Congress
to their pleas for a substantial buildup along the lines laid out in
NSC-68, a landmark document of April 1950. The authors of this internal
government report took a Manichaean view of America’s rivalry with the
Soviet Union, espoused a permanent role for the United States as world
policeman, and envisioned U.S. military expenditures amounting to
perhaps 20 percent of GNP. But congressional acceptance of the
recommended measures seemed highly unlikely in the absence of a crisis.
In 1950 “the fear that [the North Korean] invasion was just the first
step in a broad offensive by the Soviets proved highly useful when it
came to persuading Congress to increase the defense budget.” As
Secretary of State Dean Acheson said afterwards, “Korea saved us.” The
buildup reached its peak in 1953, when the stalemated belligerents in
Korea agreed to a truce.
And Chalmers Johnson - Professor emeritus of the University of California, San Diego, and former CIA consultant - writes:
This is military Keynesianism — the determination to maintain a permanent war economy and
to treat military output as an ordinary economic product, even though
it makes no contribution to either production or consumption.This
ideology goes back to the first years of the cold war. During the late
1940s, the US was haunted by economic anxieties. The great depression
of the 1930s had been overcome only by the war production boom of the
second world war. With peace and demobilisation, there was a pervasive
fear that the depression would return. During 1949, alarmed by the
Soviet Union’s detonation of an atomic bomb, the looming Communist
victory in the Chinese civil war, a domestic recession, and the
lowering of the Iron Curtain around the USSR’s European satellites, the
US sought to draft basic strategy for the emerging cold war. The result
was the militaristic National Security Council Report 68 (NSC-68)
drafted under the supervision of Paul Nitze, then head of the Policy
Planning Staff in the State Department. Dated 14 April 1950 and signed
by President Harry S Truman on 30 September 1950, it laid out the basic
public economic policies that the US pursues to the present day.
In
its conclusions, NSC-68 asserted: “One of the most significant lessons
of our World War II experience was that the American economy, when it
operates at a level approaching full efficiency, can provide enormous
resources for purposes other than civilian consumption while
simultaneously providing a high standard of living”.
With
this understanding, US strategists began to build up a massive
munitions industry, both to counter the military might of the Soviet
Union (which they consistently overstated) and also to maintain full
employment, as well as ward off a possible return of the depression.
The result was that, under Pentagon leadership, entire new industries
were created to manufacture large aircraft, nuclear-powered submarines,
nuclear warheads, intercontinental ballistic missiles, and surveillance
and communications satellites. This led to what President Eisenhower
warned against in his farewell address of 6 February 1961: “The
conjunction of an immense military establishment and a large arms
industry is new in the American experience” — the military-industrial
complex.
By 1990 the value of the weapons, equipment and factories
devoted to the Department of Defense was 83% of the value of all plants
and equipment in US manufacturing. From 1947 to 1990, the combined US
military budgets amounted to $8.7 trillion. Even though the Soviet
Union no longer exists, US reliance on military Keynesianism has, if
anything, ratcheted up, thanks to the massive vested interests that
have become entrenched around the military establishment.
You can read NSC-68 here.
Leading political journalist John T. Flynn wrote in 1944 :
Militarism
is the one great glamorous public-works project upon which a variety of
elements in the community can be brought into agreement.
But Flynn warned that:
Inevitably,
having surrendered to militarism as an economic device, we will do what
other countries have done: we will keep alive the fears of our people
of the aggressive ambitions of other countries and we will ourselves
embark upon imperialistic enterprises of our own.
Indeed,
the creator of the theory of military Keynesianism himself warned that
those who followed such thinking would fearmonger, appeal to patriotism
and get us into wars in order to promote this kind of economic
"stimulus". As The Independent wrote in 2004:
Military-fuelled
growth, or military Keynesianism as it is now known in academic
circles, was first theorised by the Polish economist Michal Kalecki in
1943. Kalecki argued that capitalists and their political champions
tended to bridle against classic Keynesianism; achieving full
employment through public spending made them nervous because it risked
over-empowering the working class and the unions.
The military
was a much more desirable investment from their point of view, although
justifying such a diversion of public funds required
a certain degree of political repression, best achieved through appeals
to patriotism and fear-mongering about an enemy threat - and, inexorably, an actual war.
At
the time, Kalecki's best example of military Keynesianism was Nazi
Germany. But the concept does not just operate under fascist
dictatorships. Indeed, it has been taken up with enthusiasm by the
neo-liberal right wing in the United States.
I
disagree that this is a partisan issue. The Independent piece portrays
the "neo-liberal right" as special warmongers; I don't believe there is
much difference with the "neo-liberal left", or "neo-conservative
right", or whatever. Indeed, political labels are fairly meaningless. What is important is the actions one takes, not his rhetoric about his actions.
- advertisements -
absolutely our government would start a war for "stimulus". if it is a choice between 20% u-3 and citizens with torches and pitchforks at the doorsteps of the oligarchs, you can be damn sure we would blow the shit out of some poor arab country in the middle east first. people need to remember not to underestimate the corruption of our government and overestimate the absolute ignorance of our population. given the right p.r. campaign, one could convince the american sheeple to bomb fucking canada.
Sure, that could happen. But it's not about stimulus. It's about power. The torches and pitchforks part is the sure giveaway. :)
from www.investors.com
Geopolitics: Why would China give uranium to Pakistan? Why would Russia help Iran build an A-bomb? Regional balance of power plays a role, but a nuclear 9/11 could restore Moscow and Beijing as superpowers.
Think of the destabilizing effects of the 9/11 terrorist attacks. The country's fastest form of transportation was paralyzed as we picked up the pieces. Financial markets had to be closed, and when they reopened, private industry was dealt an immediate body blow.
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=512489
You wrote, "I don't believe there is much difference with the "neo-liberal left", or "neo-conservative right", or whatever..."
Weirdly, nearly all of them and Republicans agree that any nation can solve any economic problem by having a war, and that any national economic intervention brings disaster, and that these two ideas do not contradict each other.
Our government will do what it's trained to do. Like Pavlov's dog, the hungry egos of tomorrow choose to be owned as well.
1) The title is, “Would Our Government Really Start a War to Try to Stimulate the Economy?”
(Emphasis added.)
GW, once again it must be pointed out that you gloss over the difference between “war” and “military spending”. (…“military spending or war as a fiscal stimulus.”)
2) “564,000 results” does not equal “half a million pages”. Regardless, it is a red herring. A Google search of “Barrack Obama + Space Alien” would likely yield similar results; but this does not indicate a widespread belief that the Messiah arose from the debris field at Roswell.
3) The Feldstein (December, 2008) opinion piece advocates, “do(ing) things during the period of the spending surge that must eventually be done anyway“. As illustrated in the chart you previously featured (twice), defense spending does have some economic benefits. That Feldstein believed such spending might have been more beneficial than numerous other types of “stimulus” spending which were included in the Porkulous/Scamulous Bill, seems, in hindsight, incontrovertible.
4) “Bill Kristol”? Now there’s a powerful and influential government official!
5) Congressional members (of course) always believe that pork spending within their districts/states is “good for the economy”; and in the case of defense spending , “vital to national security“. (Strange how that works, ain’t it? Remember the “Base Closing Commission” clusterflop?)
6) Historically, post-war revulsion has often led to too much of a drawdown in military spending. Then, when the inevitable 'next war' came about, production had to be geared up again from scratch. The vitality of the “military industrial complex” needed to be preserved…just in case. An attempt to retain some level of defense-related (domestic) manufacturing capability certainly was/is in the interest of national security.
7) The anachronistic World War II/Cold War model incorporated another horrific and cynical, but unspoken, reality -- if you want a sure-fire way to lower unemployment, send lots of young men off to die.
(As a veteran, it sickens me that anyone would follow this evil line of thinking.)
8) Unquestionably, we need to eliminate unnecessary and anachronistic cold war relics; and keep a watchful eye on the “military industrial complex“ (as well as countless other “special interests“), and for “fear-mongering“; and for any subsequent militarism/imperialism wrapped in the flag of “patriotism“. I suppose that you see this as being far more prevalent, and more of a pressing concern, than some. (At present, the sea is full of “icebergs”…)
9) The “guns vs. butter”/ trade-off debate will always be worthwhile (as is the debate whether any type of Keynesian approach is the best way to go.) We need to have a viable military, with the capacity to meet the ever-changing threats in the geopolitical landscape. (“Igitur qui desiderat pacem, praeparet bellum.”) As with the economy and many other matters, the pendulum swings…
10) GW, your anti-war passion and persistence are admirable. And I don’t trust those bastards in D.C. any more than you do. Please don’t forget that, to many of us, “blood” will always be more important than “treasure”.
Carry on.
One of the finest written and most constructive comments I've ever read. Awesome stuff loup garou !!
Be careful son, Big Ear is listening and Big Eye is watching ... y'all don't want to have trouble getting on a plane...
Like Chuck Yeager stated, 'hey its' a job program...'
Move along nothing to see here ...
After World War 2, our blessed leaders, impressed by German 'organizational' skills crafted a policy of manufacture of consent.
Over time these techniques moved to the economic realm in an attempt to manufacture content.
With the latest employment bloodletting, The SGS Alternate Unemployment Rate is 22.1%.
One might argue that this still is not as inclusive as the First Great Depression metric of those of workin' age that ain't workin' ... but it is close enough to support the thrust of this entry and frankly this blog in general.
The manufacture of contempt : it is only a Great Depression if they say it is.
And a FYI to the asshat re: Serbia. President Clinton sent our idle military forces to combat horrific abuses/ ethnic cleansing there. We were successful, and the action was cost effective.
I assume you're addressing me (asshat), Hammer. We bombed a sovereign nation the size of Ohio against whom we never declared war for 77 days. And "won", some 7-years later. Some success. So eat shit and die - no UN resolution, no charter, no national security impact on the US at all. In other words, all the things the the left screamed about Bush over for 8 f***ing years.
And yes, principally to get Billy J's loose zipper off the front pages. And it worked, too.
So bite me, son. I was a CPT in the USAR at the time, on the pad to go when my Hon Discharge came through ending my undistinguished career and nobody, n-o-b-o-d-y, could tell me why the heck I was going over there.
Like I said, some success.
Why should 1 American troop die not defending this country. We should have nukes Iraq & Afghanistan to rubble. They fight like cowards, our leaders don't fight wars to win or they'd both be over.
Half million? More like 74,700
http://www.google.com/search?q=%22military+keynesianism%22&ie=utf-8&oe=u...
Still an awful considering how wonky that phrase is, but please correct it.
Start ANOTHER war? Hell, we cant even finish the two we are in right fucking NOW! And how is that working out for us anyway, what kind of ROI are we recieving for the $10 billion a month we're spending? How do we justify leaving this kind of debt load on future generations? War is an economic sink hole that consumes resources, both natural and human. Rome had great armies, and their empire crumbled. China and India are laughing at us---while they aquire gold. We cant make clothes, cars, computers or electronics for ourselves, but we can afford to make Stealth fighters, drones, planes, ships, gunships, missles and smart bombs? Bush was too lily-livered to achieve success (draft dodging coward)--just like his daddy--too wimpy to capture Saddam during Desert Storm. The best equipment in the world is of no use in the hands of forces led by corrupt and inept leadership. When our creditors pull the plug, we are finished. Too bankrupt to even feed ourselves, let alone make war on others.
does the $10 billion a month include the medical cost of caring for tens of thousands of young men with big injuries the rest of their life?
War has to be financed. How will the US justify another cost similar to Iraq & Afghanistan to the bond vigilantes?
Plus, war sends oil price up...the US tries anything that will send that price up much more, they'll find they've brought a war right into their own borders, with a most rebellious population. (The same ones who are that much less likely to feel like enlisting in droves, being already disillusioned with Iraq, Afghanistan, & Wall Street.)
Given the context (fragile bond market, rising oil, citizens sick of 2 wars already) it will be difficult to drum up enough 'patriotic' fervour among the rank-and-file to get this off the ground I think.
Is this a trick question?
Yes. Yes they would.
How many wars are NOT fought over resources?
/thread
The problem, this time around, with starting a war is you would be killing off the wrong people. (Young men) We would need to kill off baby boomers, after all, "we" are the problem. We outlived our usefulness. So will they start a war, I doubt it, unless they can figured out how to draft old people.
I say we go to war with Mexico then. With all the retirees in Sun City on the front line, well, 2 birds with one stone.
And this doesn't even take into account all the beach front opportunities for development, the fact that they have oil to "liberate" and of course, we already speak the language.
JTS
Up to speed on the religion and cuisine too
or Logan's Option
http://www.youtube.com/watch?v=xSnLU9nyFSA
Good point.
Of course the government would start a war to try and stimulate the economy. In fact, that's one of the minor reasons to start a war. Arms sales and feeding the military industrial machine are so much better reasons.
The real question is, considering all that has gone down over the past 3000 years of recorded history, why would they not try what has been done hundreds of times in the near and distant past with great success, at least for some people?
Those young boys and girls who will actually die are a dime a dozen. Besides, no one of any real worth (read the children of the financial elite and other assorted powers that be) will be harmed in any way, shape or form. Besides, their contribution to the needs of society will be better served in the board rooms, private penthouses, luxury suites and tennis courts of corporate America.
I pledge allegiance to the Banana Republic of the United States of America.
I only disagree a little. Governments start wars for two reasons : (1) Existential wars--we won't exisit as a recognizable nation if we lose; and (2) Other wars.
The other wars are the interesting ones because they doesn't seem to provide much historic support for the 'economic stimulus' motivation for war. Does anyone really believe that FDR sat around and said "I they had just bombed Pearl Harbor, that's one thing. But dang it, our economy is in the dumps. Let's go to war."
Does anyone really believe that W sent troops to Afghanistan and Iraq (with, I should add, the enthusiastic consent of both parties )because he needed an economic stimulus? We were in a war as of 9/11. Should it be fought here or where the bad guys are. He choose "over there where the bad guys are." Reasonable people can disagree and say we shoud have done nothing. But there is no reasonable argument that the goal was economic stimulus.
No he didn't.
He chose to fight it where he could grab up some oil.
If he had actually decided to go where the terrorism came from he would have invaded Saudi Arabia, the home of Wahhabism, Al Qaida and the birthplace of the 9/11 terrorists.
If he had really wanted to get the bad guys he would have worked with the Taliban on a way for them to save face while handing over their foreign "guests" (including bin Laden) instead of spurning them for their efforts to do just that.
It was about oil and pipelines, nothing more.
If it were about terrorists and terrorism the US would not be in Iraq or Afghanistan and would instead have toppled GW's good buddies the Saudi's.
Agreed. Next war, insist on universal, no exceptions of all eligible young men and wowmn, including the children of the elite, and the war will end might quick.
Think young George W. boozing his way through the reserves - gimme a break. Oh yes, I know others did it too, but let's get serious about who these morally bankrupt losers who promote war really send out to fight their wars. Masters of War, indeed.
Contrary to the author's theorem, I think O will can Afghanistan as a means to send a "we're serious about deficits," message, gain instant support for the dollar, and he may even get some public support on a "cost-benefit" type element to his soon to be announced decision NOT to send more troops until further notice, not to mention kudos for keeping us out of a pointless, expensive and silly enterprise. We can't change that section of the world, and there are plenty of things we can do short of occupation to tend to our interests there.
No, the administration (Brzezinski) is concentrating on stopping a war between Israel and Iran that may wreck Western economies. On the other hand, Russia is probably trying to foster that scenario. Boom, head shot.
http://www.google.com/hostednews/afp/article/ALeqM5jB1iIeTXKscLXBWrVrae-...
just think how much money could be made on an economically declining china, with over a billion potential customers for that cheap afgan smack. they're refining it right there in kabul now. free trade indeed, open your markets, open your veins, (it will make you feel better) there is no end to the moral bankruptcy of these world leaders. it grows exponentially, along with their karmic debt. it will have to be repaid!!!
On the refutation of the war is good for the economy crap, how can one not look at WW2 and not realize that factories were bombed out of existence everywhere but the US?That fact alone made getting wealthy in the aftermath easy since the US had the only intact means of production.
That could work again.We nuke everything then we.....oh...maybe that would not work out so well.
we were in viet nam before JFK. that area used to be the opium capitol of the world. lots of money to be made controlling that commodity, and steering it to our adversaries. like now, russia and iran have some of the worst heroin addiction problems.
"we were in viet nam before JFK."
oui....
Your title says 'start a war' yet you fail to show any evidence of that merely that military spending has its advocates.
A Congressman with an aircraft related plant in his district is going to be pro militarly aviation and one with a shipyard
pro Navy.So what!
Since the demise of the USSR the United States has had the military capability to pound into the dust any nation on this planet were our political and military leaders so inclined. Your tendentious posts on the topic really do not belong on this forum and you fail to make a case that the US has EVER used its military power abroad to boost the domestic economy!
Sheesh. There's quite a difference between 'spend a lot on the military' and 'start wars'. My congressman served in Afghanistan as a Marine officer. I guarantee you that he is not going to be in favor of a war to stimulate our economy. What nonsense.
I agree Anon. The only idiots in this world that would take on the US are Muslims and Persians. Any conflict with them hardly passes for war. I think the title was just a come on to get us to read the thing. Two junk ratings Anon, not a bad day for going against the club. For all of you who read my comments with Cheeky, this article is a classic high school cut and paste job. Any of you can do this. There is no thought of the poster here, just cut and paste work of others', then add a little comment between each paste, or should I say paste job.
+1. This is the third pile of shit he's posted about this subject.
You must be asking a rhetorical question,right?
In a word YES.
Oh you mean like JFK(D) starting our involvement
in Vietnam? You mean like LBJ(D) escalating
our involvement in Vietnam? Are you worried that
BHO(D) might try to pull the same thing?
Not to mention WJC(D) starting a war with Serbia (no UN resoluion, never attacked us, insert whatever lefty anti-Iraq talking point you wish here as it fits perfectly) - solely to get the news of his zipper troubles off the front page. Right?
Nice display of rightie talking points.
BTW - How's that whole Invade Afghanistan/Iraq thing working out for you?
I couldn't help but notice GWB missed his targets, declared Osama not a problem, and was quite successful in making Americans think that the Taliban and Saddam were the ones that attacked you and not his good good buddies the Saudi's.
Yeah, ain't talking points great? They work wonders to obfuscate the real issues at hand.
I hope you don't use them to make investment decisions.
It wouldn't be the first time. Not saying it's a good move, just that it was good enough for FDR.
You mention Martin Feldstein, also a member of the Group of Thirty (mucho thanks for that credit derivatives, securitization & synthetic securitization scam, doods) and the Bretton Woods Committee (mucho thanks for that letter to Pelosi & Reid -- Feb. 11, 2009 -- killing the full effect of the "Buy American" clause in the fed stimulus package, doods) -- who has long wanted to privatize Social Security and shovel those monies to this buddies on Wall Street --- nothing further need be said about that shill.
You mention the Cato Institute (I don't even mention the name of that freaktard roger dodger quoted), which is financed by the Koch family which gave us the John Birch Society and the Liberty Lobby (and does some partial funding of the Heritage Foundation and Americans for Prosperity, if memory serves) - nothing more need be said about those shills.
And since we've got two official wars going (and several unofficial as well) which have proven to be extraordinarily economic draining and counterproductive to all things HUMAN, I truly can't comment intelligently on you blog, except to say it IS HIGHLY PROBABLE!
Good blog, just can't stand those cretins cited.....
Great piece George Washington; well worth a second read!
A Civil War would certainly cause a decrease in Unemployment.
been there done that
Give it 2 years and there will be war with Iran. The whole world will be pulled into it.
Yes they would... I wouldn't pass 1 thing over .GOV
How-ever I have a thought provoking idea for all to ponder...
What if the people of the US that are fed up with .GOV start a war with .GOV to end the cycle of BS ?
WE THE PEOPLE REBUILD & OVER-COME with-out Wall Street & Current Washington Antics...
I just wish the WE the people had access to military spec weapons to fight fire with fire.
Don't need no weapons.
Just remove consent: stop spending... and .gov will fall like a stone (cleaning up the mess and restarting would be the real challenge).
Barter or local coupon currency would be helpful, if structured properly - i.e. "legally" or, at least not "flouting". Thus, local spending, only, would do it. An added plus would be the foundation such cooperation and local support would lend after "the fall".
Of course - Publicizing this idea is another matter! And, convincing? Well, that's happening anyway, only with no organization to pick up where the .gov-system left off.
Probably would have to do it ... one post at a time... so to speak.