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On Tyler Cowen's "Comical" 'War-Is-Good' Memo

Tyler Durden's picture




 

Submitted by Jo Salerno via Mises Economic blog,

Forbes’ columnist John Tamny executes an inspired and wonderfully savage critique of GMU economist Tyler Cowen’s dotty blog post touting the positive effects of war on economic growth.  Tamny takes his cue from Henry Hazlitt and writes in plain and muscular language.

“Economics is haunted by more fallacies than any other study known to man.” – Henry Hazlitt, Economics In One Lesson, p. 15

 

The great Henry Hazlitt’s wise words came to mind while reading a recent New York Times post by George Mason economist Tyler Cowen. Fresh off of his unfortunate assertion (one that Hazlitt would have had a field day with) from a few years ago that economic growth has become difficult to achieve, Cowen strangely observed that “The world just hasn’t had that much warfare lately, at least not by historical standards,” and “Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely.”

 

They’re ultimately only words, but Cowen’s about war theoretically boosting animal spirits are pretty disturbing ones, and that’s truly saying something when we consider past mutterings from the economics professor about a supposed lack of “low-hanging fruit” rendering future growth a distant object.

Here is a juicy sampler that should whet your appetite for the full meal:

[T]o clarify Cowen’s views to readers, he writes that “the very possibility of war focuses the attention of governments on getting some basic decisions right – whether investing in science or simply liberalizing the economy.” His first example is laughable, and his second easily disprovable.

 

Government spending on science presumes that politicians can better allocate capital than can private actors operating under market discipline. To believe what Cowen is offering up, the lack of a war threat today is depriving Harry Reid, Mitch McConnell, Nancy Pelosi and John Boehner of the opportunity to expertly invest the money of others in the killing machines of the future; the knowledge gained from those investments eventually migrating to commercial ideas that would boost growth. You can’t make this up. Cowen is serious.

 

As for the notion that countries somehow need the threat of war to achieve great scientific advances, or better yet, liberalize their economies, apparently Switzerland, Hong Kong, and New Zealand (among many others) didn’t get Cowen’s comical memo. With all three, no credible voice in modern times has argued that either faced war or imminent attack that would have “focused” the attention of their politicians on the way to economy-boosting liberalization, or, if Cowen is to be believed, political advancement of “technological invention” and greater “internal social order” supposedly needed for major expansion.

 

Indeed, what all three remind us, and it’s something seemingly lost on Cowen, is that economic growth is really very simple. We all have myriad wants and needs, our production is our demand, so when governments remove the barriers to production, the individuals who comprise any economy tend to thrive.

 

Thinking about the U.S. economy with the latter in mind, our economy is presently limp not because we lack some national, war-mongering purpose (apparently Cowen forgot all the national initiatives of the 20th century that robbed the world of well over 100 million people), but precisely because our political class has violated the four basics (taxes, regulation, trade, and money) to economic growth.

Read Tamny's full 'attack' here

 

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Tue, 07/01/2014 - 19:29 | 4915697 buzzsaw99
buzzsaw99's picture

the real problem with the "war is good for the economy" fallacy is that so many powerful people believe it and thus make it so

Tue, 07/01/2014 - 19:33 | 4915711 Jannn
Jannn's picture

Guest Post: Are The Chinese Ghost Cities Really Empty?

http://www.ingoldwetrust.ch/guest-post-are-the-chinese-ghost-cities-real...

Tue, 07/01/2014 - 19:45 | 4915756 Quinvarius
Quinvarius's picture

Well.  That ends the stupid ass ghost city meme.  On one hand you have real estate prices high in China.  On the other you are told no one wants to live in a brand new city.  And now you see the cities are actually filling up with some percentage of the billion Chinese that live in the country.  Meanwhile, Detroit can't even keep the water running.  Americans don't register how low they have fallen in so many ways.  And then we have Obama.

Tue, 07/01/2014 - 20:39 | 4915929 Freddie
Freddie's picture

It might help if those feral people paid their water bill.  Endless welfare and dependency.  Like banksters and corporations.

Tue, 07/01/2014 - 21:29 | 4916122 Escrava Isaura
Escrava Isaura's picture

buzzsaw99  …. war is good for the economy" fallacy is that so many powerful people believe”

Buzz, sorry, but I believe you’re wrong.

Powerful people ‘smart-class’ don’t believe wars are good. It scares them to death. What they believe is that, the American people are too fucking dumb.

The ‘War’ propaganda machine started by England on the ‘American Intellectual’ class during Woodrow Wilson’s presidency. The British needed American involvement. That PR was a great success. It got US on WW-1. And the dumb Americans went along with. It’s very easy to manipulate ill informed, self-delusional.

Tyler Cowen is just using the same strategy [PR]. And he’s not targeting the ill informed masses. He’s targeting the self-delusional elites.

Wed, 07/02/2014 - 11:36 | 4917854 Urban Roman
Urban Roman's picture

It might also help if fhose feral people didn't rip the water pipes out of their houses and sell them for scrap.

There's a popular meme running around about 'private ownership', which has metastasized into bankster ownership of a large hunk of all real estate. Well, private ownership is good, but foreclosure and possession by megabanks is not private ownership. And, not having any skin in the game, these feral humans simply scavenge.

Therefore, no water. Soon no city.

Tue, 07/01/2014 - 21:26 | 4916112 buzzsaw99
buzzsaw99's picture

Detroit has a superabundance of both water AND deadbeats.

Tue, 07/01/2014 - 21:51 | 4916195 Antifaschistische
Antifaschistische's picture

Put it in this very simple way....

If you live on a 50 acre island with 20 people...and limited resources (including water), it is theoretically possible to increase your own family (of 5) "wealth" by crushing the demand of the other 15 people.   On the island, this is more difficult without just killing 1/2 of them, but that works too.

In modern economies it's easier to kill demand through economic destruction...this will free up more of the worlds resources for the one left less destroyed (e.g. oil, steel, cement, lumber).

It is this economic destruction which is beneficial for the minority.  At a macro level...destruction by definition can't produce wealth...but in a world where no one cares about macro, and we only care about the cubic footage in our own homes....destruction works.  (sanctions, boycotts, restricted trade, and bombs)

Tue, 07/01/2014 - 19:51 | 4915778 NOTaREALmerican
NOTaREALmerican's picture

China has to be seen to be believed.   I was there two years ago.   Most Americans can't wrap their brains around the how modern Chinese cities are.  

Good link.  

Tue, 07/01/2014 - 20:41 | 4915937 NoPension
NoPension's picture

I'm curious. When these cities are built, quickly by our standards, is adequate infrastructure ( water,wastewater, power plants ) also built? And do these plants sit idle, while the cities are relatively vacant?

Wed, 07/02/2014 - 05:48 | 4916945 messystateofaffairs
messystateofaffairs's picture

Good link, thanks, I just got an education.

Tue, 07/01/2014 - 19:38 | 4915729 NidStyles
NidStyles's picture

I think it's more that they believe their positions are threatened with more peasants around than normal and a less than competent policing force. Gotta thin the herd a bit you know ;-)

Tue, 07/01/2014 - 19:56 | 4915791 LetThemEatRand
LetThemEatRand's picture

The fundamental problem with the war is good memo is lost on the Mises Institute.  The fundamental problem is anyone who believes that the starting and ending point for discussion about how humanity should interact is based in economics.   

Tue, 07/01/2014 - 20:01 | 4915819 Hugh G Rection
Hugh G Rection's picture

War IS good... For Israel, when they manipulate the USA into fighting their enemies for them after using Mossad and their sayanim to blow up a few skyscrapers.

http://zionismsucks.com/2014/07/01/911-israeli-zionist-job/

Tue, 07/01/2014 - 20:05 | 4915827 NidStyles
NidStyles's picture

It's is more than plainly obvious you have never touched a single page that Mises ever wrote, much less so for Rothbard, Menger, or Hoppe. 

 

Tue, 07/01/2014 - 20:13 | 4915844 LetThemEatRand
LetThemEatRand's picture

Always the comeback for you guys as with all religions.  And didn't I see you on an earlier thread claiming martyr status for having joined the U.S. military and fighting terr'ists?  And yet I seem to recall you said in other threads that you only joined for the free training (that we taxpayers funded) and never believed in the fight.  You're welcome for funding your free training.  I am quite sure you read these guys, because they are expert at covering the kind of utter hypocrisy that defines you.

Tue, 07/01/2014 - 20:17 | 4915862 NidStyles
NidStyles's picture

See there you go straight to the Ad-Homs while professing intimate knowledge of Austrian School and what Mises said while demonstrating obvious ignorance on what Mises actually said about  the "war is good" topic of the article.

 

You continually display this fallacy based approach by using personal attacks to cement your position that is already on shaky ground without close examination, do you really want me to drag you out onto the street and display your real motivations for commenting the way you do? Would you be embarrassed by further continuing this exchange? 

Just remember, you are the one lying about me and your knowledge of the work done by the Austrian School economists. 

 

Also, comebacks are what children do. This is called a discussion. Well at least on my side it is. 

 

Tue, 07/01/2014 - 20:18 | 4915874 LetThemEatRand
LetThemEatRand's picture

Okay, Nid.  I'm lying and using ad homs and I obviously just haven't read the good books closely enough.  

Tue, 07/01/2014 - 20:20 | 4915878 NidStyles
NidStyles's picture

I doubt you've ever picked up a single copy of Human Action and read it completely through. If you had, you would be aware that the answer to your question was in the first, second, and fourth chapters. 

Tue, 07/01/2014 - 20:21 | 4915885 LetThemEatRand
LetThemEatRand's picture

Shall we pray?

Tue, 07/01/2014 - 20:25 | 4915893 NidStyles
NidStyles's picture

You can do whatever you wish. It's none of your business what I will be doing.

Funny considering Mises made a great argument against the religious pre-case for the state. I forgot though, you support the actions of the state as long as it is acting in your best interest. BTW that is another aspect of discussion of what Mises wrote about in Human Action.

 

If you want I could tell you about Einstein's work as well. He was a very prolific writer for an Empiricist. 

Tue, 07/01/2014 - 21:53 | 4916202 Escrava Isaura
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“Religion is a system of wishful illusions together with a disavowal of reality, such as we find nowhere else but in a state of blissful hallucinatory confusion. Religion's eleventh commandment is "Thou shalt not question."

The Future of an Illusion, by Sigmund Freud — 1927

Tue, 07/01/2014 - 21:57 | 4916211 nmewn
nmewn's picture

You do realize, Freud was a coke head right? ;-)

Tue, 07/01/2014 - 22:01 | 4916225 LetThemEatRand
LetThemEatRand's picture

Freud ad hominem.  Excellent.  :) (: ... ///

Tue, 07/01/2014 - 22:07 | 4916239 nmewn
nmewn's picture

Mmm, no doubt something to do with his mother relationship.

Too coy?

Tue, 07/01/2014 - 20:16 | 4915864 Chaffinch
Chaffinch's picture

If you measure everything is terms of "economic growth" then I can see how war 'works': massive demolition projects with no expensive health and safety issues and no long expensive public enquiries about whether it is going to be bad for the environment or whether we are blowing up national monuments which should be preserved for all time; kill a high number of young relatively unskilled members of the population (it used to be young soldiers in the front line but now it is more likely to be civilian 'colateral damage') avoiding high levels of youth unemployment; have medicine practiced in field hospitals where patients consider themselves lucky to be bandaged and on a stretcher in a long line waiting to be seen; avoid the expense of having too many people living into their 90s with all sorts of expensive illnesses; businesses all turn to production for the war and make profits, using cheap labour prepared to work double-shifts for low pay because they want to do their patriotic duty; fund such businesses by getting savers to accept long term low interest rates for War Bonds because that is the patriotic thing to do; have everyone accept austerity because it is necessary to defeat 'the enemy' - pure Orwellian nightmare...

Tue, 07/01/2014 - 20:51 | 4915953 deflator
deflator's picture

 yep, WAR = power grab

 I think Oligarchs bet each other a dollar that they could elect a U.S. President from bumfucked Nairobi and still push markets to all time highs.

Wed, 07/02/2014 - 00:30 | 4916686 goldsansstandard
goldsansstandard's picture

Nasem Taleb in his book anti fragile makes the case for decentralized everything.

Reluctantly he conceded that the anti fragile thesis included the advantage of many small wars as being perhaps better in the long run than a centrally imposed peace that eventually collapses into a conflagration.
Interesting anti empire thought

Tue, 07/01/2014 - 19:30 | 4915702 centerline
centerline's picture

And they are both wrong. Perhaps someone should investigate the simple concept of "growth."  Hmm... and draw some parallels to oil/gas.

Tue, 07/01/2014 - 19:30 | 4915704 cougar_w
cougar_w's picture

Because of its tie to the intersection of money and governance, all of economics equates to criminality in one form or another.

Waging war for profit is just removing the window dressing, is all.

Tue, 07/01/2014 - 19:36 | 4915719 robnume
robnume's picture

Read Chris Hedges, "War is a Force Which Gives Us Meaning".

Tue, 07/01/2014 - 19:37 | 4915726 NOTaREALmerican
NOTaREALmerican's picture

Don't forget that war makes the male's dicks swell.   And swelling dicks make for confidence.   And confidence causes optimism.   And optimism is just a hopium particle dedected.   And the 2nd law of bullshit tells us:

When two hopium particles fuse it results in bullshit.     And,  just looking at economics, we can all see the power of bullshit.   It's unlimited!  

Tue, 07/01/2014 - 19:56 | 4915790 HoleInTheDonut
HoleInTheDonut's picture

What part of a female swells with war?  Just wanna know in case Hillary actually becomes president.  Ass? Boobs?  If she developed something like a J-cup, I might not be able to resist voting for her.

Tue, 07/01/2014 - 20:05 | 4915829 Miffed Microbio...
Miffed Microbiologist's picture

Sorry but that just made me ill and I was looking forward to a nice dinner. As a female, my war inclinations lean toward defensive which I believe is normal for my sex. If Hitlery "swells" for war, she could play a part in the remake of The Crying Game.

Miffed;-)

Tue, 07/01/2014 - 21:00 | 4916003 deflator
deflator's picture

 yeah all defensive with stop, don't. I mean it stop! Don't! Stop! don't stop...

Tue, 07/01/2014 - 19:42 | 4915747 Colonel Walter ...
Colonel Walter E Kurtz's picture

Crap...and here I was hoping for more peace dividends in my investment account!

Tue, 07/01/2014 - 19:48 | 4915768 Atomizer
Atomizer's picture

Surprised that he didn't have time to hashtag the message with FOTUS.

Tue, 07/01/2014 - 19:50 | 4915776 ebworthen
ebworthen's picture

O.T. - but ABC Evening News reporting:

"Good news for your 401K!  Markets hitting all time highs!"

Yeah, sure; everything is fine, go buy something, and let's start another war!

To the moon!  Only growth and consumption and more growth!

Never-mind the Constitution!  Forget the bailout retribution!

Borrow!  Spend!  CONSUME!

Tue, 07/01/2014 - 19:56 | 4915788 Reaper
Reaper's picture

The NYT is an official government apologist. Krugman wanted aliens to attack so as to grow the economy, but Cowen will settle for a common war. Lots of broken windows, injured and dead humans, and lots of military equipment destroyed and replaced. Is this is a trial balloon to justify Obama's coming new war? Cowen is a demented economist trying to revive the Obama/Bernanke/Yellin failed economy.

Tue, 07/01/2014 - 19:58 | 4915803 magpie
magpie's picture

The USA still has a lot of equipment to gift the Caliphate with...outright war ? Perhaps over Ukraine, perhaps over Mexico to get more citizenismo...

Wed, 07/02/2014 - 00:39 | 4916353 DC Exile
DC Exile's picture

Cowen is based out of George Mason Univeristy Mercatus Center near Washington, DC. A supposedly proto-libertarian think tank heavily funded by Koch money.

Is this the best economics Koch money can buy? There must be a good reason he wrote this. Something big is brewing on the war front.

Tue, 07/01/2014 - 20:04 | 4915828 Offthebeach
Offthebeach's picture

We had The War On Hunger, now the sheeple are fat diabetics wallowing to the dialysis clinic twice a week.
We had The War On Urban Blight, but there is only so much Union Mafi Contractor $3,000 replacement windows and 10x10 $100k kitchen cabinet jobs to go around.plus whitey left for the burbs leaving justSSoweto riot cop jobs, hack pill doc clinics clearing 10 mil a year, and minority used-to-do-nails-but now-bee-stabbing fleebottomus jobs.

Commies all went Crony Capitalist.
Muzzies just be jacked.
War on Global Warming has flopped.

WTf!

Layoffs at Milo Minderbinder Industries!

Tue, 07/01/2014 - 20:58 | 4915857 Wait What
Wait What's picture

i guess this is the point where questions of economics (its utilitarian-behaviorist philosophy) vs morality (just cuz it's logical doesn't mean its right) start jumping to the fore. it's not just about having a lot of 'wealth', but allocating it in such as way as to increase it further while maintaining its heirarchy.

like anything that grows on earth, a wealth tree too top heavy will soon topple over.

Tue, 07/01/2014 - 20:26 | 4915899 quikwit
quikwit's picture

What is it good for? Absolutely nothing!  Ahan...

http://www.youtube.com/watch?v=01-2pNCZiNk

Tue, 07/01/2014 - 20:40 | 4915932 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

American exceptionalism certainly worked out for Iraq and I hear that the Pentagon made so much money that they could not account for $1.3 Trillion of it and seemed to not know where it went?

lol

p.s. If American wars are so profitable then why are you so immersed in DEBT? Just try selling us on another war and see what happens.

 

Tue, 07/01/2014 - 20:48 | 4915966 fukidontknow
fukidontknow's picture

New Zealand is not a very good example - we've joined just about every war it's how you sell milk. 

Tue, 07/01/2014 - 21:08 | 4916050 Spungo
Spungo's picture

To be fair, war and the threat of war does drive a lot of innovation. Almost everything we know about rockets and jets is from military research. The first probe in space, the first man in space, the first dog in space, and the missions to the moon were entirely driven by dick waving. Ever notice how the space race suddenly stopped when the cold war ended? A lot of stuff related to computers was driven by military research. Internet, VPN, and onion routing (tor) are all military inventions. The American interstate highway system and the German autoban were created so military equipment could be quickly moved across the country. GPS was a military creation. Spy satellites evolved into Google Earth.

I think "green energy" will be the next big military project. Anyone who isn't completely retarded knows that relying on foreign oil is a huge threat to national security, and it pulls us into neverending bullshit wars. China understands this very well, and that's why China is leading the way in wind and nuclear power development. Maybe we should do the same. Spending 1 trillion dollars on nuclear and wind power resarch seems like a better investment than doing whatever the fuck we did in Iraq for the past decade.

Tue, 07/01/2014 - 21:16 | 4916077 Libertarian777
Libertarian777's picture

all who believe war is good for the economy, i will buy you an AR-15 and send you off to Iraq personally. Come back when you're ready to tell me how much better my life will be.

I guess if you're maimed its better than if you're dead, think of all the healthcare jobs!

Thu, 07/03/2014 - 17:18 | 4922830 PhilofOz
PhilofOz's picture

> Good for the economy

> Good for the elite

War, who is it really good for?

Tue, 07/01/2014 - 22:17 | 4916287 gcjohns1971
gcjohns1971's picture

And, skipping to the punchline, the war will be on...
...us

(as in everyone who works for a living rather than eating taxes or collecting welfare).

Because they really are stupid enough to bite the hand that feeds them over, and over, and over.

And who is to blame?

Why do we keep feeding them?

Tue, 07/01/2014 - 22:28 | 4916335 AdvancingTime
AdvancingTime's picture

The catalyst for war has not been diminished as many people have hoped it would once the world matured. National pride, political agendas, religious and ethnic hatreds are some of the biggest roadblocks to world peace. Often we seem to forget as we look back to World War II and past a dozen "lesser Conflicts" peace has been the exception rather then the rule for hundreds and thousands of years.

The true reality is that across the world few mothers want to see their children killed and most farmers want to be left along to raise their crops and earn a living. More on the subject of war as a solution to conflict in the article below.

http://brucewilds.blogspot.com/2014/05/war-and-what-is-it-good-for.html

Tue, 07/01/2014 - 22:43 | 4916380 DaveA
DaveA's picture

"so when governments remove the barriers to production, the individuals who comprise any economy tend to thrive."

That's true, but governments won't remove the barriers to production unless forced to, and the only thing that can force them to is war. E.g. the New Deal was a dog's dinner of idiotic policies prolonging the Great Depression, and Hitler forced Roosevelt to end it.

Of course, dragging one hundred select Washingtonians into the street and shooting them would achieve the same effect much more humanely, but we know that's never going to happen.

Tue, 07/01/2014 - 22:46 | 4916387 esum
esum's picture

WAR IS NATURE'S WAY

Wed, 07/02/2014 - 04:48 | 4916913 falak pema
falak pema's picture

In our modern age Economia has become the other way of achieving political aims; just as during the Napoleonic age the Grand Army used war to achieve the nation's purpose (or more appropriately that of its head man, son of Enlightenment AND Absolutist Emperor. -- Only the French can invent that variety of cheese!-- ).

Today, Pax Americana uses the petrodollar weapon of mass destruction concocted by the FED in total "exorbitant privilege" cum "our money your problem" type "big stick" protected hubris.

No wonder Economia is "haunted by fallacies" just like war and heads to its financial Berezina.

Putin is playing at Marshall Kutuzov, with the Pax Americana's petrodollar now looking like its heading to globally concocted, shamanist, "debt is wealth" type fallacious territory. 

Scorched earth Gazprom threat to Eurozone will prove that all is not quiet on the western front! Just like Iraq-Jihadistan is now making the sacred Oil patch stink of other smells than those of bubbly black gold. 

Play on Economia. 

 

Wed, 07/02/2014 - 04:47 | 4916914 messystateofaffairs
messystateofaffairs's picture

Gotta go now. I need to run out and get a student loan so I can get an economics "education" from "Professor" Cowan at George Mason University. I'm sure they can print some money to lend me into usury so I can come out an indebted fucking idiot and help the NWO on it's noble mission as a useful idiot like my esteemed "professor".

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