Posts Tagged ‘MIlitary Keynesianism’

Can we do without military Keynesianism?

August 8, 2011

It is interesting how some people who disbelieve in the power of government to do anything about unemployment also believe there is such a thing as “war prosperity.”  During my life I’ve heard many people say that it was World War Two, not the New Deal, that ended the Great Depression.  To the extent that this is true, all it means is that the level of government spending in the 1930s was too modest.

Here’s a quote from Judson Phillips, a Tennessee lawyer who heads Tea Party Nation.

If we decided to build a couple of new carriers, thousands of workers would be hired for the shipyards. Thousands of employees would be hired for the steel mills that would provide the steel for the hull and various sub contractors would hire thousands. Do you know what that means?

It means they would receive paychecks and go out and spend that money. That would help a recovery. That is a shovel ready project!

Increasing spending for the military does a couple of things. It not only not only stimulates the economy, it protects our nation. That is a better investment than say spending money on teaching Chinese prostitutes how to drink responsibly.

via The Economist.

But there are those on the opposite side of the political fence who are just as inconsistent.  Many advocates of economic stimulus programs believe it is possible to make deep reductions in the armed forces and military spending without any adverse effect on employment and the economy generally.

If Judson Phillips favors military spending as a job-creating measure, and opposes spending on infrastructure construction to create jobs, that is inconsistent.  But many members of the Tea Party movement do in fact want to cut military as well as civilian spending.

The Obama administration is more in line with Judson Phillips than some of his fellow Tea Partiers are.  Defense Secretary Leon Panetta has warned against any real cuts in military spending (he favors only a slowing in the rate of growth) and says cuts should be concentrated on discretionary non-military spending as well as Social Security, Medicare and other entitlements.

I do not think the declining U.S. economy can sustain military bases and military operations all over the world.  I think the size and mission of the U.S. armed forces are excessive compared to what is needed for defense of the homeland.  But if the armed forces and military spending were shrunk to what is necessary, and nothing is else changed, this is going to raise the unemployment rate.   We need a change in priorities, not just cuts in spending.