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Are Military Contractors Buying Articles in the Post Now?

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Friday, 22 June 2012 16:14

Readers of an article that highlighted a study by the National Association of Manufacturers warning of the loss of nearly 1 million jobs due to cuts in military spending are undoubtedly asking this question. They no doubt remember a plan cooked up by the paper's publisher, Katherine Weymouth, to sell lobbyists access to its reporters at dinners at her house. This article essentially lent the paper's authority to a completely misleading study.

The basic story here is very simple, when you are in a severe downturn any spending creates jobs. If we spend money on schools and hospitals that creates jobs. If we pay people to dig holes and fill them up again, it creates jobs. And, if we pay people to build weapons for the military it creates jobs.

There is nothing magical about military spending in this story. In fact, research that was not paid for by the National Association of Manufacturers shows that military spending actually creates fewer jobs per dollar than other types of government spending.

When the economy is not in a downturn, then military spending destroys jobs. An analysis done for CEPR by Global insights showed that a long-run increase in military spending of 1 percent of GDP (roughly the amount spent on the war in Iraq in its peak years) would reduce the number of jobs by almost 700,000. The hardest hit sectors would be construction and manufacturing.

If the Post wanted to inform rather than mislead its readers, it could have just run a piece pointing out that cutting government spending at this point in the business cycle will cost jobs. (Raising taxes will also cost jobs, but not by as much, especially if the tax increases target higher income people who would not change their spending much in response to a decline in disposable income.)

In short deficit reduction right now will cost jobs. The politicians in Washington may not understand this fact, but the Post's reporters and editors should.

Comments (2)Add Comment
You Can Fool Some of the People Some of the Time ...
written by Last Mover, June 22, 2012 9:56
These clowns can't make up their mind. On the one hand any stimulus spending by government is claimed to crowd out private spending via the assertion it's only uncertainty and regulation holding back more jobs from the supply side. (This effectively lumps in stimulus spending as an essential component of uncertainty holding back the economy via a higher deficit and debt.)

Then when their favorite government spending shows up as the issue in question - the military - suddenly crowding out is abandoned like a forgotten orphan and the opportunity cost of said spending conveniently becomes lost jobs rather than some pet private spending somewhere that was crowded out.

Really, even the village idiot can figure this one out. If the military cuts go into effect, the uncertainty of government spending is lessened and by definition the now uncrowded private sector moves in with investment and jobs to take up the slack.

Who you going to believe, your lying eyes or NAM?
That's some good militarized Keynesianism
written by Yeah_No, June 23, 2012 7:14
I'm with Last Mover here. Consider Boeing. About a third of its revenue comes from government contracts. Shouldn't the Confidence Fairy be telling Boeing that with reduced military spending it can shift its aerospace engineers to its commercial airline departments?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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