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Home Publications Blogs Beat the Press Does the Right Hold the Economy Hostage to Advance Its Militarist Agenda?

Does the Right Hold the Economy Hostage to Advance Its Militarist Agenda?

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Saturday, 14 June 2014 06:35

That's one way to read Tyler Cowen's NYT column noting that wars have often been associated with major economic advances which carries the headline "the lack of major wars may be hurting economic growth." Tyler lays out his central argument:

"It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily. Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups. The Soviet launch of the Sputnik satellite spurred American interest in science and technology, to the benefit of later economic growth."

This is all quite true, but a moment's reflection may give a bit different spin to the story. There has always been substantial support among liberals for the sort of government sponsored research that he describes here. The opposition has largely come from the right. However the right has been willing to go along with such spending in the context of meeting national defense needs. Its support made these accomplishments possible.

This brings up the suggestion Paul Krugman made a while back (jokingly) that maybe we need to convince the public that we face a threat from an attack from Mars. Krugman suggested this as a way to prompt traditional Keynesian stimulus, but perhaps we can also use the threat to promote an ambitious public investment agenda to bring us the next major set of technological breakthroughs.

Comments (19)Add Comment
What would it take to change it?
written by Jennifer, June 14, 2014 9:09
This view does not claim that fighting wars improves economies, as of course the actual conflict brings death and destruction. The claim is also distinct from the Keynesian argument that preparing for war lifts government spending and puts people to work. Rather, 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.

Cowen's point is that only with a "war" does there appear to be enough support and organization to initiate, organize, and follow-through with major industrial projects. Other benefits have flowed from these major projects aside from the stated primary purposes.
Unfortunately I think there is more truth to this column then some would like to admit. Yes, as you say there is a lot of "liberal" support for such government projects but the fact that so few have occurred independent of war should give people pause. It can be argued it's a failure of organizing on the left but the larger issue is that the entire economy has been built around military spending-even Bernie Sanders has to defend it from time to time-and it will take a tremendous effort to change that dynamic. It's not that most average people are supportive, it's the oligarchs and the elites of society that benefit the most.
Also I take issue with your title-it is the "right" that is holding us hostage? If we are talking about politicians and the people who are elected war-mongering, in its various forms, it is undoubtedly a bipartisan exercise. http://alj.am/1j6OWlj
...
written by Larry Signor, June 14, 2014 9:11
This argument takes US deep into the psychological weed patch. Perhaps we need to fix what we got before we worry about expansion. Maybe paint and clean the house, so to speak.
When Two Wars are Better than One - When the First One Didn't Cost Enough
written by Last Mover, June 14, 2014 9:12

Exactly. As John McCain put it, America won the the Iraq war and Obama lost it.

Any economist knows one of the great strides of that war was to keep more wounded alive with speedy application of medical advances.

America needs to restart the Iraq war to create even more advances and expand existing ones to all of its citizens.

After all, how will America possibly increase its average lifespan to match that of other developed countries who did it with single payer instead of war?

If only McCain had won. The one war would have cost twice as much compared to two less efficient consecutive wars, but still paid for itself with those wonderful side effects like the internet now cannibilized by monopoly predators in the private sector.

Keep the Iraq war going America. The side effects alone are worth it.
The Right holds EVERYTHING hostage
written by ifthethunderdontgetya™³²®©, June 14, 2014 9:26
.
to promote its agenda.

E.g. Opposing the Republican health care plan, because a Democrat was getting it passed. And packing the courts with Federalist Society judges. And getting rid of Roe v. Wade:

http://theadvocate.com/home/9442973-125/jindal-signs-abortion-restriction-law
~

NPR yesterday: Dems and Repubs equally obstructionist, blocking change.
written by jaaaaayceeeee, June 14, 2014 9:47
Scott Horsley in "All Things Considered" yesterday, had Congressional scholar Sarah Binder of Brookings, tell us that opposition to the each other's party is now the norm, even if Republicans perfected the strategy of obstruction:

http://www.npr.org/2014/06/13/321778933/cantors-defeat-brings-an-end-to-prickly-relationship-with-obama

Guess there's no difference between the parties, policies are just for keeping score between nemeses, and it's never about money.
A simple question for one of our best Economists.
written by bailey, June 14, 2014 9:48
Why do Economists refuse to define "inflation" using real prices (as opposed to ones conjured from thin air) and demand it correlate to a population sampling, any population, any size?
...
written by skeptonomist, June 14, 2014 10:02
This is more than a right-left issue - when there is a genuine foreign threat everyone comes together. After 9/11 George Bush's approval ratings went up almost to 90%, obviously an indication of common purpose rather than real approval of the man. Although capitalists are often accused of war profiteering, in WW II many CEO's worked for a dollar a year and severe excess-profits taxes were passed. A foreign threat causes an instinctive reaction to work for the collective good (of the tribe) which is absent during peacetime. Nothing brings people together more than killing foreigners.

This drastic change in motivation is one of the many things about psychology which main-stream economics tends to ignore. All the "incentives" which economists think can be used to control economic behavior are of little importance compared to certain group-psychological factors.
bipartisan
written by Peter K., June 14, 2014 10:06
@ Jennifer it's bipartisan because the right blocks the non-war related spending.

Cowen:
"The claim is also distinct from the Keynesian argument that preparing for war lifts government spending and puts people to work. Rather, 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."

"Liberalizing" the economy? As in making it more liberal? But that's not distinct from "the Keynesian argument that preparing for war lifts government spending and puts people to work."

Did they "liberalize" the economy during WWII? I thought they put rationing and price controls in effect.
...
written by skeptonomist, June 14, 2014 10:17
One reason that the US economy has been more stable since the Depression is probably the greater share of government, of which military spending has been a major part since 1941 (the wizardy of Fed Maestros is not a plausible explanation for this stability). This spending at least tends not to be pro-cyclic, unlike expenditures of state and local governments. Of course the existence of the military-industrial complex makes it easy for jingoistic politicians to get the country involved in adventures which have no good purpose. Too bad we can't seem to have a scientific-industrial complex which has footholds in every state like the military-industrial complex. Here the anti-scientific attitude of the right may come into play.
A Real Jobs Program
written by Larry Signor, June 14, 2014 11:55
We should look to the ideas like the Interstate highway system for a comprehensive economic fix. The concept of war as an economic driver is an oxymoron, at best. Sort of like eatin' your milkin' cow.

http://fraser.stlouisfed.org/d...sdeb33.pdf
Unbehagen
written by John Parks, June 14, 2014 12:14
That we can even contemplate and discuss war, or the preparations for war, as an economic stimulus
says a lot about our society and the world we have
created.

We can not even contemplate the alternative without using the term "moral equivalent of war" which is a really sick oxymoron.

Larry Signor's term "psychological weed patch" seems very valid.

..........as does "pathocracy"
...
written by Slugger, June 14, 2014 12:32
Is this the time to dust off a VietNam era slogan: " War is good business; invest your son "?
I did not find any mention of military service in Dr. Cowen's bio on Wikipedia. Perhaps, he has some children who could serve as cannon fodder.
Seriously, is not this the classic Marxist caricature of the modern liberal capitalist/Keynesian state? Don't deeply red people say that Western society is heated by throwing people into the sacrificial furnaces of the Moloch of War?
Global Warming
written by jonny bakho, June 14, 2014 3:02
Global Warming should be that threat that we all recognize and go to war against.
Wars get support because the well connected wealthy special interests can get lucrative no-bid contracts.
Global Warming doesn't because it carries short term costs and rewards are long term.
Lets replace the War on Terror and the military with insurance
written by John Wright, June 14, 2014 5:52
Let's put the dismal science of economics to use in reducing the USA military footprint.

I want to suggest the USA should consider replacing much of the military budget with a US citizen "death by foreign terrorist" life insurance policy and use the freed up military funds for medical, energy, industrial and agricultural research for the benefit of the entire world.

Here's how it would work.

Announce that every USA citizen is covered by a free $10 million "death by foreign terrorist" policy within the USA's borders.

So if a foreign terrorist causes a US Citizen's death, on USA soil, as determined by a "Foreign Terrorist Death panel" the US citizen's estate would receive $10million, tax free from the US Government.

Home grown mass murderers wouldn't count, but could be added if a citizen desired at additional cost.

The 3,000 deaths of 911 would have resulted in a payout of $30 billion, which is a small fraction of the cumulative military expenditure on the War on Terrorism.

The freed up military budget money/homeland security money could then be used for basic research for medical, industrial, energy and agricultural breakthroughs.

The USA could share this research with the rest of the world, which would probably be more warmly received than the current USA military actions.

After all, when was the last time the USA was invaded by a foreign power with the intent to conquer and change the government?

It wasn't Vietnam, Iraq, Germany, Japan or Spain.

It was the USA's now ally, the British in 1812.
...
written by Alex Bollinger, June 15, 2014 5:40
It really does say something about the psychology of the right that we can't have nice things unless we promise to kill people.

These folks were probably the kids my parents told me would end up in prison once they turned 18. Instead they ended up in Congress when they turned 40.
1812 Invasion?
written by aj oliver, June 15, 2014 2:49
Mr. Wright wrote, ". . the last time the USA was invaded by a foreign power with the intent to conquer and change the government?". . "British in 1812"

Not exactly; the War of 1812 was declared by the U.S.. It was our first war of choice. The initial attack was by the US against (what would become) Canada. This is the 200th anniversary of the Battle of Plattsburgh, to which Mr. Wright refers. Big commemorations planned on beautiful Lake Champlain.

War is the ultimate "redistribution" of wealth, health, and property to the ONE PERCENT. We could easily rebuild the entire planed into a garden spot were it not for that peculiar institution.

This message brought to you by Veterans For Peace
Some technicalities about 1812
written by Shawn Wilkinson, June 15, 2014 7:15
The War of 1812 was the last time a European army occupied portions of our country.

Mexico did lead a foreign army and captured a fort in Texas in 1846, but if I recall correctly Texas was not quite a state during that conflict.

In terms of modern military tactics, Japan did attempt to fire bomb a forest in Oregon using a fold-able plane that could be housed in a submarine and launched via catapult. They successfully made a few craters, but the forest is too damp in the fall to support any large-scale forest fires.

I have a hard time accepting his thesis that only great inventions come out of the need to obliterate your enemy (or prevent obliteration). The printing press comes to my mind, since it was probably motivated more by lack of laboring monks due to the plague versus the need to write angry letters to your enemy.
More foreign military incursions on US soil
written by John Wright, June 15, 2014 8:49
The Japanese did shell, via submarine, the Ellwood Oil Field in 1942 in the area of Goleta California (near Santa Barbara), the first direct attack on the US mainland since 1812.

http://en.wikipedia.org/wiki/Ellwood_Oil_Field

The Japanese also captured two Aleutian Islands belonging to the Alaska territory in June 1942.

Google for "Aleutian Islands Campaign"

I believe future international historians will be surprised by the total military expenditures by the USA when geography afforded so much inherent separation from conflict.

This is "Military Keynesianism" that can be supported by both Democrats and Republicans.

And the conservatives who claim "government does not create jobs" are silent when it comes to government funding military jobs in their districts.

If hypocrisy were an illness, many politicians would be demanding the government fund a cure.
Economic benefit depends on who won and who owns
written by Jim Hannley, June 16, 2014 1:58
If your country is the one bombed and fractured, war is definitely not beneficial. Cowen makes the distinction between "war" and "preparation for war", it seems in his survey of the literature on the subject. I agree that "the right" does not support government spending unless it is for war; witness Sen. Lindsay Graham calling for Iraq war II. He does not mention costs and doesn't insist on spending offsets as he does when peace time government spending is proposed. The one encouraging element of Cowan's article is the graph of conflict deaths/100,000 population; evidently, the world is becoming a safer place. Graham nor his cohorts in the Senate GOP never raise the issue of the $56B spent on the war in Iraq all of which was unfunded; borrowed. Conversely, the Affordable Care Act will prove to be an economic boon because the health insurance industry now has a 20% limit on administration costs and millions of new healthcare consumers have been created. Those consumers will access healthcare in a more orderly, preventive mode and ultimately will greatly reduce costs since preventable illness is cheaper than treating full blown ones. The ACA is paid for, too.

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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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