War as Stimulus
Like most progressives, I find it extremely annoying that Beltway conventional wisdom exempts military-related expenditures from the normal rules of budgeting.
At the same time, in these days of recession it does occur to me that to some extent this is a two-way street. I’ve been inclined to complain that most of these more ambitious visions for Afghanistan, for example, don’t seem to meet any kind of reasonable cost-benefit test. After all, they could use better security, a Provincial Reconstruction Team, and a “civilian surge” in Newark, New Jersey. But if you take the hypocrisy of the political system as a given, this looks a bit different. At the end of the day, war expenditures don’t trade off with domestic expenditures, they trade off with increased levels of public debt. Under normal circumstances, that still means that military operations should be (though they generally aren’t) subject to real cost-benefit scrutiny, since higher debt levels has real social costs. But the basic progressive analysis of the current economic situation is that higher short-term debt levels are socially beneficial, right? The story is that World War II—at least from the perspective of the American economy—wasn’t a huge economically wasteful use of resources. Sure it was more wasteful (in economic terms, obviously the “beating Hitler” benefits were quite real) than some other possible projects, but it still on balance was helpful in ending the Depression.
ADDITION! Just after I finished writing this post, but right before I put it up, I saw Christopher Drew’s NYT story “High Costs Weigh on Troop Debate for Afghan War”:
While President Obama’s decision about sending more troops to Afghanistan is primarily a military one, it also has substantial budget implications that are adding pressure to limit the commitment, senior administration officials say. [...] Senior members of the House Appropriations Committee have already expressed reservations about the potential long-term costs of expanding the war in Afghanistan. And Mr. Obama could find it difficult to win approval for the additional spending in Congress, where he would have to depend on Republicans to counter defections from liberal Democrats.
I think that to an extent invalidates my musings above. I assume the reference to “senior members of the House Appropriations Committee” refers primarily to David Obey who’s expressed concerns about this.
19 Responses to “War as Stimulus”
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November 14th, 2009 at 2:33 pm
Defense Dollars™ aren’t fungible, like regular dollars.
November 14th, 2009 at 2:36 pm
Bolding everything on the page kind of defeats the purpose.
November 14th, 2009 at 2:40 pm
It’s going to cost a lot more than the immediate cost of the troops.
November 14th, 2009 at 2:45 pm
This works at Volokh, so let’s give it a try.
November 14th, 2009 at 2:49 pm
The U.S. government currently spends more to counter IEDs than it spends to counter cancer.
November 14th, 2009 at 2:55 pm
Please, Matt, end the bold tag
November 14th, 2009 at 3:20 pm
But of course stimulus is spposed to be only for that limited period of time when the economy is in the toilet, and the fed is up against the zero interest rate bound. It is fairly tough to turn off war spending once the economy rebounds.
Then we do have to be concerned about the long term effects of the accumulated public debt. This mainly results in pressure for more taxes, and pressure on spending. So it should be incumbent on us to spend stimulus on programs that give the most short term stimulus per buck of longterm debt incurred. But this went out the window with the shovel ready philosophy. But if stimulus were to do done based upon efficiency, we would be doing stuff like building public infrastructure which returns future revenue to the government, rather than just throwing money at makework programs.
November 14th, 2009 at 3:29 pm
The “strong” tag after “ADDITION!” is closed with “/stong” [I use quotes here instead of angle-brackets].
Of course when the typos get into the HTML, it’s just extra-Yglesian, I guess.
November 14th, 2009 at 3:38 pm
What are we to glean from MattY’s sudden new boldness? LOL!
November 14th, 2009 at 3:46 pm
Its the weekend so I guess none of thinkprogress’s interns are working?
November 14th, 2009 at 3:47 pm
It’s absolutely insane to think World War 2 defense spending was a benefit in any way other than “beating Hitler”. Sure, the unemployment rate dropped. But look at what happened to the actual quality of life for most Americans – we were subject to rationing of many/most common household items.
The absolute standard of living in fact held steady or declined during WW2, especially when you consider the standard of living of the 10 million conscripts who fought in the war.
http://www.independent.org/newsroom/article.asp?id=138
November 14th, 2009 at 4:06 pm
November 14th, 2009 at 4:49 pm
I beg to differ. The costs of endless military adventurism are only relevant because a Democrat is in the White House. When Real Men ™ sit in the Oval Office, it’s not possible to spend enough on “defense”, let alone too much.
November 14th, 2009 at 5:48 pm
You can’t begin to compare the stimulative effect of WWII to the stimulus of Afghanistan.
WWII war production efforts nearly DOUBLED America’s GDP. Afghanistan, on the other hand, is up to about a $60 billion annual cost–and the US has a $14 trillion GDP.
Afghanistan spending is not trivial. But it doesn’t even add up to a rounding error in our GDP. It’s also not nearly as efficient stimulus as dollars spent domestically, because there’s much less permanent effect–there’s literally no investment here. Money to build a bridge doesn’t only cycle through the pay to steel producers and welders, it also acts as an investment. It continues to pay us back for the next 40 years as people travel over it. When a bomb blows up in Afghanistan, its value is gone. This is consumption in perhaps its purest economic state. Literally, we are killing people–destroying human capital–as we blow up the stuff we make.
Would cutting back on Afghanistan spending have a counter-stimulative impact? Sure. But not very much. And if we were worried about that, we could more than replace it by spending a portion of the money we were going to spend on 40,000 troops in Afghanistan on something here in the US–training nurses, building bridges, whatever. Even peacetime military spending would be much, much less of a waste than $1 milllion per troop in Afghanistan. We could pick up some national guard helicopters or coast guard patrol boats. Or, you know, we could start inspecting things that were shipped in the US to make sure they’re not nukes?
November 14th, 2009 at 6:40 pm
If anyone believes the war was not a stimulus, just drive around Northern Virginia. The Iraq War did for the region what the Cold War did for Southern California, and it looks about the same, with obscure defense industries, freeways, and mega-malls, minus the palm trees.
November 14th, 2009 at 6:44 pm
THE ARAMCO CENTRAL ASIAN PIPELINE
[CIVILIAN SURGE]
Now, we just got thru reading a post on [www.ThinkProgress.Org.] by Matthew Yglesias, [War as Stimulus], and Matt has some pretty good comments on all his posting for a Progressive another term for Liberal Democratic, the boy sometimes comes pretty close to being an Independent Tea-Bagger. But, that having been said he made the observation that and we quote, [After all, they could use better security, a Provincial Reconstruction Team, and a “civilian surge” in Newark, New Jersey.] end quote. This statement could be said about more than Newark, [Detroit, part of L.A., parts of New York City etc.] and this could apply to areas in Europe, Asia, just about everywhere.
[THE ARAMCO CENTRAL ASIAN PIPELINE]
Now our boy Matt, was annoyed by the American-Israeli Empire hiding military-related expenditures in the various tax and spend bills that has always gone on, Ike got the Inter-State Road System build that way but that’s another story. The main idea of his thinking was hey guys we aren’t getting our moneys worth out of these wars of Resources and Markets [Stimulus Wars]. What Matt has forgotten is that [Af-Pak] was to be a War of Resources and Markets a [Stimulus War], In [1997], an Empire diplomat stated that Unocal oil company executives, with Empire government [DC/544] Democratic and Republicans Crooks and Criminals, approval had entertained, and met with Taliban leaders in Houston, Texas, and had offered them a generous cut of the profits of the oil and gas pumped through a [$2B] pipeline that the Americans wanted to build from Soviet central Asia, Turkmenistan through Afghanistan, to Pakistan and India, the Central Asian Aramco pipeline, a consortium of oil companies, the same that control Saudi Oil, with an emir to be put in place with lots of Sharia law, which the Oil companies are more than willing to live with.
[MORE MONEY HONEY]
But the whole thing went south it all went wrong an became an unprofitable deal, not only were there Taliban hold outs, [More Money Honey], the pro-Empire puppet government of Hamid Karzai, once having agreed to the Empire terms for the project, got together with the Taliban hold outs and they made him see the light that the oil companies were handing out chump change and Hamid was playing the Chump. So, the oil companies decided to have an election, to put in someone who would take the deal, and that didn’t go their way either. So now we see that [Af-Pak] is really a Blood for Gas, Oil, Resources and Markets, a [Stimulus War], the question is who is going to get what out of the Stimulus the Oil Companies or Hamid and the Taliban.
[TICKET SCALPING TO THE GAME]
So, [After all, they could use better security, a Provincial Reconstruction Team, and a “civilian surge” in Newark, New Jersey.] but there isn’t any Gas or Oil in Newark, New Jersey, or comedians like Bud and Lou asking Who’s on First, to stimulate Oil Company Interests. All we have is Harmid and the Taliban scalping tickets to the game, but the Unocal oil company executives, are tight wads with their cash.
HERCULE TRIATHLON SAVINIEN
Hard-Core Independent Tea-Bagger
November 14th, 2009 at 7:08 pm
sara: as a NoVA native, I have to say the Northern Virginia example is a great example of why defense spending is terrible as “stimulus”. The government is paying good money to highly skilled workers (engineers, for the most part) to destroy wealth by blowing stuff up on the other side of the globe. This is nominally good for the region, but is a net drain on the economy, because almost all of these workers would be able to find civilian jobs anyway.
November 15th, 2009 at 7:32 am
[...] Yglesias takes a look at the cost of war versus the economic benefits on the home front and comes to the standard meme that the financial burden of war might have some [...]
November 15th, 2009 at 10:49 am
I disagree with your main assertion: That defense spending doesn’t drive out domestic spending, it only increases debt. There’s a bit of a triangular effect, as the amount of debt we tolerate is constrained at about 5% of GDP. Once we get above that, lawmakers look for expenses to cut. Defense, of course, is sacred, so domestic programs take the hit.
That has pretty much been the story over the last forty years of fiscal budgeting.
I suggest that a decrease in defense spending would result in an increase in domestic spending till we hit the same cap on debt as % of GDP. I have no evidence to support this, though, as we haven’t seen defense spending decline since WWII.