The False Economy of War

Fascinating interview with Robert Pollin, a professor of economics at the University of Massachusetts-Amherst and founding co-director of its Political Economy Research Institute (PERI), quite persuasively debunking the persistent myth in American political discourse that the military is an essential driving force in the U.S. economy and a vital necessity for the development of innovative commercial technologies.

In the first part, the contention that it was WWII that ended the 1930s Depression and its present corollary that expansion of the war in Afghanistan may likewise have a beneficial stimulative economic effect is examined. According to Pollin, it’s not so much a question of whether war itself is effective means of boosting the economy (quite the contrary according to the statistical analysis), but that it’s the only thing that seems capable of generating the kind of bi-partisan political will to engage in massive, albeit inefficient, deficit spending.

In the second part of the interview, Pollin expands on his assertion that the money being generously funneled into military expenditures would actually produce better economic outcomes if they were invested in domestic social programs (e.g., education, healthcare, etc.), infrastructure development and innovative research programs. Unfortunately, such forms of public spending are conventionally regarded with derision as wasteful expressions of “big government” whereas, through some schizophrenic intellectual legerdemain, military expenditures are viewed as necessary investments made by a distinct entity that are absolutely vital to national security, etc. (even though it’s indisputably just another creature of government)

The irony of course, as pointed out by Pollin, is that the development of new technologies within the framework of the military-industrial complex circumvents all the usual rigors of the vaunted “free-market” through the closed loop of the military procurement process that practically guarantees a highly profitable return on investment for even the most harebrained, massively unproductive, and grotesquely wasteful schemes.

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5 Comments

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5 responses to “The False Economy of War

  1. I am a two tour Vietnam Veteran who spent 36 misguided years thereafter working in the military industrial complex on many of the weapons and communications systems our troops are using as we speak.

    Whether or not the average US Citizen knows it, the United States is creating the second-largest government/industrial complex in our nation’s history. It is envisioned as a tail of bailouts to the financial industry, the automotive industry and others who show up with their hands out and their lobbyists in tow. It is also comprised of state governors who are poised to invent yet another form of pork with federal representatives and senators at their sides while raising local taxes for the citizen back home. This speculative panacea cannot survive.

    HISTORY

    The longest running and largest consortium of this type is the US Military Industrial Complex (MIC), funded historically at an amount many times the Wall Street and automotive bailouts combined. It is the elephant in the room in the burgeoning financial crisis, carrying the weight of wars, weapons systems and a pentagon/corporate financial relationship based on cost plus and time and material contracts since World War II.

    IMPORTS AND EXPORTS

    We are importing goods and services and borrowing money from the Chinese, the European Union, Japan, Korea, India and other developing countries at a rate unmatched in our history. Loan proceeds are being used to fight wars and bail out our bankers, car makers and state governors.

    Our largest export today is our public debt and our credit rating is slipping.

    FACTS

    The MIC will be scaled down by collapse. The Russian MIC led to that country’s financial demise. It is now apparent that we did not outspend the Russians at weaponry and interventions. We simply had a better credit rating that is now maxed out

    The other government agencies will be re-scaled and downsized as well but not by any specific action taken by the pending or future federal establishment. The over 50 entities that make up the federal government, together with their corporate outsource services, will be shrunk dramatically because the US is broke. The feds will fight to preserve the artificial reality, but US financing and credibility on the world stage are drying up and the creditors are suffering.

    No new administration can change the above facts by riding on the taxpayer’s back with “Social Improvement”, ” Public Works” and “Creating Democracies in Other Countries” mantras. Such policies in the past have led to foreign interventions, thousands of young soldier’s s, bureaucratic growth in Washington and bloated corporations performing low quality service contacts.

    Annual budget deficits and the national debt are at intolerable levels.

    ECONOMIC REALITIES

    The US will come home from military adventures abroad because it will no longer have the money to run them and it will cease bailing out failing commercial establishments because there will be no funding for that.

    The US will re-align priorities at the state and the national level much like all the little “Joe the Plumbers” throughout the country, who are toting skinny 401K’s without jobs. They represent the present and future tax base upon which this country will run. America will not spend its way out of this dilemma because there will be no cash or credit left to spend.

    The US will demonstrate financial prudence out of necessity, align spending with available revenue, downsize the federal government and its corporate cadre, cultivate technology and the small business base and take care of its most important constituent here at home – the average tax payer.

    The US will understand the above are not political objectives but economic realities that are here and now. World economics will not allow a new, financial, government/industrial complex to emulate or replace the MIC.

    Links:

    http://rosecoveredglasses.blogspot.com/2006/11/odyssey-of-armaments.html

  2. Rob

    Thanks for posting that, Red. Fascinating stuff.

  3. Ti-Guy

    through some schizophrenic intellectual legerdemain

    Or, more specifically, the perceived presence of an enemy to America’s way of life, almost if not completely fabricated.

    Although Pollin suggests that a political consensus around a non-military industrial policy would result in more efficient public spending, I’m at a loss to figure out how that could be brought about without the cinematic fear that seems to be the only thing that galvanises Americans.

  4. TofKW

    We will bankrupt ourselves in the vain search for absolute security.
    Dwight D. Eisenhower

  5. Tim

    There will only be a political consensus around non-military industrial policy after people agree Government has clear role to play in preparation for future health care, education and industrial resource planning.

    Kings of old had forest reserves laws to insure there would be a future supply of accessible lumber.

    ‘Forest’ was a legal term, and meant an area subject to special Royal laws designed to protect the valuable resources of timber and game (Vert and Venison) within its boundaries. These laws were strictly and severely imposed by agisters, foresters, verderers (wardens) and rangers, who were all were employed by the Crown.

    But the US, Canada are only now experiencing their first resource shortage. Managing scarce resources is foreign concept to us and plays no role in our industrial planning. We universally deny the obvious. Just as American car companies have twice denied that scarcity of low cost oil and twice lost heavily as a result. We deny that our ageing population has needs we must prepare for. We deny that resources are not unlimited. And we deny that inefficiencies and disregard for fowled land and water are the cause of our gross pollution. We deny these at our own loss.

    Are we so limited that we only plan for future wars! and nothing else!? We are so dammed and already dead! Is this our Existence.

    It seems pretty clear what to do. Look around and follow what works in other countries. That is big part of how the military decides what it should do. I know education bonds to insure a sufficient supply of health care workers are available to meet future needs is so simple it is boring. It doesn’t matter how health care is paid for if there is not enough health care professions, health care will be expensive and inaccessable!

    Military is necessary to insure survival, but what is more central to survival of apeople then health care and a nation than education.

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