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Do economists actually like war? Yes.

June 17, 2014 by Jeff (ILoveCapitalism)

A key fallacy of mainstream economics today is its belief that all economic activity is good activity. Quality doesn’t matter. We must “stimulate” the economy to get those GDP numbers up, and all will be better. It doesn’t matter if we rack up endless debt, only to pay people to dig holes and re-fill them or to re-build cities destroyed in war.

It sounds like I’m exaggerating, doesn’t it? Many economists would scoff that I am. Except I’m not.

For example, Paul Krugman and other neo-Keynesian economists claim often (and wrongly) that the destroy-and-spend of World War II is what pulled the world out of the Great Depression. Krugman has called for housing bubbles and fake alien invasions on more than one occasion, and only half-jokingly at best.

Or we have the recent movement to count illegal activities (drugs and prostitutes) as part of GDP. It got another little boost when Spain signed on. (By counting illegal drugs and prostitution as part of its GDP, Spain can reduce its official debt-to-GDP ratio, making its finances appear sounder than they are.)

I believe that all of this speaks to both the deep Statism and the deep nihilism that have infected modern culture. The implication – that economists never state outright because they know it would sound too crazy, but the implication remains – “Gee, if only the government would spend on destruction, the economy would boom. If only people would buy more meaningless sex and drugs, the financial system would be sound.” As if those are productive activities.

Again, put like that, it sounds like I’m drawing a caricature; but I’m not. A recent example is from the New York Times, a serious opinion pieced titled The Lack of Major Wars May Be Hurting Economic Growth. It begins:

The continuing slowness of economic growth in high-income economies has prompted soul-searching among economists. They have looked to [various causes]…

An additional explanation of slow growth is now receiving attention, however. It is the persistence and expectation of peace. The world just hasn’t had that much warfare lately, at least not by historical standards…the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely…

The author, Tyler Cowen, carefully states that he does not support war, nor is he making any sort of Keynesian argument about the stimulus supposedly provided by government borrow-and-spend.

But in spite of his protests, the assumptions and implications of his piece remain: Big, aggressive government is wonderful. Without it, the economy would collapse. In his world, it is the lack of big/aggressive government, and NOT the opposite cause of excessive debt and overgrowth of government, that explains our present malaise.

Cowen goes on to sing of the wonders that result from war and/or massive military spending; as he puts it, the great “focus”, “invention” and “internal social order”. Cowen’s piece doesn’t pause to reflect that, under peace and the freedom of a small government (that genuinely respects people’s rights to life, liberty and property), humanity has historically made its greatest progress.

Yes, these people actually support destruction, war and violence. They don’t view it like small-government conservatives do, as a terrible evil forced upon us by the wicked; they view it as a potentially positive means to desired social ends.

War is where the logic of their philosophy leads them. And occasionally, one of them will come near to admitting it (while perhaps still pretending not to).

Filed Under: Academia, Economy, Liberalism Run Amok Tagged With: Academia, economists, Economy, keynesianism, Liberalism Run Amok, nihilism, paul krugman, statism, tyler cowen

Comments

  1. Sean L says

    June 17, 2014 at 1:04 pm - June 17, 2014

    I remember the scene in “1984” where Winston reads “The Book” and learns why Oceania’s economy is geared towards producing weapons: producing weapons does not raise citizens standards of living, and keeps them reliant on the government.

    I’m not saying that is why economists like war so much. But it needs to be reiterated: WWII did not save the economy, it was the industrial war machine being turned towards producing consumer goods that saved the economy.

    All this talk about how useful war is for creating social order certainly smacks of fascism, doesn’t it?

  2. Steve says

    June 17, 2014 at 1:54 pm - June 17, 2014

    Death tax for thee but not for Hillary.
    http://www.bloomberg.com/news/2014-06-17/wealthy-clintons-use-trusts-to-limit-estate-tax-they-back.html?cmpid=yhoo

  3. Steve says

    June 17, 2014 at 2:00 pm - June 17, 2014

    The reason Lincoln made greenbacks was because he understood that taking debt from banks would be worse for the nation than the civil war itself. Of course after he was killed they stopped govt. issued money.

  4. ILoveCapitalism says

    June 17, 2014 at 2:31 pm - June 17, 2014

    WWII did not save the economy, it was the industrial war machine being turned towards producing consumer goods that saved the economy.

    In particular, it was the reversal of many Depression-era policies that had previously prevented many people/companies from making adjustments and creating a better economy. The U.S. didn’t revert to being fully free-market after WW2, but it went partway back and as a result, the economy was finally able to heal.

    Plus, having sold arms to Europe, the U.S. had 2/3 of the world’s monetary gold (and spent it over the next several decades).

    All this talk about how useful war is for creating social order certainly smacks of fascism, doesn’t it?

    Sean, thanks for picking up on that; it struck me also. Cowen tempers it later by talking about our society having “a higher degree of social tolerance for minorities and formerly persecuted groups.” But he makes it sound almost like a luxury for rich countries, rather than a fundamental moral principle, or even a source of social strength.

  5. KCRob says

    June 17, 2014 at 5:58 pm - June 17, 2014

    No Blood for oil Growth!

    I suppose the idea is that keeping busy people, even if moving rocks back and forth, is easier than trying to figure out productive employment for too many people.

    The one thing the defense industry is heavy on is science, technology, and manufacturing. Without defense spending, you’d have a lot of engineers, scientists, and skilled manufacturing workers standing on the unemployment line.

    One of the things Mark Steyn contemplates in After America is “what if there is no Next Big Thing?”.

  6. KCRob says

    June 17, 2014 at 5:58 pm - June 17, 2014

    Forgot the link.

    http://www.steynonline.com/6425/holding-pattern

  7. ILoveCapitalism says

    June 17, 2014 at 10:07 pm - June 17, 2014

    keeping busy people, even if moving rocks back and forth, is easier than trying to figure out productive employment

    Yeah…easier for central planners, who *inherently cannot* figure out productive employment for all.

    But what about 1,000,000,000 little employers, if they are permitted the freedom of spontaneously employing a few people, on mutually acceptable terms as they all see fit?

    Without defense spending, you’d have a lot of engineers, scientists, and skilled manufacturing workers standing on the unemployment line.

    Again: The market, i.e. the People, should be permitted to solve that. Did you ever consider if the world might have a few too many scientists, engineers and skilled workers? I.e., more than are needed for society’s wants? If it is so, then why should they be employed? (Nobody deserves automatic employment.)

    And if it is not so – If we really are short a few scientists, engineers and skilled workers – then free markets in labor would solve that as well. Going back to freedom (which we don’t have, today) means trusting free people to solve these problems. We ought to.

  8. Heliotrope says

    June 17, 2014 at 10:46 pm - June 17, 2014

    At the base of every economy is the cost of a foot-pound. [A foot-pound is the energy transferred in moving one pound a distance of one foot.]

    By cost, I mean calories burned. With sophisticated machinery and highly “efficient” fuels, the cost of a foot-pound can be fairly insignificant.

    The colonial home was dimly lighted by tallow rendered from scarce farm animals or bees wax which was valuable in many ways or from gathering about eight pounds of bayberries per candle which was produced by continual dipping in the liquid wax given off by the plant. This does not speak to the calories expended in picking the berries or securing the firewood. The point is, lousy illumination at night was precious.

    We used to speak of “labor-saving” machinery. Now we are a service economy and actual labor is, by and large, something that only illegal immigrants will do.

    Today, our most personal contact with the foot-pound is int the cost of gasoline per gallon. That price underlies the cost of every grape in the grocery store.

    We are sitting on top of an enormous supply energy, but we insist on buying our energy from not only unreliable actors, but bad actors as well.

    Pointy headed economists can muse about war production and the economy, but they are just smoking rope. The Pharaohs used slave power. So did the Romans. But eventually, we got more out of steam than the energy expended in producing it.

    Until we take stock of what “fuels” our economy in its most basic sense, we are just blathering on and on about hope and change.

    Being good stewards of the environment and extracting fuels are not mutually exclusive. For whatever reason, Obama and his crowd have chosen to cripple our energy resources for nebulous reasons.

    It would be a delicious treat to hear the Progressives explain why we can not “afford” energy independence.

  9. Blair Ivey says

    June 18, 2014 at 1:20 am - June 18, 2014

    There is a story about Milton Friedman, perhaps apocryphal, but it illustrates the point.

    He was shown a construction site in China where the workers were moving earth with shovels. When he asked why they didn’t use machinery, the response was ‘This way we employ more people.’ Friedman replied ‘Why not give everybody spoons?’

  10. Sean L says

    June 18, 2014 at 5:23 pm - June 18, 2014

    @ ILC: Well, the progressives would love to let us decide for ourselves, really they would, but what if we chose wrong? What if our decision was the “wrong” one? We wouldn’t want that, now would we?

    “What if you had chosen Snowball, comrades?”

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