How the War Machine is Driving the US Economy

[G_j]

www.commondreams.org/views04/0106-12.htm

Published on Tuesday, January 6, 2004 by the lndependent/UK

How the War Machine is Driving the US Economy

Military Keynsianism Might get Bush Re-elected, But it is Starting to Worry Economists

by Andrew Gumbel

 What do the war in Iraq and the economic recovery in the United States have in common? More than one might expect, to judge from the last couple of rounds of US growth figures.

The war has been a large part of the justification for the Bush administration to run ever-widening budget deficits, and those deficits, predicated largely on military spending, have in turn pumped money into the economy and provided the stimulus that low interest rates and tax cuts, on their own, could never achieve.
The result, according to economists, is a variant on Keynesianism that has particular appeal for Republicans.

Instead of growing the government in general - pumping resources into public works, health care and education, say, which would have an immediate knock-on effect on sorely needed job creation - the policy focuses on those areas that represent obvious conservative and business-friendly constituencies. Which is to say, the military and, even more specifically, the military contractors that tend to be big contributors to Republican Party funds.

"It may be very inefficient and obviously not fair, but it is nevertheless causing almost 5 per cent more money to be pumped into the economy than is being taken out in tax revenues," observed Robert Pollin, professor of economics at the University of Massachusetts at Amherst. "At the same time, it fits into the broader ideological goals of the administration because they can paint it as part of a national emergency, the fight against terrorism, the fight against Saddam Hussein, and so on."
...more...

[ProfessorGAC]

1. He's 100% Correct

The only thing he's got wrong is that he didn't refute the "war helps the economy" canard that is part of the motivation. War is good for finances, but not for the economy as a whole.

But, everything else he describes, i've written here at DU since October. So, since i have arrived at the same conclusions, i couldn't very well argue with Pollin (et al) now.
The Professor

[G_j]

7. thanks prof,

Your insight is always appreciated.

[kentuck]

2. And the callers into C-SPAN were worried about money spent on Mars

The money spent for the Mars mission will be spent in Iraq this week. I think the money spent on Mars is better spent.

[terryg11]

5. excellent point

about the money spent on Mars. Military spending is very likely driving the economy to a point. Look at all the businesses these defense contractors sub contract out to. In CR, there is a huge Rockwell Collins plant that had it's ass saved by recieving some contracts to develop some new pieces of war hardware. They still had to cut some thousand jobs but not as many as they were going to.

About Mars, I honestly think they should be focusing on getting us to the moon or Mars and start setting up colonies or something. You know, it sounds like sci fi but I would bet we really aren't that far capability wise to do it, and imagine the jobs tht would frreakin' create. Shit,whole new communities to provide goods and services to.

[G_j]

3. important to keep this in mind n/t

[truthspeaker]

4. another similarity to fascism

Hitler got the German economy to recover from the Weimar-era depression with massive military spending.

[Karenina]

6. Read Dwight D.'s rap

on the MIC in his Farewell Speech. You know the one I'm talking about! ;-)