Monday, December 03, 2012

Guns or Butter?

I've heard these arguments for decades.  I had a college professor who was so virulently anti-war and anti-military that he actually lowered my grade when I argued the point with him.  His argument was that money spent on the military was wasted and useless to society.

My point to him is the same I will make to you and the same I made to a virulently right winger at the dog park the other day.

Military spending (including the WWII spending the dog park guy was talking about) DOES help the economy.  The money gets spent right here in the USA (as Federal law makes it mandatory for contracts to be let to US companies wherever possible), the employees who develop, design and build those things for the military work right here and spend their paychecks here too.  The companies spend a fair amount of that money on goods and services obtained here (absent the specialized elements not available here, such as specialized metals and other things mined elsewhere) and even that contributes to American jobs which ship them from US ports to the manufacturing sites here in the US.  Every penny the US government (or other levels too) spend in the US, they use to pay US companies for good and services used to further the government's mission.  These dollars contribute directly to the US economy in myriads of ways and are scattered scrupulously across the US to invite the votes of as many US Congresspersons as possible!

Which is why my friend George, in an email about this today, noted that even military spending shouldn't be reduced too much yet.  The economy is too fragile.  Krugman has said it time and time again, and he is right, you spend your way out of a recession, and Europe's experience proves it.  When the government is the only entity with money to spend, and it stops, the economy grinds to a halt.

It has been a popular meme that WWII didn't get us out of the Great Depression, which this high school "historian" tried to tell me the other day, and refused to see this point.  We did NOT see the depression end until we began our buildup, beginning with the lend-lease programs which began to put people back to work as we sent goods to Britain.  He tried to tell me that none of that helped because all that stuff we built went overseas.  Bullshit, because the money we spent to build it had been spent already - right here in the US of A.  What the US government does with those goods makes no difference to the economy - in fact the point he made that those things kept getting blown up just proves my point that the destruction simply drove up demand, which just made us buy more stuff!   As we shipped more stuff, that made us pay more US companies to ship it overseas (we had a real merchant marine then) - at exorbitant rates as companies had to cover war losses.

That is why wars always lift us out of depressions - we spend our way out.

The difference here is that today we need to spend on civilian stuff - infrastructure that badly needs to be rebuilt and repaired, putting construction workers back to work and also sending money to the States, putting teachers, cops and firefighters back to work, too as well as other State workers who, for instance, maintain those roads or keep them open in winter. (or city workers who do the same things)  The Feds used to send a lot of money Stateward - we need to get back to doing that so they will begin hiring people back they fired in the last four years - many of them to further the Republican dream of not re-electing Obama.

This whole concept is well known in economic circles and is called the guns vs. butter controversy.  Which are better for the economy, guns or butter?  The main thing that was concluded by my Economics 102 teacher (macroeconomics) was that it depends on your goals - defense or civilian uses?  Do you need to defend yourself?  Or do you need to care for an aging and sick population?  The money is spend right here in either case, the circles of wider spending as the primary contractors buy goods and services to fulfill those contracts get wider and wider and fall to companies whose business isn't strictly military or governmental - and of course the employees spend all of their salaries on civilian goods, just like the rest of us do.   Hence the spending benefits us all in the end, no matter the primary contract's purpose.  (not counting, of course, the profits that remain in the pockets of the rich and don't get spent at all)

Detractors of the military often speak as if the money so spent disappears down a black hole and is ever seen again.  Nothing could be further from the truth.  Every dollar of it is spent in the civilian economy.

The primary thing to truly argue over is to what purpose should our money be spent?  That depends on the circumstances of the day and what is needed more at that particular time - guns or butter?

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