Be careful not to attack Tyler Cowen’s message about War
Tyler Cowen has a post at the New York Times about how war can rejuvenate the economy in various ways. We need to be very careful not to jump on him and accuse him of being a war-monger.
I remember when many people jumped on me for recommending a recession based on Christina Romer’s speech. The idea was to start things over right because they had not been done right after the crisis. The idea was to re-break a bone that had not set properly. It is good medicine. The idea is similar to what Tyler Cowen now says.
I also remember that Alex Tabarrok attacked me. He writes for the same blog where Tyler Cowen writes many times, Marginal Revolution. I can only hope that Alex will not jump on Tyler for his current post on war.
We all need to understand the deeper message in Mr. Cowen’s post. There is a natural process of renewal. Just look at how in winter, nature loses all it produces in spring and summer. The whole process has to start over again. Is war like winter? There is a deep philosophical idea here.
If we get really philosophical, my personal view on war is that it is good that we have had a long stretch of relative peace. And I hope it continues. The alternative to war is social understanding. We must understand the value of labor, even unskilled labor. We must understand the social cost of each person. There is too much ideology on private interests and not enough on social interests. This ideology is tearing down society and the economy.
No more war. No more suffering. Let’s just get it right. Raise labor share!… and keep raising labor’s share no matter what economic hardships we have to encounter in the path. Eventually we will get back to a healthy economy for all.
$27T in pentagon [not sure where oosat guard is included or DHS]spending since 1950. US is lucky to only have $17.5T in federal debt.
Iraghistan tab is $3T and running, with > 6000 dead and untold added to DVA medical dependence now at 8M former US military.
I love that kind of peace.
Actually US has been occupying, counter insurgenting and poking holes in the stratosphere killing and maimimng a lot on the way for nearly 70 years of continuous war with results like Vietnam and Iraghistan.
Check Tomdispatch for more. http://www.tomdispatch.com/
Yes, I hear you. The peace is relative depending on who and where you are. Tyler Cowen was referring to the destruction of capital and the ramping up of industries on a large scale, and government direct stimulus. We have not seen these on a large economic scale like he is referring to.
Iraghistan is a good term.
Vietnam was hell. Vietnam is a good place now.
Africa has seen lots of damage. I have students in economics from various countries there. The wars did not lead to a vibrant economy, but rather huge and numerous inefficiencies. Liberia stands out as an economy that just cannot get back on its feet after the war.
I am guiding a businessman there now helping to set up an entrepreneurial cooperative.
My default position is that whatever Cowan says needs to viewed through a very powerful B.S. filter.
But he’s written quite a thoughtful article.
Still, there’s something about it that rubs me wrong, and iIcan’t quite pin it down. If gov’t lack of focus in peacetime is what allows the economy to stagnate, while the intense focus of wars is stimulative [in several senses], then the economy is really all about goverment, all the time. Thus, are capitalism, business, and free enterprise – all the stuff that Libertarians love so much – relatively trivial?
I’m quite certain that is not the message Libertarian Cowan wants to promote.
But he makes it seem as if the private sector is just blowing in the wind, and is a very poor source of either innovation or economic energy.
Or is there a point I’m missing?
As of this moment, there are 19 comments to Cowan’s article, most of then pretty thoughtful and some of them echoing my thoughts above, with a focus on fiscal policy and political will.
Also Sandwich man links to one of his posts which i haven’t read yet, but expect to be pretty good.
Instead of war, it could be better to see some violent labor protests with some damage to buildings. Wouldn’t that qualify as a war alternative? A war against the rich.
maybe that is the direction that this issue should take.
So the choice is between killing foreigners, and killing ourselves.
I don’t like it.
There was plenty of reactionary thought back in the 30’s, but there was also a powerful populist movement for progressive change. That’s what we need, but the country is not desperate enough to become progressive yet.
Occupy seems to have evaporated.
All the populism I see is reactionary and anti-government.
You are right… In general there isn’t enough activism aimed at the rich in the US. It is mostly at govt.
I read an article where activism against the rich is growing much stronger in other countries.
Wars bring death, destruction, and debt.
President Bush had us in 2 wars during his terms of office. I didn’t see any net gain for us.
And that is about par for that course.
WWII did not end the Great Depression but some economists came to believe that it did. Never mind the full employment, the high wages, the high personal savings, or the rationing.
We can have all of those without another war. Just impose rationing, have the federal government build and repair so many roads and bridges that we have full employment, and pay high wages. Have the federal government impose very high taxes and take on huge amounts of debt. Continue all those actions for 4 or 5 years. Game, set, and match!
I am not a peacenik. I spent 4 years in the US Army. But I believe that we have gotten ourselves into too damn many wars over the last 15 years.
I vote in favor of drafting Tyler Cowen into an army infantry unit. Draft his children into the same unit, so that they can carry him. Otherwise let’s just stop praising the benefits of war.
I agree with you about war, and that WWII did not end the great depression.
My view is that the rise in labor share during WWII ended the great depression.
But I understand Tyler Cowen. It’s the message that is important. The message represents frustration with the system. My view is that he is just as frustrated as us.
I talked about another recession to set things right, because once you reach the end of a business cycle, you are limited in what you can do.
He must be talking about war from a similar frustration.
ALL REVOLUTIONS are full of revolting people, some with guns.(SOME more revolting than others)
My guess is Mr. Cowen doesn’t plan to volunteer to carry a rifle in the said Great New War To Boost The Economy. (He has someone ELSE in mind for that job) As JimH proposes above, drafting him&his is the answer.
For that matter, CONSCRIPT EVERYONE IN THE MILITARY INDUSTRIAL&FINANCIAL COMPLEX. Give them ALL a rifle (and not enough ammo) with bayonet, half rations, and a Private’s Pay. A pack shovel(just in case), a canteen so they don’t die of thirst AND most important of all–no place to hide. As ALWAYS leave “FAILURE TO PARTICIPATE” the ONLY war crime.
In my past, I helped a few Guatemalan refugees escape torture during their war.
I had a friend who was a reporter in Chihuahua, Mexico. He was shot dead because he talked against the corruption in the govt. Killers were never found.
Violence against innocent people is not war. Yet I do not view the rich as innocent.
The headline of Tyler Cowen’s Upshot piece, “The Lack of Major Wars May Be Hurting Economic Growth” is calculated to provoke controversy. Cowen’s point, though, isn’t that we need a war to boost the economy. As he concludes:
“Living in a largely peaceful world with 2 percent G.D.P. growth has some big advantages that you don’t get with 4 percent growth and many more war deaths.”
But there is an underlying logic to Cowen’s reductio ad absurdum that I’m not sure he grasps completely. The national income accounts were designed with the idea of paying for war in mind. That actually might make sense during a time of war when you’re trying to figure out how to pay for it. But it embeds a social accounting protocol that is incompatible with the absence of war. The predictable results are policies such as the Cold War rearmament based on the premise that arms spending will pay for itself by siphoning off revenues from the additional growth that the spending will stimulate. The Latin term for it is inflatio. Time to recycle a piece from three years ago:
“Siphoning Off a Part of the Annual Increment of GNP”…
Didn’t Paul Kennedy write a book more or less making the point on nations who constantly outspend the growth in GDP on War as opposed to domestic productivity? “The Rise and Fall of The Great Powers.” The question arises, we can pay for a war under the premise we can stimulate the economy; but, we can not stimulate the economy through domestic investments?
“WWII did not end the great depression. My view is that the rise in labor share during WWII ended the Great Depression.”
That won’t work today. The work would be outsourced off shore and there certainly would not be a rise in labor share.
I agree with you. There is only one way… Labor will have to fight a war upon capital.
If Cowen were an iota lucid, his premise is immoral. War is organized murder.
US views “war” from WWI and WW II lens. Never having been trodden! Mostly profits from the big wars.
In each case two things are evident: US was a major supplier to its “allies” so ramped up huge arms industry, two; US was not damaged much.
Look at Pearl; Harbor, big shock. a number of ships were raised and fought in the war: see USS Nevada 14 inch guns at D-Day for one.
Since US was not damaged it did not suffer the let down when WW II ended because it had to ramp up to supply the countries which were bomber to dust. The post WW I recession is forgotten.
While the cold war kept the war making trough from being emptied as in 1920.
Vietnam and Iraghistan are similar to WW II, no internal damage and a lot of money made.
Woody Guthrie had it: “If you take the profit out of war there would be none”
Note GMU is a big supplier of “degrees” to fill resumes for the war troughers inside the beltway.
That wars cause debt is not a new idea. That the subsequent debt, causes other problems is also not a new idea.
The French and Indian War lasted from 1755 to 1762.
That war left the English government deep in debt.
Because of that debt, the English government began instituting a number of new taxes. And in order to keep the Indians peaceful King George issued the Proclamation of 1763 which banned white settlements west of the Appalachian mountains. (The Indian wars had cost money and they wanted less of them.)
Those actions lead directly to the American Revolution.
And if World War I had not left Germany deep in debt and subject to large reparation payments, the German economy would have recovered quicker. If the German economy had recovered by 1932, would Hitler have come into power?
BANKERS are the true winners in war. In the War of 1812, The King of England BORROWED 10 million LB in paper from Baron Rothchild and promised to pay back in GOLD. No matter the outcome of the war, Rothchild won.
My little pea brain flashed immediately to how WW2 turbocharged the German economy and they defeated Russia, Great Britain and the US.
Cowen might be right, but for the wrong reason. As others have noted, wars only help the economy to the extent that they provide excuses to pay people money for their work. Usually this means a prolonged war that cuts off ordinary sources of imports and requires industrial and military mobilization. We haven’t had a war even vaguely like that since Vietnam.
In fact, we could find other excuses to pay people more money.
In truth, the only thing that has directed more money to the less well off has been violence or at least the threat of violence. There was the Chartist movement in England which only ended when the king threatened to pack the House of Lords. There were the various failed European revolutions in the 19th century that made the new elites realize that they had to buy off the next round of revolutionaries. There were the violent labor movements in the US and Japan, and most likely in other countries. Even China’s modern leaders are trying to get some money into the hands of the less fortunate since they know full well how deadly a violent labor movement would be.
Bombs are for bombing people, guns are for shooting people, war machines are for making war. Americans build these things everyday. That’s business, the business of America.