Myth of Defense Spending Job Boom Exploded 

BY CHRIS PETHERICK

The military-industrial-banking complex and its supporters in government have long argued that war is good for the country. It creates jobs, they contend, and stimulates the economy. But a new study by two prominent economists has exploded that myth, demonstrating that more jobs would be created if Washington gave Americans back all of those tax dollars that are being wasted on building bombs and occupying foreign countries. 

It’s known as the fallacy of the broken window. French writer and philosopher Frederic Bastiat coined it in his 1850 essay titled “That Which Is Seen and That Which Is Unseen, where he pondered the economic ramifications of a young boy breaking a window at his father’s shop.

GET OUR FREE NEWSLETTER HERE

“Suppose it cost six francs to repair the damage,” wrote Bastiat, “and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs.” 

But that is only half of the story. Bastiat argues that the benefits attributed to the broken window are fallacious. In fact, he says, forcibly redistributing money through unnecessary spending, like repairing a recently broken window, is a drain on resources that removes any possibility that the money could be utilized for better purposes. Ironically, Keynesian economists, bankers and politicians have invoked the first part of Bastiat’s parable to argue that the broken window helped the town because it provided jobs for individuals who were paid to fix it. They then apply that to war spending, claiming it’s good because it creates jobs and increases productivity. Over the years, this myth of war spending has proliferated and flourished to the point that even U.S. presidents have cited it to justify their bloated military budgets. 

Just last year, on Feb. 18, 2008, former President GeorgeW. Bush defended his trillion-dollar war in Iraq, saying that it is good for the United States. “I think actually the spending in the war might help with jobs,” he said in response to a question about the cost of the war and the teetering economy, “because we’re buying equipment, and people are working.” Some 60 years ago, President Franklin D. Roosevelt alluded to it in one of his first fireside chats. In his most famous radio broadcast, known as “The Arsenal of Democracy,” Roosevelt made the case on Dec. 29, 1940, for gearing up America’s lagging post-Depression production to make “fuses and bomb packing crates and telescope mounts and shells and pistols and tanks” to help put the country back to work and come to the aid of Britain duringWorldWar II. “We must have more ships, more guns, more planes—more of everything,” said FDR. “And after the present needs of our defense are past, a proper handling of the country’s peacetime needs will require all of the new productive capacity, if not still more. No pessimistic policy about the future of America shall delay the immediate expansion of those industries essential to defense.We need them.” 

To this day, liberals and conservatives still quibble over just how much World War II helped to lift the United States from the Great Depression. Of course, the truth is it was the four-term president’s unprecedented borrowing spree to fund the war that helped the country crawl back from financial ruin directly attributable toWall Street’s greed, growing the national debt by tenfold from $22 billion when he took office in 1933 to over $250 billion when he left in 1945—much to the benefit of the banksters and the Federal Reserve. Today, new research is indicating that the country may very well have been better off had FDR simply handed out those hundreds of billions of dollars to American workers and farmers to do as they wished with it. 

Economists Robert Pollin and Heidi Garrett-Peltier with the Political Economy Research Institute at the University of Massachusetts, Amherst, recently published their study entitled “The U.S. Employment Effects of Military and Domestic Spending Priorities.” What they found has blown up the notion that, when it comes to job creation, the country gets the most bang for its buck by funding wars. 

The two economists looked closely at $1 billion in Pentagon spending and discovered that bomb-making ranks at the bottom of the list as far as job creation is concerned—far below investments in other public services like transportation and education. 

More importantly, one can deduce from the economist’s conclusions that were government to simply take that $1 billion and give it back to the public, the private sector would create nearly 11,000 new jobs versus the 8,500 that would come about as a result of handing it over to the military-industrial-banking complex. In other words, the government would get a 28 percent higher return on employment if they gave a check to every American taxpayer. 

If the two economists’ findings are multiplied by the current U.S. war budget of over $600 billion—giving all of that money back to Americans would result in an estimated 7 million new jobs in the private sector, and no one will have to pay the bills or bleed in the wars to keep employment high. 

Compare that with the paltry 650,000 jobs that the Obama administration is now claiming to have created out of the $787 billion stimulus package, and you’re talking about a real economic boost for Main Street.

——
 

* The Legalized Crime of Banking is available from Brandywine House Books & Media for $20 by mailing check, money order or cash to P.O. Box 638, Cheltenham, Md. 20623. Call toll-free (866) 656-7583 to order by Visa, MasterCard, Discover or American Express.

Previous Columns

Advertisement




RSS FeedSubscribe to the regularly updated RSS news feed.