"War is still hell but peace may hurt the economy" Topic

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Great article which continues past the graphic for you tablet users.

Hmmm, I wonder what a good substitute for war would be.

Robot Jox?

That's easy. Another space race. First to Mars wins. Then Europa. Then Titan…

Interesting, but some of the elements are simplistic. It's not so much war itself as the fear of war that (potentially) causes the economic boom— that is, the desire to prevent it or at least be assured of winning it should it occur. For example, the Cold War period in US and Western Europe coincided with the greatest period of economic gain, particularly during the period when military spending rose sharply in the West under Ronald Reagan (note that the economy for the decade prior to his election was stagnant or worse— and part of that coincided with the very "hot" Vietnam War). When the Cold War ended, and politicians decided to switch spending to "social" efforts, the economy took its downward turn.

However, I'm not willing to state that any of the above is necessarily causal for the economic developments. There are simply too many other factors to consider— in the US, for example, economic downturns also coincided with increases in taxation rates or changes in the tax code. For example, while the post-Gulf War I economy took a downturn at the end of the war, this coincided with a tax increase, a negative effect that was not overcome until an offsetting tax decrease was passed four years later. So, was it the relaxation of defense spending or the increase in taxes which brought about the downturn, or was it a combination of both? Or is one merely coincidental or not that significant, with the other having the greater effect?

I have often said that if you are going to spend money as a government, you are far better spending it on technological efforts than social ones, as the technological efforts do far more to improve the social situation than the social efforts do— a job is far better than a handout, any day of the week, particularly when that job demands skilled and educated workers.

Hmmm, I wonder what a good substitute for war would be.

Robot Jox?

Want a serious answer? Space exploration. It demands even greater technological advancement than any other endeavor, and thus a greater need for skilled workers at every level. It is the most likely to provide serendipitous commercial spin-off products that improve the human condition across all levels, from medical to transportation to communication to efficient energy creation to general quality of life. It is also a big, audacious and inspiring area of work that bears no taint of moral question or futility. If you're gonna go Keynesian, at least make it inspiring and challenging!

But, back to the article. There's a certain quality of it that raises red flags to me, particularly as it addresses the current state of affairs. There's a defeatist level to it, or almost a plea to complacency, as if we should accept a deteriorating economic situation and a lack of broad productivity on the flimsy argument that it somehow has the magical effect of keeping the world out of war. I think that's getting the cause and effect thing completely the wrong way around. If one looks at the history of the world, eras of complacency and acceptance of economic defeatism have often preceded times of war. The 1930s didn't come about because WWI ended— but WWII in part did come about because of the economic strains of the 1930s. Economic downtimes seed unrest, and give rise to populist, authoritarian leaders or ideologies that promise to "fix" everything, one way or another. Usually the "another way" is war.

Take a cue from 1984, build some tanks, ship them to the 'border', blow them up, rinse and repeat.

The money spent on expensive projects that produce little and employ few could be better spent hiring people to do useful and important work, such as fixing a failing infrastructure.

The author has stumbled onto one of Niall Ferguson's arguments in Civilization: that competition between nations speeds their advance. His argument is based on a longer historical period.

If they're right, we should see Japan finally come out of its funk as it's threatened by China. Assuming, of course, that Japan accepts the challenge. One of Ferguson's understated notions is that nations choose to fall.

Wunnerfull wunnferfull --- BUT --- the problem is that nuclear weapons make the theory worthless. There's no economy left after a nuclear war, unless in a grotesque Stryderg's blowing up the tanks at the border. Just choose one of your cities, nuke it, and get the rest of the country working to rebuild it.

I also disagree with the space race as a substitute. It will of course be hideously expensive, but it will be expensive in a very narrow area most of the people simply will not be able to participate in. It requires as the main engine of economic activity highly specialized industries and not those that the wide range of the population can find jobs in.

If you want to do this then also you have to wage a retrograde type of war where we go back to iron bombs and keep the smart bombs for special things, and mass armies rather than the highly specialized acolytes of the silos that we have now. Frankly I'm all for making peace as the Germans did in Warsaw (twice) and Rotterdam and we did in Dresden, Berlin, and Hamburg, but… that requires also a reversion of cultural trends to where we accept-- nay even encourage and desire collateral damage among the affected populations.

But as I said wunnerfull wunnderfull, but the question who is there to fight? Chinese and Russian conflicts with us would go nuclear in short order. That's ok, but now you're down to comparative accurace and durability of your delivery systems.

Anyone else we are faced with a serious problem.

Africa, The Middle East, South-east Asia, what aggressor would wish to conquer a region which offers no wealth and only bankrupt kleptocracies and failed states, huge social ills and a willfully ignorant tribalism that can't see beyond humping their next goat. Further, having been conquered, what opponent would want to free them. These people simply aren't worth it. Besides, these people WANT dictatorship, tyranny, and hatred. These places might have significant resources, but the problem is getting to them, getting them running, and getting them out. To do that you have to simply genocide the people there because they will just get in the way, and bring in your own crews to run them.

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The replies regarding spending on high tech projects fall into the static resource fallacy-- that the money once spent has no further impact on society and that the project only affects those directly employed by it. This is a simplistic and erroneous view. The money spent to build a rocket doesn't just get stuffed in a box marked "Rocket." No, that money goes all over the place, spurring all sorts of human activity. It is spent to design the rocket, build the rocket, launch the rocket and operate the rocket, yes. But that also means it is spent to design and build the facilities to build the rocket, to design and build the tools to build the rocket, to design and build the devices to launch and operate the rocket. But it doesn't stop there, either. Because that money then continues to move outward, into the buildings and tools necessary to house, support, feed, educate, clothe and entertain the people who design, build and operate the rocket, and the same for the people who design and build the elements necessary for the creation of the rocket, and then to those responsible for supporting or creating what those people need, and so on and so on and so on. So the money spent for the rocket thus boosts the economy in general at every level, even levels that at first glance appear to have nothing to do with the rocket. Thus, it builds schools, homes, restaurants, hospitals, roads, power plants, malls, theaters, libraries, stores. It goes to scientists and seamstesses, librarians and landscapers, engineers and everyone.

The problem with just spending on infrastructure is that infrastructure isn't a goal in and of itself. A road isn't built to have a road; a road is built to reach a destination. The existence of the destination causes the road, not the other way around. Spending on infrastructure is futility if the infrastructure doesn't support anything; indeed, it's pointless. Find a destination, and you will get the road.

Also, spending directly on things which do not advance human knowledge or human technology is wasted spending. True, that money moves on, too, but efficiency is an issue, and value isn't created, so the overall effect of the spending is inherently lesser. But when you spend to advance human knowledge and advance human technology you've created the possibility of greater value. If I buy a hot dog, I've only bought a meal. If I buy a grill, I've bought the possibility of several meals-- and not just a hot dog, but hamburgers, chicken, steak, kabobs, and so on and so on. Thus, technology spending creates the possibility of unexpected or even unintended usage for that technology. Nobody invented the Internet in order to create the Web, but we got the Web out of it (and TMP).

I'm not arguing that such spending dominate, or that taxes be raised to cover it, or anything of the sort. The true spur of an economy isn't government spending, it's good old fashioned human commerce. Always has been, always will be. But communal focus on a grand goal can act as a catalyst for commerce, even commerce that appears to have little to do with the grand goal. So the economic effect of war is not truly that it is war, but rather that it is a communal effort towards a grand goal, even a necessity of survival. So instead, why not have a communal effort aimed at creating rather than destroying? Why not give us something to dream about, rather than something to fear? Our destination is the stars; let's build the road.

Parzival-your astute exhortations are in alignment with my views on the subject and i merely add my applause to indicate such.

Or as the saying goes: yea, what he said!

Thanks for the thoughtful comments Parzival, pretty interesting.

we could always try this:
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One of the best from the first season of "The Outer Limits", in "The Architects Of Fear", a group of scientists conspire to halt the nuclear arms race by giving the world a new enemy to unite against. Their plan is to alter a man through surgical means to make him look like an extraterrestrial from the planet Theta, and then have their "scarecrow" deliver a declaration of war to the Assembly of the United Nations.

Build a giant wall, then tear it down. Keep it going up and down and up and down. Every time it goes up, we build it a day faster and an inch taller than last time.

Put people to work on the wall, companies get contracted to supply parts, tourist shops open up etc.

Perpetual employment and as much good as all the paper pushing we do in the cubicle farms.

I would only take exception to one statement in Parzival's comments. The role of Govt can be extremely important if you consider nation-building projects on the scale of the Hoover Dam, or a postal service. There are a range of activities such as roads that are extremely difficult to commercialise, so will never be attractive to private investors. Govt can equalise by using profitable public investment to cross-subsidise non-profitable public investment. Especially in somewhere like Australia with a very small population base very widely dispersed, it's the only way to provide services to undeveloped regions. One of the consequences of not being able to access services (and thus jobs)in rural areas, is an increased population flow into urban areas, with consequent social issues.

I was to write an opinion, but Parzival has beat me to it! I can only say that I am in complete agreement with him.

Well said, sir!

The problem with just spending on infrastructure is that infrastructure isn't a goal in and of itself. A road isn't built to have a road; a road is built to reach a destination. The existence of the destination causes the road, not the other way around. Spending on infrastructure is futility if the infrastructure doesn't support anything; indeed, it's pointless. Find a destination, and you will get the road.

Roads and bridges and cables already exist that lead to places. These need repairs and upgrades, they don't maintain themselves.
Over 65,000 bridges in the US need are in need of repairs to maintain their safety.
Infrastructure is communication and communication is a goal unto itself. Communication drives growth.
Infrastructure is health and health is a goal unto itself. Health drives growth.
Infrastructure is power and power is a goal unto itself. Power drives growth.

Perpetual war or threat of war is not the only way to drive the economy.
Simply, goals that create jobs are needed and there are plenty of goals to advance society, technology, etc. outside of the realm of defense. In fact, work on these things is actually in the interest of national security. Or as Parzival wrote:

So instead, why not have a communal effort aimed at creating rather than destroying? Why not give us something to dream about, rather than something to fear? Our destination is the stars; let's build the road.

War does drive the economy in spurts, until the war ends and then the economy crashes because war costs big bucks and is paid for by loans which need to be repaid.

There are a lot of holes in the assertion that war is good for the economy and peace is bad.
Replace "war" with focus, unity, leadership and then you have a much better argument.

Perpetual employment and as much good as all the paper pushing we do in the cubicle farms.

I think you're making an error very close to the Broken Window fallacy. (So, too, might the original article, now that I think about it.)

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Dax:: "And as the 34th Rule of Acquisition states: 'Peace is good for business' "
Quark: "That's the 35th Rule."
Dax: "Oh, you're right. Whats the 34th?"
Quark: " 'War is good for business.' It's easy to get them confused."

(I just had to do it.)

@ Caesar: There is no reason we cannot both repair the old roads and build a grand new one. In either case, it beats throwing money down either the hole of war or the sewer of bureaucracy.