The Lack of Major Wars May Be Hurting Economic Growth [NY Times]

Discussion in 'Markets & Economies' started by SpacePete, Jun 15, 2014.

  1. col0016

    col0016 Active Member

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    We'll see how happy they are about winning a soccer game after we carpet bomb their country in retaliation.
     
  2. JulieW

    JulieW Well-Known Member Silver Stacker

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    OC.
    This was the article.


     
  3. hawkeye

    hawkeye New Member Silver Stacker

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    We're one of the few (relatively) strong economies in the world at the moment so we are expected to subsidise the American military industry and thereby help retain the US Govt's domestic power. Got to help those Americans have jobs.

    Or it could be that the Indonesians are about to invade. There's a hundred million people up there dontcha know? They could come down and get us any second... Not sure how. Fishing boats maybe? Or maybe they are all really good swimmers...
     
  4. BiGs

    BiGs Active Member

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  5. motorbikez

    motorbikez Member Silver Stacker

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    Yeah and the way Obama is meddling in the Ukraine and provoking Russia, he'd love another war on Europe's soil
     
  6. BeHereNow

    BeHereNow New Member

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    So the USA 'took advantage' of Europe needing commodities.
    I take it you would rather the USA just let Europe do without, until they could manufacture themselves.

    Isn't this the way it always go.
    Some country -UK in this case- cannot defend themselves against an invading country, so they want help from a friend.


    The USA lost 400,000 lives in Europe. MORE than UK.
    How did that help USA?
    Oh, yeah, it ended the war, that Europe could not win without the USA.

    ~ ~ ~
    "On 31 December 2006, the UK will make a payment of about $83m (45.5m) to the US and so discharge the last of its loans from World War II from its transatlantic ally.

    It is hard from a modern viewpoint to appreciate the astronomical costs and economic damage caused by this conflict. In 1945, Britain badly needed money to pay for reconstruction and also to import food for a nation worn down after years of rationing.

    "In a nutshell, everything we got from America in World War II was free," says economic historian Professor Mark Harrison, of Warwick University.

    "The loan was really to help Britain through the consequences of post-war adjustment, rather than the war itself. This position was different from World War I, where money was lent for the war effort itself."

    Britain had spent a great deal of money at the beginning of the war, under the US cash-and-carry scheme, which saw straight payments for materiel. There was also trading of territory for equipment on terms that have attracted much criticism in the years since. By 1941, Britain was in a parlous financial state and Lend-Lease was eventually introduced.


    The post-war loan was part-driven by the Americans' termination of the scheme. Under the programme, the US had effectively donated equipment for the war effort, but anything left over in Britain at the end of hostilities and still needed would have to be paid for.

    But the price would please a bargain hunter - the US only wanted one-tenth of the production cost of the equipment and would lend the money to pay for it.

    As a result, the UK took a loan for $586m (about 145m at 1945 exchange rates), and a further $3,750m line of credit (about 930m at 1945 exchange rates). The loan was to be paid off in 50 annual repayments starting in 1950, although there were six years when payment was deferred because of economic or political crises."
    http://news.bbc.co.uk/2/hi/uk_news/magazine/4757181.stm
    ~ ~

    "The great European empires, which had controlled so much of the world, from Africa to Asia, were on their last legs and soon to disappear in the face of their own weakness and rising nationalist movements. We should not view the war as being responsible for all of this, however; the rise of the US and the Soviet Union and the weakening of the European empires had been happening long before 1939. The war acted as an accelerator.

    It also accelerated change in other ways: in science and technology, for example. The world got atomic weapons but it also got atomic power. Under the stimulus of war, governments poured resources into developing new medicines and technologies. Without the war, it would have taken us much longer, if ever, to enjoy the benefits of penicillin, microwaves, computers the list goes on. In many countries, social change also speeded up."
    http://www.theguardian.com/world/2009/sep/11/second-world-war-rebuilding
     
  7. Old Codger

    Old Codger Active Member Silver Stacker

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    BN,

    "The USA lost 400,000 lives in Europe. MORE than UK.
    How did that help USA?
    Oh, yeah, it ended the war, that Europe could not win without the USA."



    ...and neither could Germany!

    No doubt about it, Hitler should NOT have been opposed in Europe. His political and military aims were internal German concerns, and no business of the civilised world.

    The German declaration of war on the USA should have been ignored, and any ship losses in the Atlantic excused.

    Same with Japan, a peace loving nation only concerned with establishment of the 'Greater East Asia Co-Prosperity Sphere'. It was all America's fault that the attack on Pearl Harbor occurred.

    Do you REALLY think that if Germany HAD managed to prevail in Europe, that America would have been left alone with little international trade available to her?


    OC
     
  8. Old Codger

    Old Codger Active Member Silver Stacker

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    ...and Lend-Lease was NOT "free".

    The UK was the only nation that actually paid back all of her obligations as agreed. AFAIK, Russia paid NIL.


    OC
     
  9. Old Codger

    Old Codger Active Member Silver Stacker

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    ...and the 400,000 US dead was ALL of WW2, not just Europe.

    The US lost 0.32 of her 1939 population, the UK lost 0.94, and Australia lost 0.57. - Wkipedia.


    OC
     
  10. col0016

    col0016 Active Member

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    BeHereNow- what are you talking about? I'm all I said was that you can't use post WW2 USA as an example of why we need war because the reason they were prosperous was because they were practically untouched which left them with a massive advantage to get their exports up.

    U didn't say they took advantage of the Europeans, just that it's hard to compete in manufacturing when all your infrastructure has been bombed.
     
  11. BeHereNow

    BeHereNow New Member

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    Sorry for misreading your post.
    That clears it up.

    Economic prosperity, technological advances, medical advances, are still not a reason to "need war".
    If you want economic prosperity, and if war is a way to get there, it has to do with more than exports.
    That is one factor among many.

    The Austrian school teaches that war does not cause prosperity.
    This is a very complex topic.
    There are definitely technological and medical advancements as a direct result of war, and I see no discussion of this from the nay-sayers.

    Capitalism flourishes for the winning side, they get to make the rules, I see no discussion of this by the critics.
    Coca-cola made huge strides in its European markets because of WWII. I'm sure others did as well.

    "Coca Cola was involved in the Second World War.
    Robert Woodruff made a point of supporting US troops so metal cans were introduced to meet their needs.


    In 1941, when the United States entered the war, Woodruff decided that Coca Cola's place was near the front line.

    He sent an order to
    "See that ever man in uniform gets a bottle of Coca Cola for 5 cents wherever he is and whatever the cost to the company".

    http://www.diggerhistory.info/pages-food/coca_cola.htm

    Coke is one example of private business prospering because of WWII.
    Such things are never mentioned, which does not mean they are wrong, only that their arguments are fallacious.

    I see incomplete arguments that ignore important factors.
     
  12. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Wars divert capital, they don't increase prosperity. Increases in prosperity as a result of wars come from the diversion of capital from the vanquished to the victors.


    If they were giving out bottles of Coke, why were cans introduced then?
     
  13. southerncross

    southerncross Well-Known Member Silver Stacker

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    All in your mind

    Don't forget Fanta either, Coca Cola profited from both sides.


    [​IMG]

    A New York Times article, "Great Men and Tiny Bubbles," by Diana B. Henriques, published: Sunday, May 23, 1993, reports, "Coca-Cola, in essence fizzy water and flavoring, is arguably the world's most successful consumer product, instantly recognized and appreciated around the globe."

    Another article, Fanta, Drink of the Nazis, posted on Ubersite, states that, "along with sponsoring the Berlin Olympics in 1936 Coca Cola was a huge supporter of the Nazi regime." During World War II, according to Fanta, Drink of the Nazis, "when an ingredient could no longer be supplied, the German branch of Coke devised a new drink for the Nazis called Fanta."
    Source:http://www.examiner.com/article/why-historians-say-coke-invented-fanta-to-enliven-nazi-soldiers
     
  14. BeHereNow

    BeHereNow New Member

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    Divert capital to product development, innovations, medical treatment advances.
    Sounds like a good thing.
    If you are in business, you want orders to produce widgets. Your bank account does not know if it for war, or peace.
    If you are on the assembly line, drawing a good paycheck, it does not matter to your bank account.....
    Because of war, women entered the workforce, good for the economy.
    There are a lot of unintended consequences of war, some beneficial. Putting a dollar value on them is difficult at best.






    Up to that time, bottles. I'm taking it a switch to cans was for ease in delivery. An innovation.

    The storage of meat in metal cans was a result of war.
    Lots of common things we take for granted are a result of war. It probably would have come about anyway, but war sped up the process.
     
  15. bordsilver

    bordsilver Well-Known Member Silver Stacker

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    Capitalism flourished after Stalin, Mao and Che won their wars as well :/



    I'm still in two minds about the opening article (which I still have to read it properly). I'm sure the Inquisition generated many new innovations as well but that doesn't really mean anything. More important, however, is the ability to take innovations and apply them beneficially to non-war areas of life. This aspect does not flourish under a war machine or a socialist state. It's one thing to correlate economic innovation with war, it's another to correlate such innovation with subsequent economic growth without recognising the fundamental elements required to actually generate that growth are inimical to the things that (perhaps) generated the innovations.

    I'm thinking that another thing to consider is that many innovations are stumbled upon as a result of active attempts to overcome the problem of scarcity (see the induced innovations literature). War artificially generates scarcity in new areas (eg tank production) whilst also generating scarcity in areas of supply that were happening prior to the war (eg fresh food production). This does not mean that people weren't already focussing on innovations addressing scarcity issues prior to the war, but that the scarcity was felt more keenly in the areas of 33rpm Vinyl, 255 horsepower V8's, affordable housing materials or GM-free organic tofurkey.
     
  16. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Not necessarily a good thing. The diversion of capital to the war machine comes at an opportunity cost. For example, WWII cost $296 million (or $4.1 billion adjusted for inflation in 2011)*. Because war is a decision taken by governments with no consultation with the taxpayer ie those that ultimately finance the war, the question that must be asked is "If the taxpayer had a choice in how to spend the $296 million, would they choose war or would they choose to invest that sum in another opportunity, an opportunity that could possibly provide greater return?" It can only be assumed that if given the choice, the taxpayer'spreference would be to invest that $296 million elsewhere. If this were not true, it would not be necessary for governments to appropriate those funds by force in the first place.

    $296 million of taxpayer money could have been more wisely invested in other opportunities which may have led to greater innovation than a war machine. Or preferably, not have been collected in the first place.

    *http://www.fas.org/sgp/crs/natsec/RS22926.pdf

    You are suggesting that war is the best innovator.

    [youtube]http://www.youtube.com/watch?v=wx9EPR-0_-A[/youtube]
     
  17. Lovey80

    Lovey80 Well-Known Member

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    The problem is that economics is dominated by Keynsian Fcktards who always look at figures that governments can easily manipulate (GDP). Economic growth isn't some sort of set constant that just because you see a higher figure that things are better or the economy is better.

    I'm sure the GDP figures of Western Germany looked great when Ludwig Erhard told the yanks to piss off and brought about changes that allowed Western Germany to rebuild. But in reality all that employment generated and immigrants employed to rebuild Germany still only returned Germany to some where below where Germany was pre-war. Imagine if that much manpower, innovation, and resources had been employed to improving Germany instead of rebuilding it?

    As Hayek said very well in the Keynes V Hayek rap(2). "Jobs are a means to an ends not the end in themselves."

    Then "creating employment's a straight forward craft when there's a war and there's draft"

    "If every worker was employed in the army and fleet, we'd have full employment and nothing to eat"

    We have to start allowing our eyes to glaze over when we hear economists ranting about GDP and government involvement in those figures, especially when it comes to war. If they had an ounce of credibility their idiotic ideas would make bombing our own cities and rebuilding them a good idea because these morons only care about GDP figures.

    Think about the scarce resources wasted. How much steel is wasted in a tank that could of gone to building a high speed train? Which one really spurs the economy? A higher productivity generating asset like a train or a human killing destroying tank? Both require mechanical engineers and innovation to build but one enhances lives and one destroys them.
     
  18. hawkeye

    hawkeye New Member Silver Stacker

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    Industry was still happening in the second world war, particularly in places like America.

    What the Austrian shoolare talking about is the unseen. How many things weren't produced because so much capital and resources were diverted towards the war effort? It was only when the war was over that you got an economic boom and explosion in innovation. It was far more muted in the war period. Imagine if that economic boom had occurred 10 years earlier. How much better would we be off today. My experience is that government retards economic growth.

    I would say that government's need wars. The reason they need them is because they are the ones who ultimately stifle the economy. It is a good distraction and it gets rid of many young men that can't otherwise find employment because of what the government has done in terms of all the rules and regulations to protect older workers. It can show up on the numbers as being very good for the economy but when you look at what is happening on the ground, you see rations, people maimed and killed etc.

    Smaller wars like Iraq and Afghanistan are basically money-laundering schemes. You scare the population that they are under threat. You then take money from the population through taxes and use it to buy the vehicles necessary to prosecute the war. This comes from publicly-held companies which receive quite a boost in turnover and profits which results in higher share prices. Guess who's holding the shares? Then when you have bombed the countries infrastructure you use further taxpayer money (and overseas debt) to fund the reconstruction. Again, it goes to publicly-held companies and well again, you can guess who is holding shares in them. End result. Lots of jobs in military industries to keep the population happy, a massive debt, a crumbling infrastructure, and a housing bubble from keeping interest rates low to pay the overseas debt. Basically you move money that is raised in taxes, through a series of cutouts (involving many deaths and much misery of others), onto your own personal portfolio. Works great.

    Wars are necessary for big bureaucracies. Not for the rest of us.
     
  19. BeHereNow

    BeHereNow New Member

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    A family member commented that I must be writing another book.
    Apologies, no need for everyone to read everything.

    First, I am anti-war. I remember conversations with friends and my position was "War is senseless, we need to end it."
    Friends told me "Join the real world, there will always be war, get used to it."
    I am not predisposed to liking war. Not looking for points, just trying to shine some light.

    Still I paid attention to those to those arguments that said, 'Well, war improves the economy."
    Then a group of people start saying 'We were wrong to think war was good for the economy, it isn't.'
    So I look at their reasons why what I have been hearing all these years is not true, and I see no rebuttals to the primary reasons.
    An argument that ignores primary reasons is called a straw man argument. This is a fallacy of logic. This only means the argument is suspect, not necessarily wrong.

    The rebuttals I see are bringing morality in.
    They suggest that there are good ways to spend money, and bad ways to spend money - from a human standpoint.
    Economics has no morality.
    Science (in and of itself) has no morality. Scientists get their morality from ethics, not science.



    "The money could have been spent for better things.' -value judgment, has no bearing on economic improvement.
    You want to bring morality in, fine, make a moral argument against war, easy enough to do.
    ~ ~

    What I am talking about is unseen as well.
    Women entering the workforce - how do you measure the economic benefits?
    Robotics for missing limbs destroyed by IUDs, how do you measure the economic benefits.
    Coke expands into Europe, creating a brand new market for their product - They were selling plenty to civilians. Not just coke and Fanta I am sure.
    Not all arguments can be supported by data, numbers. Sometimes it is critical thinking.

    Sounds like a morality argument to me.
    Guns bad, butter good.
    The economy does not care.

    We agree, war was the cause of the economic boom. First the cause, then the effect.

    Except, war sparked the boom. Imagine if that boom never happened, how we would have to wait for those benefits.

    Well, a common viewpoint, that surely is a generality, with lots of exceptions.
    In the USA, no government: no railroad system, no interstate roads, no improved waterways (locks and dams), no airports, no health inspections, on and on. I suspect the same in other countries.

    War is a tool of big business. That's what my crowd has always said, and I believe it.
    Halliburton is a recent example for the USA.
    There is profit to be made from war, and we know who likes profit.
    In capitalism Government does not make guns, bullets, bombs and tanks. Big business does.
    The non-capitalists, they buy these from the capitalists, who make good money, selling the tools of war (no moral judgments, please - the topic for another day).

    Government stifles the economy by stupidity, not intentionally. War is an intentional effort.

    "publically held companies" - that is big business - right? I am the public.
    Who holds the shares - stock holders!
    Taxpayer money funds reconstruction, agreed. Who cashes the checks? You guessed it, Big Business.
    Maybe it is different in your country - speak up, I want to hear. Maybe the government owns the factories producing construction materials, not that way here.

    ~ ~ ~
    ~ ~ ~

    We agree, the numbers do not tell the story. Those who say war is not a benefit economically and use numbers to show this are peeing into the wind. Sound reasoning is needed.

    Dream all you want to, the USA and allies are not going into a peaceful Germany and build hospitals, schools, more, out of the goodness of their hearts.
    You offer a false dilemma. 'War reconstruction, or peacetime construction - which is better.' Those are not the choices. Do nothing for Germany - that is a choice.

    A morality argument.
    The economy does not care.
    Prosperity does not care.
    Moral arguments have their place. It is easy to make a moral argument against war.
    Immoral profits are still profits.
    Yes, of course.
    And if everyone were employed in farming, we be cold, homeless, unable to travel, with full stomachs.
    False dilemma.
    It does not have to be all guns or all butter.

    Eyes glazed over, yes, I think I see it.
    Tanks are melted down for trains.
    Which is better for the steel makers, engineers, designers - to make tanks, then melt them and make trains, or to just to make trains.
    The economy is better off when two jobs are created, not just one. Morality is a different issue.

    ~ ~ ~
    ~ ~ ~

    You make a numbers argument, and most of us believe numbers arguments are misleading, on both sides.
    A good innovator, not the best.
    The space race is a better innovator. Money down a rat hole to some, government money squandered when people are starving. Still, it opens doors to progress, and improves the human condition in many ways.
    We agree.
    However, this rebuttal is ineffective at demonstrating that no government expenditure has any economic value. Hogwash.
    Some government expenditures are invaluable for creating economic value.
    Transportation systems, education systems, health care systems, armed forces to protect from invaders, more, all can create economic value for the citizens.
    Not necessarily, but potentially, and in practice, it happens. How often is a different matter.


    ~ ~ ~
    ~ ~ ~
    Okay, got me!
    I should have said 'When a capitalist country wins the war.'
    So here we go with the moral arguments.
    'Was the Spanish inquisition good for the economy?' Really????
    You know what, maybe it was. Does that justify the event? WTF!!!
    It seems to me you and others want to make economic progress a moral issue.
    Fine. 85 individuals owing 50% of he global wealth is immoral. We need to get an army and take it away from them. That would be good moral progress. (being factitious).
    Putting a value judgment on motivation morality.
    I have never, repeat never, (like it never, ever, happened) heard someone suggest that war caused an innovation that never would have happened without war.
    If someone has not been considering this, they are on your side of the fence, not mine.
    Sooner is better than later for economic prosperity from innovations, and war makes it sooner in some cases.

    ~ ~ ~
    ~ ~ ~
    ~ ~ ~
    Many of us have been making arguments against war for many years, and the 'Flower child's' of the 60's were not the first. This from an Old Hippy. An Old biker, and an Old Hippy, what a combination.
    This idea that war does not bring economic boom is yet another anti-war argument.

    Hey, I wish you luck.
    After all, it is the beneficial result that matters, not the fallacious, misguided arguments that got us there. But, that would be a moral judgment.

    Cheers
     
  20. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Your premises are incorrect. But that is by-the-by.

    Regardless of whether the figures quoted are valid or not, you have not addressed the core issue which is one of opportunity cost.

    Granted, it may open a door to progress sometimes, but the most effective innovator is a free market whereby goods are produced according to the price mechanism that favours the production of that which is desired and eliminates the production of that which is undesirable. Governments are notorious at bankrolling the undesirable.

    The lack of a war does not hurt economic growth, government policy and regulations are the cause of our economic predicament. More government interference in the economy will only make matters worse.

    Government expenditure may provide some with profits, but the economic value of these profits is not shared by the citizens of a country or state. Government expenditure benefits those closest to the source or special interest groups with very little benefit flowing into the wider community. As such it can be argued that there is no economic value to citizens in the provision of services by a government - all that can result is that taxes are squandered or they are spent on projects that are overpriced, unwanted, noneffective and inefficient vis-a-vis, transportation systems, education systems, health care systems and even armed forces. None of these create economic value (and it certainly isn't invaluable) for citizens because they deliver a service below market standard at a cost above market standard. Where is the economic value in that?
     

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