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

"most effective innovator" - No one - as in not a person - that I have ever read, has said war is the most effective innovator.
The discussion is not about about 'the best', just about what works.

If you think defending the citizens against an invading nation is undesirable, you need to think about things.
If you think you can lob hunks of butter and defeat an invading enemy, you need to think about things.

Sorry, I do not see any benefit to me from Ford, GMC, Walmart, or any big business.
Shared equally is not a capitalist strong point. Equal opportunity, different story.
Walmart could go under next week, won't bother me as much as having to go without police and fire protection, maintained roads, and much more.

Okay, someone other than the government can give me roads, ports, transportation systems, and more.
And that would be.........??
Coca-Cola, of course.
Or is it Walmart that will be so generous?
Maybe Mercedes will build roads for their cars and trucks. They can just incorporate the cost in the vehicles.
That $40k Mercedes just became $400k. That's efficiency?

Government is a necessary evil.
The ones that govern least, govern best.
That's my story and I'm sticking to it.

Duty calls.
Cheers

 

WTF are you talking about? The USA didn't boost German economic activity it stifled it until Erhard completely disobeyed American central planning and went his own way. Killing off price and monetary controls etc etc...... It was millions of Italian and other immigrants that were needed from other countries that rebuilt Germany not the Americans.

Of course peace time construction is better for an economy. Instead of wasting resources rebuilding say a factory those resources could go towards a second factory that doubles productivity of a town.


Lovey80 As Hayek said very well in the Keynes V Hayek rap(2). "Jobs are a means to an ends not the end in themselves."
A morality argument.

No a GDP figure does not care. The economy is me and you and everyone else reading this page. And a Keynisian idiot does not care about where, when, how or who is in employment in what, they just care about a figure on a piece of paper improving and an employment number rising.... Regardless of the forward future consequences of those actions.

Ha! Hayeks next line in the rap..... "There was no multiplier, consumption just shrank as we used scare resources for every new tank. Pretty perverse to call that prosperity, ration meat ration butter, a life of Austerity"

No one is making a moral argument against war here mate. Every argument has been made against the "war is good for the economy" fallacy has been an economic one. Prosperity went backwards during the two great wars.... Every Keynesian supporter was crying out for even bigger economic intervention once the war ended. They believed that another great depression would ensue once millions of unemployed soldiers came home with no jobs to go to. But there wasn't time and the real end to the first great depression didn't start until that time. The war didnt cause the American economic boom when it ended... It simply stiffled it while it happened.

Lovely80 "If every worker was employed in the army and fleet, we'd have full employment and nothing to eat"
Yes, of course.

No one is saying it has to be all guns or all butter..... BTW the Food metaphor represented all the trades you mentioned that combat the cold and homeless etc. The point was, that while the GDP figures look good building tanks, those figures are false when you are really looking to measure prosperity. Every worker thats deployed to war is taken from the workforce where his efforts could have gone towards improving peoples lives instead of destroying them...... In a nutshell the "War is good for the economy" argument is only valid if you are looking at a data point on a piece of paper.

Lovely80 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.

Again, its nothing to do with morality here. (well it does but not in the way you are suggesting).......

False dilema??? In your case the tank gets sent on a ship from say America to europe gets blown up and the train never gets buil. For the same amount of effort two jobs could have been created......but the result was two trains......That both still exist and both enhance a countries productivity.

 

In responding to lots of people you probably misread what I actually wrote. I was deliberately not moralising and was sticking simply to economic arguments. Let's go through it again.

First, significant innovations have happened during major wars. This is not really in question.

Second, the important thing for economic growth is not innovation in and of itself. It is the ability to further develop those innovations and incorporate them into the supply side of the economy. Russia, China and Cuba failed. USA, Britain, Australia succeeded. Innovation is a condition but not the only condition required for economic growth. The "paradox" is that even if war is good for creating significant innovation it is lousy at actually translating that into economic growth.

Third, it is important to delve into the reasons why war may have seemed to generate so much innovation. The article posits the idea that "the desire to prepare for war spurred technological invention and also brought a higher degree of internal social order." This is actually an overarching statement that doesn't actually answer "What are the mechanisms?".

I posited the induced innovations hypothesis (as suggested by J. Hicks in 1932) whereby the process of technical change is guided by changes in relative prices of the inputs into production. Or, to put it another way, scarcity of particular inputs drives people to look into ways of reducing the impact of that scarcity on their production. As I said, we know that war creates two types of scarcity that would not otherwise have been present in the economy:
1. A scarcity of war materiel and the ability to deal with the impacts of fighting. This induces new types of machines, chemicals, logistics and medical procedures that perhaps would not have been developed.
2. A scarcity of previously abundant consumer goods and services. This induces new consumer goods and services as well as more efficient production (or alternative methods) of obtaining these.

Many of these innovations may have no relevance once the war is over (the use of charcoal to run cars due to fuel shortages for example). Many may (your new food preservation methods for example). As with all innovation there is no a priori way of actually knowing what innovations will be truly useful for the consumer or in the production chain or even if any will be developed at all.

I also said that observing that innovation happens during war says absolutely nothing about the innovation that would or could have happened in its absence. Innovation is constantly happening but may simply be in areas of life that are less noticeable. The innovations around reducing sulfur dioxide emissions in the US probably wouldn't have happened during a war. The creation of longer lasting hip replacements probably wouldn't have happened during a war. The creation of cost efficient methods of producing an extremely wide variety of foodstuffs, entertainment, landscaping, artistic options, environmental sustainability solutions etc certainly don't happen during a war.

I would add that many innovations developed through war could no doubt have been developed as a result of other things. Natural disasters is an obvious one. Another is engineers and logistics people working on solutions to working profitably in extremely hostile environments (such as deep ocean, deep mining, cryogenics, very hot, very remote locations, very dry or very wet conditions - all of which are present in the various Pilbara operations I might add) develop many, many beneficial innovations. Engineers working on philanthropic or prize-money competition is yet another (c.f. the Lifestraw, the Bill Gates Foundation, Virgin Galactic or Space-X).

As I said earlier and as Tyler Cowen (the article's author) said, think about the mechanisms that underlie the wartime innovations, see whether they are real and actually different to non-wartime innovation and then see if the differences are beneficial and can be incorporated into peacetime systems. No "moralising" about the goodness or badness of war is needed.

 

bordsilver

Thanks for the reply.

Lots to think about, like it seems a scarcity of arms and legs led to innovations of robotic limbs. No, you didn't say that, it was inferred.
I would say 'Necessity is the mother of invention', and war increases needs. Capitalism likes increased needs.

I can't help but think that when the Spanish Inquisition is brought into a discussion someone is putting a moral spin on things, or just using an emotionally charged subject to prejudice the reader. As it turns out you are much less inclined than others to inject moral issues, my apologies.
We agree that war creates no unique and beneficial innovations, as I pointed out several times to other posters.
We also agree that no human activity, action, or reaction, will guarantee economic improvement, war included. You did not say that, but we should be able to agree there are no foolproof ways to improve the economy. It is often not the goal of war to improve the economy, and unintended consequences are even less predictable.

As I pointed out there is a laundry list of types of events that have, in the past, improved economic prosperity as a result of war.
Post war exports alone does not tell the story.
Innovations in science, medicine, labor, energy, alone does not tell the story.
Plunder alone does not tell the story.
Creating new manufacturing jobs where none existed, reducing unemployment, does not tell the story.
Removing from power non-benevolent dictators, terrorists, or fascists, does not tell the story - thus creating new markets and making new resources available - that would have been impossible without war. This often results in imperialism, unfortunately causing yet another war.

I see these things as relevant to the subject, you see them as incidental, or non-existent.

War is not good, and is to be avoided whenever possible. Economic improvement, real or imagined, does not justify it.
Those who have or want the money and power disagree.

 

You must have missed the Sesame Street episode that explained the difference between 'good - better - best'.
War is not good because it ends human life prematurely.
It has nothing to do with money.

 

I'll try one more time.

I've got good news and bad news.
First the good news. War sometimes leads to economic prosperity. (Some would disagree.)
Now the bad news. War ends life prematurely and should be avoided. (Some would disagree.)

Not black and white, false dilemma.
That is the way life is.

 

Keep it up you 3, this is a very interesting read.

BeHereNow, do you at least concede that while war diverts scarce resources into the military industrial complex (and possibly leads to innovations) this means that those resources are taken out of the rest of the economy. Do you agree that creating tanks is probably less beneficial for the economy than roads/buses/trains that can create increases in efficiency? Do you agree that innovations in weaponry will probably not positively enhance the rest of society as innovations in dentistry or farming methods?

I don't think anybody denies that the military has been the source of innovation and that some of that has crossed over and been of use to the rest of society. The question is whether taking scarce resources and using them to build weapons to destroy workers and infrastructure is likely to be more beneficial for society as a whole than the type of free market innovations we've seen with phones, computers and cars for example.

Wars since 9/11 have cost the US roughly $4 trillion, do you think that possibly that could have been spent more effectively in other parts of society? Imagine if the $4T had been used to fund scientific research.

 

I disagree that war leads to economic prosperity ever. It does for a few but not for the whole. It may give the illusion that it does by looking at numbers but I don't think it's warranted when you actually examine the social situation.

Why do we need such huge economic growth all the time though? I think that's a question that needs to be asked. If people are largely getting what they need and want from the market, ie. the market is supplying what people demand then where is the problem?

I think the problem comes from the artificial distortion of the market. When you have the huge levels of debt that have built up (both public and private) then sure, you need a ton of economic growth to be able to pay them off. But if that debt didn't exist at those levels, would the economic growth be needed? If we didn't have to constantly keep inflation running without letting it get too high would you need constant huge economic growth?

I think it's the constant distortion of the market which then requires these huge economic false booms which ultimately always lead to big busts. Saying that war kind of solves this problem, whether it does or not (and I'm still doubtful about that) to me, is missing the point entirely.

Why does a market, that is purely there to meet the needs and wants of people, need to be spiked? I think the answer goes straight to the financial and gpvernmental system. You have a lot of people in a lot of debt to a whole lot of other people. The only way it can be paid is if they have their jobs and the only way for that to happen is if you have constant large economic growth which I would argue is impossible. It's the financial system we need to look at. Now, maybe war nominally solves that issue, at least temporarily, but really shouldn't we be asking what the underlying problem is here rather than looking for ways to cure symptoms?

The market is there to provide goods and services, not jobs, not money and not economic growth. The latter are all just ancillary effects.

 

Jut so you don't think I'm ignoring this

Not morality at all. I care about the goods and services I have access to. I don't care what "the economy" thinks if my food is rationed. That tells me the economy is not serving my, or others needs. And if a ton of production is going towards weapons, rather than towards food and other necessities, then it ain't working. Regardless of numbers.

We don't agree, but it's not an argument that I intend to pursue. Too difficult to prove either way.

See previous answer

War is only a tool of big business because the population can be taxed and put into debt against their will. Big business goes to government because that's where the biggest pool of money is. Without that pool of money that is forceably extracted I don't think many people would be interested in voluntarily pay for tanks and such.

Agreed.

Yep. Not to mention all the jobs in the war industry. A lot of people benefit from all that misallocated capital which is stolen by force from the general population.

 

I propose it all depends on which side you are on and who writes the history.

It also depends on what the definition of prosperity is, how you you measure it and what your values are in the society in which you live.

Material wealth would mean very little to the folks invading Iraq at the moment except for the quality of arms they are able to procure, on the other side of the coin those who are fleeing the onslaught would be leaving behind most likely the majority of their assets in order to stay alive.

In this instance those who would benefit the most dollar wise are those who supply the hardware to effect such an offensive and those who provide transport and or shelter for those fleeing the theater of war.

Most of the technology and research for modern warfare is already well in place, as a race humans have basically perfected the art of killing each other to the point that we even agree with our enemy's that some of the inhumane shit we have dream't up should not be used. The new scary stuff will not be revealed until well after the next big conflict and as such is of no benefit to the here and now.

The major benefit's (if you can call them that) of past combat technology are already well infused within modern life globally as a result of capitalism and are available to all already.

Modern warfare in the current time is only of benefit to those with an ideological grudge or to those who manufacture, supply services, or have a vested interest in financial gain that will increase in value as a result of war.

It is interesting to note that with all conflict on earth in the last hundred years there are a few corporate organizations owned by the same family's that have reaped financial rewards time after time as a result of war and that the same family names keep cropping up time after time in Banking, Politic's, the military industrial complex, the U.N, Hollywood, Media, New's, etc etc and time after time they all seem to have connections within "democratically elected Gov't" in the western world. Ex employee of such and such a bank or other associated organisation has become the norm now in Gov't at the global level rather than the exception.

In turn it seems to be the case that there has been a cascade effect in the past few years in country's diametrically opposed to western rule and reserve banks, it would seem on the face of things that a country is much more prone to unrest if they do not have a reserve bank system and must suffer the consequences a whole lot more than those that do.

The lack of major wars is a danger as it allows the population to remember they actually hire and pay for those who assume control of every aspect of their life.

People all too often neglect the FACT that public servants are their employees and not their masters.

 

You talk as though there is a choice - we can do this, or we can do that.
When someone threatens to burn your house, and rape your children, I see no choice.
Let's have a vote, go to war, or peacetime. I know which I'm betting on to win. What choice is that ?

Let's have a vote, lose your house, your spouse, your children, to marauding hoards of terrorists, or go to war. I know which I'm betting on to win. What choice is that?

You folks keep wanting to frame this like -'Which would you rather have, guns or butter?' I choose butter.
Now be honest, which would you rather have, countrymen raped and pillaged, or war. Not a rhetorical question. I choose war.

If there is a war, what are some consequences? That is the question. Not, didn't we waste money on this or that particular war.

Here is a tough question for you.
Should U.S.A. have NOT spent one dollar on WWII, whether to build tanks, or send a boatload of money across the pond?
Speak now.

Profit is no reason to go to war, for a reasonable person. I've said that as many times as I care to.

You go to war to protect the life and liberty of family and friends. Not profit.

~ ~ ~

So here we are, all family member raped in all orifices, then skinned alive, or go to war.
What do you choose?
Lets say, a real stretch here, you choose war.
What might be the consequences.
You stand up and say 'No tanks, I want tractors to farm the land.'
Warriors lose limbs in the battles and you say 'No artificial limbs, I want a cure for childhood illness.'

Which is the better world, war, or no war. A hippy dream - no war.
That doesn't mean people do not meet their future spouse by serving during war, and live happily ever after.
Good things happen to bad people.
Good things happen, in a round about way, from bad events.
Ever talk to a child whose parent was a victim of rape, leading to the birth of a child - them.
Good thing, from a bad event. That does not mean they think rape is a good thing.

Saying, 'Gosh, society will be better off economically if there are no wars.' - will not prevent wars.

From my perspective there is only one question - "In the even of war, can economical prosperity be reasonably expected?"
History, and reasoning, say yes.

This whole 'Wouldn't it be a better idea to do this instead?' is a red herring, total distraction, not the issue.

Here is what you keep missing. $4t was not going to be spent on scientific research.
That was not a choice. Not a choice in the real world.
No one said, "Okay, war, now remove funding from scientific research.' NO ONE!

Over $500 billion a year, each and every year, $6 trillion since 9/11 - a bunch of money, right? More that the wars.
Given through welfare programs to people who do not want to work.
Mostly (not all) given to people who never worked, and are not disabled or aged.
I have fact and figures to back this up, not just 25 years having a welfare caseload.
80% of welfare money given out is to chronic, multigenerational, loafers.
On top of the $500 billion, another $100 billion given to good people, just needing some temporary help.
Which should go first - welfare, or war effort? I say welfare.

Since there is a welfare program, that I am against, let me be honest.
That welfare money is not stuffed into mattresses. It is given to business, and helps the economy. Junk food companies love food stamps, big profit from food stamps.
Walmart friggin' lives off welfare, between what they take in at registers, and what their employees get to supplement low pay. That equals for all profits, is my educated guess.
See....you got me started.

Better ways to spend money than war or welfare.
That does not mean that society does not get some economic benefits from those sources.
Welfare - we can end it.
War - going to be around a long time, not our choice to end it.
I can't tell invading forces -'Gosh, please don't rape my children, I don't want to have to build tanks when I could use the money for a new tractor.' The argument is lost on them, you folks keep trying to present it to me, and I'm not buying it either.

 

Hawkeye

I read your posts quickly, we agree on much.

When less than 5% of the populations own over 95% of the wealth, it seems to me it is just about impossible to improve the economic standing of society, without the top 5% getting the major portion.
No proposed plan that I can think of will not benefit them the most.
Mass uprising, a la French Revolution, excepted. That reminds me of war, not over life, but money.
Do you see it differently?

ANY economic prosperity benefits them the most.

 

This is backwards.
Government says 'We need guns, bullets, tanks, and are now accepting bids. Who wants in?"
They just announce, don't knock on any doors.

Business looks for buyers - sees the government - with an outstretched hand full of money.
Being good capitalists, they take the bait.
They are in cahoots.

~ ~
Okay, I read it a different way, and not backwards.
Business only goes to government when they have an invitation, and they accept because that is where the money is, as you say.

 

BHN,


"When less than 5% of the populations own over 95% of the wealth,"

Prove it!

IMNHO, Pure and simple BULLSHIT!


OC

 

Except possibly JulieW (but I don't think so) none of the members who've posted on the past couple of pages on this topic could be called pacifists or do not see a need for some form of "national" defence. Many (including myself) do strongly advocate non-violence in all human interactions but that certainly does not imply pacifism. We all have acknowledged that no matter how good most men become, there will always be at least some small element who will resort to crime. Crime will always be with us. Yet we still condemn crime and work to reduce it.

In terms of US, Canada, Australia, New Zealand, India etc coming to the aid of the UK in WW2 I have said previously that wars have a way of making kindred peoples forget their differences and join together for common defence. The number of free countries during this time period were very few and if I had been alive I would have willingly volunteered to aid in preserving the liberties of our countries against authoritarian invaders. What I think gets lost is that this willingness to protect does not imply the willingness to support the invasion of other countries such as Iraq, Afghanistan etc in recent times. The US has unfortunately morphed from being a beacon of freedom and liberty to being an invasive fascist-like state which has left enough liberty and free enterprise to fund the parasitic and destructive military-industrial complex (the transition to imperialism that you decried).

Getting side-tracked. But, yes, I think the fact that the liberal countries "won" WW2 and consequently reinvigorated a large array of liberal democracies quite possibly did benefit in more economic prosperity because of the increased globalisation that resulted. If liberal democracies had not won the opening article would not have been written because major wars in and of themselves do not generate economic growth (during or after the war).

 

Just out of interest, when was the last time the sovereignty of a western nation was endangered?
You can't compare Iraq, Vietnam, Korea etc to a direct threat of violence where you have no choice but to defend yourself. If I had to guess I'd say that there has been no situation like that in 70 years.

So now understanding that it is not a case of self defence (such as the Allies against Germany) and there IS a choice, do you still feel that way?