Military Keynesianism

John Maynard Keynes showed us that government can, through deficit spending, stimulate an economy out of a recession. Military Keynesianism is the idea that a large military budget will stimulate and maintain a growing economy.

That's true if you don't care what kind of economy you have and you're willing to go bankrupt.

The recent stimulus package of $150 billion simply mailed out to the public was pure Keynesianism. The stimulus worked. It delayed the onset of the recession for at least two quarters. It did much to keep our slow-motion recession from tumbling into immediate crisis. It also added $150 billion to the national debt. We had to borrow that somewhere.

Unfortunately, the financial mess that we are in reflects more than the usual recessionary drop in total demand. It comes from out-of-control Military Keynesianism; the spending of money we do not have for things we do not need.

The US is now spending $1 trillion a year on its military. The excuse for much of that spending is that its shores up our economy and creates jobs. To an extent that is true; Keynesianism delivers -- in the short run. Keynes was a short run kind of economist. This problem now has been around a long time.

Military spending was dropping following the end of the Vietnam War as Congress was asserting its control post-Watergate. But Reaganomics came in as Military Keynesianism with a vengeance. A trumped up fear of the crumbling Soviet Union sent military spending gushing out in a stream that continues unabated.

Then George Bush and the militaristic response to the 9/11 attacks set us on course to the disaster of today. Defense spending more than tripled from 2000 to 2008.

America has been living a Military Keynesian life. We have all the benefits of Keynesianism but we have all the costs of militarism. The cost-benefit balance is, in the long run, very negative. And we can't afford it.

National Security Council (NSC)-68 of April 14, 1950 said that: "the American economy... can provide enormous resources for purposes other than civilian consumption while simultaneously providing a high standard of living." This is still the official policy of the United States government: that we can afford both guns and butter, that we can, at the same time, have the highest standard of living in the world and the most expensive military.

Even before the ink was dry, President Eisenhower said: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” And, it turns out, he was right.

The economy can no longer pay for both guns and butter. America would have to tax itself ever higher to pay the military bill. Since we have not been investing in civilian output, we would have to pay those higher taxes from a stagnant or declining level of output.

We have specifically refused to do this. Instead the United States Treasury must every working day go to the New York money markets to ask to borrow $3.2 billion more.

Our military spending is bankrupting us. But we do it anyway because of a corrupt military, arms industry and Congress working together to maintain their wealth and power.

The scam of the moment is something called “earmarks”, a technique the Congress uses to buy political support from the industry that stands to benefit from all of that spending. Earmarks are spending authorizations, typically military spending in a specific Congressional District, that are inserted, without hearing or examination, in some unrelated bill.

These mini appropriation bills are frequently unrelated to any military mission or need and are sometimes even contrary to military wishes.

Military Keynesianism is defended as a macro economic stimulus. The system of earmarks is defended as a micro economic jobs program. These are among the most inefficient and destructive economic programs ever conceived by mankind.

Earmarks skyrocketed after the Republicans took control of the Congress in 1994, increasing from 1500 in 1995 to 14,000, worth close to $20 billion, in 2005. But the crime is bipartisan and the Democrats seem to believe it is now their turn.

We should remember that the term military Keynesianism was first used to describe the program of military spending that was used by the Nazis to revive the German economy. In Germany, military Keynesianism overcame the Depression and created the "German economic miracle."

Military Keynesianism leads to war, imperialism and imperial bankruptcy.

It isn't just political corruption; it is also economic corruption. Contrary to NSC-68, America cannot afford both massive expenditures for guns and have butter too. We have to pay our way.