Does defense spending stimulate the economy?
Pres Mike:
Does increase military spending stimulate the economy? While this is a general question, I am asking for the US specifically.
I think during World War II, the answer is yes. But the government fundamentally changed the economy. Unemployment was basically ended. High tax rates for the rich and strong union support. Manufacturing became more efficient, and workers were paid well with federal subsidizes. But all that federal support was temporary. The reason the US continued to enjoyed such good times the following decades is because Europe and Asia was devastated by the war. But of course, there was a painful recession as the American economy adjusted from a wartime economy to peacetime economy.
But in modern times? I don’t think so. Federal spending on the Iraq and Afghan wars have not benefited the average American. Why is that?
Beet:
Quote
The reason the US continued to enjoyed such good times the following decades is because Europe and Asia was devastated by the war.
This is not true. European and Asian economies recovered extremely rapidly and by the early 1950s, had surpassed their prewar peaks. I don't know where this myth came from and why it's so durable. I heard this from my teachers in grade school like 30 years ago. I'll probably be hearing it for the rest of my life. It has disturbing implications that if America just blew up the rest of the world, we'd all be living in paradise, which is obviously not true.
As far as defense spending, sure it stimulates the economy, by reducing unemployment. That has knockoff effects. It had a big effect in 1940-41 when unemployment was still high coming off the Great Depression. But in current times, when the problem is inflation and not unemployment, it could make the problem worse.
Pres Mike:
Quote from: Beet on March 22, 2024, 06:20:33 PM
Quote
The reason the US continued to enjoyed such good times the following decades is because Europe and Asia was devastated by the war.
This is not true. European and Asian economies recovered extremely rapidly and by the early 1950s, had surpassed their prewar peaks. I don't know where this myth came from and why it's so durable. I heard this from my teachers in grade school like 30 years ago. I'll probably be hearing it for the rest of my life. It has disturbing implications that if America just blew up the rest of the world, we'd all be living in paradise, which is obviously not true.
As far as defense spending, sure it stimulates the economy, by reducing unemployment. That has knockoff effects. It had a big effect in 1940-41 when unemployment was still high coming off the Great Depression. But in current times, when the problem is inflation and not unemployment, it could make the problem worse.
What were the effects of increase defense spending from 2001-2008? I know the economy was "ok" because of the housing bubble. Did the increase of defense spending helped?
I think in the 2009-2015 period, defense spending clearly had no effect on the overall economy
Beet:
Quote from: Pres Mike on March 22, 2024, 06:24:40 PM
Quote from: Beet on March 22, 2024, 06:20:33 PM
Quote
The reason the US continued to enjoyed such good times the following decades is because Europe and Asia was devastated by the war.
This is not true. European and Asian economies recovered extremely rapidly and by the early 1950s, had surpassed their prewar peaks. I don't know where this myth came from and why it's so durable. I heard this from my teachers in grade school like 30 years ago. I'll probably be hearing it for the rest of my life. It has disturbing implications that if America just blew up the rest of the world, we'd all be living in paradise, which is obviously not true.
As far as defense spending, sure it stimulates the economy, by reducing unemployment. That has knockoff effects. It had a big effect in 1940-41 when unemployment was still high coming off the Great Depression. But in current times, when the problem is inflation and not unemployment, it could make the problem worse.
What were the effects of increase defense spending from 2001-2008? I know the economy was "ok" because of the housing bubble. Did the increase of defense spending helped?
I think in the 2009-2015 period, defense spending clearly had no effect on the overall economy
Oh, it did. I was living in the D.C. area and we hardly felt the 2007-09 "recession" at all because the government jobs were all still around. I remember interviewing in December 2008 for a job and how easy it was. As if all the doom and gloom you saw around was just noise. A lot of those government jobs were defense related.
Pres Mike:
Quote from: Beet on March 22, 2024, 06:26:44 PM
Quote from: Pres Mike on March 22, 2024, 06:24:40 PM
Quote from: Beet on March 22, 2024, 06:20:33 PM
Quote
The reason the US continued to enjoyed such good times the following decades is because Europe and Asia was devastated by the war.
This is not true. European and Asian economies recovered extremely rapidly and by the early 1950s, had surpassed their prewar peaks. I don't know where this myth came from and why it's so durable. I heard this from my teachers in grade school like 30 years ago. I'll probably be hearing it for the rest of my life. It has disturbing implications that if America just blew up the rest of the world, we'd all be living in paradise, which is obviously not true.
As far as defense spending, sure it stimulates the economy, by reducing unemployment. That has knockoff effects. It had a big effect in 1940-41 when unemployment was still high coming off the Great Depression. But in current times, when the problem is inflation and not unemployment, it could make the problem worse.
What were the effects of increase defense spending from 2001-2008? I know the economy was "ok" because of the housing bubble. Did the increase of defense spending helped?
I think in the 2009-2015 period, defense spending clearly had no effect on the overall economy
Oh, it did. I was living in the D.C. area and we hardly felt the 2007-09 "recession" at all because the government jobs were all still around. I remember interviewing in December 2008 for a job and how easy it was. As if all the doom and gloom you saw around was just noise. A lot of those government jobs were defense related.
Which is great for white collar workers in the D.C area. Or of you work in a tank factory in Ohio. But it wasn't like WW2 where every sector in the economy benefited
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