This article is from the March/April 2010 issue of Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org/archives/2010/0310garrett-peltier.html


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This article is from the March/April 2010 issue of Dollars & Sense magazine.

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Is Military Keynesianism the Solution?

Why war is not a sustainable strategy for economic recovery.

By Heidi Garrett-Peltier

The United States is currently preparing to send 30,000 additional troops to Afghanistan by summer 2010. Military contractors, deeply integrated into the U.S. economy, will continue to prosper and profit from increased military spending resulting from this surge of troops. At a time when unemployment in the domestic economy remains near 10%, it may seem convenient to fall back on the principle of military Keynesianism: War is good for the economy.

John Maynard Keynes, the British economist whose work has once again become popular in the wake of this most recent economic crisis, advocated increased government spending to lift an economy out of recession or depression. When consumers and businesses slow their spending, the government can step in to increase demand for goods and services so that businesses can continue to produce and people can remain employed. This fiscal stimulus could take the form of infrastructure projects, healthcare, education, or other productive endeavors. By this logic, military spending can lift an economy out of recession by creating demand for goods and services provided by military contractors, such as the production of tanks and ammunition or the provision of security services. Advocates of this strategy point not only to the widespread employment created by military spending, but also claim that military spending creates well-paying, stable jobs.

It is true that military spending creates jobs throughout the economy, and that many of those jobs are well-paying. But at a time when our jobless rate is high, infrastructure is crumbling, and global climate change is becoming an increasingly urgent matter, we must ask whether military spending is truly a solution to our economic woes or whether we might be able to create more jobs in productive areas that also help us meet longer-term goals.

In a recent paper that I co-authored with Robert Pollin, we show that dollar per dollar, more jobs are created through spending on clean energy, health care, and education than on the military. Further, we show that more middle-income and well-paying jobs are created in all of these areas. For each $1 billion of spending, over 17,000 jobs would be created in clean energy, close to 20,000 in health care, and over 29,000 in education. That same $1 billion would create only 11,600 jobs as a result of military spending. If we look at well-paying jobs, those that pay over $64,000 per year, these alternative domestic spending areas also outperform military spending. The same $1 billion would create 1,500 well-paying jobs in clean energy and just over 1,000 in the military—clean energy creates 50% more good jobs than military spending. Education, which is labor-intensive and creates many well-paying jobs per dollar of expenditure, creates close to 2,500 jobs paying over $64,000—thatís 2.5 times as many as the military.

According to the National Priorities Project, military spending on the Iraq and Afghanistan wars has reached approximately $1 trillion since 2001, not including the cost of the surge of 30,000 troops. In fiscal year 2009, federal government outlays on the military were 17% of all outlays.

Meanwhile, energy, resource conservation, and the environment accounted for only 1% of federal outlays, while education, training, and social services made up only 2%. Military spending is therefore eight to seventeen times as high as federal education- and energy-related spending.

The Obama administration is facing increased pressure to reduce the size of the fiscal deficit and the national debt, both of which have grown partly as a result of military spending. At the same time, there is an urgent need to put people back to work and to move the country toward a low-carbon future. While military Keynesianism offers one strategy for recovering from the recession, it is by no means the most effective, even putting aside the other reasons for objecting to a war economy. By reducing military spending, we can channel some of those savings to clean energy, healthcare, education, and other matters of national and global importance.

Heidi Garrett-Peltier is a research fellow at the Political Economy Research Institute at the University of Massachusetts, Amherst.

SOURCES: “The U.S. Employment Effects of Military and Domestic Spending Priorities: An Updated Analysis,” by Robert Pollin and Heidi Garrett-Peltier, available at www.peri.umass.edu; National Priorities Project.
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