* Soldiers plus civilians caught in crossfire; does not include disease- or famine-related deaths in war
The Lack of Major Wars May Be Hurting Economic Growth -- Tyler Cowen, New York Times
The continuing slowness of economic growth in high-income economies has prompted soul-searching among economists. They have looked to weak demand, rising inequality, Chinese competition, over-regulation, inadequate infrastructure and an exhaustion of new technological ideas as possible culprits.
An additional explanation of slow growth is now receiving attention, however. It is the persistence and expectation of peace.
The world just hasn’t had that much warfare lately, at least not by historical standards. Some of the recent headlines about Iraq or South Sudan make our world sound like a very bloody place, but today’s casualties pale in light of the tens of millions of people killed in the two world wars in the first half of the 20th century. Even the Vietnam War had many more deaths than any recent war involving an affluent country.
Read more ....
My Comment: I have never understood this "western economist mantra" that wars are good for the economy .... a point that this New York Times post gos to great lengths to explain. I have always had the opposite opinion .... wars are horrible for the economy, and unless you are in government and in the arms/war business .... for everyone else it is hell. Tyler Durden at Zero Hedge has a good retort to this New York Times post .... his response to this New York Times article is here.
I ignored the NYT story. It is after all the NYT.
ReplyDeleteIt is kind of liked a reversed & scaled up version of the broken window theory.
"Oh, Father, you're so wrong. Let me explain. [closes office door, places an empty glass on desk] Life, which you so nobly serve, comes from destruction, disorder and chaos. Take this empty glass. Here it is, peaceful, serene and boring. But if it is [Pushes glass off table] destroyed... [robot cleaners move to clean broken glass] Look at all these little things. So busy now. Notice how each one is useful. What a lovely ballet ensues, so full of form and color. Now, think about all those people that created them. Technicians, engineers, hundreds of people who'll be able to feed their children tonight so those children can grow up big and strong and have little teeny weeny children of their own, and so on and so forth. Thus, adding to the great chain... of life. [Desk prepares a glass of water and a bowl of fruit] You see, Father, by creating a little destruction, I'm actually encouraging life"
- Jean-Baptiste Emanuel Zorg
http://en.wikiquote.org/wiki/The_Fifth_Element
If no one fixes the broken window, the neighborhood gets worse. If no one fixes the failed state, things get worse.
I like Cowen Tyler's site marginal Revolutions. I read it from time to time and have it book marked. I believe in the name of the site. You do not necessarily need a 5 year plan or a great project to move things forward, to make life better. Little things aggregating and interacting can have big effects over time. So WTF was Tyler thinking?
We could spur the economy by having ebullient hope and starting something like the space program and going to the Moon. That is much better than a war. Or are thousands of people dead in Ukraine better?
People work for themselves. They figure out want the need, what they want, what would make life easier or more interesting and they go out and get it. That is unless taxes are too high and they just do not see the point. If it is 10 steps forward and 5 to 9 steps back, they think what is a point. They balk much as a draft animal will balk if given too heavy of a load to pull. You can make a draft animal still pull if you whip them. you can make people pay higher rates if you threaten to jail them. But does it make you a good person? Or wise?
I say lower the tax rates. People work for themselves. And when thing shave been going well for a good long while they tend to be generous and philanthropic.
And another thing same salesmen are frauds. But salesmen and marketing in general are pretty close to being saintly, if they don't defraud. After all of Maslow's hierarchy of needs are met, they create to impetus for people to work more, to create more. Good marketing people create GDP, by creating desire, which leads to actual work.
What was Tyler thinking?!?
The war grows the economy mantra I think got started in the 1990s. At least in its' current form I think.
ReplyDeleteThe reasoning was that the U.S. entered the Great Depression and FDR's reforms did not work. People point to the recession of 1938 with in the depression as proof. Then they see the war production ramping up before Pearl Harbor and the subsequent colossus of American Industrial war production.
I believed this myself for 10 or 15 years.
Here I think is the key. The war created a lot of demand. There was a need for war material. This is true. Another key element is that people were willing to work. They believed in the cause. It think this is important. The Iraq and Iran War created a lot of demand for war material. But did the people believe in the cause or were they just getting through the day, day after day?
Even if you could get both sides to believe in their cause and to turn out war material a la 1984, is that good? All the sunk ships destroyed planes etc are real wealth being destroyed. All the war material is wealth per se, but does it really make your life better, more comfortable?
On WW2 the U.S. industrial output grew, people worked willingly and at the end of it, we turned a lot of stuff into ploughshares. Good right?
Not really. On the other side of the pond we destroyed a lot of factories, a lot of wealth and a lot of lives.
People are not working because taxes are too damn high and government is not efficient or right sized.
In feudal time the goon squad of the nobles were the knights and the men at arms. Nowadays the goon squads are activists and voting blocs. Our nobility are people like Chelsea Clinton,the Obamas and the Bush's
I like the Bush's a whole lot better than the the former, but are they really fit for office? Jeb Bush is running for office because he was governor 6 years ago or so? One of his brothers was part of the Silverado bank scandal. GWB who I voted for twice said he relied on Paulsen. That is the worse thing I ever heard said about him. You cannot be an expert on everything, but he relied on Paulsen. He could have been any other person in the nation and the average result would not be worse.
Let me wrap it up. We do not need wars for economic growth. what we have is people being people. We have a neo-nobility and corruption which is mis-allocating resources and consequently people do not want to work.
"that wars are good for the economy"
ReplyDeleteJust not necessarily for the place in which the war is being waged.