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| War spending is not "good for the economy". It diverts goods and services from what the market wants to what the military wants. But then fire stations don't add useful Gross Domestic Product, nor does insurance, police, Forest Service rangers. There are reasons for all those expenditures as well as for defense. Is our military too big? Good question, but very hard to answer. And I don't care what Woodrow Wilson may have said about the cause of the decline of the British Empire, the cause was World War I and II. Britain in 1913 was a net owner of world assets and in 1919 was a net debtor of world assets. I have a question, had Kaiser Wilhelm known that Britain would eventually build a huge army would he have gone to war so cavelierly? Suppose Britain had had 30 divisions of regulars instead of six- would the German General staff have even thought of recommending an attack in the West?
Bush asserts that what he is doing is what the Western allies should should have done to Hitler when he illegally reoccupied the Rhineland, tore up the Versaille treaty, instituted conscription, occupied Austria, occupied Bohemia.
It is hard on the US to be the cop on the beat but no one else will do it, and just let some outrage or genocide start anywhere and the same people who attack Bush for Iraq loudly scream for us to intervene in: Haiti, Bosnia, Kosovo, Ruanda,Burudi, Somolia, Sudan, The Congo, Timor just to name a few. We cannot stick our heads in the sand and hope the bad guys will do nice-nice. Iran was minding its own business when Hussein attacked, Kuwait had even lent the monster money and he attacked. He dropped poison gas on the Kurds, destroyed Marsh Arabs by draining their home land, executed thousands of people on flimsey reasons Saddam's record (someone took a shot at Saddam, missed and he had the entire village where it happened killed.)Assassination
We are strong enough- now, to be isolationist. But the world won't let us do that.
I think some of our weapons no longer serve any useful purpose but the biggest cost of Defense is the sequestration of valuable and useful people into what is essentially a fire fighting unit. | --
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Second Lieutenant
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| War spending is not "good for the economy". It diverts goods and services from what the market wants to what the military wants. But then fire stations don't add useful Gross Domestic Product, nor does insurance, police, Forest Service rangers. There are reasons for all those expenditures as well as for defense.
Just to clarify, here is the formula for calculating GDP in an open economy (the USA is an open economy)
Y = C + G + I + NX
Y = GDP (National Income)
C = Consumption (Total domestic spending by citizens)
G = Government Spending
I = Investment spending (not Stocks and bonds, those are consumption goods, but housing and inventory accumulation)
NX = Net Exports (Exports minus Imports)
Now government spending is equated by this equation:
G = T - G1
T = Tax revenue
G1 = actual government spending (this does not include transfer payments like welfare, because welfare will be used when computing C in the first equation I gave when it is spent in the economy)
When G1 is larger than T, it is said that the Government is running a Budget Deficit
Net Exports (NX) use this equation:
NX = Ex - Im
If Im are larger than Ex, than it is said that the government is running a trade deficit.
So as you can see, government spending on the military is added directly into the GDP for the country.
Now by how much government spending actually changes total income (Y) in the economy, you use the government multiplier equation, which is:
Delta G/Delta Y = 1/(1-MPC)
MPC = Marginal Propensity to consume
MPC is always a number between 0 and 1 which basically is the ratio to which the citizens as a whole spend to save. For example, a MPC of 0.8, mean that out of every dollar, 0.8 is spent and 0.2 is saved. You can use some simple calculus as well, using limits to find the actual area representing the total quantity the GDP will rise due to a 1 dollar increase in government spending.
I believe the MPC in the USA is something like 0.99. Meaning Americans only save about 1% of their income, and spend the rest. This has huge implications on the future value of I (investment), but that’s a long run problem not related to the issue at hand.
I hope this clears up some of the issues this thread is having with military spending.
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Money is like diarrhea, it runs out fast. |  | |
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Grand Poobah!
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I am pot
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Grand Poobah!
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Chairman of the bored.
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