[PEN-L:4639] On Military Keynesianism

[sawicky@xxxxxxxxxx (Max Sawicky)]

A few factoids-cum-notes, none of which bear on whether NATO
should be in Yugoslavia:

1.  Since the mid-80's the economic policy of the U.S. cannot be
said to conform to any sort of military Keynesianism, since the
basic drive has been for deficit reduction.  Accordingly, the
Keynesian element here is problematic.  It also happens that
military spending relative to the budget and the economy have
been reduced.  Defense peaked as a share of GDP in 1986 (6.3).
Before that, it hadn't been as high unless you go back to 1972.
In 1998, defense/GDP is 3.2%.

2.  The Clinton budget does not propose an increase in defense if
one discounts for inflation.  This also means, naturally, that
defense/GDP continues to decline.

3.  Conflicts on the scale of the Gulf War cannot alter the basic
trend of stagnation in military spending.  Defense/GDP continued
to decline from 1989 to the present.  There was no uptick, not
even a temporary one.

4.  The real grease in military spending -- the economic rents,
if you will -- come from hardware and R&D, not from soldiers' pay
and gumboots.  In the budget wars, the soldiers always lose; just
take a look at their barracks.  Military conflicts are not
necessarily the best way to get more funds allocated to hardware
R&D.  In fact, the debate for more hardware/R&D had already been
decided before the Kosovo affair.  By supporting anti-missile
defense, Clinton and the Democrats already gave the contractors
all they could have asked for.  By encouraging Serbian terrorism,
in fact, this intervention threatens to take the focus away from
the mythical missile threat to the more likely one, relatively
speaking, of two guys in a pickup truck, thereby sapping the
drive to finance the fancy hardware.

5.  The last thing a hardware vendor wants is a legitimate test
of his product.  To maximize sales, both buyer and seller have an
interest in hoked-up tests that make them look good, not real
tests which could end unhappily.  Think of the possible fall-out
from the shoot-down of the "Stealth" fighter.

6.  Military Keynesianism may have meant something back in the
1950's, or in 1962 when defense/GDP was near ten percent.
Presently the defense budget is about $270 billion.  An unlikely
increase of, say, $80 billion, all in one year, and all
deficit-financed, might add a percent or so of GDP in a time of
economic slack.  It's hard to imagine the fate of capitalism
hinging on this.

mbs