Concerns about Defense Spending
A friend recently wrote to me expressing concern about cutting Defense Spending. The jist of the argument is that, while wasteful and bureaucratic, modern defense jobs are highly specialized. Considering the quantity of people employed in the Military-Industrial Complex (MIC) and how little those skills are needed in the private sector, what can possibly be expected from a massive cut in Defense Spending other than another economic calamity?
From the Keynesian perspective, my friend is right. In fact, following the end of WWII, Keynesians predicted great economic strife from the return of servicemen to the private sector. After this prediction blew up in their faces, they invented the myth of "pent up demand" to explain why the economy recovered in 1946-47 (the numbers do not match up to their myth, but they believe it anyway.)
"the government cannot just disband the Army, close down munitions factories, stop building ships, and remove all economic controls." - Avlin Hansen, Keynesian Economist, 1945
This quote highlights exactly where mainstream economists go wrong, and why so many lay people fail in their attempts to see through economic proposals.
What Alvin and my friend are missing is one of the toughest concepts in economics to grasp. It is the Unseen.
"The bridge exists. It is, let us suppose, a beautiful and not an ugly bridge. It has come into being through the magic of government spending. Where would it have been if the obstructionists and the reactionaries had had their way? There would have been no bridge. The country would have been just that much poorer.
Here again the government spenders have the better of the argument with all those who cannot see beyond the immediate range of their physical eyes. They can see the bridge. But if they have taught themselves to look for indirect as well as direct consequences they can once more see in the eye of imagination the possibilities that have ever been allowed to come into existence. They can see the unbuilt homes, the unmade cars and radios, the unmade dresses and coats, perhaps the unsold and ungrown foodstuffs. To see these uncreated things requires a kind of imagination that not many people have. We can think of these nonexistent objects once, perhaps, but we cannot keep them before our minds as we can the bridge that we pass every working day. What has happened is merely that one thing has been created instead of others." -Henry Hazlitt, Economics in One Lesson, pp. 19-20
Resources allocated to the MIC remove other possibilities from the economy. Every billion that is sent off to the war machinery is one billion that was never invested in the private sector. Regardless of the so-called benefits of military "spin-off" projects (projects that would have already taken place in the private sector if there was a need), it is impossible for many people to see what would have been if those MIC jobs had never existed in the first place, what would have been if that money had been invested in the private sector instead of being confiscated on behalf of Boeing and Northrop Grumman.
Where Do Jobs Come From?
According to the fairy tales passed around by Progressives and government teachers, jobs are granted to you be the benevolent overlords of the State. Without them, my goodness, we would all be living in a Hobbesian existence in a war of all against all. (Which is actually a perfect description of democracy.)
Jobs come from each other. We employ each other to meet ends that satisfy wants. No State is necessary for the creation of jobs. The State only exists in its lavish and putrid moral decadence because of the efforts of millions of private citizens that employ each other, creating wealth that the State can confiscate.
Without jobs, there is no State.
Without the State, there are plenty of jobs.
When Defense Spending finally gets cut (and maybe that won't happen in our lifetimes), mainstream economists will once again be fooled when the UNSEEN becomes possible again. We will give employment to each other, as we have all along.
For those who don't believe a lick the State's warfare propaganda, I strongly recommend Tom Woods' piece on Military Spending. It is an indespensible primer on waste, fraud, and abuse by our MIC.
David in Liberty