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Concerns about Defense Spending

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December 04, 2012 – Comments (37)

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.

http://www.theamericanconservative.com/articles/less-bang-for-the-buck/

David in Liberty

37 Comments – Post Your Own

#1) On December 04, 2012 at 7:11 PM, ChrisGraley (29.68) wrote:

We can cut the military in half an still have a stronger force than any country on the planet.

There are so many worthless administrative jobs in the military it's unbelieveable.

I knew an LT in the Navy whose sole job was to make sure that the pop machines on the boat were never empty. That's an officer doing that job, not an NCO.

I'm pretty sure the economy would not suffer if he had a job in the private sector.

The waste in the military is unbelieveable. The military structure is just simply too big to control. 

 

 

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#2) On December 04, 2012 at 7:25 PM, whereaminow (< 20) wrote:

ChrisGraley,

There are so many worthless administrative jobs in the military it's unbelieveable.

Yep, it's systemic.  There are worthless jobs in the private sector too, but barring handouts from government buddies, they quickly disappear or the whole Twinkie implodes.  The military is not subject to audit (a resolution was passed some 20 years ago to force an audit and they have yet to comply).  The contractors get their money from expropriation of taxpayers.  They have no incentive to improve, and are in fact, de-incentivized in many cases.  The only incentive that the board of directors of NG or LM or Boeing, etc., has is to bring aboard a CEO that has connections in the Lootway.

As we are now in an era of perpetual war, the inefficiencies have grown exponentially.  Too bad we have such lousy journalists. There are plenty of stories out there to be written.

David in Liberty

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#3) On December 04, 2012 at 7:38 PM, ChrisGraley (29.68) wrote:

The journalists are another subject.

Independent journalism is non-existent in this country. When ratings became more important than realism, journalists became puppets of the left and right (mostly left). 

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#4) On December 04, 2012 at 11:06 PM, StuckinQatar (< 20) wrote:

Hey F you man, quit trying to make me unemployed! Also we are GD now not NG, because I SOOO know you were talking about us when you wrote this!

Now having said that, great article, thanks again for your insight.

Cheers,

Rob 

 

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#5) On December 04, 2012 at 11:40 PM, RouteReflector (29.11) wrote:

@whereaminow:  I disagree with a number of your points and agree with a smaller number.  Since I have direct experience with one in particular, I'll comment on it.  I may ramble a bit,  but what the hell - there's nothing good on TV at the moment.

 

I'll start off by saying I'd like to see you support your premise that DoD contractors have no incentive to improve.  I'm a network engineer and have been working as a DoD contractor for the past 6 years.  It's partly the nature of my industry, and partly the fact there are actual lives depending upon it, but primarily there is enormous pressure placed on us to provide the best product possible as a result of our government overseers and their demand for top performance on their contracts.  

 

If we don't meet those standards they'll replace us either by not picking up an option year on our contract or by completely recompeting the contract.  This happened very recently on a $5 billion contract I had decent visibility into.  The incumbent, SAIC, who performed about average on the contract over the past 5 years, lost the contract in a recompete.  I'm sure you can imagine the importance placed on that contract by the incumbent, and the resulting impact that loss has on a company; and almost without fail the new company will be doing the work for a lower price.

 

I've had fairly extensive experience writing contract proposal responses, primarily on the technical side of the equation, and it's an intense process.  The work requested by DoD is so skillset-intensive and the stakes are so high that there are generally a small number of companies with access to employees who have the correct skillset and required level of clearance to compete for the work.  Even then the companies that qualify must beat out the other competitors' prices in order to win the contract.

 

In summary, there is definitely competetion involved in most DoD contracting.  Sure there are exceptions when critical work must be done RIGHTNOW, there isn't time to go through a lengthy bid process, and there are known companies with the manpower, skillset, and clearance level to do the work.  Those examples often end up in the newspapers or in op-ed pieces, but they are necessary and are few and far between.  In general there is immense pressure to improve and perform above expectations in the DoD contracting world; the majority of that world just doesn't make its way to the news because there's very little sensationalism to be derived from it.

 

All of that said, good post.  I enjoyed reading it even though I disagreed with a good portion of it. 

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#6) On December 04, 2012 at 11:50 PM, HuellHowser (< 20) wrote:

The defense sector donated 24 million to political candidates in 2012 and spends over a hundred million annually on federal lobbyist.  (www.represent.us)

That said defense spending is one of those things politicians don’t easily oppose, especially if you’re in a state that relies on it.  If defense cuts equal, we’re closing a base… Good luck getting re-elected if you’re the senator from the state that lost the base.  There is I think a more tangible element to defense spending because it’s so close to so many of us.  Everyone knows someone in the military and almost everyone knows someone who works for a defense contractor. 

Your comment about the audit is interesting, I never heard that before but I’m not surprised.  I remember when Schwarzenegger was running for Governor one of his big talking points was doing a full independent audit of the state government.  I never once heard him bring it up after the election and to your point about our journalist, I never once heard someone hold his feet to the fire on it. 

I think most reasonable people would be for some kind of reduction in defense spending unfortunately I don’t think it will ever happen given our current political and economic structure. 

 

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#7) On December 05, 2012 at 1:12 AM, FleaBagger (28.07) wrote:

Dear RouteReflector, if I may interject, I'd like to point out that government employees having an instruction to select a cheaper bid for a contract is not the same thing as the constant honing friction of the pressure to profit that is environment of the voluntary sector. I too have some personal experience with this, having my own employer just recently underbid for a government contract. It's one of those things where they just send in a bid and hire all the same workers if they win, but the upshot here is, everyone in a certain position got a 25-30% cut in pay, depending on whether they were part time of full time. This resulted in a massive labor shortage, and was not good for the overall well-being of the enterprise. So some bureaucrat gets Employee of the Month for cutting costs and there's chaos in the actual day-to-day operations of the enterprise. Statists could argue that this bureaucrat made a poor decision, and there should be some mechanism for directing bureaucrats to better decisions, but in the voluntary sector, there is: the constant honing friction of the pressure to profit. Without that, you will continue to have bureaucrats making poor decisions, getting their funding anyway, and going about their merry way, leaving waste and chaos in their wake.

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#8) On December 05, 2012 at 1:44 AM, whereaminow (< 20) wrote:

StuckinQatar,

Haha, Rob!  I'm trying to help you out brother =D.  You know me... the selfless servant to others...

Seriously though, thanks for the kudos, and this blog is actually inspired by another friend that I have not worked with.

RouteReflector,

FleaBagger just beat me to the punch, but let me add a couple of points.

Likewise I speak from experience. I have seen all sides, as a member of the military, an employee of several defense contracting companies, and finally when I had had enough and realized that the hilarious ineptitude and immoral behavior was a result of the system and not just a bad run of employers, I moved to the private sector.

You are confusing competition, in a general sense, with genuine market activity.   

Getting promoted from NCO to Staff NCO in the Marine Corps is highly competitive.  But it in no way reflects the wishes of consumers or can be considered an economic competition.

Likewise, bidding on government contracts, while at times extremely compeititive, is not an economic competition. It's not reflective of genuine market activity.  

Besides the problems associated with contract bidding discussed in Tom Woods' article linked above, there are two very important differences between government contracting and genuine market competition:

1. In a market, the buyers are private property owners, stewarding their property in exchange for goods and services that will satisfy their most urgent wants.  In gov contracting, the buyer is a representative of public property (i.e. stolen goods), that the is stewarding to satisfy the wants of bureaucrats.  

2. In a market, the buyers can, and often do, refuse in masse to select any of the goods available at the current array of prices.  In the gov contracting world, failure to spend is a failure indeed!  One cannot justify the size of the bureaucracy's budget by finding nothing worth buying!

This second point is extremely important from the seller side.  A certain level of revenue is all but guaranteed to the small group of contractors that dominate the landscape.  Such a cozy relationship with the taxpayers' money is what every company dreams of (and this is why most leaders of big business LOVE big government. It helps their bottom line.. at the expense of competition.)

So while I don't question your work ethic or your general inclination to do what is right for the tax payer, I can say with certainty that no matter how hard you toil in your task, it is to our detriment.

HuellHowser,

I agree with your political commentary, but that means the problem lies not with the politician per se (he/she is generally scum of course), but with the voting public, whose complete ignorance of economic theory (mainstream or otherwise) leads them to believe such fallacies, and whose complete lack of morality (it's ok to steal from the rest of the country so long as our base stays open) is on display with every vote.

That being said, I don't really worry about it.  Things will happen when the people change. And if they don't change, so be it.  My eyes are open (at least more than they were), and I can do what I can to preserve my tiny wealth and my good health (mental and otherwise).

The saying goes, "No army can stop an idea whose time has come." The saying does not indicate when that time will be.  Oh well. 

The other saying goes, "We might be going to hell in a bucket, but at least we're enjoying the ride.

Well, at least that's what Jerry Garcia said... Hmmm..

FleaBagger,

Thanks for the great comment!

David in Liberty

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#9) On December 05, 2012 at 2:24 AM, Starfirenv (< 20) wrote:

C'mon David, I think that's a Bob Weir tune. He sang it too... pretty sure.

Nice post.

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#10) On December 05, 2012 at 9:24 AM, whereaminow (< 20) wrote:

Starfirenv,

Nice catch. It is Bob's.  I just lost some Hippie Cred.

David in Liberty

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#11) On December 05, 2012 at 9:42 AM, Louebsch (< 20) wrote:

Great article.

For those that believe DoD contracts are competitive and not full of waste, I would like to point you to something that is not as obvious anymore as it once was because many industries have copied the MIC to increase profits.

Anything that is MIL-STD certified or (DoD-STD or any other military certification you can come up with) is way over priced. The simple fact that a component is Mil certified, is justification enough for the contractor to crank up the price.

The same thing is now catching on in other industries. The medical industry comes as a prime example. Medical supplies are over priced just because it is part of the medical industry. Does a standard syringe really need to be $5 a piece? I'm pretty sure it's about 4 cents of plastic and half a cent of steel. Even if you add a dollar for profit where does the rest of that 5 dollars come from? How about medications? Why are medications in the US 5 times more expensive than the same medication in Mexico or Canada?

Don't get me wrong, I'm certainly not anti profit, but if the government really wanted to cut down on waste of the things they purchase, they could.

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#12) On December 05, 2012 at 1:55 PM, outoffocus (23.43) wrote:

I am a former OIG DOD auditor.  You are preaching to the choir DIRECTOR. lol  The government IS the economy in DC.  Where are the 2nd and 3rd richest counties in America right now?  Prince Georges County MD and Fairfax County, VA.  Now check where all the Defense contractors are located... Case closed...

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#13) On December 05, 2012 at 2:07 PM, outoffocus (23.43) wrote:

I wish I had caught  RouteReflector's comment earlier.   I'm so busy that I'm just gett back to reading the comments

I am a former defense contract AUDITOR.  The accountibility problem is not in the bidding, its in the execution.  The contractors are not heavily monitored and more often than not go over-budget.  Instead of getting on the contractor to control their costs, the DoD simply pays them.  DFAS works on autopilot.  The left hand has no idea what the right hand is doing.  They get an instruction to pay a contractor and the pay indefinitely until someone tells them to stop.  There have even been cases where DFAS continued to pay contractors years after their contract was over.   There are numerous GAO audits out there for your reading pleasure that show these and a number of other findings. I just say have a drink before you read them because they will raise your blood pressure.

The DoD is so inefficient, its a wonder how they even operate. From my experience there I can say, just barely.  As long as the Gov keeps giving them a blank check, they will continue to waste billions (of YOUR tax money) per day. 

The sad part is, all of this is public information.  Its just the American SHEEPLE are too concerned with who will win The Voice to care.  

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#14) On December 05, 2012 at 2:12 PM, outoffocus (23.43) wrote:

And one more thing.  There are PLENTY of articles out there on the inefficiency of the DoD.  The problem is the tend not to make it outside the Beltway.  Gee...I wonder why...

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#15) On December 05, 2012 at 2:15 PM, outoffocus (23.43) wrote:

Wow I did think of something else.  

Anybody wonder why the government bailed out GM with TARP funds?  It had nothing to do with "american jobs".  It so happens that GM is one of (if no THE) largest government contractors... 

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#16) On December 05, 2012 at 8:29 PM, ChrisGraley (29.68) wrote:

And GM contributed heavily to the Obama campaign. So did the banks we bailed out.

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#17) On December 06, 2012 at 12:31 PM, GNUBEE (24.16) wrote:

David,

May I ask what is your solution then?  Please clarify is the Govt. procument process wholly unsound because it is an attempt at master planning? Or is it simply inefficent and should be scrapped?

What if as you suggest, there are no purchasing options that the free market finds appealing? Can we stand by and encourage economic paralysis? this would be because prudent purchasing would discourage any purchasing at all?

While I'd be a fool to suggest that Government purchasing is even remotely efficient, but it still provides utlility. 

So just wondering, are you saying that a free market system will provide for the needs of the people because it is the most efficient? If so will it provide for all the people, or just those who are the strongest?

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#18) On December 06, 2012 at 1:13 PM, whereaminow (< 20) wrote:

GNUBEE,

So just wondering, are you saying that a free market system will provide for the needs of the people because it is the most efficient? If so will it provide for all the people, or just those who are the strongest?

Markets are not some Darwinian struggle where only the strong and powerful survive. If anything, that characterization applies aptly to government intervention, which allows a few powerful players to concentrate power and influence legislation and government processes.

Your question also implies that the current system cares for all the people.  This is shown to be false by every government action.

Poverty levels declined dramatically from the start of America up until the beginning of the war on poverty instituted by LBJ in the 1960s. At that point, they leveled off and have recently started to slightly rise.

How do you explain that?

As far as solutions, are you implying that something needs to replace the nearly trillion/year wasted on defense spending?  I'm confused.  You cannot see how that trillion invested in the capital structure would make our country wealthier, lower prices, and improve the standard of living of Americans?

David in Liberty

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#19) On December 06, 2012 at 1:30 PM, whereaminow (< 20) wrote:

David in Liberty

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#20) On December 06, 2012 at 1:56 PM, GNUBEE (24.16) wrote:

"Markets are not some Darwinian struggle where only the strong and powerful survive" I disagree. Not that I am some big government kool-aide drinker, but in a free market, only those the market finds utility in survive.

 Just what jobs would the free market provide? because after all keeping the populance occupied is the goal of every government. Idle masses will engage in destructive behavior, and those that rule...will no longer. So keeping people busy is in the governments self interest.

Your desire to infer is leading you down the wrong path. I never said it takes care of all. I said it may be inefficent, but does a better job of taking care of the people than a locked up free market would. So Inefficent in this case is preferred over immobile.

Without knowing your definition of "poverty" I cannot speculate to guess at an answer for you. How about standard of living? Has that increased? It can be argued that a poor person in a developed country lives a better life than one in a third world nation. Your chart to me looks like a point at which the poverty level has simply met too much resistance. Is it possible the "war on poverty" was launched at a time when the poverty level was already at its natural floor? Certainly you dont think that poverty can be eliminated? If  it cannot be eliminated, is the 10-15% simply the natural level?

I could see how an alternative of investment "could" imporove. But with no specifics it is hard to agree. Just pumping cash directly into the hands of the people sounds like a recipe for inflationary disaster.

Always like discussion, and will be bouncing back and forth between this and work/life/kids etc. but I will try to not "walk into your Dojo slap a challenge down old man, and just walk away" (my sons had original Karate Kid on a loop at home for a few weeks...)

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#21) On December 06, 2012 at 2:28 PM, whereaminow (< 20) wrote:

GNUBEE,

in a free market, only those the market finds utility in survive.

There is no such thing as "market utility."  Only individuals can have preferences and ordinally rank objectives in their minds.  There is no collective mind.

There is also no such thing as "government utility."  Government's desires are merely the reflections individuals working in a capacity to take action on other's behalf.  It can not be known what those other's utility rankings would be. (Last I checked, no one is a mind reader. And don't even bother trying to argue that it's represented in voting. I want to take you seriously.)

Just what jobs would the free market provide?

Before the iPad was created could you predict what jobs Apple would provide?  You are asking me to tell you exactly how other individuals will cooperate to create means that satisfy ends?  Because I am not a politican, I do not pretend to know these things.

However, if you would like to know how a single creation can create thousands of jobs, I recommend reading I, Pencil by Leonard Read, or google the updated one I, Ipad.

because after all keeping the populance occupied is the goal of every government.

Well, keeping the populance under control is the goal of every State. The government is simply the administration of the nation-state, and it really doesn't matter who you vote for. The State is the violent minority of the population that holds a advantage in violence in a certain geographic area.

Oddly enough, States live in anarchy with each other, but deny that to you.  You must be under their control.

locked up free market

What is a "locked up free" market?  How can something be free and locked up at the same time?  Weird choice of words.

David in Liberty

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#22) On December 06, 2012 at 2:37 PM, whereaminow (< 20) wrote:

Without knowing your definition of "poverty"

It's not mine. It's the Census Bureau's.

The standard of living was certainly better in 1989 Russia than 1920 Russia, but the mere fact that it rose tells us nothing.  Cleary something was wrong and they were not at the level it should be.

I'm not setting up any kind of argument to say that Americans are poorer today than they were before LBJ's policies became law.

But imagine the opposite scenario.

1. Since the start of America there are mountains of laws and redistributions that are implemented to help the poor.

2. The poverty rate declines dramatically for a century.

3. In the 1960's a "free market" President pushes forward legislation that eliminates almost everything put in by the original do-gooders.

4. Poverty rates suddenly flatline.

What would you say?  Wouldn't you be screaming bloody murder that the 1960's guy's ideas need to be re-examined?

I don't know if you would, personally.  But i can bet my white a** that a thousand Progressive bloggers would.

HT2 Thomas Woods for this thought experiment.

David in Liberty

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#23) On December 06, 2012 at 4:47 PM, GNUBEE (24.16) wrote:

Free market utility, meaning only those that have something someone wants will survive. This would primarily exclude the weak and destitite, or at least prime them for exploitation. 

Not knowing what the future holds, and leaving it up to chance seems a dangerous concept to anyone honestly looking to improve the world. If as you say,"predicting what future jobs will be created is impossible" then, in an effort to ensure stability, why not attempt to shape the jobs that are created?

I would rather have a stable environment where the Ipad, and other technological trinkets can be thought up than one where all energy is focused on survival. Military spending, in an strange paradox, may allow for a stable society. (military spending, not war mind you.)

States may live in anarchy with each other, but identification with a state gives me the strength of that state. And true anarchy is not where I'd like to live.

A locked up free market is one paralized by over abundance of choice. In your example above, ("2. In a market, the buyers can, and often do, refuse in masse to select any of the goods available at the current array of prices". Not selecting any goods would amount to economic paralysis, or being "locked up". When you have your "belevolent" puppeteers always willing to feed the system, it avoids this paralysis.

In esscence what I am arguing is that the MIC may provide an inefficient, albeit functional, method to maintain a societal framework where technological trinkets can be birthed.

I think it is a stretch to conclude the 1960's guys ideas were the sole factor in a leveling off of the poverty level. More detailed analysis is needed. Could be pure coincidence.

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#24) On December 06, 2012 at 4:51 PM, whereaminow (< 20) wrote:

Free market utility, meaning only those that have something someone wants will survive. This would primarily exclude the weak and destitite, or at least prime them for exploitation.

Is that how it always worked?  You do realize we've only had governments caring for the "weak and destitute" (if you really call what they do caring), for about 50 years (maybe longer in a couple other places).

Were they just dying off in droves and getting run over by the strong?

I don't recall this.

David in Liberty

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#25) On December 06, 2012 at 5:08 PM, whereaminow (< 20) wrote:

Not knowing what the future holds, and leaving it up to chance seems a dangerous concept to anyone honestly looking to improve the world. If as you say,"predicting what future jobs will be created is impossible" then, in an effort to ensure stability, why not attempt to shape the jobs that are created?

That all sounds swell, gnubee, but it doesn't really work like that.  What happens in the real world is that resources are moved from one place to another. That's all this "shaping of jobs" creates.

That's the lesson Henry Hazlitt is imparting. You can see the bridge being built. You can't see what would have been built in its place.  It's really that simple.

You may be happy with that bridge. You may not want anything else. But that's not being debated here.  IF you're happy with governments moving resources around to shape things as you see fit, that's not really up for debate.  I'm only trying to impart the lesson that all you've accomplished is moving things around (at best).

Of course, when you actually look closer, you find that it's not really that even.  Governments just give our resources to the politically connected.  It has nothing to do with protecting the weak and destitute, That's salesmanship.

David in Liberty

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#26) On December 06, 2012 at 5:16 PM, whereaminow (< 20) wrote:

Shifting from an economic discussion to a moral one for a second:

In esscence what I am arguing is that the MIC may provide an inefficient, albeit functional, method to maintain a societal framework where technological trinkets can be birthed.

And do you find nothing wrong with how these trinkets may be deployed? Do you believe the State when it claims it only uses these trinkets to fight evil doers?  Even if everything they said were true, is it ok that children digging holes in Afghanistan are seen as terrorists and executed with these trinkets (as recently happened and was justified as "possible" terrorist activity by our military)?

See, here's the thing.  

I am not asking you to do anything. I'm asking you to leave me alone and my property alone.  As such, it is on you to prove how your moral case and economic case is superior.  I understand that like most Americans you feel a certain collective responsibility is expressed in the Will of the State. I don't buy that and don't give a rats behind about the phony baloney State rationalizations for murder and caging of my neighbors and fellow humans.

So the burden of proof is on the State, not on me.  I can, anyway, present my case clearly and logically.  And I try to do that here, from economic, political, and moral frameworks.

David in Liberty

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#27) On December 06, 2012 at 5:49 PM, whereaminow (< 20) wrote:

Sorry for turning one comment into several. I'm just multi-tasking. It's rude, I know....

Let's see what else I glossed over here:

I would rather have a stable environment where the Ipad, and other technological trinkets can be thought up than one where all energy is focused on survival.

Well I don't know why you don't like a free market then.  During the Gilded Age, the automobile, railroad, airplane, and tons of other inventions were thought up. 1873-1896 is the most stable and prolonged expansion of prosperity on record. All this while on a gold standard with a remarkably smaller government.

You do realize that humans provide charity to each other, whether or not a government exists?

Military spending, in an strange paradox, may allow for a stable society. (military spending, not war mind you.)

Unfortuntaley, I don't see any evidence. It seems you're stretching it here hoping that it'll fit.  Military spending is spending for war, and eventually those bombs are going to kill someone. Otherwise, no one would make them.  As Woods' article above notes, by the 1980s we had 6 tons of TNT per every human on Earth.  I don't see how that allows for a stable society.  You'd really have to stretch the bounds of imagination to go from 6 tons per person to stability.

States may live in anarchy with each other, but identification with a state gives me the strength of that state. And true anarchy is not where I'd like to live.

But I'm not asking you to live in anarchy. If you wish to identify with a State that is fine. (Many people who have done so have eventually discovered that the State's identity shifts and suddenly they are no longer allowed to live.)  But I do not identify with the State. I don't need their roads or schools or retirement plans. And millions of people like me feel that way.  We have our own land or have peaceful relationships with landowners.  There is no reason for us to move. We would simply like to be left alone to cooperate with each other voluntarily.

I'm sorry, but there is not one thing the State provides that I cannot get from peaceful exchange with my neighbors.  And really, that goes for anyone on this planet.  Many people prefer to have the State provide these things. I am not debating that. I am simply pointing out how unnecessary they are. 

When you combine that with the fact that the State employs violence (the political means) to achieve its ends, whereas peaceful individuals use exchnage (the economic means), I side with the latter.

A locked up free market is one paralized by over abundance of choice. In your example above, ("2. In a market, the buyers can, and often do, refuse in masse to select any of the goods available at the current array of prices". Not selecting any goods would amount to economic paralysis, or being "locked up". When you have your "belevolent" puppeteers always willing to feed the system, it avoids this paralysis.

Not selecting goods is the right of anyone. I don't come to your house and tell you at gunpiont that you need spend X number of dollars or we're all going to die!  Such silliness this is.  You complain that the market is survival of the fittest, then you complain that the fit don't get enough of our money and we are causing paralysis, and then you complain that they have too much market share. 

Make up your mind, please :)

David in Liberty

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#28) On December 06, 2012 at 10:33 PM, GNUBEE (24.16) wrote:

ohmy word.

OK, lets try to tackle this.

#24- no they were not getting run over in droves, but there were a lot less people. Lower populations can be employed/occupied in simple economies. Larger population,need for a "purpose" to be created. If tomorrow everyone had to fend for themselves, there would be a large # of weak people who would not be able to survive.

#25 Moving around of resources creates societal stability because people have a job. The state steps in and makes sure there are these jobs. These jobs may not have any "productive" value other than to occupy time.

#26, technological trinkets are IPads, Wii's,  and bluetooth what have you's. Not weapons. A stable society has the luxury of using productive capacity for luxuries. It is the stability provided from the MIC that allows people to spend time on "non essential" endeavours. In WWII, how big was the market for automobiles? It was NIL because car production was a luxury,nonessential.

Far as wanting to become a sovereign nation state, good luck with that. you may want the freedom to be left alone. Your neighbor may want the freedom to rape and pillage. Leaving people entirely to their own devices will end poorly. As soon as you allow anyone to outline their own "freedom" you lose the right/ability to place moral limitiations.

#27 I do like free markets, just with some regulation, and clear rules of conduct. During the guilded age there were also gross wealth malignments, also an average standard of living that would make a modern person shudder. That era of expansion was like the wild west of wealth, and many were trampled over to facilitate that growth.

Millitary spending is not always for war. How many Titan II's were actually used? Building, Stockpiling, phasing out, destroying armaments, replacing them is a cycle that can be repeated without a single offensive or defensive deployment.

If you want no part of the state, then you must expect to live in a small, weak state. You could be right, life for you may work out well. But for the majority we need collective membership. And yes majority rules. You may see sheep,but sheep have a shepherd to fall back on. You would never need modern medicine? because I dont have any neighbors with an MRI machine, and the local hospital stopped accepting chickens for payment last month. The state does not solely, or even chiefly employ violence. Yes it happens, but sometimes it is justified. In the instances where it is misapplied I do  feel regret. As insensitive as it sounds, bad things may happen. I do not expect man as a species to figure out utopia in a generation.

People are generally short sighted creatures. If in your boot strap society there was a genuine need for a hospital to help the 1% needing medical care. Do you think knocking on doors and asking your healthy neighbors to foot the bill would get the hospital built? People will not roll back the clock on technological advancement simply becasue they want to live in a society unencumbered by any obligation. They will want the trappings of modern society. If not ,why is there no mass exodus to more lawless countires. Its because no matter how flawed, the US is still a very desireable place to live.

There is no contradiction. An unchecked free market is a selfish one.If society wants to advance and grow, it cannot do it based on barter, or even a gold standard. Both of those systems have outlived their utility in a modern world.

You are mixing the examples together. Survival of the fittest is one point. Its weakness is that it does not protect the weak. Another point(flaw) is that if people chose not to interact (because they can now chose to abstain) then the remainder of society suffers because of it. It's not the fit not getting enough money. It's the system that supports the weak that becomes starved, and in turn fails to serve the weak.

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#29) On December 06, 2012 at 11:11 PM, whereaminow (< 20) wrote:

ohmy word.

LOL

It appears neither one of us is ever at a loss for words. But hey, at least this is one of those rare internet conversations where both sides are actually reading what the other wrote. 

=D

David in Liberty

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#30) On December 07, 2012 at 9:08 AM, GNUBEE (24.16) wrote:

Yep, I do enjoy a healthy discussion.

Holidays are always fun at my house.

Thanks for the discussion.

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#31) On December 12, 2012 at 3:09 PM, Melaschasm (53.59) wrote:

A locked up free market is one paralized by over abundance of choice. In your example above, ("2. In a market, the buyers can, and often do, refuse in masse to select any of the goods available at the current array of prices". Not selecting any goods would amount to economic paralysis, or being "locked up".

 

Sometimes micro economics does not translate to macro economics.  Mega retailers sometimes run into problems with customers being overwhelmed by the number of choices.  Some customers freeze up when faced with to many options, and end up buying nothing, or at least less than normal.  These customers usually become shoppers at smaller stores, and that hurts the Mega retailer with to many options.  However, this economic paralysis does not translate to the macro economic level because in a free market you will have retailers for each major group of customers.  

The only macro examples of such behavoir that I can recall is a situation where there is rapid sustained deflation or paralysis caused by extreme fear.  

With deflation, the majority of people expect lower prices tomorrow, so they delay purchases as long as possible to maximize their purchasing power.  Rapid sustained deflation has been so rare that there are not enough real world examples to make an extensive study of the phenomon.  This is primary an academic discussion of a theory, without much real world support.

Extreme fear paralizes markets during catastrophies, plagues, wars, and other similar situations.  While these situations are fairly common in the real world, there has not been many great economic breakthroughs in this area of study.  Basically economists recomend having emergency plans for such situations, and recognize that it is impossible to be fully prepared for everything. 

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#32) On December 13, 2012 at 1:03 PM, GNUBEE (24.16) wrote:

Melaschasm,

Thanks. I was leaning more toward the MIC spending, when the economy at large would abstain.

 A "logical" free market may chose to delay hiring, producing and most general economic activities. This could cause the free market (no benvolent Govt, or MIC to step in) to slow, or in extreme cases stop. Just like your examples of extreme fear, economic uncertanty should be added.

Basically MIC is a means to facilitate fiscal pump priming by the government, in a controlled and self benefitting manner. In one action they provide economic certainty (hooray, I have a job says the worker), and introduce money into a system that would otherwise chose to hoard what money they have.

A point I will never diasagree with is it is a terribly inefficient method. But in the end "A good plan violently executed now is better than a perfect plan executed next week." (Patton's quote not mine)

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#33) On December 16, 2012 at 11:25 PM, whereaminow (< 20) wrote:

A "logical" free market may chose to delay hiring, producing and most general economic activities. This could cause the free market (no benvolent Govt, or MIC to step in) to slow, or in extreme cases stop. Just like your examples of extreme fear, economic uncertanty should be added.

If you could cite one historical example where a free market just stopped, or where extreme fear caused an entire economy to cease producing and hiring, I would be impressed.

No matter the level of fear or the amount price deflation, there is a point at which a consumer will purchase or a business will invest. Even in the worst depressions in history, certain industries did well while others were floundering.

Looking at economies as simple aggregates has been the most damaging thing that ever happened to economic study.  

David in Liberty

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#34) On December 17, 2012 at 10:55 AM, GNUBEE (24.16) wrote:

David, you're missing my point as it relates to my original argument.

(not hard I know we have lots of tangents)

The millitary spending is an inefficent way to push money into the economy, at the same time as providing jobs that would otherwise not exist. Its not an economy stopping all commerce and shutting down completely. It is one where the sustaining lower threshold is breached. - Not enough activity to support the economy.

Oversimplified, the Government spending on the MIC (in a socialist manner) helps provides a floor for employment. Wastefully, yes...but its functional.

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#35) On December 17, 2012 at 1:37 PM, whereaminow (< 20) wrote:

Ok, well I don't find that to be a very strong argument.

Have a great holiday season!

David in Liberty

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#36) On December 17, 2012 at 2:34 PM, GNUBEE (24.16) wrote:

Fair enough, but I dont think military spending can be written off in its entirety simply because its inefficent.

Internal combustion is woefully inefficent, but it remains a primary mode of transit.

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#37) On January 11, 2013 at 7:06 AM, skypilot2005 (< 20) wrote:

Unrelated:

http://finance.yahoo.com/news/investor-attacks-krugman-inflation-propaganda-103554982.html

Sky 

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