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No, Mr. Krugman … War is Not Good for the Economy
Aug 16, 2011
As I have repeatedly documented, influential Americans are lobbying for war in order to save the American economy – what is often called “military Keynesianism”.
For the first couple of years that I wrote on this topic, commenters more or less said, “That’s crazy, no one is calling for war to stimulate the economy”.
When allegations surfaced that Rand Corporation was lobbying the Pentagon to start a war to save the economy, Washington Post hack David Broder started promoting war as an economic panacea, and former Goldman Sachs analyst Charles Nenner and economist Marc Faber started predicting a major war, people started paying more attention.
And well-known economist and writer Paul Krugman has argued for years that World War II is what got us out of the Great Depression.
For example, Krugman writes today in the New York Times:
World War II is the great natural experiment in the effects of large increases in government spending, and as such has always served as an important positive example for those of us who favor an activist approach to a depressed economy.
But Sunday, Krugman went over-the-top by more or less calling for a major war … and manufacturing a false justification for starting one, if need be:
If we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months. And then if we discovered, oops, we made a mistake, there aren’t any aliens, we’d be better.
There was a Twilight Zone episode like this in which scientists fake an alien threat in order to achieve world peace. Well, this time…we need it in order to get some fiscal stimulus.
This statement is disturbing for two reasons.
First, many economists have demonstrated that – contrary to commonly-accepted myth - war is actually bad for the economy.
And the following statement by Mr. Krugman implies – whether intentional or not – the use of hanky panky to justify military spending:
And then if we discovered, oops, we made a mistake, there aren’t any aliens, we’d be better.
How can he be so irresponsible to publicly pine for all-out war based upon ginned-up reasons?
Postscript: There have been Internet rumors floating around for years that the government was planning to use a “faked alien invasion” to justify a power grab by the government. I have no idea whether or not that rumor has any truth, and it is irrelevant for the purposes of this post.
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