Now that the stock market has signaled the start of a collapse, portending future crises and miring further the so-called recovery, we can expect to hear an old call.
A big war can get us out of this.
As absurd as this may sound, it is a favorite solution offered by Keynesian economists, for instance Paul Krugman of The New York Times.
Tyler Cowen, a professor of economics at George Mason University, argued along similar lines last June in an article posted in The New York Times titled “The Lack of Major Wars May Be Hurting Economic Growth.”
Others, including Ian Morris, a history professor at Stanford University, offer similar arguments.
“It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily,” Cowen writes, to which Gary North responds:
“Yes, we can. Quite easily. You would be hard-pressed to find a war in American history that did not raise taxes, raise debt, and kill innocent people.”
Sam Selikoff and Luke Bessey countered Krugman’s argument with a short video, “The Broken Window Fallacy.”
Krugman’s logic is also countered by Robert Higgs, a libertarian historian and economist.
The outbreak of war, Higgs explains, leads not only to a diminishment of the market economy but also “greater taxation, governmental expenditure, and regulation of the remaining civilian economy.”
Higgs also counters the common theory that spending during the Second World War put an end to the Great Depression. For more on this, see Art Carden’s World War II Did Not End the Great Depression.
Now that the inevitable collapse is underway we can expect desperate Keynesian economists, liberals and no shortage of so-called conservatives (especially the warmongering neoconservatives) to call for economic stimulus through massive war expenditures.
While there is no shortage of imperial hotspots ready to be exploited, the front and center crisis is Ukraine and the growing conflict between Russia, the United States and NATO.
A belief that a war on the European continent by a number of nations in possession of nuclear weapons — the United States, Russia, France and Britain — will result in economic stimulus is not only pure folly, it is manifest mental illness.