Defense spending as a job creator: The last refuge of today's defense lobbyists

Posted By Thomas E. Ricks Wednesday, October 12, 2011 - 11:05 AM Share

The last refuge of defense lobbyists isn't patriotism, it is arguing that defense spending means jobs. Here's a quote from yesterday's Boston Globe:

'When people are polled right now, what's their number one issue? Jobs and the economy. Defense and homeland security and terrorism are polling very, very low,' said Michael H. Herson, a lobbyist whose firm's clients include Raytheon Co., the defense titan based in Waltham. 'So how do you make this issue resonate? You talk about jobs.'

The problem with that approach is that defense spending resembles consumption more than investment -- once the money is spent, it is gone. Probably half the bridges we drive over were built during the Depression, but no one, except maybe some rear echelon Taliban, is using weapons bought then. So if the worry is how to use federal spending to create or preserve jobs, the best way to do that is to spend on infrastructure building -- roads, bridges, schools, hospitals. These all pay additional benefits. And as Joe Nocera pointed out in yesterday's New York Times, the ingredients (labor, capital and equipment) are all readily available at historically low prices.

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RUBBER DUCKY

3:15 PM ET

October 12, 2011

Voodoo BS

And of course those same dollars diverted elsewhere in the economy would just be pissed away... Not!

Unless someone can suggest that a defense dollar is more efficiently applied than - say - a dollar to repair a bridge or feed a homeless vet or send my kid to college ... this argument from the Iron Triangle fails on the face of it.

This is as good a marker as any that the Defense Establishment is strategically bankrupt: with this argument they are hoist by their own petard (yet another form of ordnance they probably don't understand).

MGUNNS

3:23 PM ET

October 12, 2011

I can't understand why we

I can't understand why we haven't offered a way for people to make a reasonable wage to work on infrastructure instead of being paid to sit on unemployment. If you are going to pay someone $300/week to look for a job, why not pay them $300/week to work 3 days and spend 2 looking for a job? Or better, pay $600 week to work all week until the roads and bridges get fixed? Even people with medical issues can hold a stop sign or place cones.

ERIC HAMMEL

4:20 PM ET

October 12, 2011

Oh dear.

Yeah, sure, that's what every professional tradesman wants: a bunch of clueless, resentful, passive aggressive civilians clogging up his worksite, requiring close supervision, incessant motivating, and urgent medical treatment.

That, and how many ways can you spell i-n-d-e-n-t-u-r-e-d? If it's illegal under the Constitution to unreasonably seize your stuff, what is one to make of the concept, the mere idea, of unreasonably seizing you?

FG42

5:06 PM ET

October 12, 2011

I really don't know how it

I really don't know how it worked, so this is a genuine question: How did we do it in the 1930's, when I understand thousands of unemployed were put to work in great public works projects? Was it coercion, bribery, or what?

WHISKEYPAPA

7:21 PM ET

October 12, 2011

The CCC

They enlisted people into the Civilian Construction Corps. My dad did some of that.

Walt

MARCUS SCOTT

7:37 PM ET

October 12, 2011

False Premise

Not everyone who is unemployed or on unemployment is otherwise a burden.

ERIC HAMMEL

9:13 PM ET

October 12, 2011

@FG42

Paycheck.

Simple Keynesian economics from a time just before Keynes published his magnum opus (1936): One way or another, the government dumps money into the pockets of the needy people who are mosty likely to spend it (rather than save it). The recipients buy goods to stay alive. The goods providers hire people to handle goods creation, goods shipment, goods warehousing, goods selling. Those people,. plus the original recipients, buy more goods, leading ultimately to more hiring. And then you have a recovery at a speed and strength commensurate with the amount of sales coming at first, second, third, etc. degrees from the original government expenditure on public works, unemployment insurance, whatever government can do to dump money into the economy to start, then maintain, the process.

The Roosevelt Administration dumped its stimulus money into government-created jobs (WPA, CCC, etc.) because there was no unemployment insurance system at the time. But for us, today, it's all the same. Unemployed people tend to spend immediately rather than save, so the ripple effect of economic stimulus is as strong as is would be by creating govenment jobs. What works is what beneficiaries do to spend the money, not what they need to do to get it.

MGUNNS

9:27 PM ET

October 12, 2011

So there is NO benefit to get

So there is NO benefit to get something back eg, labor, from that government spending?

Given the poor state of most of our infrastructure, and our inability to afford it's maintenance and replacement, I cannot fathom how it makes sense to give people money for nothing. Not their fault, but there should be some return on the government's investment.

MILPROF

9:36 PM ET

October 12, 2011

Then vs Now

@FG42

75 years ago, during the Depression, construction work was far less capital intensive than today. You didn't rely on high-tech, nearly-robotic tunnel boring machines, or laser-guided paving machines, you had a bunch of guys with shovels. Today, the need is for a fairly small number of skilled machine operators more than it is for willing men with strong backs. It's not unlike the change in military technology. I suppose you could go back to shovels, but that ends up being more expensive overall than making use of the technology we have today.

It's probably also the case that back then you had more people with at least modest relevant experience like putting up a shed or a fence, handing farm equipment, whatever. Today, there's a large gap between the average office worker who's never changed their own tire and the skills required on a major bridge-building project.

Of course, it's also true that the WPA/CCC/etc paid people to do a lot more than build things. The WPA paid musicians and poets to write poems and compose songs. They paid writers to write local histories, travel guides, and such. Lots was spent paying people with skills not useful for infrastructure to do makework projects in their own fields, we just don't focus on that today.

ERIC HAMMEL

6:07 AM ET

October 13, 2011

What NO Benefit?

MGUNNS, do you really not get that the very act of spending money, including government-distributed money, for goods and services IS the benefit? The entire objective of stimulating the economy via consumer spending is to reignite increasingly higher consumer spending and, thus, the creation and expansion of businesses and the hiring of more and more people to take part in the creation of more and more goods and services. The fallout from increased economic activity is, in part, rising tax revenues that restore the seed money to government.

MGUNNS

1:36 PM ET

October 13, 2011

Eric, I understand that there

Eric,

I understand that there is benefit to spreading the money around. I just don't understand how there is NO benefit to getting any labor return on it.

ERIC HAMMEL

3:04 AM ET

October 14, 2011

Didn't Say That

I never said there's no benefit to putting someone to work; I said it isn't necessary if what you're trying to do is heat up and thus expand a dormant economy via Keynesian methods, through the infusion of government money. There's nothing wrong with using government money to hire people, but it isn't necessary, per se. It might be socially advantageous, but it's not economically imperative.

Didn't the Bushies send all of us a check in their waning days? As I recall, all the work I had to do was deposit it and buy something. Pure Keynesian economics.

NAHNSEN

5:11 PM ET

October 17, 2011

@ Eric Hammel

That's not a particularly helpful application of Keynsien theory.

Infrastructure investment is not only a great tool for local, high-wage employment, it also leaves in place an asset that creates further value for U.S. citizens in the future.

General spending from U.S. consumers is just as likely to provide zero to little in U.S. employment and leave nothing for future citizens.

They are called "investments" for a reason. They create value. I don't go to the market to invest in groceries and a Sony LCD. All spending isn't equal.

MGUNNS

6:38 PM ET

October 12, 2011

Eric, I suggested offering a

Eric,

I suggested offering a wage of approx. $15/hr, double the minimum wage, and you call that indentured servitude? There are thousands of people lining up for the opportunity for jobs that pay less. Maybe you should put down your pen and try working for someone else to put life back in perspective.

I don't know how being paid a fair wage for work makes one an indentured servant. If they don't want to work, they don't have to get paid. Whatever did we do back in the day before unemployment insurance? I'll tell you-people found a job, lived with family, or found a way to make do.

As far as :"that's what every professional tradesman wants: a bunch of clueless, resentful, passive aggressive civilians clogging up his worksite, requiring close supervision, incessant motivating, and urgent medical treatment." -----Those are what used to be called apprentices, new employees, or, if they take those issues too far-former employees.

WHISKEYPAPA

7:17 PM ET

October 12, 2011

The Purpose

"And as Joe Nocera pointed out in yesterday's New York Times, the ingredients (labor, capital and equipment) are all readily available at historically low prices."

Create jobs? Improve the infrastructure? Bad ideas.

The idea of some people is to destroy the federal government, not make it look good. They've made quite a bit of progress.

Walt

WHISKEYPAPA

7:23 PM ET

October 12, 2011

CCC

The Civilian Conservation Corps (CCC) was a public work relief program that operated from 1933 to 1942 in the United States for unemployed, unmarried men from relief families, ages 18–25. A part of the New Deal of President Franklin D. Roosevelt, it provided unskilled manual labor jobs related to the conservation and development of natural resources in rural lands owned by federal, state and local governments. The CCC was designed to provide employment for young men in relief families who had difficulty finding jobs during the Great Depression while at the same time implementing a general natural resource conservation program in every state and territory. Maximum enrollment at any one time was 300,000; in nine years 2.5 million young men participated. Reserve officers from the U.S. Army were in charge of the camps, but there was no military training or uniforms.

The American public made the CCC the most popular of all the New Deal programs.[1] Principal benefits of an individual’s enrollment in the CCC included improved physical condition, heightened morale, and increased employability. Of their pay of $30 a month, $25 went to their parents.[2] Implicitly, the CCC also led to a greater public awareness and appreciation of the outdoors and the nation's natural resources; and the continued need for a carefully planned, comprehensive national program for the protection and development of natural resources.[3]

- wiki

FG42

9:09 PM ET

October 12, 2011

The CCC sounds like it was a

The CCC sounds like it was a great idea, and it surely had many benefits for the country at the time of the Great Depression. Interestingly, it does sound like the Germans' National Labor Service (Reichsarbeitsdienst), who are perhaps most familiar to foreigners as those massed thousands in the Nuremberg Party Rallies who were doing the manual of arms and marching with spades instead of rifles.

MISTERTWIG

8:43 PM ET

October 12, 2011

Anyone on enemployment (

Anyone on enemployment ( except those with sevear mental or physical disabilities) who refuse to work atleast part time for minimum wage holding construction signs, placing cones, sweeping sidewalks/ streets, picking trash up, etc should immediatle be removed off unemployment befefits

That is not indentured servitude, coercion or degrading. It is requiring those being supported by society to give back. If you are unemployed, no reasonable job is "beneath" you. This is an economy, not kindergarden

KILGORE_NOBIZ

8:54 PM ET

October 12, 2011

Military Spending Really has no Long Term Benefit?

Do I really need to make a list of all the things in our society technology derived from military contracts has added to our economy? Almost absurd this justification needs to be made, but certain writers really are that short-sighted. Here goes:

The internet (and computer technology in general), GPS, satellite communications, weather forecasting, the aviation industry as we know it, microwave ovens, cell phone technology, firefighting and search and rescue techniques, the modern day emergency room, blood plasma and transfusions, and this was all from two minutes of informal brainstorming.

Yep, I guess there really is no economic benefit to society from military spending. Let's just stop it all, take all those satellites out of the sky, pull the plug on the internet, get rid of our modern communications and see what happens next.

RUBBER DUCKY

1:55 AM ET

October 13, 2011

The space weenies make the same pitch:

'Look at all this neat stuff.' Unsaid is the neater stuff to be had were the same resources applied by profit-incentive entrepreneurs, lean, mean, and able to squeeze investment for output and efficiency, not pork-laden workfare. The opportunity cost of military R&D is paid with civilian-side R&D not funded.

The defense establishment is turned into a cargo cult just praying for the next aircraft loaded with dollars to crash near their plant or hometown or congressional district. No economist will say that the military spending is the most efficient use of those funds in the economy. Military chauvinists may, neatly lumping themselves into two camps, the fools and the liars.

BEARCAT

9:05 PM ET

October 12, 2011

Alphabet Soup

The problem with defense spending is "it is not the gift that keeps on giving" you spend it and it is gone, especially if you pee it away in the Stans. I am ready to fund the Air Force next manned aircraft program w bake sales.

New Deal had lots of programs besides CCC.

The Public Works Administration was the biggest and built their Govt projects with private firms. The NIRA included ship building (passed by one vote) and one of the first authorized was USS Yorktown (later wasted at Midway).

The NIRA or NRA was ruled unconstitutional about 1935, what got it was price fixing, wage fixing, monopolistic, cartels the Feds had encouraged. The rest of New Deal ran until about 1942 when everything was shifted to fighting the wars.

The WPA Works Progress (later Project) Administration included Art, Music, Theater, and Writers Projects. I'd like to see that ; ) It predictably became a political football even during the depression and they dialed it down.

LUVMY91STANG

10:47 PM ET

October 12, 2011

It's been a while since I

It's been a while since I looked at all the stuff withheld from a paycheck, but as I recall, unemployment was one of them. I also remember, as an employer, sending the state a good chunk of money for unemployment matching, including for my own pay, even though I wasn't eligible to draw unemployment when I sold the business.

Given the facts above, I would really like to know why people think taxpayers pay for unemployment. They don't.

Granted, during good economic times, the gov't uses the excess on other stuff, and during bad economic times the taxpayer picks up the slack, but over the long term I would wager it's a wash. Perhaps one of you trashing the lazy bums drawing unemployment has ready access to those stats and can support or refute that assertion.

MISTERTWIG

12:17 AM ET

October 13, 2011

I could be wrong, but its a

I could be wrong, but its a payroll TAX that pays for unemployment. The specific amount taken out of your paycheck every two weeks does not fund a specific account that will specifically pay your unemployment benefits if you need it in the future.

If you have a job, you are paying unemployment payroll tax, which turns into an unemployment check sent out to someone else eligible for unemployment.

And you further state that the business has to contribute to unemployment taxes, including from your own pay.

What exactly would you call that other then tax payers funding unemployment?

LUVMY91STANG

2:50 AM ET

October 13, 2011

The point is...

it's drawn from a fund provided BY workers (and employers) FOR workers. It is supposed to be a zero sum game. Being administered by the state and called a tax doesn't change that basic dynamic. There is a reason it's called insurance.

MILPROF

4:06 PM ET

October 13, 2011

unemployment

At the state level the unemployment taxes do go to a fund earmarked for unemployment benefits, not at the worker level true, but not into the general fund. Moreover, as with an insurance program, the rate set on each business in most states varies based on that employer's history -- those with high rates of laying off workers get charged more in unemployment tax. And of course benefits vary with what your wage was. In that sense, it is more akin to a mandatory government-run insurance system than just another welfare program run out of general tax revenues.

KAYKURI

10:49 PM ET

October 12, 2011

Apologize in advance for the rant, but...

Having had front row seats this week to the shipping of yet another several hundred high-skill jobs overseas, I'm not in the best mood. The people making these decisions are not evil--this is the inexorable logic of a publicly listed company in the current globalized environment.

But it's got me thinking that perhaps we have been going about this the wrong way. Maybe instead we should totally double down on defense spending. Making war may truly be the one remaining competitive advantage the US has. We love it. We're good at it. We should simply start charging steep fees for the global security services we are already providing anyway. Once the rest of our economic interests have atrophied to nothing, we will be fully impartial to boot.

Team America, fuck yeah. Would the last grunt deployed to Asia please turn out the lights?

AST16

4:55 PM ET

October 14, 2011

Nice Idea but

as we're seeing in New York with the Tappan Zee bridge it just doesn't work. They estimate the cost will be $6 billion but everyone knows it will rise to 17 and it will take years before any work starts because of Fenderal and State regulations. Not to mention all the politicians, they're construction company friends and union leaders will all have to get their cut. It doesn't matter that a new bridge is desperately needed, everyone just wants their cut.

NIKI111

8:52 PM ET

October 19, 2011

Daily Ausaf

I understand that there is benefit to spreading the money around. I just don't understand how there is NO benefit to getting any labor return on it.
Daily Ausaf

FAULKNER

4:45 PM ET

November 8, 2011

It's probably also the case

It's probably also the case that back then you had more people with at least modest relevant experience like putting up a shed or a fence, handing farm equipment, whatever. Today, there's a large gap diy home ideas between the average office worker who's never changed their own tire and the skills required on a major bridge-building project.