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Real Peace Economics or Not

It used to be commonly referred to as economic conversion until I came along with my book titled Peace Economics in April 1986 hardcover or August 1986 paperback.  The new terminology soared to the top of the charts as the SANE/Freeze Congress adopted Peace Economy as its number one priority in 1988.  I found out about this in February 1990 when I attended the Congress in Oakland.  Then the balloons at the luncheon all read “Strength Through Peace” the title of my second book used for my fall 1989 class in Peace Economics.  The peace community has been slow if not dense in adopting the real meaning of peace economics, that those crucial resources used in the military budget represent lost capital, lost manufactured goods available to the civilian economy, lost manufacturing productivity growth rate.  This is huge, far more important than merely the loss of money.

As a result, the phonies who use my term peace economics without the understandings I pioneered with my books, tend to diminish the importance of the lost resources by treating it as just lost money, not the much more crucial lost economic growth opportunity.  This all goes back to a basic flaw in Keynesian economics.  In Keynesian economics, if a bunch of people are paid to dig holes and another bunch of people are paid to fill those holes, both groups contribute to the economy.  This is utter nonsense.  Productivity matters, useful purpose matters, mere redistribution of money is not necessarily economic growth.

So the “it’s just money” crowd looks at things like the number of jobs produced for the same amount of money or the number of schools or hospitals that could be built with the money for an aircraft carrier.  This reduces the argument to guns versus butter, and gives a strange kind of economic equivalency to military spending it does not deserve.  Besides, large numbers of low paying jobs cannot be honestly compared to smaller numbers of high paying jobs.  Salary matters, family wage jobs matter, high wage jobs can carry an entire community including the lower paying service and retail sectors.  This is why Marian Anderson’s analysis by jobs per state of the Reagan military buildup is so in error and meaningless with a low statistical correlation with the military budget changes.  When I looked at the money transfers between and among states, I got a high statistical correlation of .975 and a strong explanation of how the military buildup rewarded the military states at the expense of the manufacturing states.  The Bi-Coastal Economy of the Atlantic coast states and California had 80% of the military buildup and triple the economic growth rate for five years of the 34 inland states.

The roles are completely reversed when the military budget reverses course after 1985 Through 1991.  Gorbachev, Gramm Ruddman Hollins, and the end of the Cold War produce a resurgence of inland states, especially the Great Lakes region, as the Bi-Coastal economy suffers.  This time I used the unemployment rate change as the dependent variable, still had a .97 correlation with 17 mini-regions. Yes, Virginia, the Clinton years were the low military Peace Dividend after the Cold War with the economic growth rate doubling over the high military Reagan years.  Nobel Economics Laureate Joseph Stiglitz attributes the difference in military spending for the difference in economic growth rate.  The Reagan buildup mirrors the Bush buildup of recent years.  Both were a similar percentage of the economy, both distorted the real estate market and lead to financial institution bailouts at the end of their respective buildups/decades.  The difference is that Reagan ran much bigger deficits due to much bigger tax cuts, and had better timing around the reelection date.  Bush had nearly zero oversight of the financial markets.

Military spending does add to the deficit and government spending creates a deficit and creates economic growth.  The difference is the lack of contribution to the economy from that spending.  When government spends on education, that clearly improves the economy, and when government spends on health care, that clearly benefits the population.  And most of the rest of government spending is mainly social transfer payments that are like normal insurance industry transfer payments.  That contributes to the stability of the society.  But military spending does nothing for the many years between wars it is not used, or it destroys things and people in wartime.  Nothing constructive about that, the double negative, “the destruction of my enemy is my good” rings hollow.  Destruction is not construction, is not goods making, is lost manufacturing opportunities.  Zero or negative is not positive.  So military spending is qualitatively different from all other government spending.  Would you rather have an MX missile in your backyard or a swimming pool?  Case closed, the military is useless to the civilian economy.  And that’s what the math says, too.

Here is a brief summary of the math:

Dr. Peace, Dr. Bob Reuschlein,

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