A topnotch site

Not “Economic Conversion”


Economic conversion conjures up images of unwanted religious people on your doorstep.  Some people are still stuck in the seventies notion of converting the military economy into a peacetime economy.  These people do not know their economic history.  Looking at the economic record it is obvious that, as long as you don’t move too fast, military reductions are easily absorbed by the civilian economy.  The two best examples of this are the sixties and nineties economic boom periods.  These seventies thinking people also think narrowly in terms of the federal budget, that military spending can be shifted over to other budget uses like education.  This ignores the workforces involved, engineers and teachers are two entirely different economic sectors.  This is to be stuck in the two dimensional world of politics and money about military spending.

Third Dimension

The crucial third dimension is left out of the analysis.  The third dimension recognizes that military spending does not produce a product for the civilian economy.  The activity produced in the name of the military budget is all consumed in the name of national defense.  This defense is a national service, not a national product, a kind of make work program for resources that would otherwise propel the economy forward through advanced manufacturing.  To use a medical analogy, this means that military spending creates a blockage of the economic arteries.  The fact that vast resources are moving into communities creates the false impression of economic growth.  This local effect of military spending ignores the national loss of capital investment.

Local Effect

For some reason, people have a hard time differentiating between economic inputs (the local effect) and economic outputs (the national effect).  They are blind to the fact that so called economic stimulus in one part of the nation comes at the expense of another part of the nation.  We all pay the income tax in this nation.  While some states get more back in military spending than they pay out in taxes, others do just the opposite, paying more taxes in than they get back in terms of military spending.  This is a great transfer scheme our politicians play to reward and punish each other.  The regional transfer of the money this way has the effect of rewarding the military spending states at the expense of the manufacturing states.  No other part of the national budget has much of an impact on regional economic growth.


Roads are a small part of the national budget.  Lincoln spent plenty on infrastructure, including a railroad to connect the East and West coasts.  His party now refuses to maintain and improve the national infrastructure in the absurd belief that the untaxed rich will invest in America when they have better places around the world to invest their money, such as cheap labor countries with infrastructure programs.  Engineers can be used to build infrastructure or they can be wasted on military spending.  That public sector optional use of capital and research resources recognizes that so called conversion does not have to convert engineers into teachers.  This is in addition to the private sector use of these key people.  Military buildups cause a lack of machinists in Milwaukee and Detroit, while the military factories use them in droves in Los Angeles, Atlanta, Dallas, Boston, and Saint Louis.  When the Cold War ended, the peace dividend and the shift of machinist jobs restored the auto industry and the Midwest in the nineties.  Japan took over the world automobile production lead in 1981 under the Reagan military buildup and the United States took it back in 1996 with the peace dividend of the nineties.

Misguided Activists

Paul Soglin, the peace mayor of Madison, Wisconsin, does not believe there was a peace dividend in the nineties.  Yes, the military budget stayed at about $250 billion for fifteen years, but that was a military drop from 6.5% of GDP to 2.9% of GDP.  Robert Pollin, a leader of the Union of Radical Political Economists, also does not understand Peace Economics.  He thinks the nineties boom was all a wealth effect from the stock market boom.  He does not understand that restoring the missing military research and capital to the economy will create a boom.  He also thinks that you gain by getting more low paying jobs in places like education with the same money than spending it on the military creating fewer higher paying engineering jobs.  This may be true, but it is irrelevant to why military spending hurts the economy.  It is another example of the two dimensional thinking of most conventional economists.  They think of money spent, jobs created, and politics only, not the key national components of lower productivity and lower investment. These last two missing ingredients lead to the internal destruction of empires.  Code Pink has fallen into the same trap.  Their new Peace Economy campaign (a rip off of my Peace Economics vocabulary invented in 1986) is in support of the old paradigm that considers military spending in just the two dimensions of money and politics.  Harry Targ has fallen for the old paradigm in his new Peace Charter for the 21st Century calling on the old term, “Economic Conversion”.  All have had exposure to my thinking, yet they still don’t “Get It”.  They are all stuck in what I call Flat Earth Economics.  Ralph Nader still looks at military spending as money, as he interviewed the head of Vets for Peace instead of me, just after meeting me in Rowe Massachusetts two months ago.  Labor for Peace and Vets for Peace are the same way, so is Peace Action.  All are stuck in the old paradigm.  The economy needs to be thought of as more than money and jobs, it is a flow of energy directed at meeting economic needs.  Military spending misdirects constructive flows and replaces them with “stand by” destructive flow potentials.  The double negative of destroying enemies is still basically negative, not positive.  The military is inactive during peace time, destructive during war time.

Peace Movement Inertia

Seymour Melman was asked a question in October 1987 at an Oregon State University conference, but I answered it before he could, because I knew the answer and knew he didn’t.  He was the keynoter, I just another presenter, but I knew why the peace movement wasn’t into economics.  It’s because they are either environmentalists concerned about the bomb or they are human rights advocates concerned about military intervention in other countries.  Neither group cares much about the economy.  But when my book “Peace Economics” came out in 1986, two years later the SANE Freeze congress made peace economy their number one priority.  Working behind the scenes I created a new terminology and rationale for this, but they gave me no credit.  Four years later I attended their 1990 congress, and they were using the title of my 1989 book, “Strength Through Peace” on all the balloons at the luncheon.

My most popular press release last year summarizing many military effects:

Hint: to read this paper for free, you must click on the tiny word “read” in the middle of the bottom of the screen after you go to the above link on
Dr. Peace, Dr. Robert Reuschlein, Real Economy Institute, Madison, Wisconsin
MESSAGE: 608-230-6640

(Real Economy and/or Peace Economics free eBook for the press)
Archive of this two year long press release campaign at:


Single Post Navigation

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: