Nonproductive Government

Not all government spending hurts the economy, as many conservatives believe. But certain types of government spending DRAIN CRITICAL RESOURCES away from the goods producing sectors of the American or any other economy. These losses are due to a brain drain of scientific and engineering talent; a capital drain of heavy equipment and construction; and a “hard nosed people” drain of those good at “technical and/or physical” labor. All of these key resources are being taken from the civilian economy. These diversions rob resources from “goods producers” competing in the global REAL ECONOMY, for the sake of a SERVICE, a political service: military spending. This is what it means to say military spending is NONPRODUCTIVE.

This is not just rhetorically true, it is mathematically true. The main ingredient I’m talking about explains the rise and fall of civilizations throughout the ages. It is low in the emerging nation and high in the declining nation, consistently showing a negative impact on a nation’s economy exactly proportional to its size. In modern nations it models a direct reduction in capital investment equal to its size. It also has a tendency to dominate the politics, regional economies, and crime rates of the nation. See below links.

INPUTS (same for goods producing and military) CAPITAL SCIENTISTS ENGINEERS PHYSICAL TECHNICAL

OUTPUTS (different for goods producing and military) PRODUCT BUILDING CROP MINERALS (in the case of productive industries)

OR NOTHING (peacetime) DESTRUCTION (wartime) (in the case of military spending)

Military spending is like manufacturing without the product. This nonproductive nature of military spending is the economic flaw that leaves a “hole” or hollow place in the economic equation. This makes military spending an inert economic ingredient, a black hole in the economy that stops the normal economic upward spiral of change and growth tested against the market place. Military Spending is like a welfare program for the upper middle class. Except that welfare harmlessly transfers money, while military spending harmfully depletes the economic growth rate, the manufacturing productivity growth rate, and capital investment levels of a nation. To judge military spending by its research spinoffs, you must consider that about two thirds of that benefit is reduced by secrecy and being too military specific to have civilian benefits. Research is about 10% of the military budget, so then about 3% of the military budget returns a useful research output to the rest of the economy while the input half of the economic equation merely spreads money around. Then military spending is only about 97% without economic benefit to the rest of society other than the direct recipients of the military welfare.

CURRENT PEACE ECONOMICS ANALYSIS (video conclusion) The two year military buildup after 9-11-01 caused 2.8 million manufacturing jobs to be lost: 1 million jobs due to trade treaties and 1.7 million jobs lost due to the military buildup. That military buildup through 2004 cost three times the lost jobs per capita in the lower military half of the nation as in the higher military half of the nation. The military buildup was concentrated on the Atlantic Coast states and the Southern and Southwestern border states between Florida and California, especially the Bush home state of Texas. These are the same areas and states most affected by the sub-prime mortgage crisis. The uneven military buildup over stimulated the real estate markets in the military boom states setting up the Great Recession. This was very similar to the Reagan military buildup overstimulating real estate in the high military states and leading to the Savings and Loan bailout when that bubble burst in the eighties. The Iraq surge added troops in Iraq and $70 billion to the war costs above the normal Pentagon budget. This last economic drain to the economy took about a year to push us into the banking collapse of September 2008. The surge policy was announced in December of 2006 and six months later the new troops arrive in Iraq. The unemployment rate increased nearly every month for two years, starting in July 2007 and ending in June 2009. Obama was the first Democratic president since World War Two to NOT cut military spending in his first year. This will keep the recovery weaker than expected.