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OpEdNews Op Eds    H3'ed 7/2/18

Tomgram: William Hartung, Weaponized Keynesianism in Washington

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Although insufficient, increases in defense manufacturing and construction can help areas where employment in civilian manufacturing has been lagging. Even as it's expanded, however, defense spending has come to play an ever-smaller role in the U.S. economy, falling from 8%-10% of the gross domestic product in the 1950s and 1960s to under 4% today. Still, it remains crucial to the economic base in defense-dependent locales like southern California, Connecticut, Georgia, Massachusetts, Michigan, Missouri, Ohio, Pennsylvania, Texas, Virginia, and Washington state. Such places, in turn, play an outsized political role in Washington because their congressional representatives tend to cluster on the armed services, defense appropriations, and other key committees, and because of their significance on the electoral map.

A long-awaited Trump administration "defense industrial base" study should be considered a tip-off that the president and his key officials see Pentagon spending as the way to economincally prime the pump. Note, as a start, that the study was overseen not by a defense official but by the president's economics and trade czar, Peter Navarro, whose formal title is White House director of trade and industrial policy. A main aim of the study is to find a way to bolster smaller defense firms that subcontract to giants like Boeing, Raytheon, and Lockheed Martin.

Although Trump touted the study as a way to "rebuild" the U.S. military when he ordered it in May 2017, economic motives were clearly a crucial factor. Navarro typically cited the importance of a "healthy, growing economy and a resilient industrial base," identifying weapons spending as a key element in achieving such goals. The CEO of the Aerospace Industries Association, one of the defense lobby's most powerful trade groups, underscored Navarro's point when, in July 2017, he insisted that "our industry's contributions to U.S. national security and economic well-being can't be taken for granted." (He failed to explain how an industry that absorbs more than $300 billion per year in Pentagon contracts could ever be "taken for granted.")

Trump's defense-industrial-base policy tracks closely with proposals put forward by Daniel Goure of the military-contractor-funded Lexington Institute in a December 2016 article titled "How Trump Can Invest in Infrastructure and Make America Great Again." Goure's main point: that Trump should make military investments -- like building naval shipyards and ammunition plants -- part and parcel of his infrastructure plan. In doing so, he caught the essence of the arms industry's case regarding the salutary effects of defense spending on the economy:

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"Every major military activity, whether production of a new weapons system, sustainment of an existing one or support for the troops, is imbedded in a web of economic activities and supports an array of businesses. These include not only major defense contractors such as Lockheed Martin, Boeing, General Dynamics, and Raytheon, but a host of middle-tier and even mom-and-pop businesses. Money spent at the top ripples through the economy. Most of it is spent not on unique defense items, but on products and services that have commercial markets too."

What Goure's analysis neglects, however, is not just that every government investment stimulates multiple sectors of the economy, but that virtually any other kind would have a greater ripple effect on employment and economic growth than military spending does. Underwritten by the defense industry, his analysis is yet another example of how the arms lobby has distorted economic policy and debate in this country.

These days, it seems as if there's nothing the military won't get involved in. Take another recent set of "security" expenditures in what has already become a billion-dollar-plus business: building and maintaining detention centers for children, mainly unaccompanied minors from Central America, caught up in the Trump administration's brutal security crackdown on the U.S.-Mexico border. One company, Southwest Key, has already received a $955 million government contract to work on such facilities. Among the other beneficiaries is the major defense contractor General Dynamics, normally known for making tanks, ballistic-missile-firing submarines, and the like, not ordinarily ideal qualifications for taking care of children.

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Last but not least, President Trump has worked overtime to tout his promotion of U.S. arms sales as a jobs program. In a May 2018 meeting with Saudi Crown Prince Mohammed bin Salman at the White House (with reporters in attendance), he typically brandished a map that laid out just where U.S. jobs from Saudi arms sales would be located. Not coincidentally, many of them would be in states like Pennsylvania, Michigan, Ohio, and Florida that had provided him with his margin of victory in the 2016 elections. Trump had already crowed about such Saudi deals as a source of "jobs, jobs, jobs" during his May 2017 visit to Riyadh, that country's capital. And he claimed on one occasion -- against all evidence -- that his deals with the Saudi regime for arms and other equipment could create "millions of jobs."

The Trump administration's decision to blatantly put jobs and economic benefits for U.S. corporations above human rights considerations and strategic concerns is likely to have disastrous consequences. Its continued sales of bombs and other weapons to Saudi Arabia and the United Arab Emirates, for example, allows them to go on prosecuting a brutal war in Yemen that has already killed thousands of civilians and put millions more at risk of death from famine and disease. In addition to being morally reprehensible, such an approach could turn untold numbers of Yemenis and others across the Middle East into U.S. enemies -- a high price to pay for a few thousand jobs in the arms sector.

Pentagon Spending Versus a Real Infrastructure Plan

While the Trump administration's Pentagon spending will infuse new money into the economy, it's certainly a misguided way to spur economic growth. As University of Massachusetts economist Heidi Garrett-Peltier has demonstrated, when it comes to creating jobs, military spending lags far behind investment in civilian infrastructure, clean energy, health care, or education. Nonetheless, the administration is moving full speed ahead with its military-driven planning.

In addition, Trump's approach will prove hopeless when it comes to addressing the fast-multiplying problems of the country's ailing infrastructure. The $683 billion extra that the administration proposes putting into Pentagon spending over the next 10 years pales in comparison to the trillions of dollars the American Society of Civil Engineers claims are needed to modernize U.S. infrastructure. Nor will all of that Pentagon increase even be directed toward construction or manufacturing activities (not to speak of basic infrastructural needs like roads and bridges). A significant chunk of it will, for instance, be dedicated to paying the salaries of the military's massive cadre of civilian and military personnel or health care and other benefits.

In their study, the civil engineers suggest that failing to engage in a major infrastructure program could cost the economy $4 trillion and 2.5 million jobs by 2025, something no Pentagon pump-priming could begin to offset. In other words, using the Pentagon as America's main conduit for public investment will prove a woeful approach when it comes to the health of the larger society.

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One era in which government spending did directly stimulate increased growth, infrastructural development, and the creation of well-paying jobs was the 1950s, a period for which Donald Trump is visibly nostalgic. For him, those years were evidently the last in which America was truly "great." Many things were deeply wrong with the country in the fifties -- from rampant racism, sexism, and the denial of basic human rights to McCarthyite witch hunts -- but on the economic front the government did indeed play a positive role.

In those years, public investment went far beyond Pentagon spending, which President Dwight Eisenhower (of "military-industrial complex" fame) actually tried to rein in. It was civilian investments -- from the G.I. Bill to increased incentives for housing construction to the building of an interstate highway system -- that contributed in crucial ways to the economic boom of that era. Whatever its failures and drawbacks, including the ways in which African-Americans and other minorities were grossly under-represented when it came to sharing the benefits, the Eisenhower investment strategy did boost the overall economy in a fashion the Trump plan never will.

The notion that the Pentagon can play a primary role in boosting employment to any significant degree is largely a myth that serves the needs of the military-industrial complex, not American workers or Donald Trump's base. Until the political gridlock in Washington that prevents large-scale new civilian investments of just about any sort is broken, however, the Pentagon will continue to seem like the only game in town. And we will all pay a price for those skewed priorities, in both blood and treasure.

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Tom Engelhardt, who runs the Nation Institute's Tomdispatch.com ("a regular antidote to the mainstream media"), is the co-founder of the American Empire Project and, most recently, the author of Mission Unaccomplished: Tomdispatch (more...)
 

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