Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10 5/3/83; site tty3b.UUCP
Path: utzoo!linus!decvax!harpo!eagle!mhuxl!houxm!ihnp4!we13!tty3b!mjk
From: mjk@tty3b.UUCP
Newsgroups: net.politics
Subject: Defense Spending and the Economy
Message-ID: <254@tty3b.UUCP>
Date: Mon, 5-Dec-83 17:53:29 EST
Article-I.D.: tty3b.254
Posted: Mon Dec  5 17:53:29 1983
Date-Received: Thu, 8-Dec-83 20:12:48 EST
Organization: Teletype Corp., Skokie, Ill
Lines: 46

T.C. Wheeler should have studied beyond Economics 101.  That's when you
learn that all the simple theories don't usually work.  His basic claim
(although it took him some 54 lines to illuminate it) is that defense
spending is good for average people because the money trickles down to
them from spending by the defense contractors.  There's an element of
truth there: money doesn't just disappear.

But what we're really playing here is somewhat of a zero-sum game, as
illustrated by the Federal budget fights over the past few years.  How
much for defense and how much for other things is the real question.   
The proper analysis, then, is a comparative one: given X dollars, what
is the effect of spending it on, say, an MX missile versus a new hospital,
or mass transit.  This analysis highlights the wastefulness of defense
spending.  Marion Anderson, of Employment Research Associates in Ann
Arbor, Michigan, has done a lot of work in the area of employment effects
of government spending.  She shows that defense-
related industries produce the fewest number of jobs per dollar of
spending.  That's fairly intuitive: most defense firms are
high-technology, and thus capital-intensive, not labor-intensive.  She
has identified the net loosers and winners from defense spending by
industry, and calculated the effects of shifting the spending to other
areas (e.g. education).  I don't have the details here right now, but
I'll post another article with them tomorrow.

Of course, we should not base defense outlays entirely on their economic
impact.  We must spend as much as is needed for security.  But what this
analysis shows is that, since defense spending is so wasteful when
compared with other forms of government programs, it should be kept to
an absolute minimum.  We have failed spectacularly at that, squandering
hundreds and even thousands of billions of dollars on useless (and
dangerous) weapons systems.  The fact that our defense industry is
privately owned and consistently profitable should give most people a
clear reason why this is so.

Interestingly, the International Association of Machinists, the largest
trade union in the defense industry, agrees with Ms. Anderson's findings.
Although obviously concerned with the impact on its members of cuts in
defense spending, the IAM has a far-sighted enough view to realize that
even more people would be employed if the money wasted on defense
boondoggles could instead be spent on socially useful projects, such
as building 185 mph trains and 80 mpg cars.  It has funded a Conversion
Project, which is studying ways of converting plants making war goods to
plants manufacturing other products.

Mike Kelly
..!ihnp4!tty3b!mjk