News Could Significantly Upping Defense Spending Help the Economy Recover?

[turbo]

Why is it always roads&bridges that get all the attention? There is all sorts of different sectors that fall under "US Infrastructure" that has nothing to do with automobiles.

They get mentioned because they are critical to our economy. The US has practically abandoned public transportation for anything outside of cities and hubs and a couple of critical corridors, so we need to maintain and upgrade highway infrastructure. For instance, Maine desperately needs a robust east-west corridor. We have trading partners in NB and PQ that end up running heavy loads over secondary roads like Route 9 and Route 2. Original roads here were built along river valleys, which run generally N-S. An E-W corridor, continued through NH and VT and connecting with highways in the Hudson valley and the St.Lawrence valley would make shipping and trading FAR more efficient, so siting industries like quarries, kilns, sawmills, etc would be more viable and produce more long-term jobs out here in the boonies.

 

[Char. Limit]

Why will oil be constrained and what do you mean the government will ration ordinary citizens?

Well, the thing about non-renewable energy is that it's not renewable. Oil will run out. And at the rate we're gulping it down, which is only showing signs of increase, it's going to run out soon. Now, when people go to the gas stations across America, only to hear "Sorry, we have no gasoline, you greedy people went through the world's reserves too fast", the government will have to start rationing oil, keeping it for their fighter jets and tanks. For the national defense, I'm sure you understand. Sacrifice everything for the military and all that.

And here's some links to support my argument:

http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html
http://www.guardian.co.uk/environment/cif-green/2010/feb/10/oil-crunch-peril
http://www.countercurrents.org/porter090110.htm

That'll do for now, a quick Google search will find others.

 

[CAC1001]

They get mentioned because they are critical to our economy. The US has practically abandoned public transportation for anything outside of cities and hubs and a couple of critical corridors, so we need to maintain and upgrade highway infrastructure. For instance, Maine desperately needs a robust east-west corridor. We have trading partners in NB and PQ that end up running heavy loads over secondary roads like Route 9 and Route 2. Original roads here were built along river valleys, which run generally N-S. An E-W corridor, continued through NH and VT and connecting with highways in the Hudson valley and the St.Lawrence valley would make shipping and trading FAR more efficient, so siting industries like quarries, kilns, sawmills, etc would be more viable and produce more long-term jobs out here in the boonies.

The only problems I can see with working on infrastructure are:

1) Possible eminent domain problems for building new highways (?)

2) Environmental regulations getting in the way (how will building this new highway through said area affect it?)

3) Corrupt contractors who decide to stretch the construction period out as long as possible (I heard there's one highway where they've been working on the construction like twenty years or something!?)

 

[CAC1001]

Well, the thing about non-renewable energy is that it's not renewable. Oil will run out. And at the rate we're gulping it down, which is only showing signs of increase, it's going to run out soon. Now, when people go to the gas stations across America, only to hear "Sorry, we have no gasoline, you greedy people went through the world's reserves too fast", the government will have to start rationing oil, keeping it for their fighter jets and tanks. For the national defense, I'm sure you understand. Sacrifice everything for the military and all that.

And here's some links to support my argument:

http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html
http://www.guardian.co.uk/environment/cif-green/2010/feb/10/oil-crunch-peril
http://www.countercurrents.org/porter090110.htm

That'll do for now, a quick Google search will find others.

Well sure plenty have been saying that, but people have been claiming this for years. I am no expert, but the subject of peak oil is a complex one that involves many variables. For example, I think scientists right now say there are about three trillion recoverable barrels of petroleum out there, and so far we've taken around one trillion. Some believe there could be as much as ten trillion out there.

But even if there's about three trillion, there's issues like technology, economic growth, etc...that come into play.

Then there's natural gas, there's shale oil and tar sands (which are expensive and difficult to get to, but I am sure in time the technology, especially if necessary, would make it easier and more profitable, and if petroleum ever does start coming in shorter supply, it's increasing price will make shale and tar sands profitable).

There's also coal. The United States alone is a Saudi Arabia of coal, and you can convert coal into oil.

So I highly doubt fossil fuels will run out soon, although finding a replacement to significantly reduce our usage of them is something we very much want to do. But the fact is that solar and wind power just are not going to do it right now.

 

[turbo]

The only problems I can see with working on infrastructure are:

1) Possible eminent domain problems for building new highways (?)

2) Environmental regulations getting in the way (how will building this new highway through said area affect it?)

3) Corrupt contractors who decide to stretch the construction period out as long as possible (I heard there's one highway where they've been working on the construction like twenty years or something!?)

Please give some decent documentation for claim 3). I doubt that you can substantiate it.

 

[Gokul43201]

It is, however, relevant to whether upping defense spending would be a good idea.

But that is beyond the scope of this thread.

You can't ignore an aspect just because it works against you.

Au contraire, you ought to ignore it, as it is off-topic. The thread topic asks very specifically about the economic benefit of changes to defense spending. All other issues are irrelevant.

 

[CAC1001]

Please give some decent documentation for claim 3). I doubt that you can substantiate it.

When I wrote that, I was thinking to the expressway in Philadelphia, PA, where if I am remembering right, there was some part of it where construction had been going on for years. I don't have documentation for it however.

BTW, I'm not saying investing in infrastructure is a bad thing, I was just pointing out what I would see as possible problems in doing so.

 

[turbo]

When I wrote that, I was thinking to the expressway in Philadelphia, PA, where if I am remembering right, there was some part of it where construction had been going on for years. I don't have documentation for it however.

BTW, I'm not saying investing in infrastructure is a bad thing, I was just pointing out what I would see as possible problems in doing so.

Please give a well-referenced instance of when a public works project has been going on for years, sucking up taxpayer money. It's a common complaint of the right, but there is no evidence in support. Bring it on.

 

[Evo]

Please give a well-referenced instance of when a public works project has been going on for years, sucking up taxpayer money. It's a common complaint of the right, but there is no evidence in support. Bring it on.

Let's not drag this off topic. To think that there has been no corruption is extremely naive. turbo, you are aware that the cement industry was controlled (at least in NY and NJ) by the mafia in the not so distant past?

 

[cronxeh]

DeFoe company in NYC. Enough said.

 

[apeiron]

But that is beyond the scope of this thread.

Au contraire, you ought to ignore it, as it is off-topic. The thread topic asks very specifically about the economic benefit of changes to defense spending. All other issues are irrelevant.

The economic equation has to include the opportunity cost impact of not spending that money in other potential areas of society.

 

[Jack21222]

The thread topic asks very specifically about the economic benefit of changes to defense spending. All other issues are irrelevant.

If that were the case, the thread would have had one reply, containing one word, "yes." Even though it wasn't explicitly asked, there is an implicit question of "is it the best way?"

 

[turbo]

If that were the case, the thread would have had one reply, containing one word, "yes." Even though it wasn't explicitly asked, there is an implicit question of "is it the best way?"

True. There are advantages to improving infrastructure like roads and bridges, as opposed to defense spending. Job-creation for infrastructure projects is very diffuse, geographically and demographically. You get jobs for surveyors, engineers, planners, equipment operators, laborers, truck drivers, suppliers, etc, and they all spend paychecks wherever they live. And that can happen all over the country with positive effects everywhere. There are such projects on the books all over the country that are not being worked on simply for lack of funds, and they can be kicked into gear in a relatively short period of time.

How does that compare to building a few new ships or some fighter jets that no longer have a relevant mission? That helps a few workers in a few locations. The benefits are not wide-spread and can take years to ramp up in any case.

 

[ThomasT]

How many shot-in-arms does it take before we really have an economic IV?

How many shots in the arm has the general (the real) economy gotten? None. And, it's not going to get any. Upping defense spending will help a relatively small group of people for a short time. Period. The point being that the general economy is still quite strong. And, it will remain strong for the foreseeable future. And this is at least one reason, maybe the main reason, why the current group of politicians who control the direction of the US will do nothing to help its long term prosperity.

Given demographic and economic trends, and a general lack of commitment to alternative energy sources, the distant future doesn't look bright for the US.

 

[turbo]

While it's important to keep people from falling into poverty (extension of unemployment benefits comes to mind), it is far more important to provide enough stimulus to create jobs. That's why I would like to see lots of large highway infrastructure projects financed. Not only do people get jobs and paychecks, when they spend that money, other people get jobs, more hours at their own jobs, and more pay. Finance a multi-year project to replace a crumbling bridge and you not only employ all the people responsible for planning, engineering, and building the bridge, but the money they and their families spend employs pizza-makers, hairdressers, filling-station operators, salespeople... it goes on and on. The fact that such projects can happen all over the country make them a nice option, as opposed to highly-concentrated defense spending. Maine has Bath Iron Works (shipyard) and some facilities that make gas turbines for the military, but our state's economy would be far better-served by upgrading roads and bridges all over the state.

We have lost sawmills and paper mills in the economic downturn, and the tourism sector is suffering badly, as is commercial fishing. An infusion of construction jobs would not only help stimulate our local economies; the improved infrastructure would position our industries well for a (hoped-for) coming bounce.

 

[Evo]

Maine has Bath Iron Works (shipyard) and some facilities that make gas turbines for the military, but our state's economy would be far better-served by upgrading roads and bridges all over the state.

I may be wrong, but I thought only the interstates were funded with federal money, all other roads, bridges, etc... came from state funds. That's why Kansas has excellent roads, but the second you cross into Missouri, it's all potholes & disrepair.

 

[CAC1001]

True. There are advantages to improving infrastructure like roads and bridges, as opposed to defense spending. Job-creation for infrastructure projects is very diffuse, geographically and demographically. You get jobs for surveyors, engineers, planners, equipment operators, laborers, truck drivers, suppliers, etc, and they all spend paychecks wherever they live. And that can happen all over the country with positive effects everywhere. There are such projects on the books all over the country that are not being worked on simply for lack of funds, and they can be kicked into gear in a relatively short period of time.

On paper, it should be able to, in practice, I don't know about infrastructure spending's stimulative effects (Japan built a lot of infrastructure for example).

How does that compare to building a few new ships or some fighter jets that no longer have a relevant mission? That helps a few workers in a few locations. The benefits are not wide-spread and can take years to ramp up in any case.

Well a few things:

1) It wouldn't be just a "few ships or fighter jets," I was talking about the stuff that does have a relevant mission.

2) I think it would depend on some things regarding the time to ramp them up. I think it would be just like with infrastructure; certain infrastructure could be ready to go immediately, other stuff could take some time.

3) I don't know if it would only help workers in a few areas, because the technology and parts and tooling involved in building such military hardware requires a lot of various businesses from around the country I'd think. You'd have everything from various small manufacturers to suppliers and so forth.

4) If defense spending for stimulus would only help the economy to a limited degree, then one could try combining it with other forms of stimulus (supply-side stimulus by say cutting the corporate tax rate (ours is pretty high)), increase aggregate demand through demand-side tax cuts, maybe mail large checks to people as well, or infrastructure projects as you said.

 

[CAC1001]

I may be wrong, but I thought only the interstates were funded with federal money, all other roads, bridges, etc... came from state funds. That's why Kansas has excellent roads, but the second you cross into Missouri, it's all potholes & disrepair.

Yes, roads, bridges, etc...are state. Much of the Obama stimulus went to the states with this goal in mind from what I understand (spend it on infrastructure), but instead it seems the state governments have squandered it on their bureaucracies. Which I think is one of the flaws with infrastructure spending: how exactly to make sure the money goes to the actual infrastructure projects and doesn't get squandered along the way?

 

[turbo]

I may be wrong, but I thought only the interstates were funded with federal money, all other roads, bridges, etc... came from state funds. That's why Kansas has excellent roads, but the second you cross into Missouri, it's all potholes & disrepair.

It's not that federal money can't be used for state roads, bridges, etc. It just is commonly not made available in sufficient quantity. We often vote on state bond packages that leverage federal funds for improving docks, roads, etc.

There has been a plan in the works for years to build a new, high bridge across the Kennebec river in Skowhegan, to allow most traffic to bypass the downtown, but the money is simply not there. It would take heavy truck traffic out of the highly congested downtown, and allow for downtown businesses to have safer parking, pedestrian access, etc, but our state just can't justify the cost. That project would employ people for years, and revitalize the economy while improving public safety and improve the efficiency of heavy traffic that has to traverse those routes. Routes 2 and 201 cross in Skowhegan - the major E-W and N-S routes in this region, and all the traffic transitioning from one route to the other has to make right-angle turns at a really busy intersection on a fairly steep grade. Not good.

Neither the town nor the county can afford to finance a multi-million-dollar project like this, and the state simply doesn't have the money to pull it off, especially while tax revenues are down. If the federal government doesn't step up, the project will never be undertaken, despite the many long-term benefits that it would provide to citizens and local businesses.

 

[KalamMekhar]

The more money that is spent on R&D for weapon and gear systems to help create a better warfighter the better. There is no need to send our operators into battle with insufficient equipment.

The one thing that does make me angry, is phase 4 of the Army camo debacle.

Army Camo Phase IV

And so it begins…well actually it began awhile ago but Phase IV of the Army’s camo program is gaining steam and Natick in conjunction with PEO-Soldier released a Sources Sought Notice yesterday for camouflage patterns. SSD was also able to speak with PEO Soldier’s COL William Cole and LTC Mike Sloane about the situation.

http://soldiersystems.net/2010/06/30/army-camo-phase-iv/"

They really do not need to be spending more time than they already have on this to come to the same conclussions. All camouflage patterns blend in and look the same at 500m, and that movement and IR reflectivity are the largest issues in being detected.

It is time for the US Army to admit that the US Marine Corps. had it right with the CRYE pattern for its UCP.

 

[CAC1001]

Neither the town nor the county can afford to finance a multi-million-dollar project like this, and the state simply doesn't have the money to pull it off, especially while tax revenues are down. If the federal government doesn't step up, the project will never be undertaken, despite the many long-term benefits that it would provide to citizens and local businesses.

Would there be a way for the federal government to send the money directly to the town or county, or would it have to be funneled down through the state government first? If the latter, that is where I think one can run into corruption problems.

 

[turbo]

Would there be a way for the federal government to send the money directly to the town or county, or would it have to be funneled down through the state government first? If the latter, that is where I think one can run into corruption problems.

Why all the focus on corruption? Our state is populated by some pretty conservative folks and our state's elected officials are pretty open. We have never had a governor or chief legislator resign in disgrace or get indicted due to corruption charges, and there is not enough money involved in public service here to attract the creeps.

We need federal funds to get some of these projects underway because our state's finances simply can't supply the necessary money. If the feds granted a contract for a new destroyer to the shipyard at Bath, it would benefit a relative handful of people for another 4-5 years or so. Those aren't the people that are hurting here.

 

[CAC1001]

Why all the focus on corruption? Our state is populated by some pretty conservative folks and our state's elected officials are pretty open. We have never had a governor or chief legislator resign in disgrace or get indicted due to corruption charges, and there is not enough money involved in public service here to attract the creeps.

I'm talking about in general. Not all states are the same Plus government officials in general are not regarded as squeaky clean.

We need federal funds to get some of these projects underway because our state's finances simply can't supply the necessary money. If the feds granted a contract for a new destroyer to the shipyard at Bath, it would benefit a relative handful of people for another 4-5 years or so. Those aren't the people that are hurting here.

Would it benefit a handful of people, or just a handful of people in your particular area do you mean? For example I'd assume the only people in your area that would benefit would be the ones there who construct it, but what about all the parts and so forth required, I am sure that nationwide, there'd be benefits in other places too.

 

[turbo]

I'm talking about in general. Not all states are the same Plus government officials in general are not regarded as squeaky clean.

Would it benefit a handful of people, or just a handful of people in your particular area do you mean? For example I'd assume the only people in your area that would benefit would be the ones there who construct it, but what about all the parts and so forth required, I am sure that nationwide, there'd be benefits in other places too.

A relative handful of people in this state would benefit from a new destroyer contract, and those people work in south-coastal Maine - the area that has been least depressed by the poor economy.

If you're suggesting that defense spending is less-infected with corruption and deal-making than construction of highway infrastructure, I'm not convinced. If you want to build a new highway, it's going to take stone, gravel, concrete, culverts, guardrails, pavement, etc, etc. All that stuff is real and verifiable, and the contractors all know it, and when they bid on the contracts they are counting on their sources for all the materials and gauging the costs. I'd say that is a lot safer than relying on defense contractors to be above-board about costs and refrain from colluding with competing contractors.

 

[CAC1001]

If you're suggesting that defense spending is less-infected with corruption and deal-making than construction of highway infrastructure, I'm not convinced. If you want to build a new highway, it's going to take stone, gravel, concrete, culverts, guardrails, pavement, etc, etc. All that stuff is real and verifiable, and the contractors all know it, and when they bid on the contracts they are counting on their sources for all the materials and gauging the costs. I'd say that is a lot safer than relying on defense contractors to be above-board about costs and refrain from colluding with competing contractors.

I'd imagine there's probably corruption amongst defense contracting as well (although I don't know for sure, I don't see why not), and new projects can most certainly end up ballooning far beyond their initial projections in cost and so forth. That is why I only wanted money spent on replacing existing hardware that has already been developed.

When discussing corruption regarding highway infrastructure, I think it could be twofold: first, how to get the money from the federal government to the actual construction, and then possible corruption among contractors themselves.

I might be mistaken, but wasn't New Orleans for example given the money to build their levees up to withstand a more severe hurricane but never did, and thus when Katrina came through, the city flooded?

 

[Char. Limit]

One thing on the "corruption" argument...

If government is involved, corruption is massive. I'm sure it's provable, but I don't want to prove it.

 

[Antiphon]

New govt spending adds to the problem even if it's more benign like defense.

The whole world and especially the US Congress has borrowed so much money that it's now a question as to whether it can be paid back.

The world economy is a value-creating engine. When the world borrows money from it's own future but spends it on things that don't create more net money (like roads and tanks) then the future will have less money in it. That's where the world is right now, awash in debt.

The only answer is for the debt to be paid down by the wealth-creating sector of the global economy. This means governments have to reign in spending and yes, lay off workers if necessary.

This global economic trouble will be over when the global debt is paid down to between 3/4 to half of where it is now. More government spending is what created the mess. The sooner it stops borrowing, the sooner the debt can be retired.

 

[Office_Shredder]

How do roads not create money? The transportation of people and goods is a huge driving factor in the American economy.

I don't think it is at all obvious how government debt created the economic crisis. Obviously private debt destroyed companies, but most government were able to escape without much harm as far as I can tell. While the debt may (and probably will) be an issue in the future, it hasn't been an issue to this date

 

[Antiphon]

You're right it's not obvious. That's why the world isn't screaming for the debt to be paid down. The government is just another borrower, it has no special status in that realm.

The first rule of holes is stop digging the hole. Like every business and individual should know, you don't borrow money to pay bills. You borrow money when the thing you *do with the money* makes *more* money. Besides roads, the list of government spending that fits this bill is very very short.

Roads are necessary. Much of "social spending" is not. What's the payoff of paying farmers not to grow crops?

 

[mheslep]

Back at the height of the crisis / recession Martin Feldstein probably was the most prominent economist promoting this idea - increased defense spending - as the most effective way to actually stimulate, i.e. quickly recover the economy and create jobs. Feldstein was the chairman of the Council of Econ. Advisers under Reagan. I didn't like the idea, because I was sceptical of any kind of Keynesian spending if it is done solely for the purposes of economic stimulus, and now I'm more than sceptical. His article received wide review and you'll find rebuttals googling the title.

http://online.wsj.com/article/SB123008280526532053.html", December 24, 2008.

Feldstein's main point goes to addressing one of the main criticisms of stimulus spending (also made by Keynes), in that it is difficult to move the allocated government funds out into the depressed economy fast enough. See for example that large chunks of the 'Recovery' money will not be spent until 2011 or even 2012. His arguments:

• Defence spending can be fast via actions like immediate troop increases using two year enlistments that perfectly fits the time line.
• Acquire the components/materials for ship and airplane construction now, hold them in inventory until later in the construction process. Single shift production lines move to two.
• Replace the parts and munitions stocks depleted in Iraq (immediate impact).

etc.