Templeton Times: Professor Tyler Cowen Wants the Pentagon to Break a Few Windows. By Gary North from LewRockwell

June 18, 2014

I begin with a statement. Would you say it sounds Keynesian?

The continuing slowness of economic growth in high-income economies has prompted soul-searching among economists. They have looked to weak demand, rising inequality, Chinese competition, over-regulation, inadequate infrastructure and an exhaustion of new technological ideas as possible culprits.An additional explanation of slow growth is now receiving attention, however. It is the persistence and expectation of peace.
The world just hasn’t had that much warfare lately, at least not by historical standards. Some of the recent headlines about Iraq or South Sudan make our world sound like a very bloody place, but today’s casualties pale in light of the tens of millions of people killed in the two world wars in the first half of the 20th century. Even the Vietnam War had many more deaths than any recent war involving an affluent country.
Counterintuitive though it may sound, the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely.

This sounds Keynesian to me. The fact that it appears in The New York Times also leads me to conclude that it is Keynesian.
But, no, the author assures us, this is not Keynesian at all. “This view does not claim that fighting wars improves economies, as of course the actual conflict brings death and destruction. The claim is also distinct from the Keynesian argument that preparing for war lifts government spending and puts people to work.”
If it walks like a duck, and it quacks like a duck, it takes a lot of evidence for me to conclude that it is not a duck. When it is in the The New Duck Times, that pretty well confirms it.
He goes on.

Rather, the very possibility of war focuses the attention of governments on getting some basic decisions right — whether investing in science or simply liberalizing the economy. Such focus ends up improving a nation’s longer-run prospects.

Does this make sense to you? It makes no sense to me.
It was written by Tyler Cowen, who teaches economics at George Masin University. He is regarded as a free market economist. I do not know why.

It may seem repugnant to find a positive side to war in this regard, but a look at American history suggests we cannot dismiss the idea so easily.

Yes, we can. Quite easily. You would be hard-pressed to find a war in American history that did not raise taxes, raise debt, and kill innocent people. Nevertheless, I have recommended to my friend Tom Woods that he write a series of books on America’s wars. He should also produce video lectures. There are at least 20 of these wars. I want him to cover each war in three chapters: (1) how the government got us into the war; (2) how the government raised taxes and increased debt to fight the war; (3) how the economy was worse off after the war ended, and maybe society, too. Dr. Woods is the right man to write this series. He should use the books by Robert Higgs as the foundation, especially Crisis and Leviathan. Dr. Cowen continues.

Fundamental innovations such as nuclear power, the computer and the modern aircraft were all pushed along by an American government eager to defeat the Axis powers or, later, to win the Cold War. The Internet was initially designed to help this country withstand a nuclear exchange, and Silicon Valley had its origins with military contracting, not today’s entrepreneurial social media start-ups.

We have heard this before. Frederic Bastiat wrote about it in 1850. It is called the fallacy of the broken window.
What about nuclear power? That was based on Rutherford’s splitting of the atom in 1932. The U. S. government sped up nuclear research, but with a purpose: to incinerate civilians. It then nuked Hiroshima and Nagasaki, which had no military targets. This was not collateral damage. This was a way to scare the USSR.

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