Stop Me Before I Vote Again

I'm not really sure why you find him so outrageous. Like you, he wants fewer troops in Iraq, fewer troops in Afghanistan, less defense spending, and a less aggressive overall American foreign policy. Why not complain about the people who want the reverse?

(Uh, just in case, referring here to the first comment on the ioz thread)

Yes. That was rich, wasn't it? Think it was really him? I bet it was. Imagine him thinking that IOZ wants "fewer" troops in Afghanistan -- just like Yggy does.

No idea if it was really him, but it easily, easily could have been. I think my favorite comparative was the "less aggressive overall American foreign policy" bit.

It had to happen.

http://progrepnow.blogspot.com/2010/07/amber-milgram-interviews-matt-yglesias.html

Personally, much as I enjoy IOZ, I found IOZ's attack on this one to be pretty horrendous. Military spending absolutely IS a stimulus to this system. And that's more reason to oppose this addicted-to-guns system, is it not?

Right, op-san and FB?

I used to subscribe to the alternate "left" view, but that view is all wishes and no facts.

War is good for business.

Yglesias is a pig, to be sure, but why do you grant Davis a chit? This is his view of the political economy of war spending:

"It's also unclear to me how spending loads of money on missiles and Predator drones actually benefits society as a whole, rather than just a select few politically connected military contractors."

That's pathetic and ignorant. I thought that when I was 18 and worried that Reagan was going to start a nuclear war. Then I encountered people who actually understand the institutional facts.

If it's unclear to you why military spending boosts this system, then you are a rookie.

Davis' formulation is also a false dichotomy. The general benefit is higher demand and increased investment and employment. Of course it's mal-distributed. But claiming that war is bad for business is an effort to shoot off your third foot when you're team is already in a wheelchair.

"Maybe Matt didn't really mean this quite the way it turned out. "

That's sort of the sense I get, but who knows. Once anything passes through yggy's equivocation cortex...

MD:

Yeah, IOZ mangled Keynes pretty badly there. Obviously the buried money comes to mind.

What I find odd is that right after the boilerplate anti-econ bit, he immediately attempts to explain what Keynes really meant.

War, in its present form, is certainly good for businesses to the extent that they're in the war business. It's not quite the same picture as in the 40s, though. How much of a stimulus war spending under current conditions might be to "the economy" in general isn't obvious to me. Edification is hereby solicited from those who know.

I read something recently -- was it even in the Times? Can't put my hand on it now -- about what a relatively small component of "the economy" military spending is, compared to the glory days of military Keynesianism half a century and more ago.

But here I am starting to follow Yggie's repellent line of reasoning. Once one has put one's hand to the plough, though... I guess in the spirit of the tough-minded thought experimenter, I'd have to conclude that the amount of blood we're shedding now isn't nearly enough to have any really stimulating effect on "the economy". We need to invade Iran, Pakistan, Baluchistan, and Tadzhikistan, and reopen the Indochina front, to see any real benefit.

Let's give Yggy a field marshal's baton and send him off to some tropic clime that will sweat him down to McChrystalline sveltitude.

i'm sympathetic. the security apparatus is employing millions. there's other work, but not shovel-ready. send the heroes home to their red states and what do they do, except listen to 'radio free horseshit'? go pentagon go! it's the works-progess-asskicking.

My understanding is that what the USA economy lacks from a military Keynesian pov is a peer competitor i.e. a legitimate threat a la 1941 and ff.

Another flaw in the art as now practiced is that over time the labor component of the US war materiel production has been radically reduced. E.g., my career AF officer brother returned some years ago from a guided bomb factory tour somewhere in the Southwest. His eyes glowed as he told me of the no-human-hands-involved manufacturing and assembly line that created the complex infernal devices. Sheet metal and gunpowder in at one end and instantly useable Mark 3 Mod 5 exploding balls pong ping at the other.

And naturally the low end grunt work has been handed on to less and less organized and cheaper labor. Then some or much of the costs of the work done in the field by KBR-hired contractors (cooks and cleaners, etc.) never sees its way back to the USA because the contractors are from South America, the Philippines, or anywhere without an Islamic culture and with low wages.

Suggestion: Ban ALL chemical weapons and declare war on the crabgrass.

Sure war is good for business. In the same way metastasis is good for cancer. It's integral to a process. I'd hesitate to call it beneficial, but there's no denying its importance and scope. Yggie makes a good spokesman for it. He's got that kludged Jay Gould meets Keynes understanding of the real national dividend. The specter of wanton wealth accumulation inspired him to set half the working class to digging graves and the other half to filling them. It's not what Keynes was saying, but Yggie is still a credit to his alma mater.

some on the checker board sqyare
left
the smiles only frowns only left
find the crusades systemically harmful
and or systemically irrelevent

system ??:

corporate ever globalizing capitalism

truth :

they are wrong

consequences:
there will be no end to it

want a parallel ??:

corporate globalizing
advertisement campaigns
call em both
"marketing by other means"

efficient use of capital??
the master john wannamaker :
"i know half my advertising is wasted ..
i just don't know which half "

---that core "raison d'etre
isn't about effective demand (ED )
the ED argument
(discovered
in a cabbage patch
by herb stein in 1953)
is a sugar coating
the sweetness of it
for an economy forced to swallow it
is accurate enough
however --

recall the "bill" is ultimately
paid for
by all 'world market integrated 'corporations
.....without boundary limits
of course not spontaneously
this is the outcome of much complex shifting
and handeling
worked out
one state by one state
and ultimately booked
to the payables accounts
of each member nation's
ass hole toiling masses

up side ???

jobs for little people in civis

but attendez
lord keynes gave us a means
to create jobs anytime "they" want
any where they want
and applicable here
of any sort they want
and have it a national win win
err if that's what "they" want
let's put it this way
as alternatives to invasion
and great power war
building up one's worldwide trade
to produce a " national surplus"
remains in the arsenal of national "growth " and development dirty tricks
but it is no longer
trick numero uno or supremo

there is kold war potlatching too
uncle spiked the soviets
by out spending
the red fuckers
on weapons of mass employment
as good a weapon of mass employment
bang for buck wise ??
as hopkins' WPA ??
obviously not
as useful as ick-eeees PWA
no
i think a few bolder dam like projets of equal " real social expenditure "
had a higher return then hanford
but how can one put a price on the necessary
aspect in the one case (hanford)
and the convenient in the other (all them Hoovers)

one might note this
---with the simpering contented candor
of uncle milty perhaps ---

there is often
no free
"win win "class outcome
especially
when the hegemon's
waffen wing
of the chamber
of global capitalist commerce
comes to your village

electric Al:

Clio is a big fan of national cancers
going global
as catalytic agents of her
n billion pilgrims "group" progress

no ???

She is indeed, Owen. And to that end, war is the most efficient use of capital. There are, as our anarchist friends (IOZ, Davis) point out, no obstacles to its deployment other than what comes from the tussle for an advantageous position from which to deploy it in pursuit of an even more advantageous position from which to deploy it. It's batshit crazy, but it works. When the pursuit is destructive of the means and the end, complex fiddles and arbitrages can delay a reckoning for quite some time. Hundreds of years, maybe.

If anyone is at all curious about multipliers, you can refer back to the flow chart in this post:

http://stopmebeforeivoteagain.org/2010/07/intro_to_economism.html

If the government were to put $100, the multiplier measures the increase in NGDP (this is how I think about it anyway, I like to keep RGDP and NGDP more separate than many others do). Basically it measures how many times in one year the money circulates along the red arrow path (wages->spending->wages->spending etc.) before it leaves the national economy via taxes, imports or saving.

If you put in $100, and all of it is spent on domestically produced goods, then you get a multiplier of 1. If, after the producers pay that out in income to the households, half of it goes into savings, imports and taxes and there's $50 that goes towards buying domestic goods, then the multiplier would be 1.5. If the $50 goes around again, and half goes towards savings, taxes and imports, then $25 would go to the producers, and the multiplier would then by 1.75. Every $1 in spending results in a $1.75 increase in yearly sales.

The reason that a tax cut for the rich has a poor multiplier is because they have a higher propensity to save, so right off the bat you have a chunk of the stimulus leaving the flow. Poor people tend to spend all their income, so spending that targets the poor has a higher multiplier.

For military spending, this is the way that I would think about it:

If there is a $1 billion contract awarded to Lockheed Martin, then you would want to look at where that money goes after going to Lockheed Martin.

How much of Lockheed Martin's inputs are sourced/subcontracted domestically? How is the income from Lockheed Martin split between wages (lower income households, higher propensity to consume) vs. profits (higher income households, lower propensity to consume). Then look at the wages: how much of it goes to low wage earners (factory workers with higher propensity to consume) vs. high wage earners (engineers with lower propensity to consume). You would want to consider the same thing for all of companies from whom Lockheed Martin would make purchases as well.

M. Dawson --

I am willing to believe that you know more about this stuff than IOZ, but in all your posting on it, both on IOZ's site and here, you haven't said anything to persuade someone like me, a complete idiot on this topic who like Davis, can't really see the obvious economic benefit of the government taking my money and burning it in a far flung desert as opposed to letting me keep it to spend at home.

I can't speak to IOZ's understanding of Keynes, not understanding him fully myself, but he made a couple interesting points in his post that you did not substantively respond to:

1. That every country involved in World War 2 except the US was impoverished by it.
2. That our current economic decline has run in parallel with the largest military expenditures in our history.

In these parts, Flak raised some good points about automation and the outsourcing of services that at first glance tends to undermine the buried money angle.

If you could possibly respond to this with something other than, God, American leftists really are clueless, I'd be very grateful.

"In these parts, Flak raised some good points about automation and the outsourcing of services that at first glance tends to undermine the buried money angle."

Yes, they are good points about why military spending would have a lower multiplier, but it doesn't exactly undermine Keynes's bit about burying money.

Keynes basic point is that any spending is stimulative. Even military spending obviously has a multiplier greater than 0. Some spending (foodstamps, EI) is more stimulative, and should be preferred, but that doesn't mean that military spending is not stimulative

" taking my money and burning it in a far flung desert"

if that were an accurate statement of what's happening
but is it ???

the money even strictly for the crusade in afpak isn't all burning away over there eh ??

and is it your money or simply your debt obligation as mediated by uncle

and are the resources mobilized here on net
pulled from elsewhere or pulled from an idle stock pile of men and material

okey new material
is that drwan from idle production capacity or creating shortgages and or higher prices elsewhere in the system ???

those who condemn political economy junk food
with out understanding what it is and swhy it is what it is
are doomed to reheat it over and over again

ps there's peace nik poli econ-con
junk food too
my dear sisters and brothers

i note ioz has a copyright
attached to woody matt chuck
i'm deeply offended

i'm no common word commodity smith
let alone one with the hubris to copyright
my earish or eyerish genii

my entire output is free to all
ravish them as u will....

i''l even take back
the ugly stunted ones
with bad breath and farts
only an electric Al could love
to me
they are all op's children
i'll not disowen a one of em

"1. That every country involved in World War 2 except the US was impoverished by it."

Just the ones whose capital stock (machinery, houses, etc.) got destroyed or consumed in an all out war effort, and whose fixed capital could not be retooled for civilian uses (Maginot line vs. a plane factory). Canada also benefitted, at least in narrowly economic terms.

"2. That our current economic decline has run in parallel with the largest military expenditures in our history."

Correlation & causation. IMO the main culprit is the trade deficit

fb

go ahead give em the general simplest form
of the comp stat expenditure multiplier

as seen say ... here :

http://www.worthpublishers.com/krugmanwellsnew/pdf/KRUGMAN_WELLS_MACRO_CHAPTER11_APPENDIX.pdf

the waste i contend
if they are produced in a fashion that crowrds out other production
is in building these arms in the first place
not expending them
an imperial berush war in the out back somewhere
is a use of foolish useless crap
the consumption
of an inventory of purely wasteful outputs

the destruction it causes ??

some of it is creative eh ??

would we have the glory of hezbollah
without the IDF ??

don't try to tell me without the infernal IDF hezbollah would be useless
ask the leb-falange
spilling innocent blood??

hegels slaughter bench knows no other
"fool proof " means
to propell world progress

waffen liberators spill innocent blood too

to hell with world progress ???

now we are at ultimate oughts
i leave the stage hand in hand with my blow up doll
of david hume

btw

the multiplier is subject
to zeno's most famous paradox ...

"Basically it measures how many times in one year the money circulates along the red arrow path (wages->spending->wages->spending etc.) before it leaves the national economy via taxes, imports or saving"

fb by using a one period time limit
on your injection leakage type
expenditure multiplier
i am happy to annnounce
u have won
the father round head smiff
occasional
pseudo dynamic model
fudge cake award (second class)

--expiration date 8/3/10 --

Girard, the reason all the other countries in WWII were impoverished was physical destruction. Until it was literally leveled, Nazi Germany was greatly enriched by WWII and it's run-up.

As to the correlation between our slow decline and our steady Pentagon expansion, I see it as a matter of our overclass extracting and sidelining wealth even faster than the military has grown. They have rendered the core of the economy so productive of capital that we now get zero job growth when the economy expands by 3 percent. The implications of that are huge, if you think it through.

And to say that military spending stimulates the economy is not to deny that it is a thoroughly terrible form of spending in other ways. It is obviously war-criminally murderous for those trapped in the war zones, and it encourages a militarist culture here at home.

The problem is that the overclass is highly intolerant of social spending, and utterly fanatical in opposing "production for use" programs, which were tried for a year or two in the 1930s, and quickly and vehemently shouted out of existence by capitalists. There's no physical or organizational reasons the government could not be seizing and repairing and reselling and adding to the nation's housing stock, other than it would compete with and show up the private sector. Same goes for building railroads, bicycle highways, fixing up the woods and streams, etc. But, again, that's too embarrassing to business interests, so nope.

BTW, even doing Keynes' bottle scheme would be preferable to military spending, from a decent human perspective. But, if done big enough, it would work great at boosting the economy, since it would obviously employ the poorest workers. Even this would show up business and its ideology, so it's unthinkable, even though it's far less stupid and harmful than half of what passes for "our economy" at present.

"fb by using a one period time limit
on your injection leakage type
expenditure multiplier
i am happy to annnounce
u have won
the father round head smiff
occasional
pseudo dynamic model
fudge cake award (second class)"

Thanks?

I'm not actually a huge fan of that equation just because it basically assumes infinite velocity or infinite time horizon.

In my example there where the MPC is 50% of income or 0.5:

Multiplier = 1 / (1-MPC)
Multiplier = 1 / (1 - 0.5)
Multiplier = 1 / 0.5
Multiplier = 2

The way that I would do it is:

Multiplier = 1 + 0.5 + 0.25 + 0.125 + 0.06125 + etc..

Only when the money goes around the circuit an infinite number of times do you get to the limit of 2. Don't you think that it's more useful to think about it in terms of a discrete period with a finite velocity?

"Don't you think that it's more useful to think about it in terms of a discrete period with a finite velocity"
this is a profound question disguised as a simple one

comp stat is about steady states
and has timeless assumptions

a dynamic model needs an end state
if some how the comp stat result is that dynamic end state ...fine

but we have at least two problems here

there will be other injections
and
there will be changes in leakage

that is why i simply look at
the g peddle and the t brake
as the controls on a feed back system
and forget using a ultra refined pre existent model

side bar on the science here:

the mechanics of the multiplier are just diffrence equations ...no ??
one damn related transaction after another
stretching out thru time in limitless chains

where the finite periods between transactions
vary and the size of the knock on transactions vary too
leaks becoming future injectables
injections the stuff of future leaks

once we have a measure of all that is
part of the system either
in midst of transaction or at rest in a stock
we have the basis for a steady state
we can close the system and run it forever
at some point it would stop changing
ala edgeworths fantasy

but in the real world
we only need to know the actual outcomes
more or less in an aggregate and timely fashion
we don't need to predict anything ...eh ??

its nice to have anticipations confirmed but primary uncertainty like a road never travelled b4 creates no inherent impossibilities

as to the dynamic science and mjs's
missing causations

to avoid the perils of model dependent coincidence and thus causal ambiguity
and chain break down
we must seperate connected transactions

which we can do so long as
we can measure intervals between connected transactions
no matter how short
if so
we can maintain our causal chains ... right ??

we define our system wide
basic finite time unit t
as so small no two connected sequential transactions could both occur inside it

that basic unit might be made operational
by a renormalization function
that would intervene as we travel along
if we suddenly have a new closest ever
pair of connected sequential transactions

what folks need to retain is the dynamic extinguishment of any one expenditures impact
eventually it leaks away
so it must be replaced by a subsequent injections
the hope of the simpak crowd regardless of their desired level of unemployment or output
rely on either maintaining the expenditure at the present rate or anticpating an injection from elsewhere to relieve the need to continue the present injection of expenditures
example
uncle might anticipate a gradual restoration of corporate spending to off set the declining
deficit spending of uncle over the next 6 quarters
or an increase in exports
or decrease in imports

the obvious big spender the householders
i doubt can be expected to add much
to their spending
in that brief interval

Oh, c'mon, Owen. Even I can understand the integral of an exponential-decay function -- since I can visualize it, admittedly a low order of mathematical intelligence.

I'd like to point out this video that deserves a wide distribution. It is off topic here I suppose, but worth 15 minutes of your time if you have missed it.

http://www.commondreams.org/video/2010/07/29-1

mjs
a decay rate is indeed similar
but lacks the intricacy and variation any causal pattern requires if it is to model the wildly hereogenious paths of these injected dollars till their remaining value after enough
transactions and leak points has
become negligible

what is key here is the patterns of diffusion out into the system and how they modify the impact
and how the various leak points or better sump points both suck in and spit out value themselves in a constant uneven respiration

the elastcity of the system is in these reservoirs of value that are on the balance sheet as both means and obligations
receivable and payables assets and liabilities

get on with it fb
we need our wynne fest

IOZ makes the excellent point that to Keynes, it did kinda matter HOW the money is spent.

Which brings us to this kind of claptrap: How the Great Recession was brought to an end, which asserts that the trillion dollar embezzlement of federal funds by the financial industry single-handedly saved us.

Oh I feel so saved, and so do all my unemployed friends.

@ts

[...]the trillion dollar embezzlement of federal funds by the financial industry single-handedly saved us.

"IOZ makes the excellent point that to Keynes, it did kinda matter HOW the money is spent."

Uh, source please?

I'm pretty sure that IO "Skidelsky" Z is just talking out of his ass, conflating multiplier and accelerator effects, and obviously missing the point of Keynes's buried money example, that "the heedless outlay of public funds would necessarily catalyze the private economy". I don't know how IOZ could actually get it completely backwards, but I guess that's what happens when you try to bullshit about things that you've never read.

Keynes:

"When involuntary unemployment exists, the marginal disutility of labour is necessarily less than the utility of the marginal product. Indeed it may be much less. For a man who has been long unemployed some measure of labour, instead of involving disutility, may have a positive utility. If this is accepted, the above reasoning shows how 'wasteful' loan expenditure may nevertheless enrich the community on balance. Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better.

...

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."

Actually, on second thought, that attack is a bit off and I am being a unfair to IOZ there.

I need to avoid commenting first thing in the morning

IOZ makes the excellent point that to Keynes, it did kinda matter HOW the money is spent.

That is not what I took from IOZ's post which, admittedly, i didn't understand entirely. The gist to me of the last bit, pasted below, was that Keynes rules don't apply in our current situation.

My guess is that this goes back to the mitigation of the multiplier effect that flak's post above introduced.

IOZ said:

But whatever you think of the merits of this argument (Keyne's multiplier effect) in an industrial economy is irrelevant, because where spending is unrelated to productivity, productivity is untethered from production, and production is unmoored from employment, there is no multiplier. There is just worthless money printed on one end, and a dead Afghan on the other.

Girard, that last quote from IOZ is the meat of his wrongness. In fact, it's sophomoric. Keynes' main point wasn't about spending and product,b>ivity, but about spending and production. Productivity is how much gets produced by a unit of labor. Production is how much gets produced in the economy.

Meanwhile, the rest of that quote is just erroneous hyperbole. Spending, production, and employment are all still tightly related to one another. There are still 150 million paid jobs in this nation-state. Why there aren't 200 million is the big question, and Keynes is more relevant than ever to answering that.

IOZ's fancy college years pretty obviously were long on lit and politics, but not so much on political economy.