Most people believe that war spending can “stimulate” the economy. The huge increase in government spending during WWII allegedly got us out of the Great Depression. The problem with this theory is that it only looks at the visible effects of government spending while ignoring the invisible—but still real—effects.
When a government goes to war, the gains to certain groups are obvious. We can see the jobs at the factories making bombs and guns, but we can’t see the costs of war spending. The government can’t create the resources needed to fight a war out of nothing. Everything it spends it must first take from the productive sector. The increase in production as a result of government spending is illusionary—it only seems like an increase because we see what’s produced without seeing what could have been produced but wasn’t. We can see the planes and tanks made in factories, but we can’t see the cars and homes and other goods for which those resources could have been used.
But then why did so many economic indicators improve during WWII? Gross domestic product, for example, greatly increased. The problem with seeing this as an improvement, aside from the many problems associated with the reliability of government statistics, is that GDP isn’t particularly meaningful. The point of an economy isn’t simply to produce; it’s to produce things people want. Paying people to dig holes in the ground and then refill them isn’t productive; it doesn’t add anything to the well-being of the citizens of a country.
Similarly, devoting labor and physical resources to making a bomb that’s just destroyed in some other country is counted as part of our GDP, but it doesn’t actually improve the lives of the American people. So, not only does war spending simply move production around, rather than increasing it, it moves production from the production of consumer goods that improve people’s lives to the production of things that don’t.
What about unemployment? Didn’t that go down? Yes, but employment in and of itself isn’t desirable. People don’t work because it’s fun; the point of working is to get goods that people want to consume. People having to work more for less total consumer goods can hardly be considered a good thing. In addition, the decrease in unemployment happened largely because of the draft—29 percent of the pre-war labor force was coerced into the military during the war. Becoming a slave economy does decrease unemployment, but it certainly isn’t a desirable way to do so.
What about all the advances in technology caused by military spending? Didn’t military research and development help create what became the Internet? Again, this analysis looks only at the visible effects of government spending, while ignoring the invisible ones.
The Pentagon doesn’t conjure up the scientists and engineers it hires out of thin air. They, like any other resource, must first be diverted from the productive sector of the economy. Scientists trying to advance military objectives will sometimes invent something useful for consumers, which is what we see. What’s not seen is what those same people could have done had they been working for the private sector, focusing all of their efforts on finding improvements for consumers.
Michael Annes is a freshman majoring in mathematics.
