The Iron Triangle

Great-Aunt Mary used to play her numbers every week. This was in those halcyon days before powerballs and hundred-bajillion dollar jackpots, when sometime during the evening news they'd cut to a goofy studio with a bell-jar air-blower contraption, a lot of ping-pong balls bouncing around wildly, and a great theme song (see it here), to do the lottery drawing and then the "Big 4". Anyway, one of my uncles once suggested to her that she'd increase her chances by buying more than one ticket. So she did. The next week, she bought twenty. All with the same number.

Woody Mattchuck© is now on the cusp of embracing the Albert Speer model of economic development. Charlie Davis politely--too politely, if you ask me--points this out to the little sociopath, who swiftly twatted back, pulling the liberal's most potent trump, The Krug Man, as in: even Paul Krugman agrees that war spending can have a stimulative effect. (Davis notes that Nobel Paul's post doesn't support Yggie quite so much as Yggie thinks.)

Now far be it from me to question the collective wisdom of the Times' hiring department and the Norse Dynamite Commission, but any case that war spending is universally rather than very particularly and very occasionally stimulative is easily falsifiable and demonstrably untrue. Modern warfare tends to impoverish nations, even the victors, and the example of the United States after World War II is a glaring historical outlier, not a repeatable model. (That war destroyed all of the competing industrial economies; the United States acquired a set of tributary European vassal states; the only potential competitor, the USSR, was set back two generations by its catastrophically Pyrrhic victory; etc.) But we hardly need turn to history, to which Yggie is in general woefully, willfully blind. Present circumstances thoroughly debunk the claim. In the past decade, the United States has spent roughly one trillion dollars--$1,000,000,000,000, boys and girls--on war. Please show me the accrued economic benefit of that spending. Oh, you can't? What's that you say? You say that this spending has taken place concurrently with the greatest economic decline since the Great Depression? Why, that's impossible! That would mean that . . . oh, my. Perhaps "reality" doesn't quite have that liberal bias after all.

(By the way, economics proposes itself as a science. It is really a collection of nostrums wrapped in an Excel worksheet and then hazed about with a white smoke of academized jargon to give it the appearance of a mystery cult. Economic illiteracy--what Yglesias accuses Davis of--sounds like an insult, but it's really like accusing someone of Klingon illiteracy. In certain circumstances you might regret not speaking a made-up language, but as a general life condition, you're probably better off.)

Anyway, Yglesias doesn't even understand the Keynsianism for which he claims to speak. He certainly doesn't understand the multiplier effect. Keynes never proposed that spending was universally stimulative nor yet that the heedless outlay of public funds would necessarily catalyze the private economy. He was a product of an industrial age, and he argued that the government could spend money in such a way as to stimulate production; that this would stimulate the growth of industry; that the growth of industry would drive employment; that the growth of employment and wages would expand consumption; that employment and consumption would drive more production and expansion; and so on. But whatever you think of the merits of this argument 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.