Paul Krugman, the New York Times’s most strident columnist, has a laughably typical headline on his column today: “Keynes was Right.” Krugman once again insists that government spending, qua government spending, makes the country richer.
The best counterpoint to Krugman this week comes not from a free-market economist, but from Andrew Bacevich writing in the Atlantic, about the Military-Industrial Complex and its self-serving argument that government expenditure on arms boosts the economy.
Bacevich writes:
Military Keynesianism—the belief that the production of guns could underwrite an endless supply of butter—was enjoying its heyday.
The key here is to understand, as my brother John Carney writes at CNBC, that “Government spending occurs through specific channels, not in aggregate abstractions. This means that certain companies and sectors of the economy benefit, and others suffer, because of government spending.”
In theory, government stimulus boosts aggregate demand. In reality, it profits the well-connected. Bacevich’s exploration of the Military-Industrial Complex is a great case-in-point:
But the bad Keynesianism justifying it isn’t the only objectionable aspect of the Military-Industrial Complex. The cost in lives and the harm to democracy are also acute, Bacevich writes. The revolving door might be the tawdriest aspect of it all:
The Bacevich article is great, (as is most of what he writes). Read it, and you’ll be reminded that in the military, like in most of government, the men and women in power and close to power have interests that are adverse to the public interest. And remember what side Krugman and his big-government ilk are on.
