Election 2012

Does Defense Spending Stimulate Anything Other than Military Contractors' Bank Accounts?


While many conservative Republicans rightly sneer at Keynesian-derived stimulus spending as counterproductive, they nonetheless often create a loophole for something called "defense spending."

In thinking that government spending can generate long-term economic growth, they end up being similar to stimulatarians like Paul Krugman, who dings GOPpers on this inconsistency while entertaining his own bizarre fantasies of alien invasions, dreams of a World War to crank up economic growth, and misimpressions that flattening the World Trade Center was going to revive the building industry (seriously).

Reason columnist and Mercatus Center economist Veronique de Rugy provides some interesting charts that plot economic growth and military spending:

Politicians and pundits have often implied that reductions in defense spending would shrink the gross domestic product (GDP) and further weaken the already-weak economic recovery. Based on this week's chart series, their concerns don't appear to pan out. In fact, over the past 30 years, real economic growth has grown and shrunk irrespective of defense-spending levels.

Using data from the Office of Management and Budget, these charts highlight general trends between defense outlays and real GDP.

The short version of de Rugy's findings? Defense spending is no more super-fantastic than other sorts of government spending when it comes to goosing the economy. Here's her second chart:

And just to drive home the trifecta, here's one final chart:

De Rugy's full explanation of the above is here.

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  1. …they nonetheless often create a loophole for something called “defense spending.”

    In their defense, it can stimulate voters in certain districts.

  2. OT: New evidence against ethnic nepotism.

    It will be interesting to see where this research leads.

  3. It stimulates my war boner!

  4. I like this guy’s idea – fire the military secretaries.



      Ms. Buxley.

      1. Is that a little red cock and balls on her skirt? I don’t get Asian humor.

        1. btw, if nsfw, get a better job.

        2. Never mind, sugar freed it. Actually, the metadata can’t be sorted without dipping into the page’s script. Fuck that.

    2. Why stop there? I have a few tens of thousands of people I could suggest firing.

  5. Alt Text:

    “A roomful of stoopid”

    1. Alt-Text:

      “A Target-Rich Envi2b 96 8b 0a 90 23 13 f8 0f 0f

      [For more information please contact: U.S. Department of Justice
      10th Constitution Ave., NW
      Criminal Division, (Computer Crime Intellectual Property Section)
      John C. Keeney Building, Suite 600
      Washington, DC 20530
      Tel (202) 514-1026
      Fax (202) 514-6113]

      1. +drone strike

  6. Speaking of the need for defense, someone’s shooting at people in the Detroit burbs. Probably a Michigan Militia dude.


    1. Casual sniping accuracy is worse in Michigan than Virginia. That’s what I’ve taken from this.

  7. Krugman, fourth from left, possibly playing Angry Birds.

    He imagines the birds are stacks of newly printed money, and the pigs are people with underwater mortgages.

    1. He’s going to be much happier under a Republican government. Then, instead of trying to justify steps taken that don’t work, he can wail and moan about the free market, deregulation, and whatever else socialists moan about.

      1. He can tell us how France is making all the right moves, just not enough.

  8. Any nutrient-rich environment will attract parasites.

    Defense and police are no exception.

  9. I’m as likely to sneer at Keynesian solutions to the non-problem of the liquidity trap as the next libertarian, but I will allow that some forms of government spending are better than others…

    In fact, if we could just get most Pop Keynesians to accept that fact alone, that’d be one hell of an achievement.

    …so, anyway, point is that when the government spends a ton of money on the interstate highway system it really is more productive than what they did with the Obama stimulus the last go ’round. And isn’t that what we’re comparing this to?

    No stimulus is preferable to stimulus, but if I had to choose between defense spending and the last stimulus, I think building weapons is a lot more productive than keeping state government payrolls as bloated as possible. The problem with the Obama stimulus wasn’t just that it didn’t stimulate anything–the Obama stimulus was extremely counterproductive.

  10. Kneel before ZOD the MULTIPLIZER!

  11. …they nonetheless often create a loophole for something called “defense spending.”

    And libertarians are nonetheless unable to grasp the need for having any significant military capabilities at all. Call it a convenient “loophole”, that enables them to avoid having to think seriously about hard foreign policy problems.

    If Keynsian economics amounts to simplified and canned stupidity, standard libertarian foreign policy (“Oh gee, if we’re just nice to everybody, then everybody will be nice to us”) is just another flavor of simplified and canned stupidity.

    In fact, over the past 30 years, real economic growth has grown and shrunk irrespective of defense-spending levels.

    I can’t believe you admitted this in public. That’s got to be a mistake, an oversight.

    None of which means I agree with our actual “foreign policy” today. But “just get rid of the goddamned military” is approximately as stupid as what’s being done now, just a different kind of stupid.

  12. While I generally agree with the thrust of this study there is a flaw in DeRugy’s method.

    Comparing the effect of total defense spending to GDP is a non starter because not all defense spending could be expected to impact GDP.

    For example, the salary of a soldier with no family stateside stationed in Germany would do nothing to benefit US gdp because the money is not being spent in the US. Another discrepancy is fuel purchased to put into a truck in Iraq. The fuel will not have come from the US nor will it be used in the US. All categories like this where the expenditure never passes through the US by definition could not impact US GDP, it is effectively like paying for imported goods you never recieve and so the money is simply lost.

    In order to have a valid comparison of for debunking the Keynesian multiplier effects of defense spending you would need to compare only that portion of the defense budget that was actually spent here in the US because that is the only portion which can actually (in theory) provide a multiplier.

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