Worst Stimulus Plan Ever
David Broder highlights an “obvious” idea for growing the economy — war with Iran:
Look back at FDR and the Great Depression. What finally resolved that economic crisis? World War II.
Here is where Obama is likely to prevail. With strong Republican support in Congress for challenging Iran’s ambition to become a nuclear power, he can spend much of 2011 and 2012 orchestrating a showdown with the mullahs. This will help him politically because the opposition party will be urging him on. And as tensions rise and we accelerate preparations for war, the economy will improve.
I am not suggesting, of course, that the president incite a war to get reelected. But the nation will rally around Obama because Iran is the greatest threat to the world in the young century. If he can confront this threat and contain Iran’s nuclear ambitions, he will have made the world safer and may be regarded as one of the most successful presidents in history.
Broder concedes too much. Not only is a war with Iran really bad national security policy (the military is already badly overstretched trying to pacify Afghanistan and recover from Iraq), but the idea of stimulating the economy through military buildup relies on assumptions that are obsolete by decades. The reason that war mobilization worked to pull the United States out of the Great Depression was because at that time mobilization meant expanded manufacturing — workers were hired by the millions to go into the factories and build guns, tanks, bombs, and bullets.
Armaments acquisition doesn’t work that way any more. Any new military adventure in Iran would be done with arms that have either already been built or which come from already-existing factories working under already-existing defense contracts. A few new hires might be needed to ramp up production of a few items, but the impact would be at best a few thousand jobs rather than millions. And any new manufacturing would be shared with overseas suppliers who are deeply integrated into the defense acquisitions system.
The cost would be added to the deficit, however. While they would produce few new manufacturing jobs in the United States, deployed military operations are enormously expensive to sustain due to their consumption of food, fuel, equipment maintenance, and munitions. That debt would be piled atop a weight that is already crushing the life out of global credit markets. In this way, the stimulus-by-war plan shares the flaws of the Keynesian stimulus-by-more-spending plan championed by the likes of former economist Paul Krugman. Both plans are driven by ideology rather than data. Both plans would pile on debt in the hopes of generating economic activity. And both plans would fail.
But all in all, the mere idea of stimulus-by-war is the worst stimulus plan ever.