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Blowing Up the Death Star Didn’t Destroy Economy, Building It Did. https://mises.org/blog/blowing-death-star-didn%E2%80%99t-destroy-economy-building-it-did htt

by elmar 11y ago

Blowing Up the Death Star Didn’t Destroy Economy, Building It Did. https://mises.org/blog/blowing-death-star-didn%E2%80%99t-destroy-economy-building-it-did https://mises.org/blog/blowing-death-star-didn%E2%80%99t-des...

acqq 11y ago
How can the arguments from that article be applied to all the stuff produced for the U.S. military? 1.5 Trillion (with a T) USD for just F-35 Joint Strike Fighter: http://www.cnbc.com/2014/07/31/how-dods-15-trillion-f-35-broke-the-air-force.html http://www.cnbc.com/2014/07/31/how-dods-15-trillion-f-35-bro... V.s: "While noted science fiction fan Paul Krugman may point to the number of jobs that the Death Star created, Hazlitt is also ready with a response. Using the example of government building an unnecessary bridge: [F]or every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence."
- afterburner 11y ago
  Public investment doesn't crowd out private investment if the private sector isn't investing anyways. Such as in a depression, or other instances of high unemployment.
  - Eliezer 11y ago
    The correct way to fix that by having the Federal Reserve lower interest rates or do quantitative easing - you create new medium of exchange until the volume of trade is going as fast as practical. The fiscal multiplier is zero when monetary policy is active.
  - rplst8 11y ago
    Sure it does. In order to generate the money needed to pay the public workers, either taxes must be raised or the monetary supply changed. In either case this affects the private sector economy that shifts investors away from using the capital they have to do some work.
    - xenadu02 11y ago
      Not in a huge recession (or depression). Even in the current environment capital is extremely cheap and plentiful. In a depression with deflation there is a strong incentive for capital to stop investing because the literal zero-risk rate of return is positive (sit back and watch your dollar go further and further!) The economy has many variables and assuming that a condition holds for all situations is ideological, not factual.
- ticviking 11y ago
  I think most Austrian Economists would agree with that re: the US military.
- golergka 11y ago
  What this argument misses is a political and economical difference, in trade agreements, amount of wars and overall political situation between a world where US has F-35 Join Striker Fighter and a world where it doesn't. This comparison becomes more and more obvious when you include more and more military technology in the question. Creation of Death Star had a direct political goal: unity of the Galaxy under united government. The methods that were used to achieve this goal, were, of course, horrible and inhumane — but these characteristics have little economic effects. The united government, as opposed to a fragmented states in a quasi-federation named Republic, which we had an opportunity to see in first three episodes, however, has a direct effect on economics. Do I really need to explain how different is trade, commerce and business in the world of united Galactic Empire with brutal, but effective police enforcement and bureaucracy as compared to thousands of states of the Republic, that could actually wage war against each other? Or, for that matter, how different was in that regard the world of 18th and 19th century, with constant wars between economic behemoths, compared to the world of today, where all "western", "1st-world", and essentially economically powered world is ideologically, economically and even military united as never before?

by elmar 11y ago

acqq 11y ago

How can the arguments from that article be applied to all the stuff produced for the U.S. military? 1.5 Trillion (with a T) USD for just F-35 Joint Strike Fighter: http://www.cnbc.com/2014/07/31/how-dods-15-trillion-f-35-broke-the-air-force.html http://www.cnbc.com/2014/07/31/how-dods-15-trillion-f-35-bro... V.s: "While noted science fiction fan Paul Krugman may point to the number of jobs that the Death Star created, Hazlitt is also ready with a response. Using the example of government building an unnecessary bridge: [F]or every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence."

afterburner 11y ago
Public investment doesn't crowd out private investment if the private sector isn't investing anyways. Such as in a depression, or other instances of high unemployment.
- Eliezer 11y ago
  The correct way to fix that by having the Federal Reserve lower interest rates or do quantitative easing - you create new medium of exchange until the volume of trade is going as fast as practical. The fiscal multiplier is zero when monetary policy is active.
- rplst8 11y ago
  Sure it does. In order to generate the money needed to pay the public workers, either taxes must be raised or the monetary supply changed. In either case this affects the private sector economy that shifts investors away from using the capital they have to do some work.
  - xenadu02 11y ago
    Not in a huge recession (or depression). Even in the current environment capital is extremely cheap and plentiful. In a depression with deflation there is a strong incentive for capital to stop investing because the literal zero-risk rate of return is positive (sit back and watch your dollar go further and further!) The economy has many variables and assuming that a condition holds for all situations is ideological, not factual.
ticviking 11y ago
I think most Austrian Economists would agree with that re: the US military.
golergka 11y ago
What this argument misses is a political and economical difference, in trade agreements, amount of wars and overall political situation between a world where US has F-35 Join Striker Fighter and a world where it doesn't. This comparison becomes more and more obvious when you include more and more military technology in the question. Creation of Death Star had a direct political goal: unity of the Galaxy under united government. The methods that were used to achieve this goal, were, of course, horrible and inhumane — but these characteristics have little economic effects. The united government, as opposed to a fragmented states in a quasi-federation named Republic, which we had an opportunity to see in first three episodes, however, has a direct effect on economics. Do I really need to explain how different is trade, commerce and business in the world of united Galactic Empire with brutal, but effective police enforcement and bureaucracy as compared to thousands of states of the Republic, that could actually wage war against each other? Or, for that matter, how different was in that regard the world of 18th and 19th century, with constant wars between economic behemoths, compared to the world of today, where all "western", "1st-world", and essentially economically powered world is ideologically, economically and even military united as never before?