Wednesday, June 24, 2009

Weaponized Keynesianism

Ali Frick reports on a very well articulated tirade from Barney Franks. The backdrop:

Last week, over the objections of Defense Secretary Robert Gates and the Obama administration, the House Armed Services Committee restored funding for the basically useless F-22 fighter jet, in the process stripping funding for nuclear waste cleanup efforts. Last night, Rep. Barney Frank (D-MA) filed an amendment to restore the waste cleanup funds and eliminate the money for the F-22. The move came after months of Republicans issuing dire warnings about the consequences of suspending the F-22 program: Frank Gaffney, for example, declared it would lead to “diminished military capability, emboldening enemies, and alienating our friends.”

But it’s time to give Congressman Franks the microphone:

I am of course struck that so many of my colleagues who are so worried about the deficit apparently think the Pentagon is funded with Monopoly money that somehow doesn’t count ... These arguments will come from the very people who denied that the economic recovery plan created any jobs. We have a very odd economic philosophy in Washington. It’s called weaponized Keynesianism. It is the view that the government does not create jobs when it funds the building of bridges or important research or retrains workers, but when it builds airplanes that are never going to be used in combat, that is of course economic salvation.

A follow-up question given the role of the marginal propensity to import in the size of the Keynesian multiplier: when the government purchases a military airplane, how much of that comes from domestic versus foreign content as opposed to when the government decides to have a bridge built?


Shag from Brookline said...

Barney Frank is the Congressman representing the district where I reside. He responds to communications from constituents, even those who have not contributed to him, but he declines to suffer fools, even among his constituents. Political life has not been easy for him. Just take a look at the shape of his district.

Seinfeld's TV series had an episode where he told Elaine that Tolstoy's "War and Peace" was initially titled "War, What is it Good For?" That's a great question, including in song form. And I think back to the "Excess Profits Tax" in the mid-1940s aimed at war profiteers. And I think of Ike's "Farewell Address" warning of the military-industrial complex. When it comes to defense, the Keynesian multiplier may be zero, or close to it, or perhaps negative.

Daro said...

Ike's original statement was going to be "the military-industrial-congressional complex" but his speechwriter urged him to drop it because it sounded too paranoid.

But the goal of the speechwriter wasn't the same as the goal of Ike and we can see who understood the right goal correctly.

Bruce Webb said...

To answer PGLs question.

I live a couple of miles from the Boeing assembly plant that puts together the 747, 767 and much-delayed 787 (Dreamliner).

Most of the larger air-frame components for the Dreamliner are made overseas in Italy and China in a fairly transparent effort to trade jobs for future sales. Boeing's military planes take the same tack with the lead actor here being the Pentagon trying to keep per unit costs down by pre-selling orders to NATO and other foreign partners. This may or may not be effective in getting the Pentagon for planes for less bucks (it never seems to really work in the end) but it does mean that a lot more of a jet contract will end up overseas than a highway contract.

At least the Navy builds its wasteful ship projects at home and in two states that really need the jobs (Maine and Mississippi)

ProGrowthLiberal said...

Bruce - thanks for the info which basically says that if we want "jobs, jobs, jobs" (whoops - just quoted the title of a Barro 1992 oped) then we want to build bridges not F-22s.