Bombs, Bridges and Jobs By PAUL KRUGMAN

[Erda Gercek]

This is actually a tragicomic article but very telling in terms of economics
v policy debate.

Op-Ed Columnist

A few years back Representative Barney Frank coined an apt phrase for many
of his colleagues: weaponized Keynesians, defined as those who believe "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."

Right now the weaponized Keynesians are out in full force - which makes this
a good time to see what's really going on in debates over economic policy.

What's bringing out the military big spenders is the approaching deadline
for the so-called supercommittee to agree on a plan for deficit reduction.
If no agreement is reached, this failure is supposed to trigger cuts in the
defense budget.

Faced with this prospect, Republicans - who normally insist that the
government can't create jobs, and who have argued that lower, not higher,
federal spending is the key to recovery - have rushed to oppose any cuts in
military spending. Why? Because, they say, such cuts would destroy jobs.

Thus Representative Buck McKeon, Republican of California, once attacked the
Obama stimulus plan because "more spending is not what California or this
country needs." But two weeks ago, writing in The Wall Street Journal, Mr.
McKeon - now the chairman of the House Armed Services Committee - warned
that the defense cuts that are scheduled to take place if the supercommittee
fails to agree would eliminate jobs and raise the unemployment rate.

Oh, the hypocrisy! But what makes this particular form of hypocrisy so
enduring?

First things first: Military spending does create jobs when the economy is
depressed. Indeed, much of the evidence that Keynesian economics works comes
from tracking the effects of past military buildups. Some liberals dislike
this conclusion, but economics isn't a morality play: spending on things you
don't like is still spending, and more spending would create more jobs.

But why would anyone prefer spending on destruction to spending on
construction, prefer building weapons to building bridges?

John Maynard Keynes himself offered a partial answer 75 years ago, when he
noted a curious "preference for wholly 'wasteful' forms of loan expenditure
rather than for partly wasteful forms, which, because they are not wholly
wasteful, tend to be judged on strict 'business' principles." Indeed. Spend
money on some useful goal, like the promotion of new energy sources, and
people start screaming, "Solyndra! Waste!" Spend money on a weapons system
we don't need, and those voices are silent, because nobody expects F-22s to
be a good business proposition.

To deal with this preference, Keynes whimsically suggested burying bottles
full of cash in disused mines and letting the private sector dig them back
up. In the same vein, I recently suggested that a fake threat of alien
invasion <http://krugman.blogs.nytimes.com/2011/08/24/coalmines-and-aliens/>
, requiring vast anti-alien spending, might be just the thing to get the
economy moving again.

But there are also darker motives behind weaponized Keynesianism.

For one thing, to admit that public spending on useful projects can create
jobs is to admit that such spending can in fact do good, that sometimes
government is the solution, not the problem. Fear that voters might reach
the same conclusion is, I'd argue, the main reason the right has always seen
Keynesian economics as a leftist doctrine, when it's actually nothing of the
sort. However, spending on useless or, even better, destructive projects
doesn't present conservatives with the same problem.

Beyond that, there's a point made long ago by the Polish economist Michael
Kalecki
<http://rortybomb.wordpress.com/2011/01/21/kristol-kalecki-and-a-19th-centur
y-economist-defending-patriarchy-all-on-political-macroeconomics/> : to
admit that the government can create jobs is to reduce the perceived
importance of business confidence.

Appeals to confidence have always been a key debating point for opponents of
taxes and regulation; Wall Street's whining about President Obama is part of
a long tradition in which wealthy businessmen and their flacks argue that
any hint of populism on the part of politicians will upset people like them,
and that this is bad for the economy. Once you concede that the government
can act directly to create jobs, however, that whining loses much of its
persuasive power - so Keynesian economics must be rejected, except in those
cases where it's being used to defend lucrative contracts.

So I welcome the sudden upsurge in weaponized Keynesianism, which is
revealing the reality behind our political debates. At a fundamental level,
the opponents of any serious job-creation program know perfectly well that
such a program would probably work, for the same reason that defense cuts
would raise unemployment. But they don't want voters to know what they know,
because that would hurt their larger agenda - keeping regulation and taxes
on the wealthy at bay.