Home > Main > Were the Korean and Vietnam Wars a cover for the U.S. to implement an Employer of Last Resort?

Were the Korean and Vietnam Wars a cover for the U.S. to implement an Employer of Last Resort?

May 1, 2011

Paul Krugman says Unemployment was very low during the Korean war:

“Except briefly during the Korean War, the United States has never achieved unemployment as low as Ryan and co. are claiming. The Fed believes that the lowest unemployment rate compatible with price stability is between 5 and 6 percent — that is, twice what Ryan is claiming he will achieve.”

It seems to me like these wars employed “armies” of workers who otherwise would not have been employed. Pushing the U rate down to 4% or lower quite quickly.

It’s a shame that we need to employ military Keynesianism, when we could just build useful stuff here in the States, or at least clean up the sides of the highways, and paint the overpasses.  But we don’t like to give stuff to people who we think don’t deserve it.  So killing people remains the only “honorable” way to implement the ELR.

Still, we need to call the Defense budget for what it is – a soft ELR that disproportionally benefits “Honor Culture” areas of the U.S.  From a Heritage report:

n 2004 and 2005, 29 states were overrepresented among military recruits in comparison to the general population.[12] (See Table 9.) The top five states with the highest proportional enlistment ratios for 2004 and 2005 are Montana (1.69, 1.57); Texas (1.34, 1.46); Wyoming (1.44, 1.41); Alaska (1.47, 1.40); and Oklahoma (1.31, 1.37). As mentioned in the previous report, one might expect states directly affected by the 9/11 terrorist attacks to respond with increased enlistment proportions. However, Virginia and New York continued to decrease in proportional representation from during 2004 and 2005.

It’s unfortunate we have all these people training to kill people, or to support other people to kill people.

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  1. beowulf
    May 3, 2011 at 12:28 am

    TC, get to know Leon Keyserling. As Truman’s CEA chairman, he quickly realized the only kind of Keynesianism that Congress believed in was military Keynesianism.


    • TC
      May 3, 2011 at 7:01 pm

      Ugh. This term was just reintroduced to my thinking about 1 year ago. And I hate it. But it is very, very true. We like to spend money if it means killing people.

  2. beowulf
    May 4, 2011 at 2:44 pm

    Easier to channel the money instead of stopping it. Redirect military spending to infrastructure in a “managed trade” system where existing defense contracts are amended so defense contractors are tasked with carrying out Army Corps of Engineers public works projects (so long as the contractors can keep hitting their earnings estimates, I doubt they care if the govt pays them to build highways in Iraq or in Iowa).

    Since anything involving transportation and energy has military value, there’s a lot that could be done– electrifying and expanding freight rail lines, improving the internal waterway systems (already run by Corps), expanding the Air Force’s GPS system into a congestion pricing system for roads and airports, building and operating land-based nuclear plants (and selling the power as the Corps already does w/ hydropower). In fact, if Congress balks, all of these things could be ordered by the President unilaterally under the Defense Production Act.

    • TC
      May 4, 2011 at 8:56 pm

      So we move from killingry to livingry that easily? Just a stroke of the pen, and limited only by the imagination of one man. 🙂

      Good to know it is there though. I wonder how it could really be used today. It could be a good little start. People have problems with army guys in their neighborhood in uniform, but the Army Corps of engineers has a decent reputation for getting stuff done. I’d say that the reputation is for getting the stuff done that isn’t always smart, but it gets done to spec, and pronto.

      One problem we do have now is that doing this is bound to piss people off. If you are going to have the military come in and do it, why not private contractors? When there isn’t enough money to go around, there are fights over the initial spending.

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