the 9/11 security state as failed right wing keynesianism
It is often said that war spending can bring an economy out of recession. I call this the Right Wing Keynesian Thesis. I’m usually skeptical. Spending on defense does not satisfy consumer demand, even if it does mean that some more people are employed in the short term.
In 2011, we have a new test of the theory – the post 9/11 security state. We have ten years of astronomical spending on two wars, homeland security and a vastly expanded intelligence apparatus. This spending has occurred as the economy recovered in the early 2000s, boomed in the mid-2000s and then tanked in 2007.
Collectively, we have spent about two trillion on defense and anti-terrorism beyond what was projected in the 1990s. The wars have cost $1.2 T. Homeland Security has cost about $50b a year, so add another $.5T to the total over last ten years. I have no idea about the cost of expanded intelligence, but the CIA alone costs about $27B – back in 1997. I’m sure it’s a bit more now. So let’s be conservative and say that it costs $50b a year since 2001. It’s probably way more.
Basically, the US economy, in the last ten years, has been stimulated to the tune of $2T. That’s about $200B+ a year. In other words, every single year, the US government, though defense, security and intelligence, has added on an extra “stimulus package” about 1/3 the size of the Obama stimulus, which was around $700b.
All this extra money, massive and likely underestimated, seems to have done nothing to tamper the business cycle. Furthermore, there’s a lot of evidence that wages have stagnated. Given that, the Right Wing Keynesians get a failing grade.