June 16, 2004

Meanwhile, back at reality ranch
Posted by Jon Henke

Oliver asks....

An Economic Question
Now imagine we weren't off at war, and so many military functions weren't being outsourced. Do we have to invade another country to keep the economic bubble growing?
As Sean at The American Mind points out, "[w]ar doesn't directly help the economy because goods and services are destroyed not created.". It's true - war is to an economy as an energy drink is to healthy living. It can provide brief stimulation, but no real growth. And looking at the cost of this war as a percent of GDP, it's hard to conclude it is generating that much stimulation - especially since most of the money is being spent elsewhere, so it's not exactly having a multiplier effect - or, speeding up the monetary velocity - in the US.

And the purely imaginative arguments don't stop there....

If a computer programmer loses his job, and then a few months down the line two fry cooks are hired at a burger joint... technically a new job was created -- but somehow I don't think the economic impact is the same -- and it doesn't do much for the unemployed programmer.
This idea is echoed in the comments, where, among other economically illiterate comments, Jesse in SD claims "...all we've got are the burgerflippers to boost our economy...".

In reality.....

In May, construction employment increased by 37,000, with most of the gain
occurring in specialty trade contracting and the construction of buildings.
Manufacturing employment grew by 32,000 in May.
Employment also increased in computer and electronic products.
In the service-providing sector, professional and business services added
64,000 jobs in May.
Strong employment increases in health care and social assistance continued
in May with a gain of 36,000.
Employment in financial activities rose by 15,000 in May, reflecting con-
tinued increases in real estate and in credit intermediation.
Those are well-paying industries. In fact, Civilian Worker compensation rose 3.8% over the past year.


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