Military Keynesianism for the 21st Century

https://www.youtube.com/watch?v=OyBNmecVtdU

In the final days of his presidency, President Dwight D. Eisenhower, the legendary four-star General of World War 2 and the Supreme Allied Commander who led the Allied Forces through the beaches of Normandy on the D-Day Invasion, gave his now iconic farewell address in which he addressed the looming threat of “unwanted interference by the Military-Industrial-Complex” and the corrupting influence on our society. Now 60 years later, that ominous warning of this giant industrial juggernaut that arguable in many ways has been the backbone of the American economy for the better part of a century unfortunately has seemed to come true with its worst excesses manifesting itself so blatantly in our society. However, as someone with a deep and nuanced understanding of contemporary American history, I do not think that this aspect of our economy has to be such a negative force in our society. I am someone, who as a proud patriotic American that wholeheartedly believes in having a strong national defense, believes very strongly that if properly recalibrated and restructured, the Military-Industrial-Complex can be transformed into a force that is much more positive and meaningful for the American economy and society while still maintaining the integrity and meaning for all the undoubtedly positive aspects the US military contributes for our society.

Now as someone who is not very ideological in terms of holding any type of deeply held economic philosophy and as someone who has always believed in a mix of Keynesianism-interventionist policies and free market supply-side economics beliefs, I do strongly believe that in order to solve all the fundamental issues in our economy whether its student loan debt, rampant poverty and income inequality in rural and urban America, community development and education, health care, unemployment and job displacement by automation, homelessness, protecting the environment, infrastructure, or especially government and private sector accountability, the U.S. Military without a doubt has to take a much more directional role. And regardless of whether or not many staunch believers in the libertarian free market philosophy want to believe it or not, from a certain perspective America’s economy has always been, especially in the 20th century, at its core a Military-Keynesian or as some notable academics such as Professor Noam Chomsky would proclaim- a Military-Socialist country because historically our economy has always seemed to perform the best when the military is heavily involved. In short, the Military-Industrial-Complex has to be permanently transformed into what can be described as a Peace-Industrial-Complex.

https://www.youtube.com/watch?v=uFdh-04b3oM

https://www.learnliberty.org/videos/dan-carlin-what-is-military-keynesianism/

That is the core of my philosophy at least with respect as to how the defense industry can be reformed to become a more positive force domestically in the American economy. In many ways I believe that you could consider this type of philosophy as a mirror reflection of the former recent Democratic Presidential candidate in the 2020 Democratic Primaries: Andrew Yang. Now Andrew Yang is obviously very much of a libertarian-leaning liberal or a sort of new generation techno-libertarian, but the core fundamental of his economic philosophy is his Universal Basic Income or Freedom Dividend or UBI or however one may like to characterize it. I think you could consider a new 21st century form of Military-Keynesianism as way to complement Andrew Yang’s signature Universal Basic Income philosophy. In essence, this basic pragmatic philosophy I have is to get the military or rather National Defense establishment much more heavily in every aspect of our economy in part because the US Military is such an essential part of American culture and tradition in a positive way and our country can certainly use that to our advantage. And I wholeheartedly believe many economists across the ideological spectrum and prominent academics can agree to that as well.

Now one must bear in mind that I am absolutely not implying in any way that the purpose of the US Military should be to fight endless pointless wars in the Middle East or promote what one may consider to be American imperialism abroad, all of these long-standing wars whether it is Afghanistan and Iraq have exhausted and overwhelmed the purpose and capabilities of the US military for the better part of the last two decades. In addition, there is also the tremendous cost of human life not only of American soldiers but the unfortunate civilian casualties that suffer in conflicts around the world.

There is no doubt that from a national security perspective, we need a strong military that takes up a fairly reasonable but not bloated part of our annual GDP, maybe between 3-4% of our annual GDP is probably reasonable. Right now our current annual military expenditures hover around the $700 billion mark and as many people know that is larger than the military budgets of the next ten countries combined and there is understandable concern over that. But it is true that the US economy dwarfs the rest of the nations in terms of GDP numbers and of course we shoulder most of the financial burden when it comes to the collective financial responsibility of international defense organizations like the UN and the North Atlantic Treaty Organization, or NATO. So yes, while I do believe $700 billion is a huge amount for the US to spend on its military, I believe that as long as the current US expenditures are around about 3% of our annual GDP, then the issue of having an out of control military budget is not too pressing on an issue if the US military needs can be far more involved to rebuild our own country. In the 1950s, President Dwight Eisenhower knew very well that a strong military could not exist without a strong economy and vice versa. But that priority over the decades has meandered in unfocused directions that often times lead to waste and misplaced use of taxpayer funds. I believe that we need to turn the dial that is our incredible $700 billion defense budget and repivot it back to our country and repurpose it for our domestic economy back at home.

In our current Congress, there are two very prominent anti-war and non-interventionist Congressman- Republican Senator Rand Paul of Kentucky and House Democratic Representative Tulsi Gabbard who of course famously ran for President in this year’s Presidential primary. While both of them may appear to be on opposite sides of the ideological spectrum when it comes to economic and cultural issues, one common theme that unites them together is that they both vigorously are against intervention in unnecessary wars and reallocating the funds to reinvest in our own domestic economy.

Both Rand Paul and Tulsi Gabbard have constantly advocated for our government to bring our troops home and get the defense establishment to become more involved in our own country and rebuild our own nation and economy instead of diverting their efforts to fighting what seem to be never-ending wars with vague at-best objectives in Latin America or the Middle East. And with our National Defense priorities repurposed to concentrate on rival geopolitical competitors like China, the lines between economic security and national security have become more blurred now than ever before. And without a doubt since the Eisenhower administration and especially during the Reagan Administration, every US leader has understood that Economic Security and National Security are undeniably intertwined. In many ways from the perspective of a domestic economy, we absolutely “Peace through Strength” as President Ronald Reagan famously proclaimed. However, in this case strength has to be not only conventional Military Strength, it has to without a doubt be Economic Strength as well. That is what both Presidents Harry Truman and Dwight Eisenhower realized and is a key factor as to why the US Economy prospered so wonderfully in what is now known today as “the fabulous 50’s”. Leaders from Teddy Roosevelt to Dwight Eisenhower all the way to Ronald Reagan understood that a strong America depended not only on a strong US military but a strong US economy as well. So in this 21st century- we can implement that again whether the goal is to fight climate change as former President Barack Obama proclaimed towards the end of his term or to address poverty and the economic health of communities at home.

http://www.ncsl.org/research/military-and-veterans-affairs/military-s-impact-on-state-economies.aspx

Now there seems to be a never-ending debate concerning which philosophy is better for the economy especially when it concerns infrastructure and community development. On the one hand, you will have more liberal-minded people advocating that government intervention or stimulus policies embodied by the economist John Meynard Keynes, of which his philosophy is famously referred to as “Keynesianism” and historically is an economic philosophy typically associated with President Franklin Delano Roosevelt during the 1930s at the height of the Great Depression, the proper way to foster economic growth and prosperity. And on the other had, you have supply-side economics mentality commonly referred to as “trickle-down” economics, notably promoted by economists such as Milton Friedman or Hayak, that is usually associated with President Ronald Reagan during the 1980’s as well as the British Prime Minister Margaret Thatcher that advocate for business deregulation and lower taxes. That philosophy was famously given the nickname of “Reaganomics”.

So the real question in philosophical economic debate is which way is the right way to go? That is the question at the heart of the ideological debate for decades. Should we go the interventionist Keynesian route of government spending or should we do the private sector-oriented approach of trickle-down economics. In recent decades, there has been a well-intentioned attempt at a compromise between those two economic philosophies that manifests itself in the form of public-private partnerships to stimulate the economy. But that compromise philosophy can be murky and historically seems to garner mixed results in the pursuit of balancing economic prosperity and social equality. No one seems to be really able to come to a clear consensus, but I do believe that there is a new approach we can definitely take. When it comes to developing regional economies whether in the big urban city or small rural community the answer in my view is not public gov spending, private industry incentives, or even the compromise approach of Public-Private partnerships; the approach that America needs is a Public-Private-Military Partnership. It is a three-tiered approach and I think looking at America’s economy today and what has traditionally worked in a historical context, this economic philosophy is where the U.S. needs to pursue in the 21st century.

Now regarding Keynesian philosophy that emphasizes government spending and usually raising taxes to generate government revenue, it can usually be utilized as a good start to get the economy moving but as history shows that if government spending and stimulus isn’t mixed with substantial business-incentives, then those government programs will often get bogged down with well-intentioned but burdensome regulations, delays, budgeting constraints, then eventually inflation like we saw in the late 1970s, and all sorts of bloated government bureaucracy. However, on the opposite side of the spectrum, conservatives will traditionally argue for low taxes coupled with massive private sector investments and debt financing but the problem that lies within there is that if there is not enough discipline or transparency regarding corporate investment, then private sector initiatives and tax credits get too easily corrupted by the profit motive and financial incentives and that would unfortunately lead to undesirable outcomes such as price gouging, debt traps, shareholder pressure, economic displacement of lower-income people, gentrification, and all the worst elements one can expect from what’s appropriately called in many cases “crony capitalism”. That’s a big reason why the traditional compromise or middle-ground position of “public-private” partnerships or giant tax credits for big corporations have generated very mixed results at best. At its worst you see all the problems of grotesque income inequality, gentrification, homelessness, poorly maintained buildings and roads and infrastructure, and endemic corruption which have become all too familiar in the big wealthy coastal regions such as New York City, San Francisco, Los Angeles, Seattle, and so on.

So my proposal is that we need to get the Department of Defense and U.S. Military Establishment to play a much larger role in getting involved in the building of our communities and infrastructure. Now, I am not advocating a military takeover of our government or businesses or any type of military rule of our country, that would absolutely be undesirable. What I am implying is that we need our numerous military bases across the country to more closely cooperate with our local governments and the business community of both large and small. California alone has more than 30 military bases. In many respects since it’s inception, the United States of America has always had a homogeneous military culture that prizes individualism, discipline, hard work, and helping the fellow countrymen out and that mentality needs to be applied to make our society more coherent and stable. The economy of America since at least World War II has always had in many respects a sort of Military-Keynesianism philosophy. But that approach does not have to be a misplaced priority, it can be a force for good and prosperity.

For example, let us say that hypothetically the city of Sunnyvale needs $15 billion dollars to rebuild the roads, transportation, affordable housing, infrastructure, and what not; the typical procedure would be to allocate a little bit more than half of that fund like maybe $8 billion in public funds in concert with the Department of Transportation and in addition, $7 billion of that fund would be to private sector investment to in this instance various construction companies and Civil Engineering companies as well as debt financing by large banks. Many economists would describe that as a state-capitalist approach common in Western Europe or even reminiscent of Franklin Roosevelt’s New Deal Public Works projects.

Now the other reverse approach would be a corporatist approach where more than half of that aforementioned $15 billion fund, $8 billion in this case, would be allocated to the private sector and the remaining $7 billion would be allocated to the public sector, a practice more common in East Asian countries like Japan, Taiwan, and South Korea or how many economists would define it as a “National Champion” model which President Ronald Reagan to a large extent applied in the 1980s and that philosophy has largely continued onto today. Those two respective approaches seem to work fairly decently in their respective regions of Western Europe and East Asia, but in the US the results have been somewhat uneven. So how can we fill in that gap between the Western European Social Market model and the East Asian National Champion model? Well, as I proposed before, we can get the United States defense establishment to be that bridge between the public and private sector. And while many professors and historians with good reason point out that Western Europe and East Asia respectively are fairly ethnically and culturally homogeneous while the US prides itself more on individualism, liberty, and entrepreneurship, and is much more culturally diverse; I believe that view is somewhat misguided and simplistic.

America prides itself on tolerance and diversity and being a proud nation of immigrants, and that’s one of the aspects of our nation that makes our country so great. And even though we are very ethnically and culturally diverse, I believe that one common element which seems to have bound our great history together at least from an economic standpoint is our proud military and civil culture of standing up for liberty, freedom, and democratic values. The U.S. economy historically seems to perform the best when the U.S. military plays a key role, or to be more specific when Government-directed investments in both the public and private sector are framed as a National Security or National Defense priority.

Now, in coming back to that previous example of the city of Sunnyvale embarking on a $15 billion investment, my idea of a Public-Private-Military Partnership would be to allocate for example $5 billion to the local government, $5 billion to private sector business investment, and the remaining $5 billion to a local military installation such as the US Naval Base in Monterey or more specifically the Civil Engineering Corps division of that Naval Base in Monterey.

So in essence, the philosophy that I am espousing is that the U.S. Military establishment or more specifically the Department of Defense needs to sort of act like a fulcrum or balancing point between the public and private sector. An overreliance on government spending leads to burdensome regulations, red tape, and wasteful bureaucracy and on the other hand, if there is too much of an emphasis on private sector investment, big corporations eventually get too preoccupied by profit motives, shareholder pressure, and desire for influence on government institutions. However, if the US military establishment and the military/naval bases were to play a balancing role between the public and private sector, I wholeheartedly believe that the culture of discipline and honor and efficiency of the great U.S. Military institution will be able to balance the excesses of both Big Government and Big Business and make our great communities and local economies prosper forward into the future. Perhaps the Department of Defense can possibly create a new division of the military that focuses on government accountability and transparency and also ensures that big businesses and special interests do not take excessive advantage of government contracts.

As I come to my conclusion, I would like to highlight. which I think the biggest examples in our contemporary history as to why “Military-Keynesianism” seems to be the most effective model for the US economy. The first example and probably the best known example is FDR’s massive armaments build up to win World War II which subsequently created the incredible industrial economic manufacturing juggernaut that led to the prosperity of the 1950s. The second great example is Ronald Reagan’s massive military build-up and arms race that certainly played a large part in pressuring the Soviet Union into collapse and resulted in the resolution of the Cold War and that subsequently led to the high tech boom and prosperity of the Internet economy in the 1990s. In conclusion, the U.S. military establishment is an integral element of our culture and economic infrastructure and without a doubt has to play a much more directive, but not domineering, role in the prosperity of our great country as well as enable the world economy to prosper in the 21st century.