Confirmed: Defense Spending Creates Fewer Jobs than Other Types of Spending

Yesterday, I pointed out that a study by one of the leading economic modeling companies shows that military spending increases unemployment and decreases economic growth.

Indeed, an economic paper published in 2007 by The Political Economy Research Institute at the University of Massachusetts, Amherst - entitled "The U.S. Employment Effects of Military and Domestic Spending Priorities" - concludes:

We present in Table 1 our estimate of the relative effects of spending $1 billion on alternative uses, including military spending, health care, education, mass transit, and construction for home weatherization and infrastructure repair.

click to enlarge

The table first shows in column 1 the data on the total number of jobs created by $1 billion in spending for alternative end uses. As we see, defense spending creates 8,555 total jobs with $1 billion in spending. This is the fewest number of jobs of any of the alternative uses that we present. Thus, personal consumption generates 10,779 jobs, 26.2 percent more than defense, health care generates 12,883 jobs, education generates 17,687, mass transit is at 19,795, and construction for weatherization/infrastructure is 12,804. From this list we see that with two of the categories, education and mass transit, the total number of jobs created with $1 billion in spending is more than twice as many as with defense.

"Military Keynesianism" - the idea that war is the best economic stimulus - is false.

Thanks to Gordon for the tip.

Comments

[Scott Sacknoff:]

Not confirmed. Just repeating data from recent another posting you did that can be influenced by the assumptions chosen, the agenda that is sought, and the outcome that you want to reach. As I said on your other posting, as Mark Twain said, "There are lies, damn lies, and statistics." I've worked with policy groups that can give you statistics on whatever you are trying to say. The table above will depend on a> what primary data is used (is this direct and/or indirect jobs), b> what type of jobs (ie. engineers tend to get paid more than bus drivers and teachers as well as soldiers), how the jobs are determined (in a heavy R&D activity there are additional costs that lead to indirect jobs), etc. Including personal consumption was the kicker to me on a bias. Whereas certain jobs in certain industries lead to sustained growth and are hence better for the health of an economy, this analysis tells me its better to get a tax refund and spend it on new shoes than spend it in areas which create a better trained workforce, new technologies, marketable skills, and increased exports which are a plus to resolving our deficit issues.

Nov 12 01:01 PM

[conceptwizard:]

US spy agencies have spent $49.8 billion in fiscal year 2009, which is $2 billion more than the previous year and the second such multibillion-dollar increase in as many years.

The aggregate figure was released by National Intelligence Director, Dennis Blair, on Friday.

The Us has 16 intelligence agencies, which include the Central Intelligence Agency (CIA), the Federal Bureau of Investigation (FBI), the Pentagon, and the Homeland Security Department.

Around 80 percent of the intelligence budget is consumed by the Pentagon intelligence agencies, including the National Security Agency, the National Reconnaissance Office, National Geospatial Intelligence Agency and the Defense Intelligence Agency, AP reported.

According to the Office of the Director National Intelligence (ODNI), the budget has grown for two years running, from $43.5 billion in 2007 to $47.5 billion in fiscal 2008.

The ODNI has refused to provide any other specific details on how much each agency spends and on what, saying the release of such information "could harm national security."

Budgets for the United States' 16 intelligence agencies and their 200,000 employees were a closely-guarded secret until 2007.

Under a law passed that year, however, the US secret intelligence community has been required to disclose the annual budget.

The Clinton administration voluntarily disclosed the budget in 1997 and 1998. It was then $26.6 billion and $26.7 billion, respectively.

That is a 50% increase in 10 years!

Nov 12 05:19 PM

[Dave Wrixon:]

Probably a pretty good guide to who is overpaid and who is underpaid.

Nov 12 06:56 PM

[TinyTim:]

""Military Keynesianism" - the idea that war is the best economic stimulus - is false."

OMG. Where did this come from??

Many famous people have said that spending resources to create things that get blown up is the worst sort of economics- no increased productivity, no improved infrastructure, not even a consumption benefit.

"military spending increases unemployment and decreases economic growth."

This would be relative since defense contractors are notoriously bloated, inefficient and overpaid. Anyone fro a $5K toilet seat??

Nov 13 05:28 PM