Are Wars Good For The Economy? The Myth...

I came across this article using Google and found it very interesting.  It's something I've heard all my life that the second world war was responsible for pulling us out of the depression, and the cold war kept us making money...

Lee Murray

Written by Mike Moffit  Found it at About.com    About.Com Link
One of the more enduring myths in Western society is that wars are somehow good for the economy. Many people see a great deal of evidence to support this myth, after all World War II came directly after the Great Depression. This faulty belief stems from a misunderstanding of the economic way of thinking.
The standard "a war gives the economy a boost" argument goes as follows: Let's suppose that the economy is in the low end of the business cycle, so we're in a recession or just a period of low economic growth. The unemployment rate is high, people may be making less purchases than they were a year or two ago, and overall output is flat. But then the country decides to prepare for war! The government needs to equip its soldiers with the extra gear and munitions needed in order to win the war. Corporations win contracts to supply boots, and bombs and vehicles to the army. Many of these companies will have to hire extra workers in order to meet this increased production. If the preparations for war are large enough, large numbers of workers will be hired reducing the unemployment rate. Other workers may need to be hired to cover reservists in private sector jobs who get sent overseas. With the unemployment rate down we have more people spending again and people who had jobs before will be less worried about losing their job in the future so they'll spend more than they did. This extra spending will help the retail sector, who will need to hire extra employees causing unemployment to drop even further. A spiral of positive economic activity is created by the government preparing for war, if you believe the story. The flawed logic of the story is an example of something economists call The Broken Window Fallacy.
The Broken Window Fallacy is brilliantly illustrated in Henry Hazlitt's Economics in one Lesson. The book is still as useful today as it was when it was first published in 1946; I give it my highest recommendation. In it, Hazlitt gives the example of a vandal throwing a brick through a shopkeeper's window. The shopkeeper will have to purchase a new window from a glass shop for a sum of money, say $250. A crowd of people who see the broken window decide that the broken window may have positive benefits:
After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $250 more to spend with other merchants, and these in turn will have $250 to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever-widening circles. The logical conclusion from all this would be ... that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor. (p. 23 - Hazlitt)
The crowd is correct in realizing that the local glass shop will benefit from this act of vandalism. They have not considered, however, what the shopkeeper would have spent the $250 on something else if he did not have to replace the window. He might have been saving that money for a new set of golf clubs, but since he has now spent the money, he cannot and the golf shop has lost a sale. He might have used the money to purchase new equipment for his business, or to take a vacation, or to purchase new clothing. So the glass store's gain is another store's loss, so there hasn't been a net gain in economic activity. In fact, there has been a decline in the economy:
Instead of [the shopkeeper] having a window and $250, he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window or the suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.
(p. 24 - Hazlitt) The Broken Window Fallacy is enduring because of the difficulty of seeing what the shopkeeper would have done. We can see the gain that goes to the glass shop. We can see the new pane of glass in the front of the store. However, we cannot see what the shopkeeper would have done with the money if he had been allowed to keep it, precisely because he wasn't allowed to keep it. We cannot see the set of golf clubs not purchased or the new suit foregone. Since the winners are easily identifiable and the losers not, it's easy to conclude that there are only winners and the economy as a whole is better off.
The faulty logic of the Broken Window Fallacy occurs all the time with arguments supporting government programs. A politician will claim that his new government program to provide winter coats to poor families has been a roaring success, because he can point to all the people who have coats who didn't have them before. It's likely that there will be several new stories on the coat program, and pictures of people wearing the coats will be on the 6 o'clock news. Since we see the benefits of the program, the politician will convince the public that his program was a huge success. Of course, what we do not see is the school lunch proposal that was never implemented to implement the coat program, or the decline in economic activity from the added taxes needed to pay for the coats.
In a real life example, scientist and environmental activist David Suzuki has often claimed that a corporation polluting a river adds to a country's GDP. If the river has become polluted, an expensive program will be required to clean up the river. Residents may choose to buy more expensive bottled water rather than cheaper tap water. Suzuki points to this new economic activity, which will raise GDP, and claim that the GDP has risen overall in the community although the quality of life surely has decreased. Dr. Suzuki, however, forgot to take into account all the decreases in GDP that will be caused by the water pollution precisely because the economic losers are far more difficult to identify than the economic winners. We do not know what the government or the taxpayers would have done with the money had they not needed to clean up the river. We know from the Broken Window Fallacy that there will be an overall decline in GDP, not a rise. One has to wonder if politicians and activists are arguing in good faith or if they realize the logical fallacies in their arguments but hope the voters will not.
Now on to the war.
From the Broken Window Fallacy it is quite easy to see why the war will not benefit the economy. The extra money spent on the war is money that will not be spent elsewhere. The war can be funded in a combination of three ways:
1. Increasing taxes
2. Decrease spending in other areas
3. Increasing the debt
Increasing taxes reduces consumer spending, which does not help the economy improve at all. Suppose we decrease government spending on social programs. Firstly we've lost the benefits those social programs provide. The recipients of those programs will now have less money to spend on other items, so the economy will decline as a whole. Increasing the debt means that we'll either have to decrease spending or increase taxes in the future; it's a way to delay the inevitable. Plus there's all those interest payments in the meantime.
If you're not convinced yet, imagine that instead of dropping bombs on Baghdad, the army was dropping refrigerators in the ocean. The army could get the refrigerators in one of two ways:
1. They could get every American to give them $50 to pay for the fridges.
2. The army could come to your house and take your fridge.
Does anyone seriously believe there would be an economic benefit to the first choice? You now have $50 less to spend on other goods and the price of fridges will likely increase due to the added demand. So you'd lose twice if you were planning on buying a new fridge. Sure the appliance manufacturers love it, and the army might have fun filling the Atlantic with Fridgidaires, but this would not outweigh the harm done to every American who is out $50 and all the stores that will experience a decline in sales due to the decline in consumer disposable income.
As far as the second one, do you think you'd feel wealthier if the army came and took your appliances away from you? The idea of the government coming in and taking your things may seem ridiculous, but it's not any different than increasing your taxes. At least under this plan you get to use the stuff for awhile, whereas with the extra taxes, you have to pay them before you have an opportunity to spend the money.
So in the short run the war will hurt the economy of the United States and their allies. It goes without saying that flattening most of Iraq to rubble will decimate the economy of that country. Hawks are hoping that by ridding Iraq of Saddam, a democratic pro-business leader can come in and improve the economy of that country in the long run. The economy of the United States could improve in the long run due to the war for a couple of reasons:
An increased supply of oil
Depending on who you ask, the war either has everything to do with Iraq's vast oil supplies, or absolutely nothing to do with it. All sides should agree that if a regime with better American relations were set up in Iraq, the supply of oil to the United States would increase. This will drive down the price of oil, as well as driving down the costs of companies that use oil as a factor of production which will certainly help economic growth.
Stability and Economic Growth in the Middle East If peace can somehow be established in the Middle East, the U.S. government might not have to spend as much money on the military as they do now. If the economies of the countries in the middle east become more stable and experience growth, this will give them more opportunities to trade with the United States, improving both the economies of those countries and the U.S.
Personally I do not see those factors outweighing the short term costs of the war in Iraq, but you can make a case for them. In the short term, however, the economy will decline due to the war as shown by the Broken Window Fallacy. Next time you hear someone discuss the economic benefits of the war, please tell them a little story about a windowbreaker and a shopkeeper.

War - Right or Wrong? Legal or Illegal? Moral or Immoral?

I was watching TCM and they showed a short from WWII staring Bette Davis. She was pushing War Bonds. This started me thinking. I've thought about this a lot over the years, and talked about it too.
When I was a kid war, serving in a war (serving your country), being wounded or killed in a war, was glorified. Glorified in TV, movies, books, glorified by our whole civilization, with the exception  of many of the men and women who'd actually been there, who didn't glorify it at all.  Of course, it's natural and neccesary to glorify your son or daughter, your husband or father, your relative or friend that fought for his or her country and possibly was injured or killed doing it. It's natural to call that heroic, what else would you say. 
When I was a kid we read about wars in history, Charlemaigne, the Romans, the Knights and their crusades, on and on, and again it was glorified, but to most of us they weren't real, they were just stories, not real men and women being killed. I know of relatives of mine that fought in the Spanish American War, my maternal grandfather fought in the First World War, my paternal uncle and several other relatives, my aunt who's my mothers sister,  fought in the Second World War, my father and uncle my mothers brother were in the Korean War.  They were real, but still stories in some sense. In my family, like most others, they joined and fought because they'd been taught over generations of history, stories, books, and later movies, radio and tv, that serving their country was a noble sacrifice, and to be wounded or killed was the ultimate nobility. True? Maybe if the wars were necessary and not the result of political maneuvering. 
Unfortunately most, if not all, wars, not just recent, but throughout history, are the result of political maneuvering, absolutely. Unnecessary and evil, but portrayed to the public, who will be the soldiers, the ones wounded and killed, as well as the survivors, together with parents, husbands, wives, children, relatives, that it was necessary and good. 
I wish I could tell you the real reasons for the wars throughout history, but I don't know, maybe nobody does really. I'm sure there are, or were, reasons.  Quarrels among the royals, revenge, invasions and advantage of one kind or another, all of these reasons and more. Good reasons probably for the kings, emporers, presidents, or politicians responsible for murder in the guise of patriotism, but maybe not so good for the millions of victims on all sides. And there are, were, victims. Millions, hundreds of millions of innocents, killed by a few, relatively, leaders. Kings, Emperors, Pharohs, Tsars, Shahs, Caliphs, Politicians of every stripe and nationality, mostly old men, some who themselves had fought in someone else's war and survived, sent the young men, and now women to fight for them.
Is there a purpose beyond the lies told us to get us to fight? Well, population control, how about that? If you think the world's overpopulated now, just think what it'd be like without the wars. I seriously doubt that the murderers had any motive as theoretically noble as population control. More likely the

Well I finished this post, but for some reason this is all that f---king blogger had saved. I thought it was done and hit publish post, and blogger said it couldn't, so I clicked the back arrow and this above is all there was, nothing of the rest that I'd written, and frankly, I couldn't do it again the same way, so I'm publishing this... Isn't blogger great?????

Lee Murray

Newest Update on Mini-Stroke??? Ear Infection??? Latest info again...again

Well so far no definative explaination, or diagnosis. The best answer so far is not a brain tumor, we'd have seen that. Not MS, we don't even consider that in your age group. Probably two TIA's ie mini strokes, but why are the symptoms still here almost a year later? Well, we don't know... Had a cerebral Angiogram, everything good but for 50-70% blockage in the left rear artery to the brain. Yes, I'm told that MIGHT cause the numbness on the right side of my face and other symptoms. I'm also told that either the blood pressure or colesterol meds don't remember which, can cause the balance issues as a side effect. Then had a CT Perfusion scan, apparently even with the blockage blood flow to the brain is normal I'm told.
Still diabetic I guess, that apparently never goes away. I am surprised by how it seems to have grown in this country compared to 50 years ago or so. My blood sugar is down in the low to mid  100's now and the 3 month blood test was under 7 (6.5-7 is right per the Dr.) both times. Blood pressure has corrected itself and colesterol was good, except good colesterol was low, need to get that up some. See Dr. Young in Hamilton, this week, who knows maybe something new????

Lee Murray

Napoleon Hill - Advanced Thinker - Before His Time

Recently I did a post on Napoleon Hill on my other blog, Lee Sells Rascals and Other Stuff. In that one I focused on how Mr. Hill benefits those of us in sales. That he is if not the first motivational author, he's one of the first. The focus of Think and Grow Rich, his best known book written in 1937 and selling to date something like 80 million copies, and others like The Law of Success written in 1925, is ostensibly making money and getting rich. Surprise!!!!
I hadn't read Mr Hill for awhile, so being in sales and always needing motivation, I decided to re-read Think and Grow Rich, and yes the focus is making lots of money, on the surface. But underneath, it's much deeper, showing that Mr. Hill was indeed ahead of his time.  To begin with let's realize that while Mr. Hill uses the word money, lots of money as the goal, I think he could as easily use the word success, most of us when we say we want to be rich, we mean successful. That's in general how most of us keep score, broke is unsuccessful, rich is successful, and most of us fall somewhere in the middle. Most of us would like to be more successful. But, how?  Mr. Hill gives lots of pointers, and yes some are dated but others aren't, and even those that are make you think and who know's thinking may point you in a direction that nobody else, maybe even Mr. Hill, thought of.
A quick aside, personally my best years income, or most successful year, so far, has been an income of eighty-some thousand, gross before taxes. All my life I wanted to make that kind of money, or told myself I did, but was I happy? No, all I could think of was how was I going to pay the taxes. Clearly I was not ready even for riches on that modest scale, it scared me, as it would about 99.9% us. Since then through no effort on my part, my income has dropped, and yes it's annoying because I keep thinking and comparing to the good year, I'm working as hard and making less, but at the same time I'm not scared because I'm back in my comfort zone. What that tells me is, since I'm hardly unique, that unlimited success, and/or riches are not for everybody. For whatever reason it didn't suit me then, maybe many if not most of the average guys and gals would feel the same, fear instead of joy. Weird huh?
The answer I think is to plan for it. Mr Hill advocates organizing  and directing knowledge. Using a plan of action, with a definite end in mind you state where you want to go and how you plan on getting there.  The six steps he came up with, using faith to turn it over to the subconcious mind, are briefly:
1. Fix in your mind the exact type or level of success, that you want.
2. Decide exactly what you'll give in return for that success.
3. Decide on an exact date to achieve the success.
4. Create a definite plan for achieving the desired success.
5. Write a concise and clear statement of the type and level of success you intend to achieve, the time limit to achieve it, what you're willing to give to get it, and your plan of getting there in detail.
6. Read the statement aloud twice every day. When you get up in the morning and before going to bed at night.
Important: As you read you must see, feel, and believe that you're already successful.  Mr Hill believes that it's a burning desire, for wealth, or success, that achieves it, desire on the level of obsession. Following his six steps, in particular the 6th and see yourself as successful, impossible as that may seem, will create that desire, that obsession, to the point you have no problem seeing yourself as rich and successful.
Maybe by following the steps and desiring wealth and success obssesively would make me, and others who are average, think we deserve it and eliminate the fear of success....

Lee Murray

Thou Shalt Not Kill - How?

Well, I talked pretty good awhile back about how humans ignore God's 6th commandment and kill, kill, kill. Let's look a little deeper. I think I called it a rabid dog murderous nature of 99.9% of human beings, recently. As you can probably tell, that's a pet peeve of mine. Truthfully I didn't always feel that way, and even today, insects, flies and moths in particular that get in the house, or in my way, aren't safe around me. So let's face it, all human beings, with the alleged rare exception, are killers, murderers, even if it's something as small and insignificant as a fly.

Is there a way for humanity to live without killing? I honestly don't have a clue. We all, Christians, Muslims, Jews, etc. accept the idea of thou shalt not murder, in theory. But in practice, in real life, it's an accepted and easy way to solve problems, personal problems, and national or diplomatic problems. It may be a fight in a bar, gang wars, a world war or a police action, or "The State," meaning all of us killing a killer, how is that for hypocrisy? 

In church, mosque, or temple, we all say Thou Shalt Not Kill, or words to that effect. Since all of our religions are built on previous civilizations going who knows how far in the past, this is not a new thought, but what do you find looking back, murder, assassination, war, and it's been going on as long as there have been people, apparently.  Buddhists are anti-killing, perhaps more than any of the rest of us, but being human even most Buddhists will kill too, if no more than stepping on an ant, or swatting a fly. The Buddha himself was reputed to be against killing even an ant. I will say that a friend mentioned, and I agree so far as I know Buddhism is the only religion that has never been responsible for, declared, or started a war. But again, they are human, which means with an inborn prediliction for killing, so I could be wrong.

I just watched a short on TMC that was about a couple that immigrated to the US from Poland in the 1850's, they became citizens, became small farmers, had children, and when the Civil War came along he enlisted in the North to fight for his country. It said that he'd said he'd give his good right arm, for his country, and he did. Then it jumps to the Spanish American war and this man told his sons that they must enlist and fight for their country, they did and some didn't come home, then WW1 and WW2 same thing, this family proudly sending it's sons, and daughters, to work,  fight and die for their country.  In my family too, and in most, if not all, of those I know, it's the same story.  We fight for our country, some because we want to, some because we have to, some because we think we should.  Our parents, relatives, political leaders, priests and pastors, girlfriends and wives, everybody it seems, encourage us to do it. It's patriotic or protecting our family, or just the thing to do. At the same time ask any one of that myriad of people if killing is wrong, they'll say yes. Hypocrisy raises its ugly head.  Ask them if they believe in the 10 Commandments, they'll say of course, some, not many, would say  yes killing is wrong, period, yet others would say but in this case, or that case, it's necessary. Too many though have never given it a thought and see no need to, killing another person is like swatting a fly, easy.

Gandhi who in my opinion was a modern saint,  is the only leader that comes to mind who truely abhorred killing, which didn't prevent the Hindus and Moslems from killing each other. But he never accepted it, he came close to death several times starving himself in protest.  Well I've talked long enough for now.

Lee Murray

Just Sent An Email To the Dalai Lama

I came across a quote of his on the Theosophical website. And I emailed him to ask a question. I'm not saying what I asked because I said in the email that with his permission I'd put both my question and his answer on my blog, and he hasn't given permission as he probably hasn't read the email yet, let alone answered it.
But I will say that in thinking about it, it makes me doubt my own committment. I like to say that over the years I've evolved from whatever I was to a more enlightened person. I say that I was raised as an Episcopalian who really never thought about religeon, to look into witchcraft and hang out with witches (it was So Calif in the 60's), to a Buddhist, (and a Rosicrutian for awhile), who began to wonder if there was more and look for answers, then thanks to a girl I dated in the late 70's a born again, and destroyed everything Buddhist that I had. After a while I saw that I'd sidetracked myself, but took the things of value, there were some, and combined them with the things of value I'd learned from witchcraft, Rosicrutianism and especially Buddhism, and that's where I am now.

What makes me doubt myself is that I still see the fact that humans are no better today than they ever were and if the world were about to be destroyed I'd find it difficult to care, and that tells me that I am no better. No better than the kid that never thought about religeon, and apparently I never learned anything in all the years of studying. Yes, I know a lot, I understand the philosophy, I understand that there were people and civilizations before us, I do believe in God, and that Jesus was his/her/its son as we all are, I believe that there is the chance to evolve or grow, or raise your vibrations, I believe in higher levels of existence, and more. I don't however believe that most people care, and that's my fault. I should see the good in people and instead I see the greed, the hate, the disinterest, the I just care about me, and more to the point I see the same things in me... 
I see hope in two things, one it's all a dream, an illusion, and two I'll do it over until I get it right, unless, and it's a slim chance, I'm wrong and I am getting it right.

Lee Murray