DISTORTED PRIORITIES….
This video (below) of about 500 tanks being transported by train was posted in the comments section from Zero Hedge. Now, I’m almost certainly taking a case of micro and extrapolating out to macro to some degree, but I think it’s safe to say that this video pretty nicely summarizes how distorted the country’s priorities are right now. We live in a time of relative peace, but there’s a domestic war raging on the unemployment lines. 8.5% of our workforce is unemployed, our economy is stagnant, our cities are falling apart. And what are we doing? We’re building and shipping thousands of machines that kill people and destroy cities.
Now, I’m about as a big a supporter of the military as you’ll find, but are our priorities not totally out of whack right now? The most sickening part of this is that we’re actually beginning to discuss military cut backs. The Pentagon has released a plan to cut back $500B in spending. Great news right? Less killing and destruction and better living standards and production, right? Not so fast. Because we think we’re broke or at risk of hyperinflation (something Modern Monetary Realism thoroughly disproves), we aren’t planning to alter the spending course. No, we’re going to reduce the budget so that we can avoid the mythical Greek moment that is never going to come here (that CAN’T come here!).
Talk about having your priorities out of whack….Misunderstanding the monetary system is killing this country one minute at a time. And we don’t even need tanks to achieve all that killing! We just need a government that has no idea how the monetary system functions!
*The price tag of 1 M1 Abrams tank: $4.35MM. That’s a lot of new infrastructure…..
There you go again being an evil capitalist!
Right! Watch your kids. I might eat them while you sleep!
While you are at it, could you eat my neighbors kids? They have been throwing snowballs at my window lately. And they are quite chubby so you’ll have some leftovers.
Wow, thanks for the laugh.
The “tanks” are actually M2/M3 Bradleys @ $3.1M ea (avg price), but the point still stands.
Thanks Ben. I figured I had that wrong. Too much History channel, not enough Military channel. I’ll have to work on that.
What was that January 17 1961, Eisenhower’s farewell address all about again?
“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.”
Guess, some people didn’t pay enough attention to this fateful warning…
Oh well…
I bet that was the final straw for many couples along the train route. For those who did not make it over the tracks before that thing came…”I told you we had to go..”
kidding aside. agree CR.
“History channel”? Is that what Oprah is calling her network these days?
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The big question is, how does the department reduce its budget and continue to provide a modern, balanced and ready defense when more than half of the budget is committed to personnel costs?
The all-volunteer force has provided the nation with the most capable and experienced force in our history. We need to preserve that capability; however, we cannot afford the imbalance of resources stemming from the size and composition of the force.
The answer to that question is right before us: We should return to our historic roots as a militia nation. So, what does that mean, exactly? Simply put, it means we should return to the constitutional construct for our military and the days when we maintained a smaller standing military and a robust militia.
http://www.defensenews.com/article/20120116/DEFFEAT05/301160015/Going-Back-Future
Oprah. I wish. You have no idea…some of the garbage on our DVR can’t even be mentioned here for sake of losing my masculinity….
Platform for a President who understands monetary reality and is up to the job:
2 years of national service for full citizenship status. Individual chooses when, but military gets first pick (barring emergency, and with a CO exception; some may elect to make a career of it). There is your citizen militia: share the readiness, share the risk; provide wo/manpower for needed hands-on tasks, and a backbone of sorely needed unity to this society.
Basic universal health coverage.
Federal funding for quality public education (preK-16+) with universally available and affordable higher and technical ed.
A fair, simplified tax code; VAT-type tax on consumption (with your indexing to unemployment an option) and a carbon tax, to replace payroll and reductions ib other corporate taxes.
Rethink federalism and the relationship of public and private sectors (functional collaboration replacing the mix of adversarial dynamics andb cronyism?)
Commitment to whatever it takes to:
ensure a living wage for honest work of any kind;
control the corrosive effects of money on politics and greed on capital.
I’m no fan of the military industrial complex and I’m thinking about this from a purely fiscal perspective (Don’t get me wrong I’m liberal as the day is long socially speaking)… but for a nation w/ a CAD for the government and private sector to split, that is mired in a private sector balance sheet recession for which the prescription must be gov’t deficit spending in excess of the CAD, that can’t seem to muster the political will to authorize any new deficit spending for any sort of (seemingly) socially productive programs… is it better that proponents of MR take what they can get with regard to how the money is spent? I mean, hypothetically, as proponents of MR, would we rather see the necessary spending even if it’s spent on things like tanks instead of infrastructure? Or would we rather see the private sector sink further and further into debt? I guess what I’m asking is: Does MR have a conscience? Or is it strictly technical? In an imperfect (real) world where we as backers of MMT or MR aren’t in control of specific government spending programs, is it best to take what we can get for the time being? Or if not, is that letting best get in the way of better? I realize that this isn’t the exact scenario under which these particular military machines were constructed, but I immediately thought of this question upon seeing this thread…
FYI: I’m really asking, I have yet to reach my own conclusion on this…
The problem is spending via contracts with defense corporations isn’t particularly efficent at stimulating demand considering how much is diverted into profits, administrative overhead, lobbying, etc. The most effective way to spend would be to put money directly in the pockets of consumers.
Again, I’m no neo-con… but don’t corporate profits (Tax policy and all other reallocation mechanisms aside) eventually end up becoming some private sector individual’s income?
You’re doing what MMT advocates love to do and take production for granted. Yes, America is an exceptionally productive country. But that doesn’t mean we should just always try to fill the demand gap. We should fill the demand gap in the most productive of ways. I think Cullen has alluded to this in his discussions on full productivity. Sending out pay checks for nothing might be the fastest way to stabilize demand, but it’s not the best way to build long-term prosperity.
I get that, and I realize that I’m off on a bit of a tangent… but I think it’s obvious that it’s best to utilize our resources in the most productive manner possible. I don’t think anyone would argue with that. And I’m sure we’d be able to agree that building a road or a high-speed rail or a national power grid or investing in some high-tech new-fangled hydro-electric green power plant is WAY more productive than building a bunch of crap that we may or may not need. I’m with you on that. But the question I’m posing is this: In the real world, obviously everyone can’t agree on what’s MORE/ MOST productive. So, when the choice of investing in the MOST productive form of spending is off the table; when left with the choice of filling the gap w/ something that is arguably of little social value (i.e. a tank in a time of relative peace)OR not filling the gap at all, what provides the greater social utility? Pulling the private sector out of debt with spending programs of questionable social value or not spending the money at all?
It’s like being a body builder who benches 400 pounds and going to the gym with this mentality: “should I bench 50 pounds at 500 reps today or should I bench 225 at 10 reps?” Clearly, you’re not going to hurt yourself doing the 50 pounds, but you’re not necessarily going to help a whole lot either. So yeah, given the output gap and huge demand void I guess we take what we can get, but that doesn’t necessarily make it optimal or even good. This is basically my mentality on the JG (not that I want to resurrect that mess of a debate). People love to point to bad policy and use the JG as an alternative. We dish out a lot of unproductive spending now so this justifies slightly better spending, right! It’s like: “well, I eat 50 pounds of chocolate every week so if I eat only 20 pounds in the future then that’s good, right?” Sorry, wrong. Bad policy shouldn’t be used to justify decent policy. Not that the JG is just decent policy, but as I’ve pointed out on many occasions, it’s impossible to know the long-term ramifications of the program because nothing like it has ever been implemented. I hope you get my point….And sorry for the bad analogies.
I’m not taking productivity for granted, I’m arguing that demand is a primary impetus for it. If you’re making as many widgets as you can and demand is still high, you put some money into increasing your productivity so you have more widgets available to sell, thereby increasing your profits. Demand and productivity cannot be separated without becoming unsustainable.
It sounds like you’re taking it for granted. If the best way to produce prosperity were to “put money in the pockets of consumers” then Zimbabwe would have become the world’s most prosperous nation over the last 10 years. Printing money is not always the best way to produce prosperity. I know the USA is nothing like Zimbabwe, but creating a welfare state should not be the long-term goal. Government spending is only one piece of the puzzle.
And of course, MMT advocates like to explain away the case of Zimbabwe by making arguments about foreign debt or whatever caused the hyperinflation. The real cause of the hyperinflation in Zimbabwe was the fact that you had a group of unproductive workers who didn’t make anything that anyone wanted. And when the government did what you advocate the whole thing crashed on their heads. But MMT advocates love to take the story of America and other developed nations and pretend the rules of MMT apply to all of them.
Zimbabwe printed in excess of productive capacity. But I still see your point and I think it’s one I would make also. Zimbabwe could have done things to stabilize their economy to a greater degree. And it wouldn’t have involved just printing up bills. It would have involved utilizing resources to do real productive work that would have improved the real living standards of the citizens thereby creating a virtuous cycle of demand for the currency….
I don’t really agree Cullen. Zimbabwe’s production collapsed because they weren’t putting their resources to work. We agree there, but they didn’t just print in excess of productive capacity. Their production collapsed first and then they printed. There’s two sides to the coin here. Zimbabwe became a corrupt bureaucracy with an unproductive government run farm industry. It is everything that a capitalist fears and a socialist doesn’t understand.
Sure, but we’re basically saying the same thing. Productive capacity assumes that capacity is stable. Clearly, bringing in the untrained farmers just reduced the level of potential output. So yeah, they still printed in excess of productive capacity. It just so happens that the level of productive capacity was reduced when you took trained farmers and replaced them with untrained farmers.
Good strategy: ignore anything which doesn’t support your pet theory (such as a war, foreign debts, collapse of the tax system) and then claim that what is left (money printing) was entirely responsible for hyperinflation. Printing money doesn’t cause productivity to collapse. If it did the U.S. economy would have fallen apart forty years ago when it started printing money to pay its bills.
You’re doing what MMTers always do with hyperinflation – distorting the facts and timeline. Zimbabwe had wars and conflict long before the hyperinflation occurred. The real cause of the hyperinflation was the Mugabe government. They came in and reallocated property through the land reforms. And the output and productivity at these farms collapsed because they became small corrupt bureaucracies and not productive private sector farms. The black Zimbabweans who were put in charge of the farms had little or not experience in farming so their management of the farms was substantially below potential output. The corruption, foreign debt and war were all exacerbated by this one primary cause.
Check your history on Zimbabwe. It sounds like you’re just reading out of the MMT manual for your standard lines that make excuses for the fact that the government is exactly what caused the hyperinflation in the first place.
No, you just have some bizarre far-right ideology which holds that gubmint do all dat bad ting. Sorry, but politics and economics don’t mix.
Actually, I am not being ideological, but that seems to be the insult of choice these days when MMTers run out of arguments. What I did was explain the facts behind the Zimbabwe hyperinflation. It was caused by the government’s seizing of private property and reallocating resources to their corrupt friends. When the productivity at the farms collapsed all hell broke loose and they tried to print over it to fix their mess.
Call it whatever you want, but that’s what really happened. It had very little to do with war, foreign debt or anything else. It was just good old big government doing what it does worst.
No one is saying productivity doesn’t matter FDO. I think we all agree there.
I think the goal should always be to optimize output in a manner that maximize potential living standards. So, is 3.5MM on tanks a better expenditure than say, infrastructure or education or any multitude of other things that we actually NEED right now? I have to develop some sort of scale by which someone like the CBO could measure various spending, but I don’t think we should advocate spending just for the sake of spending. Our knowledge of the sectoral balances shows that we basically just need to fill the spending gap and keep the pvt sector nice and flush, but that doesn’t mean the type of spending doesn’t matter or have enormous multi-generational effects. So yeah, in the meantime, I think we have to take what we can get because our govt doesn’t know any better, but that doesn’t mean we can’t aim higher in the future. Call me a dreamer….
So you would rather see a bunch of containers filled with plastic toy crap from China? Each one of those tanks is a significant engineering accomplishment inside and out.
When you say spend money on education what does that mean EXACTLY?
Education other than hard sciences is incredibly overrated.
You’re right. They are a significant engineering achievement. I just wonder if we should stop worrying about ways to tear down cities and maybe use our significant engineering expertise to BUILD UP cities. Just one example. We don’t need a huge military expansion. We need investment in other areas so I think this is not exactly the most effective spending right now. Do you disagree?
“Education other than hard sciences is incredibly overrated.”
What an absurd statement. You must be a lot of fun at parties . . .
The Pentagon wants to cut $ 500 billion ? According to my info, that’s over 10 year. So, that’s $ 50 billion a year. And by what amount is that budget going to increase without those cuts ? Perhaps 60 billion ?
When the politicians in D.C. talk about cutting spending they always talk about reducing the increases. So, what’s mr. Roche worried about ?
Just to make you all more angry, the Stryker was supposed to replace much of the Bradley fleet given that the Bradley is a bit too heavy and more suited for Cold War style conflicts, not the current type of security and stability operations we’re seeing today. Either we’re continuing to waste money on these, or we’re selling them to a country that wants them. Still a shameful indication of where our priorities lie.
the Army just finished moving an armored division from Bavaria to El Paso.
Which, considering that Juarez is just across the river, is probably its highest and best use.
Perhaps your regular rail shipping stat is distorted. It is skewed to a gross misallocation of resources via military hardware movements which are happening all over the country right now, a lot more than usual
Good call Helix12- there are huge rail movements from gear from Iraq and other non commercial purposes… it definately skews the numbers… now the only question is how much?
“that’s a lot of new infrastructure” ? In order to rein in spending the gov’t should stop building new roads, new railways, etc. like the german government decided to do in 2009. Then the existing budget can be used for maintenance of the already existing infrastructure. Like the decrepit US railway system.
Keep in mind: Every new mile of road or railway costs money to build but it pushes up the (potential) maintenance costs in the future to a structural higher level.
“It is skewed to a gross misallocation of resources via military hardware movements”
From the Pentagon’s perspective, resources are a stock not a flow, and they are indeed misallocated. The rail traffic is the flow, moving hardware to its proper geographic place.
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I don’t quite see any logic in what you wrote. What am I missing?
I live a few miles from a plant that once built Bradleys, and now they retrofit and repair them. I know a few of the 600 or so employees who work there (down from 1800 a few years ago).
They are solid middle class wage union jobs, and if/when that factory closes, they will have no place else within a few hours drive to find similar paying jobs. And those workers are mostly hard core, politically active voters who routinely vote “D”.
So the problem is not entirely about oversized profits going to corrupt defense companies. There are plenty of mouths (and voters) at this trough.
On the plus side, it’s one of the few industries where the US is undeniably the technological leader, and one of the few remaining manufacturing sectors that has an export market. (Not a bright spot if you subscribe to the MMT philosophy that exports are a bad thing…)
How are exports a bad thing? I don’t recall seeing that MMT claim.
It’s one of the points MR differs on. MMTers say exports are a real cost. Imports are a real benefit. But there’s all sorts of intangibles in terms of living standards that are involved in being an exporter (think of all the jobs and benefits that come from being a large producer of goods and services). Not that you need to run a trade surplus, but you shouldn’t just seek to increasingly become a nation with a persistent external account deficit. As Kaldor said, that’s a great way to turn a nation of producers into a nation of consuming rentiers with increasingly worthless production….ie, exactly what America appears to be turning into.
Exactly.
I can see their argument on a theoretical level. I.E., we’re trading worthless tokens for real stuff.
On the other hand, those exporting countries have REAL jobs as a result. Meanwhile, the importers need to consider things like the JG in an attempt to utilize their idle workers.
That might all work out for the best in the long run. But that is highly theoretical at this point, IMO.
Who in particular is making this claim, and how can the MMT “founders” (assuming that’s who we’re talking about) simply ignore the draining of demand which occurs when a country runs persistent trade deficits? There’s a serious contradiction here.
The founders don’t ignore it. They know it’s a demand leakage. They just say spend over it to cover the leakage. Which is technically right, but I don’t believe that’s a) politically sustainable as we saw under Bush or b) an optimal approach over the long-run targeting living standards.
Yes, I don’t see how we get around the problem of nationalism (they took our jobs!) Exporting work to other countries is something people generally don’t like.
A big part of it is that we don’t have the jobs in the first place. I saw an Apple exec in the NYT the other day quoted saying that they don’t hire American engineers because they can’t find enough people with the right talent. That’s a frightening thought. Foreigners are just flat out beating us out for these jobs. It’s not just the unskilled labor we’re losing. It’s the skilled labor….I am guessing that’s in large part because our education system is flawed from the bottom up, all of our brightest minds are running hedge funds (woohoo financialization!) and we let foreigners get educations at our top schools and don’t even give them citizenship! Talk about a bad farm system!!!!
Apple is proof of what I am talking about regarding productivity as opposed to just consumption. There’s no question that America has plenty of demand for crappy goods. The problem is that we’re not the ones making the goods and reaping all the benefits from it. Instead of us having the skilled engineers, the jobs and the many potential benefits of having these workers in our domestic economy, we’re just filling the demand hole with even more and more government spending to paper over the fact that we’re becoming less competitive. Meanwhile, China gets the jobs, they get the skills, they get the innovative talents from working those jobs and we get fatter, lazier and less productive. And our government encourages more of it.
I’m not so sure those jobs are coming back here no matter what. We just can’t compete with China at the costs level. Even if the RMB were revalued substantially it would still be a big arbitrage for the corporations. But that doesn’t reduce the risks of the CAD or eliminate the need to reduce financialization, increase domestic skills, maintain foreign talent, and spend on programs that will ultimately make us more competitive. And as I’ve said before, the problem is not so much that Apple exports jobs overseas, but that there aren’t MORE Apples. There’s more John Doe Capital Management LLCs, but there should be more XYZ Technologies, INC.
On the plus side, it’s one of the few industries where the US is undeniably the technological leader, and one of the few remaining manufacturing sectors that has an export market
Buy American procurement requirements. The Chinese would happily equip, feed and clothe our soldiers if there weren’t a law against that.
I’m OK with such laws in this case. Not so much from the “make jobs and keep the dollars home” perspective. But for keeping the technology here, current, and controlled, and for limiting opportunities for espionage and supply cutoff. Pretty important stuff over the long term.
Perhaps those Bradleys are coming back from Iraq.
It is un-American not to know your tanks……LOL
These tanks are headed to Greece.
How else would you ship tanks, except by train? They are too heavy to put on ordinary roads without tearing them up.
We are on the same page..
Just to be accurate on the number of tanks I don’t believe
There’s 500 of them on that train.
Has anyone bothered to find out WHEN and WHERE that video was made?
If it was, say, 9 years ago, the premise of this thread is fallacious.
Says Santa Cruz. Recent. Not sure that’s accurate though the thoughts are valid regardless.
I only count some 96 tanks.
Our Mr. Roche still hasn’t got a clue why the US has such a large army. And why should our CR bother ? It doesn’t matter because the US is supposed to be currency issuer, right ? They can issue all the money they want, right ?