http://www.nytimes.com/2014/06/14/upshot/the-lack-of-major-wars-may-be-hurting-economic-growth.html?hp&rref=opinion&_r=0&abt=0002&abg=1

The idea
that war is good for society is very common. Not many economists endorse it,
but Tyler Cowen is an exception. In The New York Times 13 June 2014, he
suggested it might remedy the current sluggishness in the USA economy. He seems
to think that war can be a stimulus. There has been too much peace.

The stark
reality seems to contrast with Cowen’s thesis, as it seems to be that the wars
have cost farl too much to almost everybody, but so, too, have normal politics and, indeed, the state itself.

Cowen is,
despite this brave outburst, the sort of libertarian who likes to conform to
the state. Like most economists, he tends to think that economics exists to aid
the state to make economic policy. He might well agree with many people,
economists and non-economists, that Alfred Marshall erred to brand the area, or
the subject matter, economics instead of leaving it labelled as “political
economy”. Keynes, whom Cowen also admires, attempted to reverse that but he failed.

Indeed, this
war-eulogy outburst from Cowen shows
this conformity to the state, as well as being a brave anti-social message. The
state is, after all, the epitome of an anti-social institution, despite its
rather successful attempt to get large numbers of people to think it is an
obvious social boon. War is about as bad as politics gets, it is the acme of
crass politics, but even normal politics is crass. It is intrinsically
illiberal.

Cowen says
he feels that war been lacking recently, or at least, it remains low by
historical standards. He earlier supported the war in Iraq; odd for a
libertarian, as is his conformity to Keynes and the endorsement of state action.He says that he “realistically” settles for as part of the package of modern life.

He says some
headlines from Iraq recently might fool some people into thinking war is already
abundant today but he says it is tame next to the killings of the 1914 or 1939 world
wars that killed off tens of millions prior to 1950. Does he even think that
killing itself can boost growth? He later replies that the growing destruction
of war might be the thing that accounts for the current sluggish peace. But
first he continues that even the killing in Vietnam killed more off than recent
wars in the Middle East have done. All
this abundant peace makes economic growth less urgent, he declares.

Cowen does
not quite want to say that war improves economies, as he admits that it clearly
destroys wealth, as well as lives. He is not endorsing the Keynesian rather
popular meme, that preparing for war boosts state spending and so it puts
people back to work, either. Instead he
wants to say is what war tends to do is to aid the politicians to get things
right. Competition such as war between
states sharpens up any state so that it better aids the nation’s overall
fitness. This tends to boost the GNP. He, later, suggests that it might boost
it to 4% a year rather than the current best-hoped-for 2% a year.

If we look
back at all the innovation war has aided in history then we might realise that
a very good case can be made out for war, Cowan suggests. It might seem
repugnant, but history suggests that war is an economic boon. He feels this
case recently made out by a few historians and that it is not so easy to
dismiss.

Cowen
says that war aided nuclear power, the computer and the modern aircraft just
as he passively accepts that the state can boost effective demand by stimulus
rather than looking at the reality that the state merely broadens demand in
such a way that the immediate result will be to lower it, overall, rather than
to increase it, despite the fact that purchasing power will be transferred to
new hands by inflation. Such a process is not likely to ever even conserve
total demand at the same level let alone boost overall demand to new a higher
level, as the Keynesians imagine. But Keynes said it, so Cowen conforms to it. He
is similar with the historians in doing that.

Cowen
continues that war in the past got the USA state to push forward many new innovations along. This is what history
teaches us, he seems to say. Not for Cowen the extreme idea of Henry Ford that “history is
bunk”. But as it is written, it all too often seems to be, especially on the benefits of war.

Cowen tells
us that the Internet was designed to conduct a nuclear exchange and Silicon
Valley too was innovated by the military. It was the late USSR that, with
Sputnik, boosted the USA to try to catch up by developing science and
technology in reaction. Here we seem to have one economist, Cowen, who much
prefers history as it is presented to him than to thinking about the opportunity
costs of whatever the state did. He admires the sheer efficiency of the
Manhattan Project but he tends to overlook that the bomb was no social boon.

But war
makes the state efficient; Cowen seems to think, or at least to say. He feels that
Japan might wake up now that China is pressurising it with revenge for the
1930s in mind, but Western Europe lacks that sort of vital external threat.
That is why European states are so sluggish.
He seems to have forgotten the fact that they can tax so have no need to
earn their keep.

We are told
of three books by recent historians that make the case further: War! What is it Good For?(2014) Ian
Morris, War and Gold (2014) Kwasi
Kwarteng and War in
Human Civilisation
(2006) Azar Gat, the last cited on which Cowen feels the
two new books are both based on.

But Cowen
feels the main problem with all this is that war can be so much more
destructive today. This seems like Cowen himself is waking up to the weakness of his new shocking thesis.

So it is not
the useful as a means of getting out of economic stagnation that it used to be,
after all. Cowen feels that we are in a trade-off between more growth with war
in exchange for less growth with peace. This latter option brings Politically Correct things like
tolerance for minorities and sometime persecuted groups. Cowen reflects that
this might be the better result than more growth and war together might bring. He
somewhat returns to normality at the end of his article.

I think
Cowen is over impressed with the GNP in any case, just as he is with Keynes. A
lot that passes for economic growth looks like a misnomer, as adding the costs
of the funeral services of tragic victims of road accidents makes for a higher
GNP out of clear losses. Nearly every economics textbook lists some of the many anomalies with the meme of GNP.

War is
clearly an all-round risk to people that generally reverses economic well-being,
and that should be as clear to Cowen as is the nose on his face. As a critic of
economics rather than an economist, it seems to me that Cowen ought to attempt weigh
up, by opportunity cost, what the backward historians say rather than to accept
whatever happened as what best needed to
happen, at least to a far greater extent than he seems to have done.