Home > economics, General Comment, political-economy, politics, shorter work time > Is serious left criticism of government’s share of GDP possible? (12)

Is serious left criticism of government’s share of GDP possible? (12)

Continued from here.

Pop quiz:

It’s 1950, you’re Harry S. Truman, thirty-third President of the United States, and new CEO of America Inc., and you want to prepare for a long Cold War.

So, you’re going to need a lot of stuff, like copper, steel, bauxite, petroleum, enriched uranium, etc., for both your immediate military needs and as stockpiles in case of actual conflict.

You’re also going to want to add lots of new soldiers, sailors, airmen, and marines, so you will need lots of stuff to intake, process, train, house, outfit, and feed kids just out of high school (who are not exactly born with enough common sense to know which end of a rifle to hold, and have appetites the size of a small African village.)

You will need a lot of new whiz bang flash boom stuff, preferably loaded on shiny new rockets, and in shiny new bombers, capable of striking deep into Soviet territory.

Finally, since that stuff requires a lot of different scientists, engineers, and English majors – just who do you think gets to be the office manager – you’ll need to add capacity at the nation’s colleges and

How much is all this stuff going to cost you?

Your choices are:

  1. As much as a liberal Democrat can tax and spend during a lifetime of “public service!”
  2. As much as a conservative Republican can borrow (from the Social Security Trust Fund, China and Japan) and spend during a lifetime of denouncing “Socialized Medicine!”
  3. More money than God. So have the Treasury get out the printing presses now!

If you answered 1, 2, or 3, shame on you!

You weren’t paying attention.

If you think this is all about money, you’re engaging in magical thinking, and I can prove it.

Do this for me:

Take a hundred dollar bill from your wallet. (If you are so impoverished you don’t have a hundred dollar bill, a ten dollar bill will do.) Set it on the table in front of you. Now, tell it to change itself into one hundred dollars (or ten dollars) worth of enriched uranium.

What did it do?

If your money is like my money, very little – it just sort of…laid there in front of you, with the picture of some dead historical figure staring vacantly into the middle distance. Dollars are like that – pretty pathetic when it comes to transforming themselves into instruments of murderous outrage, or 42 inch wide screen, high definition plasma televisions.

That’s why money is called an inanimate object.

People, on the other hand, are constantly turning one thing into another – give them some steel, silicon, rubber, chobham armor, titanium, textiles, and depleted uranium, some classroom training, and, a little time and effort, and they will give you a fully functioning M1 Abrams tank squad.

The key thing here, of course, is that last bit – “a little time and effort.”

If you eventually want to make hundreds of M1 Abrams tank squads, it will take – I’m guessing here – hundreds of times more time and effort.

And, if you want to make all those tank squads, plus MIRVed ICBMs, SLBMs, stealth bombers, six or seven fleets of naval armadas, a fully functioning military satellite communications network, while fighting at least three major wars, countless little ones, and God knows how many mini incursions, commissioning Mafia-contracted hits on foreign leaders, as you construct a dense network of military outposts encircling the globe, well that just might take the time and effort of tens of millions of people with a lot of time they don’t need to spend making real shit.


This is, more or less, what Leon Keyserling, told the real President Truman in 1950 – although, of course, being an economist, he so completely couches it in ‘economese’ that you may not at first notice he is actually proposing you, your parents, and your kids, and Americans in general, literally be forced to work an unnecessarily longer workweek for decades!

According to Sourcewatch, Keyserling became chairman of the Council of Economic Advisers (CEA) in 1950, under Truman’s administration.

He came to Truman’s attention because, with the country facing a deep recession in 1949:

Keyserling proposed a threefold increase in nonmilitary federal spending, basing this approach on his experience with the economics of World War II. Because the growth of federal spending during the war seemingly had validated the ideas put forward by John Maynard Keynes in his book The General Theory of Employment, Interest, and Money (1936)…

Perhaps it was just a coincidence, but, we are told, around this very time Paul Nitze, who had just been named Director of Policy Planning for the State Department, was looking for a way to fund an aggressive new containment policy  directed at the Soviet Union, and, as fortune would have it, ran into Leon on the golf course.

We made up the part about the golf course, but it does seem to be a strange intersection of history that brought these two men together – Nitze, who based on his experience as chief of the Metals and Minerals Branch of the Board of Economic Warfare, and then as director of the Foreign Procurement and Development Branch of the Foreign Economic Administration, both during World War II; and, Keyserling, who had helped write the draft version of the unconstitutional National Industrial Recovery Act – along with the heads of General Electric and the US Chamber of Commerce.


Oh, yeah. That is probably not so strange after all – fascism was all the rage during this period, however much it became something of a scandal following the discovery of Auschwitz.

In any case, we are told:

Eventually Paul Nitze, head of policy planning for the State Department, began to look for an economic argument for a significant increase in cold war military spending. He and Keyserling cooperated on developing such an argument in a top-secret National Security Council memorandum, NSC-68.

Keyserling wrote an assessment of the economic impact of a long term military containment of the Soviet Union which stated in part massive military power could be achieved by simply maintaing and extending the social work day of Americans:

These broad estimates are based on the assumption that working hours and the proportion of the population drawn into the active labor force would increase considerably above recent levels, although not approaching the peaks of World War II. With greater increases in labor effort than assumed in these estimates, a substantially greater increase in total output could be achieved.

This could provide the basis for a greater military production even while still maintaining the consumption standards outlined above….Given a major labor effort over the next two years, and given a substantial investment in basic productive facilities, there can be no doubt that the force targets presented in the report could, from the standpoint of our manpower and other resources, be maintained indefinitely…

NSC-68 carried this idea one step further:

With a high level of economic activity, the United States could soon attain a gross national product of $300 billion per year, as was pointed out in the President’s Economic Report (January 1950). Progress in this direction would permit, and might itself be aided by, a build-up of the economic and military strength of the United States and the free world; furthermore, if a dynamic expansion of the economy were achieved, the necessary build-up could be accomplished without a decrease in the national standard of living because the required resources could be obtained by siphoning off a part of the annual increment in the gross national product.

So, from now on, when Barack Obama or John McCain – or any other politician in Washington – trumpets a plan for more economic growth, you will know the exact purpose of this growth – to make you and your family work longer hours to support aircraft carriers prowling the Indian Ocean.

This, in fact may be how you would like to spend your spare time, but at least you now know why.

Of course, highlighting the above, we probably will be accused of being hysterical, and silly – speaking of NSC-68 with conspiratorial overtone, and charaterizing the leaders of this country as men and women with with dark and malevolent intentions.

However, there is this very small point provided by Steven Casey, whose work we cited earlier:

As [then Secretary of State Dean] Acheson noted in one discussion on how to sell NSC-68, “speeches alone would not do it, that people read and heard what was said and then turned their attention to other matters.” What was vital was an incident, a crisis in one of the many flash points of the Cold War. Seen in this light, the start of the Korean War on June 24, 1950, was a godsend.

Indeed, as the Wiki explains:

While there was little support for this program in Congress and at the Defense Department, the Korean War, which broke out in June 1950, in effect put the military Keynesianism of NSC-68 to work.

The first year of the Korean War produced a surplus in the federal budget as previously unemployed wage earners went back to work and paid taxes. It also produced the Federal Reserve-Treasury Accord of March 1951, which returned the monetary policy of the Federal Reserve system to its pre-World War II activist role, despite Keyserling’s opposition. In contrast to the situation after World War II, there was little increase in the national debt or evidence of pent-up demand after the Korean War. In fact, prices fell after the removal of wartime price controls during the administration of Republican President Dwight Eisenhower.

NSC-68 was off and running.

To be continued

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