Sunday, June 15, 2014

Tyler Cowen Provides Another Explanation For Slow Economic Growth

Tyler Cowen is professor at George Mason University.  He is the director of an institute at George Mason that is heavily funded by the Koch brothers.  The institute specializes in providing libertarian arguments against government regulation and programs designed to limit carbon emissions.  His blog is also one the most popular blogs on economics.  In this article he offers a unique explanation for slow economic growth in the West.  He argues that the expectation of peace is bad for economic growth.

His first move is to separate his argument about the benefits from warfare from the usual Keynesian argument that spending on warfare serves as a stimulus for economic growth.  Cowen was not a supporter of the Obama Administration's stimulus program.  His argument is that the preparation for war enables governments to win popular support for spending programs that lead to innovations that become useful in the civilian economy.  He provides support for this argument by citing historical references to the even distant past that make a similar argument.  He then lists some of the developments that were made possible by our preparation for recent wars.  His assumption is that government would not have undertaken these developments without the threat of war.

He is very careful not to advocate for the destruction and death that results from war.  His point is that governments need the threat of war to foster innovation.  Perhaps we should settle for slower economic growth and innovative activity in order to enjoy peacefulness.  

Dean Baker summarized his argument and he agreed that governments have often used the threat of war to fund innovations.  He pointed out, however, that many important developments were undertaken without the threat of war.  Moreover, Cowen's favorite political party has often opposed government programs that would have been beneficial for the economy, and for the national interest.  In the past, it was easier to get both political parties to agree upon programs that were in the national interest.  That is less true today. 

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