[P2P-F] Fwd: History US Military Economy

Sat Apr 9 22:48:00 CEST 2016

interesting, shows the inverse relationship between military spending and
economic growth over a long period of time

---------- Forwarded message ----------
From: Bob Reuschlein <bobreuschlein at gmail.com>
Date: Sat, Apr 9, 2016 at 7:28 PM
Subject: History US Military Economy
To:

Link to send or tweet to others:

*https://bobreuschlein.wordpress.com/2016/04/09/history-us-military-economy/
<https://bobreuschlein.wordpress.com/2016/04/09/history-us-military-economy/>*

*100 Year History US Military Economy *

by Professor Robert Reuschlein

*ROOSEVELT**’s New Deal, 1933-1945*

New Deal deficits create strong economic growth: correlation .73 from 1934
through 1939. New Deal Provides Five Times War Growth: Total growth from
1933 to 1941 was 86%. Total growth from 1942 to 1947 was 17%. Unemployment
change followed deficit change R=.74.  Note that unemployment decreased at
a steady rate from 1934-1941 except for one year.  That one year, 1938, the
increase set back the recovery by about three years.  Without that setback
the economy would have recovered in1940. That setback was actually a two
year process, when Roosevelt attempted to balance the budget. This created
the mistaken impression that World War II caused the ending of the Great
Depression.  This delayed recovery caused the end of the Great Depression
to be postponed until 1943 instead.  The biggest economic drop years in the
last 100 years cover the multiyear 1930-33 trade war of the Great
Depression and the 2 post world war three year stagnation periods 1919-21
and 1945-47.  Reality follows with a simple model based on Military
Lowering & Deficit Raising Economic Growth Rate: Best Fit occurs from
1941-1948, with Correlation of  -0.97.  Key statistic is the Net Military
Burden (Military minus Deficit) Increases from 1941 to 1946 steadily
lowering the growth rate from positive 15.9% to negative 11.9%.  1946-1948
both trends reverse as the lowest military (3.7% of the economy) of the
entire Cold War in 1948 creates enough growth to re-elect President
Truman.

*WILSON and the Twenties (1913-1926)*

Note the 1914 US economic slump as the World War begins.  Not unlike the
Swedish slump in WWII. Both are cases of a neutral country losing trade
with some of the warring parties.  Note how the war boom is more than
cancelled by the three year postwar slump.  Note how the postwar slump
translates into Wilson's League of Nations confirmation problem. Note how
the roaring twenties only roared for five years (1922-26), after the
Spindeltop Texas oil surge and automobile sales covered the easy top 20% of
Americans, then stalled. Although the stock market crashed October 28, 1929,
the economic growth drops of the Great Depression did not start until June
1930 when the Smoot Hawley tariff bill was signed into law.

*HOOVER** Election and the Great Depression (1927-1933)*

Hoover was elected in the 1927-1928 two year no growth economy.  The
Smoot-Hawley special session of Congress starting in September 1929 lead to
the stock market crash four days after the bill was finalized by the
committee. Economy continued strong until the June 11, 1930 signing of
bill.  1000 economists signed a petition to Hoover to not sign the bill
predicting it would lead to a trade war with Europe.  Trade was 7% of the
economy in 1929.  After the signing of the bill, trade dropped to 2% of a
then 30% lower economy in 1933.  Hoover attempts to balance the budget
doubled the rate of collapse in 1932.  Economy bottomed in1933 due to lost
trade from bill at an unemployment rate of 25%.

*ROOSEVELT** NEW DEAL*

Notice that the economy grows about 10% per year 1934-1943 except for
1937-38.  The 1938 recession was due to trying to balance the budget
running for reelection in 1936.  The new social security tax and jobs
program cuts shrunk economic growth 5% and increased unemployment from 14%
in 1937 to 19% in 1938.  Without this blunder, full employment would have
been by 1940 not 43.  Unemployment was dropping about 3% per year with New
Deal jobs program spending.  We would have been spared the myth the war
ended the depression.  Note the high net military burden devastates the
growth rate in the 1944-47 period.

*TRUMAN*

With the tariff bill crashing the world economy in depression, the GATT
restarts world trade January 1, 1948 and combined with lowest military of
the Cold War to produce the first growth after the war in 1948, just in
time to re-elect Truman after three years of negative growth.

*EISENHOWER*

Ike doubles Truman's 5% military to 10% military budget percent of the
economy after Korea leading to the worst decade of the Cold War in lost
share of world GNP by the US.

*KENNEDY*

Kennedy increases the deficit with an investment tax credit which steals
all the credit from the lower military also creating the sixties boom.

*JOHNSON*

Johnson's war stalls the economy with flat productivity in 1967 and slowing
growth in 1969-1970.

*NIXON*

The burst of growth in 1972 comes as Nixon signs a 20% social security
increase into law. But Watergate, end of war, and oil crisis trigger two
year slump in 1974-75.  The recovery comes to late in 1976 to save Ford.
This preserves the record of low military states losing all Cold War
elections as the man from high military Georgia wins.

*CARTER*

Carter's does the responsible raising taxes in 1978.  Economy slows in
1979-80 further due to oil crisis and military buildup.

*REAGAN*

The biggest peacetime increase in military spending of the Cold War hires
jobs away from productive industries, creating the 1982 recession and 10.8%
unemployment. The three year phased in tax cuts were twice as large as the
military increase, giving a net stimulus to the economy by re-election year
1984 as the high military half of the country grows at triple the rate of
the low military half of the country.  This military states real estate
bubble bursts in the Savings and Loan crisis at the end of the decade.

*BUSH 41*

The 1990 tax increase and the three year post Cold War slump combine to
defeat him in 1992. The Gulf war is not enough to stop the tide of the
massive end of Cold War military cuts.  These released military resources
later create a great manufacturing boom in the nineties under the next
president.

*CLINTON*

The 1993 military cut combines with Bush 41 Cold War peace dividend and the
fastest changing part of the long cycle boom period to give prosperity and
a balanced budget.  Despite 1993 trade treaties manufacturing jobs and
incomes rise as 23 million jobs are added to the economy.  Trade losses are
not enough to offset the manufacturing injection from the end of the Cold
War military economy.  Military spending economy drops from 6.5% in 1986 to
2.9% by 1999, adding 3.6% of GDP to capital investment in the real economy
each year.  The normal 54 year cycle takes the form of the internet
economy, which is so strong that while balanced budgets slow the stock
market, the economy continues for a while longer before the mild military
buildup at the end of the Clinton years creates a stall that is amplified
by the post 9-11 two year military buildup.

*BUSH 43*

2.8 million factory jobs are lost in the two year military buildup after
9-11-01, 1 million from trade and 1.7 million from the military buildup.
Iraq surge helps trigger the collapse of the house of cards mortgage fall
in 2007 set up by runaway real estate in military buildup states in the
early war years.  This is very similar to what happened in the eighties
Reagan military buildup followed by the Savings and Loan bust.  Once again
the bi-coastal military and the monetary drain the real economy of the
industrial Midwest where job losses were triple those of the military half
of the nation.  Military spending surged from $280 billion before 9-11 to
$405 billion including homeland security increase after 9-11.

*OBAMA*

The first Democrat since World War II to *NOT* cut military in his first
year in office, adding to the sluggish economic recovery.  Bad advice came
from hawk economist Larry Summers.  Obama should have listened to Biden or
Clinton’s Nobel Laureate Economist Joseph Stiglitz.  Tripling troop levels
in Afghanistan was not good for the economic recovery, although Larry
Summers’ military Keynesianism would predict that military jobs would be
good for the economy.

For more on the Depression War Roosevelt Period:

https://www.academia.edu/4044531/ROOSEVELT_Depression_War_Myths

For more on the 100 year military economy US history:

https://www.academia.edu/4044532/PRESIDENT_Military_Economy 1910-2009
<https://www.academia.edu/4044532/PRESIDENT_Military_Economy%201910-2009>

Professor Robert Reuschlein, Dr. Peace,

Nominated for the Nobel Peace Prize 2016

Real Economy Institute, Madison, Wisconsin

CONTACT: bobreuschlein at gmail.com 608-230-6640,

INFO: www.realeconomy.com

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