From: ZEITLIN@SLACVM.SLAC.STANFORD.EDU (Cary Zeitlin)
Newsgroups: alt.politics.elections
Subject: Re: Republicans bad for Economy?
Date: 18 Aug 92 18:38:14 GMT
 <1992Aug17.212830.9788@henson.cc.wwu.edu> <l90a0mINN5ju@roundup.crhc.uiuc.edu>
 <1992Aug17.230530.7762@news.columbia.edu> <168478D40.MEDELMA@cms.cc.wayne.edu>
Organization: Stanford Linear Accelerator Center

From: MEDELMA@cms.cc.wayne.edu (Michael Edelman)
>>     [...]
>>Yeah, instead we had the largest peacetime military buildup in history.
>>Does anyone have comparison between military expenditures during the
>>Vietnam war and the Reagan buildup?

>If you graphthe ratio of military spending to GNP, you see that military
>spending as a % of GNP has been steadily falling since WWII. There was
>a rather large blip during Johnson's reign (Vietnam) and a much, much
>smaller blip during the early Reagan era, which later fell back to the
>general trend line.

I think a better measure would be the fraction of the federal budget
that military spending constitutes. Remember, it is not just DoD spending
that needs to be considered; a substantial fraction of the DoE budget
goes for defense, not to mention funding for the various branches of
the national security bureaucracy. Does anybody have these figures handy?

>At the same time, entitlements have consumed an increasingly large part of
>budget since WWII, and have again exploded under Carter. I mean Bush.
>

I would have guessed that entitlements were steadily increasing, rather
than undergoing periodic explosions. Still, if there are such explosions,
perhaps they can be best understood by looking at the underlying state
of the economy. Some part of entitlements must be gradually increasing,
just because of demographics (the aging U.S. population); probably
other parts of this spending are stronlgy anti-correlated with the
strength of the economy. Again, I'd like to hear some numbers here,
if anyone can present them in a reasonably objective way.

>>You know, what Reagan did was essentially a Keynsian policy: lower
>>taxes, spend lots of money (in defense, not social/infrastructure
>>expenditures).
>>
>Not true. As we see, the military fraction was overall quite low. And
>during his second term Reagan did manage to get spending more under
>control, particularly in 87-88.

Mike, I disagree. The classic Keynsian idea was to pump up the economy
by means of federal deficit spending. Now, point to whatever you want
as the cause of the deficit, but the fact remains that there was deficit
spending on a huge scale. The Keynsian idea was that the government's
role in the economy was to moderate the swings of the business cycle --
pile up a reserve during good times (this never happened!) and spend
more during bad times to prime the economic pump. What Reagan et al.
(and I include the Congress in this too) did was deficit spending
during a boom time. Not surprisingly, this exaggerated the upswing
in the business cycle that was coming anyway, hence the good times rolled
on and on. But it couldn't last forever, and now we have to pay the piper.
It should not be surprising if the downswing now is as protracted as the
upswing was in the 80's. (Yes, I know by some measures the economy is
growing. But it is weak growth at best, and in the longer run we may
well look back on this time as part of an extended recession. I'd like
nothing better than for that prediction to be wrong.)

>It's interesting how many flat-out lies about the economy are repeated
>uncritically. by the media. But then, they're not hired because they're
>economic geniuses.
>
>       --mike

The media are certainly not economic genuises. They repeat the conventional
wisdom ad nauseum. But I'd like to hear some specific examples of the
'flat-out lies' you complain about.

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Cary Zeitlin                                ZEITLIN@SLACVM.SLAC.Stanford.Edu

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