Military spending and industrial capacity

  A fairly uneventful post, but as redundant as it sounds, it is something worth re-mentioning. As stated in previous articles GDP does not measure anything but inflation. It does not measure the economy in any way. Thus military spending has no relationship with GDP. It is all about industrial capacity. It is also important to note that its not just any kind of industrial capacity. But very conservative forms of capacity like steel, raw resources, energy, and labor.

  This is because most weapons are concocted out of iron and steel. These hulking masses of war machines weigh between 20 to 100,000 tons of iron and steel. So it is very important a nation possesses this capacity if it wishes to enter an arms race.

  It is also important that there is enough capacity left over for consumer demands like automobiles, trains, aircrafts, appliances, and the such. WW2 ended the great depression, but it did not make life easier. Because productivity was not devoted to consumer satisfaction, but devoted to military output.  So consumer spending crowds out military spending and military spending crowds out consumer spending, assuming we are already at 100 percent allocation to both sectors.

  If we still have unemployment and idle factories, then the added military spending has almost no negative consequences to the general economy. This is why WW2 ended the great depression since military spending crowded out unemployment. Lives were terrible during the great depression, consumer productivity was already down. Thus WW2 did not crowd out consumer spending, when there was so little during the Great Depression to begin with. At the very least, WW2 created jobs and bought employment rates up to near 100 percent. And given the fact that women were bought to the workforce. Something that had not been seen since WW1. Employment rates were in fact above 100 percent if we used conservative estimates that only included men.