Military spending is good for the economy

  Military spending is good for the economy since it mobilizes unused labor and resources. Sometimes we are led to believe that a good economy allows for more military spending. But realistically, its harder to mobilize resources for war when the economy is good as opposed to when it is bad.

In macroeconomics, the guns versus butter model is a simple example of the production possibility frontier. It models the relationship between a nation's investment in defense and civilian goods. In this model, a nation has to choose between two options when spending its finite resources. It can buy either guns (invest in defense/military) or butter (invest in production of goods), or a combination of both. This can be seen as an analogy for choices between defense and civilian spending in more complex economies.

  Civilian spending and military spending are in conflict with one another. If everyone is buying houses and buying cars, it makes it very difficult for the military to buy new warplanes and to buy new missiles. Its not because the military lacks the money to buy new warplanes and missiles if consumer spending is high. If people are buying more houses and cars, the government is most likely flushed with funds from all the transaction fees, sales taxes, and property taxes to pay for additional military spending. The problem isnt that it lacks the money to pay for military spending. It has plenty of money to pay for military spending. The problem is that regardless of how much money the government has collected in tax revenue, resources and labor are still finite unlike the state's treasury. Additional spending would only drive up the price of labor and raw materials making both labor and resources more scarce.

  However, if civilian spending is actually down, then military spending would not help drive up inflation since labor and resources are not being utilized anyways. Even if the government lacked the financial resources to pay for military spending, ironically, this would have been the best time to spend since real physical resources are left idle.

  As we had witnessed during the 20th century. The only thing that ended up the great depression was when Hitler initiated the second world war.

The massive rearmament policies leading up to World War II helped stimulate the economies of Europe in 1937–39. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 finally ended unemployment.^[8]