Since Russia invaded Ukraine in early 2022, those in favor of ever-increasing US involvement in the war have tossed around numerous justifications for their dangerous and escalatory policy that is detached from American national interest. We are of course served the normal pablum about defending freedom, that the Ukrainians are fighting “them over there, so we don’t have to fight them over here,” and that if not stopped the Russian army will soon be marching down the Champs-Élysées (although the Russian army, we are told, is also simultaneously full of starving demoralized conscripts forced to fight with shovels.)

Yet among the many flimsy excuses for continuing to risk nuclear escalation with Russia, few surpass the foolish argument that many billions of dollars of military aid to Ukraine are actually being spent here in the US, so it doesn’t even count as foreign aid and is therefore great for the economy.

The loudest institution promoting this line of thinking has been the American Enterprise Institute, and especially Iraq War cheerleader and Bush administration speechwriter,Marc Thiessen. The Biden administration has echoed this talking point as well.

Their logic runs as follows. We have to spend money to build and/or replace the weapons we are sending to Ukraine. That money is spent at American factories employing American workers. This helps to generate prosperity and economic growth and happy American families who can pay their bills and go on vacation.

These arguments are little more than military Keynesianism, and their reasoning falls to pieces if one thinks about it for more than 30 seconds.

As the nineteenth century French political economist Frédéric Bastiat succinctly put it, “Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee.”

Thiessen and others are being very bad economists (assuming they are not knowingly spreading propaganda and hoping it sticks), and repeating an age-old mistake that Bastiat identified as the broken window fallacy. In short, Bastiat reflects on a hypothetical broken window at a bakery and how at first one might say that this is good, since it will stimulate demand and lead to money being spent in the glass industry. But that is merely the visible effect. The unseen effect is that now the baker will no longer be able to invest that money into improving his business by acquiring more capital goods, or even spending it on personal consumption at a restaurant, hairdresser, or shoe shop.

A broken window does not result in an increase in wealth for society and leaves the victim poorer than before.

If this were not true, then we should pray for powerful and destructive hurricanes to wreak havoc every year since they generate so much economic activity in their wake. Similarly, its proponents would have to admit that the war is great for the Russian economy, as well. Look at all the jobs and productivity generated by the conflict!

Such thinking is nonsensical.

Yet, somehow this same line of thinking can pass muster for usually economically literate people who want to justify America’s fruitless and dangerous involvement in the Ukraine War.

We are told not to fret, since many tens of billions of dollars are being spent in America. But that is merely the seen effect. What are the unseen effects? There are many.

The US is running trillion dollar deficits and at risk of a debt trap with over a trillion dollars in interest payments. All this money being spent is either being borrowed from the capital markets, meaning the government is crowding out other borrowers, or is being financed by the Federal Reserve creating money to purchase bonds, therefore fueling further inflation.

But the effects do not stop there. Even if the US was not drowning in debt, building Javelin missiles (2023 estimated cost of $197,884 a pop), 155mm artillery rounds ($3,000 a shell), and Patriot air defense missiles ($4 million per missile) requires the use of labor, time, capital goods, and resources.

These resources obviously cannot be used to supply the other wants and needs that Americans have. Someone working at the bomb factory can’t be working at the car factory. Steel used to build an artillery shell can’t be used to make girders for buildings.

As Dwight Eisenhower noted back in 1963

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.
This world in arms is not spending money alone.

It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.

The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities…

We pay for a single fighter plane with a half million bushels of wheat.

We pay for a single destroyer with new homes that could have housed more than 8,000 people…

Under the cloud of threatening war, it is humanity hanging from a cross of iron.

The cost of supplying weapons to Ukraine is not limited to money alone, but also the many and myriad things that we either will not have, or will have at more expense, than we did before.

The core logic put forward by military Keynsians is essentially no different from arguing that it is great for the economy to invest billions of dollars in building luxury cars and then dropping them down the Marianas Trench. (You don’t oppose money going to hard-working auto workers do you!)

At least with that plan there is little risk of stumbling into a great power war (unless Cthulhu gets annoyed at all the Cadillacs disturbing his slumber), unlike the current proxy war in Ukraine where the Biden administration has escalated the conflict even further in the wake of his defeat in November.

People are free to argue that America should be waging a proxy war in Ukraine and risking nuclear escalation. But don’t tell us that doing so will somehow make Americans more wealthy.

Original article: The Daily Economy