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History shows us that government deficit spending reduces unemploymentand boosts the economy.Krugman, Paul October 29, 2011, 2:20 PMhttp://krugman.blogs.nytimes.com/2011/10/29/more-thoughts-on-weaponized-keynesianism. New York

Times Op-Ed Columnist, Professor of Economics and International Affairs at Princeton, ReaganAdministration Council of Economic Advisors staff economist and 2008 Nobel Laureate in Economics.

Let me follow up a bit on the sudden discovery by Republicans that cuts in government spending cost jobsand drive up the unemployment rate as long as the spending is on destruction rather than construction.Oh, and thanks to commenters for reminding me of Barney Franks coinage, weaponized Keynesianism.

The first thing to say is that liberals shouldnt engage in mirror-image thinking, and imagine that spendingwe dislike somehow lacks the job-creating virtues of spending we like. Economics, as I say often, is not a

morality play. As far as creating aggregate demand is concerned, spending isspending public spending is as good as but also no better than privatespending, spending on bombs is as good as spending on public parks. As Ipointed out not long ago, a perceived threat of alien invasion, by getting usto spend on anti-invasion measures, would quickly restore full employment,

even though the spending would be on totally useless object. Its also worth noting

that one ofthe main sources of evidence that fiscal expansion really doesstimulate the economy comes from tracking the effects of changes in defensespending.Thats true of Depression-era studies like Almunia et al, and also of several of the studies

described in the Romer and Romer lecture on fiscal policy.Why the focus on defense? Tworeasons, actually. One is that in practice defense spending is what moves:the fact is that large-scale stimulus programs consisting of domesticspending basically dont happen, while wars and arms races do. The other isthat domestic spending tends to be endogenous, responding to events in theeconomy, so that cause and effect get blurred spending on unemploymentinsurance generally soars during recessions, but the causation runs fromrecession to spending and not the other way around. And the evidenceclearly shows that weaponized Keynesianism works which means that

Keynesianism in general works. So why do politicians and their hired economic propagandistssay differently? On reflection, I think its a bit more complicated than I suggested in my previous post on

this topic, because theres a strong element of cynicism as well as genuine intellectual confusion.Whatkind of cynicism am I talking about? First, theres the general fear on the part of conservatives that if youadmit that the government can do anything useful other than fighting wars, you open the door to do-gooding in general; that explains why conservatives have always seen Keynesianism as a dangerous leftistdoctrine even though that makes no sense in terms of the theorys actual content. On top of that theresthe Kalecki point that admitting that the government can create jobs undermines demands that policies be

framed to cater to all-important business confidence.That said, theres also the Keynes/coalmines point:theres a strong tendency to take any spending that looks like a business proposition building bridges ortunnels, supporting solar energy or mass transit and demanding that it appear to be a sound investmentin terms of its financial return. This makes most such spending look bad, since almost by definition adepressed economy is one in which businesses arent seeing good reasons to invest. Defense gets

exempted because nobody expects bombs to be a good business proposition.The moral hereshould be that spending to promote employment in a depressed economyshould not be viewed as something that has to generate a good financialreturn; in effect, most of the resources being used are in reality free.

Economic downturn doesnt cause war Empirically.Blackwell 09Robert Blackwill, Former Deputy National Security Advisor for Strategic Planning, 2009The Geopolitical Consequences of the World Economic RecessionA Caution, Occasional Papers @ RANDInstitute. www.rand.org/pubs/occasional_papers/OP275.html

Earlier slumps that have affected the United States may hold lessons regardingthe present one. Including this recession, from 1945 to 2009, the National Bureau of

http://www.rand.org/pubs/occasional_papers/OP275.htmlhttp://www.rand.org/pubs/occasional_papers/OP275.html

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Economic Research has identified 12 U.S. recessions; excluding the current recession,their average duration was ten months (peak to trough).8 Did any of these postWorld War II U.S.economic downturns result in deep structural alterations in the internationalorder, that is, a fundamental, long-term change in the behavior of individual nations? None isapparent. Indeed, on some occasions geopolitical events caused internationaleconomic dips, but not the other way around. For example, the Iranian Revolution in 1979sharply increased the global price of oil, which in turn produced an international energy crisis and, abettedby tight monetary policy by the Federal Reserve, a U.S. recession.