Paul Krugman recently argued, if the world were duped of an imminent alien threat, then many of the problems of our economy could be resolved. In a way I guess he’s right. If significant focused production were aimed at avoiding exogenous costs, those efforts could lead to technological innovations with significant spill-overs. Spending, employment, GDP… the macro guys would be content to call it a day.
Given that the benefits of Krugman’s plan would be tied to actually avoiding an alien invasion, which wouldn’t have actually happened, we shouldn’t consider it when balancing costs to benefits. Therefore only left are the benefits from the coincidence that intergalactic weaponry can be productively used in consumer industries.
Ahem, Austrians think the capital structure is heterogeneous in infinitely varied and complicated ways as a consequence of subjective tastes and preferences. Making the likelihood of conveniently multi-specific capital innovations from military to consumer value ever more difficult in an ever non-physiological economy.
And this all presumes that those innovations are continually efficient and don’t impose unsustainable costs.
It’s not that I don’t think nuclear technologies have done more good than harm, I’m not intimately familiar with the numbers, but I would be morally and philosophically comfortable to say that they have. What I am far less comfortable with is thinking about how likely nuclear innovation would have still taken place without military subsidy and under what time line? Because at that point, you realize that all those lives were lost as a trade off just against that difference in time.
I also wonder what our society’s relationship to nuclear energy would be like without the military legacy of the twentieth century polluting its bloodline.
Or maybe, Krugman just wants to fight some really inexpensive aliens, could be.
But it certainly doesn’t seem likely that we would make level headed decisions concerning vital and scarce resources in the immediate presence of global annihilation. Seriously, watch some sci-fi.
Krugman’s strategy reveals more about his own creativity or lack there of, than it does anything profound about macroeconomics. The power in such proposals is in the exogenous shock, not in the mechanism for multiplying economic production. Technically the multiplier should operate regardless to the source of the shock. The only power in warfare for the economy has been its convenient ability to lower the transaction costs associated with collective action.
I propose an alternative to Krugman’s war. I call it the Michael Jackson effect. It is composed of a similar exogenous shock, way lower social costs and a super higher likelihood of awesomeness. Instead of waking up tomorrow and working hard to fend off aliens, we should wake up and fervently commit ourselves to Michael Jackson fandom. Music, film, performances, fashion, food, etc… the entire world could be remade in the image, likeness and influence of the King of Pop.
It is my contention that the Michael effect would be preferable to Krugman’s war because the likelihood of spillover gains surpassing costs seems far greater. A decade of MJ austerity would be good for the world. We could still do massive amounts of spending, subsidizing and regulation if people are so concerned about spending cuts amidst recession. But the only guns made will be used as props in smooth criminal renditions and rather than couching their work in the functions of war to attract subsidy, scientists would have to, however loosely, connect the relevance of their work to the overarching mission of promoting Michael-ness.
Friedman’s insights about stable expectations through constitutional credibility is another point for Michael. In other words, I’d rather try to guess who my elected official thinks is paying Michael the best tribute (so long as he was honestly operating according to that standard), than know what industry will yield revenue in the future given today’s level of regime uncertainty.
My boldest suggestion would be that a global Michael decade could lower rates of war perpetually and generally promote a society wherein people shared a common cultural legacy and experience. Jim Henson had a similar vision for Fraggle Rock – unrelated but also awesome!
This certainly sounds silly, but silly is always and everywhere better than living in the cultural aftermath of a mass hysterical bout with the extra-terrestrial apocalypse.
It’s not so much that Michael has the power to unite us as a people (even though I believe he does). Instead we should admonish, just as Krugman’s proposal would require an elaborate ruse, the Michael effect would require a systematic change in culture and subjective preference just to get off the ground.
Which is itself revealing: how significant the coordination problem for centrally planned solutions to economic recession is. It is as difficult as changing the fundamental beliefs, opinions and preferences of our entire society.
I don’t think we would be foolish enough to try to centrally plan for a world where everyone really did like Michael Jackson. Preference and culture are too personal a journey and they are the true opportunity costs to chasing Krugman’s war.