06 April 2009

Unemployment and war

In the face of high unemployment cunning leaders turn to military conscription to enact a Keynesian-like stimulus and spending program. They pull masses of unemployed young men and women into the armed services to strengthen the national morale while giving the conscripts regular food and shelter and, at the same time, getting them out of the civilian labor pool. Military expenditures are the most stimulative forms of fiscal spending because military spending is completely unproductive and so it doesn't crowd out other kinds of spending, which is a good thing during a severe economic downturn. This is how persistently high unemployment leads to war.

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