Minnesota’s Economic News – W/E 7/16/21
State and local taxes and spending Star Tribune: St. Cloud will use federal relief to offset lost revenue KNSI: Minnesota to Finish Fiscal Year 2021 Stronger Than Expected Pioneer Press:…
On Monday, Space Force turned one month old. For all the fuss, the creation of Space Force is less loopy than it sounds. All that happened last month is that the United States Space Force (USSF) became independent from the Air Force, something which has been discussed since 2001 and which has probably become inevitable given that the Air Force’s space mission has become distinctly secondary to its air dominance mission.
Nevertheless, the whole thing has generated much mirth, much as Ronald Reagan’s entirely sensible ‘Star Wars’ program did in the 1980s. When Space Force uniforms were unveiled, some questioned why a black print wasn’t chosen, given the environment that space troops would theoretically be fighting in. Of course, if Space Force were deployed to a forest planet or moon such as Endor, camouflage uniforms would entirely appropriate, you only have to look at how the Imperial Scout Troopers stuck out there like a red British coat.
I jest, but there is a serious economic side to Space Force.
If we discovered that space aliens were planning to attack, and we needed a massive build-up to counter the space alien threat, and inflation and budget deficits took secondary place to that, this slump would be over in 18 months
This is a modern restatement of the old Keynesian idea that increased spending drives faster economic growth. And, importantly, it doesn’t really matter what you spend the money on. In his 1936 book The General Theory of Employment, Interest and Money, the economist John Maynard Keynes wrote
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
As a professed Keynesian, Space Force is Paul Krugman’s dream come true. Perhaps, on Monday, he cracked open a bottle of Romulan Ale to celebrate.
John Phelan is an economist at the Center of the American Experiment.