Marginal increments of military spending track gdp better than well-being or actual economic performance

Perhaps you have seen reports such as this:

The report showed gross domestic product grew at an annual rate of 2.5 percent during the first three months of the year — significantly slower than most economists had expected. The culprit? A surprising 11.5 percent annualized drop-off in military spending.

In other words, much of the “missing” gdp — whatever its long-term geopolitical value for foreigners — was not creating actual, consumer-relevant value for the United States.  Putting back that military spending would pump the gdp number back up, but that is distinct from the economy improving.  Fetishizing gdp makes the least sense when it comes to military spending, and it is remarkable how few media accounts recognize this point in even a partial fashion.


Comments for this post are closed