Of course, nowadays any war that involves Russia - the only potential enemy ever mentioned in these European discussions - is likely to end with a thermonuclear exchange. And then there will be no value or wealth anywhere - just ash.
As Keynes' friend Bertrand Russell wittily remarked, "War does not determine who is right - only who is left".
Amazing that Brexit was never mentioned when discussing Germany and Britain. Germany was the only economy with which Britain had a trade surplus of the 27 members of the E.U. Since 2020 we have lost 4% of our GDP because of Brexit, roughly £100 billion in trade and about £20 billion in tax revenues. Yet we complain about the lack of growth in our economy as if this was the fault of other people, as Liz Truss enumerated ad nauseam. I studied Keynes and he suggests people digging holes and other people filling them in but he was faced with six million unemployed during the 1930’s. Nowadays we need 150,000 houses built a year just to keep up with housing demand and, despite the efforts of Angela Raynham, the deputy PM, there is so little evidence of the capacity of the building industry to respond that people forced to live in temporary accommodation must be pulling their hair out. Talking about military equipment, we have been promising a lot of drones to Ukraine. How is that going? If we wanted to initiate a war economy there is plenty of opportunity. Unfortunately the experience of Iraq and Afghanistan is a real damper on that. My own advise which is ignored is to reintroduce the FIT payment for Solar PV and a tax advantage for local wind turbine enterprises. We have 70% of the wind resources of Europe and totally fail to use them.
We don't have anything like as heavy unemployment as in the interwar years, but there is a lot of underemployment. A quarter opf Britains' working age population is working part time or not working at all. The reasons are varied, but they add up to spare capacity.
What seems underweight in the EU plans is the thinking, the analog to Schilling’s Cold War “hostages” deterrence (hint here). Thinking extends the lives of soldiers and weapons by cutting their usage. That’s for sure.
So, there is no doubt.There will be war in Europe. Sooner or later.It is almost ridiculous to think that a common European( EU+UK) economic policy of rearmament, if enforced, it will not lead to war. If not to war, then to what? To prosperity using guns as capital for investments? The tragic irony : this common rearmament is seen and aimed as ,, the only solution " for the economic failures of last 20 years. War because austerity fails.War as ,, there is no other economic solution". War not for some imperialistics purposes, nor caused by competition for European supremacy, as before.Not even against some invented civilisational enemy( Russia or anyone else). Almost surreal, war as a common policy, as a community of wills for solving economic problems. This is unprecented in Europe's liberal democracy history of over 200 years.This is THE historic failure of Europe.Europe's suicide, marching to her own grave.
It is indeed sad to see how politicians time and again have to use old tricks to solve economic problems. Keynes would have been amazed (and depressed too) to see how well his theory describes reality nearly a century after he defined it.
Japan was in an economic quagmire starting from WW1 due to its loss of the European markets. Japan had a good market in China, but harsh treatment of Chinese labor and using brute force to "open" China's market caused repeated protests and boycotts. The Japanese elites decided on policies similar to the "military Keynesianism". Japan could not find enough foreign buyers for its debt, so the domestic population was forced to buy the government debt (no different from taxation, given that Japan was defeated and surrendered unconditionally). I think the EU will face the problem of insufficient buyers of EURO debt sooner or later. Either print without accounting, or a heavier tax load, or forced purchase of government debt as "savings" (similar to the US Social Security Trust Fund invests all its money into the US government debt). Once a country moves onto this path, there is no good ending. Either the nation will conquer another country and loot that country, or the country will be defeated and get looted. I guess this paraphrases the author's point that such an "economic policy" will have consequences far beyond the "economy".
The spectre of war has been summoned very conveniently, in time to replace the previous smokescreen for massive borrowing, the Green New Deal, now unpopular.
I am a skeptic on massive borrowing but I could be persuaded if it was for investment that benefited the social, technological and industrial base.
Of course, nowadays any war that involves Russia - the only potential enemy ever mentioned in these European discussions - is likely to end with a thermonuclear exchange. And then there will be no value or wealth anywhere - just ash.
As Keynes' friend Bertrand Russell wittily remarked, "War does not determine who is right - only who is left".
Good quip from Russell.
Amazing that Brexit was never mentioned when discussing Germany and Britain. Germany was the only economy with which Britain had a trade surplus of the 27 members of the E.U. Since 2020 we have lost 4% of our GDP because of Brexit, roughly £100 billion in trade and about £20 billion in tax revenues. Yet we complain about the lack of growth in our economy as if this was the fault of other people, as Liz Truss enumerated ad nauseam. I studied Keynes and he suggests people digging holes and other people filling them in but he was faced with six million unemployed during the 1930’s. Nowadays we need 150,000 houses built a year just to keep up with housing demand and, despite the efforts of Angela Raynham, the deputy PM, there is so little evidence of the capacity of the building industry to respond that people forced to live in temporary accommodation must be pulling their hair out. Talking about military equipment, we have been promising a lot of drones to Ukraine. How is that going? If we wanted to initiate a war economy there is plenty of opportunity. Unfortunately the experience of Iraq and Afghanistan is a real damper on that. My own advise which is ignored is to reintroduce the FIT payment for Solar PV and a tax advantage for local wind turbine enterprises. We have 70% of the wind resources of Europe and totally fail to use them.
We don't have anything like as heavy unemployment as in the interwar years, but there is a lot of underemployment. A quarter opf Britains' working age population is working part time or not working at all. The reasons are varied, but they add up to spare capacity.
What seems underweight in the EU plans is the thinking, the analog to Schilling’s Cold War “hostages” deterrence (hint here). Thinking extends the lives of soldiers and weapons by cutting their usage. That’s for sure.
So, there is no doubt.There will be war in Europe. Sooner or later.It is almost ridiculous to think that a common European( EU+UK) economic policy of rearmament, if enforced, it will not lead to war. If not to war, then to what? To prosperity using guns as capital for investments? The tragic irony : this common rearmament is seen and aimed as ,, the only solution " for the economic failures of last 20 years. War because austerity fails.War as ,, there is no other economic solution". War not for some imperialistics purposes, nor caused by competition for European supremacy, as before.Not even against some invented civilisational enemy( Russia or anyone else). Almost surreal, war as a common policy, as a community of wills for solving economic problems. This is unprecented in Europe's liberal democracy history of over 200 years.This is THE historic failure of Europe.Europe's suicide, marching to her own grave.
One can only hope that rearmament will not be carried to the point of collective suicide.
It is indeed sad to see how politicians time and again have to use old tricks to solve economic problems. Keynes would have been amazed (and depressed too) to see how well his theory describes reality nearly a century after he defined it.
Agreed.
Japan was in an economic quagmire starting from WW1 due to its loss of the European markets. Japan had a good market in China, but harsh treatment of Chinese labor and using brute force to "open" China's market caused repeated protests and boycotts. The Japanese elites decided on policies similar to the "military Keynesianism". Japan could not find enough foreign buyers for its debt, so the domestic population was forced to buy the government debt (no different from taxation, given that Japan was defeated and surrendered unconditionally). I think the EU will face the problem of insufficient buyers of EURO debt sooner or later. Either print without accounting, or a heavier tax load, or forced purchase of government debt as "savings" (similar to the US Social Security Trust Fund invests all its money into the US government debt). Once a country moves onto this path, there is no good ending. Either the nation will conquer another country and loot that country, or the country will be defeated and get looted. I guess this paraphrases the author's point that such an "economic policy" will have consequences far beyond the "economy".
Interesting reflection on Japan. I expect European governments will finance rearmament by issuing war bonds, as they do in actual wars.
In the USA, the Pentagon sells its weapons (even nukes!) as "investments."
The dividends are death and maybe apocalyptic destruction. Some "investment"!
Agreed.
The spectre of war has been summoned very conveniently, in time to replace the previous smokescreen for massive borrowing, the Green New Deal, now unpopular.
I am a skeptic on massive borrowing but I could be persuaded if it was for investment that benefited the social, technological and industrial base.
Bloomberg is running a simulation of how a Russian invasion of the Baltics would unfold. Link: https://www.bloomberg.com/graphics/2025-russia-war-with-nato-cost-world-trillions/?cmpid=BBD062425_politics&embedded-checkout=true
Highly informative. Thank you.