Could military spending be used for boosting employment figures?

[Tangles up aubergine]

First post, so I thought I'd make it a good question. In the 1930s the U.S. suffered through the Great Depression, and struggled hard to pull out of the recession and Depression that framed the build up to WW2 on the west of the Atlantic. Many would say that the second world war was the main reason for the U.S. recovering economically.

My question is this: could another nation use military spending to counteract the same economic downturn? The nation I am looking at specifically is Britain and her Empire. Could the treasury release funds to the armed forces with the intent for them to provide factory owners the funds to expand and modernize via grants? Or provide public work projects such as digging out the ground for airfields?

I am aware that this would require a more left-wing leadership, but I think it could be done. Getting rid of MacDonald and bringing in someone with ties to the industrial unions. Maybe Arthur Henderson? I don't know if he has the military ties I am aiming for though. Any suggestions for that would be welcome too.

 

[Jape]

I'd suggest looking up @EdT 's A Greater Britain

 

[AlanJWhite]

No ...

Governments only take the fruits of citizens labor
military spending is the worst way of investing it

 

[RousseauX]

First post, so I thought I'd make it a good question. In the 1930s the U.S. suffered through the Great Depression, and struggled hard to pull out of the recession and Depression that framed the build up to WW2 on the west of the Atlantic. Many would say that the second world war was the main reason for the U.S. recovering economically.

My question is this: could another nation use military spending to counteract the same economic downturn? The nation I am looking at specifically is Britain and her Empire. Could the treasury release funds to the armed forces with the intent for them to provide factory owners the funds to expand and modernize via grants? Or provide public work projects such as digging out the ground for airfields?

I am aware that this would require a more left-wing leadership, but I think it could be done. Getting rid of MacDonald and bringing in someone with ties to the industrial unions. Maybe Arthur Henderson? I don't know if he has the military ties I am aiming for though. Any suggestions for that would be welcome too.

Sure, if you draft every single person unemployed you have 100% employment

 

[wcv215]

The US was able to use military spending to pull itself out of the Depression because American industry was so huge that there wasn’t enough demand to use everything it pumped out. Factories were capable of producing too much. The War took that production and destroyed vast quantities of it, meaning there was actually enough uses for the industrial goods produced.

For Britain to have the same effects without it backfiring would need similiar slack.

In general however money spent on the military can be used more efficiently somewhere else.

 

[Tangles up aubergine]

The US was able to use military spending to pull itself out of the Depression because American industry was so huge that there wasn’t enough demand to use everything it pumped out. Factories were capable of producing too much. The War took that production and destroyed vast quantities of it, meaning there was actually enough uses for the industrial goods produced.

For Britain to have the same effects without it backfiring would need similiar slack.

In general however money spent on the military can be used more efficiently somewhere else.

Prior to 1929, British industry was very large too, nowhere near the same league, but not nearly as heavily demanded by the population either. The lack of small scale factories in this time is obvious, but shipyards and trainyards were getting fewer and fewer orders in this time, especially the largest shipyards in the north. This was compounded by the much decreased farming industry, no one was growing in Britain, with nearly half of all British food co ing from overseas and no economic viability in increasing the funding for the industry prior to the war. It wasn't until the outbreak of War that the Ministry of Agriculture imported the seeds necessary for the allotments to function in any degree. Britain's primary economic concerns in the Depression were maritime trade that was halved, and employment in heavy industry that fell by as much as one third. At this time no one was prepared to pony up the funding in the private sector, and the government planned to cut unemployment benefits by 20%.

With no means of increasing the agricultural sector's economic viability, and recent drop in world trade, as well as the imposing of tariffs on foreign goods, the British government (running with a different, as yet undecided leader heavily influenced by industrial trade unions) has to increase employment or risk losing the trust of their main voting block. Where should they fund? I only examined the military angle because I have read, and enjoyed, several naval and Air force timelines. If there is an avenue that offers a higher chance of success than the one I mentioned, I would be interested in having more information on it.

I'd suggest looking up @EdT 's A Greater Britain

I'll definitely be reading that one, always nice to have a recommendation for reading.

 

[riggerrob]

Yes.
Deciding where to spend military dollars is the key.
For example, spending money overseas - to import weapons - is a net drain on a country’s economy.
OTOH if you build the most expensive weapons in country, that money stays in the country. It can fund upgrades in factories and buy votes in politically critical tidings.

For example, during the Cold War, the RCAF started to build Avro Arrow fighter planes in politically conservative Ontario. But as Quebec politics shifted towards separatist, the RCAF shifted fighter plane purchases to Canadair in Montreal, Quebec. Canadair mostly built British or American patterns - under-license - but they bought enough votes that Quebec never separated.

 

[Tangles up aubergine]

Yes.
Deciding where to spend military dollars is the key.
For example, spending money overseas - to import weapons - is a net drain on a country’s economy.
OTOH if you build the most expensive weapons in country, that money stays in the country. It can fund upgrades in factories and buy votes in politically critical tidings.

For example, during the Cold War, the RCAF started to build Avro Arrow fighter planes in politically conservative Ontario. But as Quebec politics shifted towards separatist, the RCAF shifted fighter plane purchases to Canadair in Montreal, Quebec. Canadair mostly built British or American patterns - under-license - but they bought enough votes that Quebec never separated.

This is very helpful, and certainly true based on past wars.

I feel like I have not been clear in the original post. I am trying to ask if increasing military spending around 1930, aiming at retooling the industries that provide materiel through grants, would lessen th impact of recession on the working class and help to pull the U.K. out of recession sooner by providing jobs. Would an army grant to modernise a trainyard result in more jobs? Would the Navy ordering a destroyer squadron allow a steel mill to employ more people while still making a profit? Would this help in a sufficiently impactful way?

These would all help increase the employment levels, but is it sustainable, at least as far as the government would be aware. I know rearmament began in the 30s for Britain, this is simply a way of pushing it forward with an appropriate driving force. But until the German election in 33, there was no great chance of War, and even then, appeasement was practiced almost religiously by most of Western Europe. I feel like with the right leader and sufficiently powerful steelworkers unions, this could just about work, but I have too much knowledge, no one planned on ww2, even Hitler planned for the war to begin around 42. Because of this, I want to know if it would be possible to specify that money should be used by the armed forces on seemingly civilian tasks such as factories and steelmills rather than tanks and warships.

Thank you all for the help you are providing and I hope I am making myself clear enough in my question.

 

[kernals12]

No ...

Governments only take the fruits of citizens labor
military spending is the worst way of investing it

In the middle of the great depression, anything short of paying people to dig hole and then fill them in is a more productive use of money than letting it sit in bank vaults or under peoples' mattresses. The argument of crowding out becomes nil when you have lots of idle resources.

 

[kernals12]

Yes.
Deciding where to spend military dollars is the key.
For example, spending money overseas - to import weapons - is a net drain on a country’s economy.
OTOH if you build the most expensive weapons in country, that money stays in the country. It can fund upgrades in factories and buy votes in politically critical tidings.

For example, during the Cold War, the RCAF started to build Avro Arrow fighter planes in politically conservative Ontario. But as Quebec politics shifted towards separatist, the RCAF shifted fighter plane purchases to Canadair in Montreal, Quebec. Canadair mostly built British or American patterns - under-license - but they bought enough votes that Quebec never separated.

That's called mercantalism and it's long been debunked.

 

[kernals12]

The US was able to use military spending to pull itself out of the Depression because American industry was so huge that there wasn’t enough demand to use everything it pumped out. Factories were capable of producing too much. The War took that production and destroyed vast quantities of it, meaning there was actually enough uses for the industrial goods produced.

For Britain to have the same effects without it backfiring would need similiar slack.

In general however money spent on the military can be used more efficiently somewhere else.

Our demand for goods and services is infinite. There is no way that we can produce too much of everything.

 

[Riain]

Yes it certainly can be of assistance as a form of deficit spending to stimulate the economy, but is no magic wand.

Britain did have legitimate defence requirements throughout the 30s such as modernising battleships and carriers, building cruisers, destroyers and submarines within Treaty limits, tanks for the Army and Planes for the Airforce as well as significant infrastructure requirements such a barracks, docks and airfields. It could have been useful stimulant for the economy to meet these legitimate needs rather than OTLs course of not meeting them in order to keep the budget balanced, especially when not meeting them lead to major security problems in 1939.

 

[Riain]

That's called mercantalism and it's long been debunked.

Debunked as what?

 

[wcv215]

Our demand for goods and services is infinite. There is no way that we can produce too much of everything.

That is utterly untrue. People will only buy so many clothes, so much food, etc. and once that limit is hit they won’t buy anymore. Goods literally rotted in warehouses because so much had been made.

 

[kernals12]

That is utterly untrue. People will only buy so many clothes, so much food, etc. and once that limit is hit they won’t buy anymore. Goods literally rotted in warehouses because so much had been made.

We can have overproduction of certain types of goods but not every good. When supply exceeds demand, the price drops. To claim that demand is limited is absurd, you don't think 1930s Americans all wanted to live like John D Rockefeller? The idea of overproduction is another dubious claim of marxism. Our system of prices and profits are how we ration scarce goods and services.

 

[wcv215]

We can have overproduction of certain types of goods but not every good. When supply exceeds demand, the price drops. To claim that demand is limited is absurd, you don't think 1930s Americans all wanted to live like John D Rockefeller? The idea of overproduction is another dubious claim of marxism. Our system of prices and profits are how we ration scarce goods and services.

Irrelevant. What matters is the reality, not economic theory. The goods actually being produced are what matters, not the theoretical ones. And many goods being produced exceeded supply.

 

[Riain]

Irrelevant. What matters is the reality, not economic theory. The goods actually being produced are what matters, not the theoretical ones. And many goods being produced exceeded supply.

I assume you mean demand, because so many people were broke?

 

[kernals12]

Irrelevant. What matters is the reality, not economic theory. The goods actually being produced are what matters, not the theoretical ones. And many goods being produced exceeded supply.

You didn't specify specific goods. You just said that "American industry was so huge that there wasn’t enough demand to use everything it pumped out." Also, you said that we had enough spare capacity that we could divert it to war with no problems. Why then did we need rationing?

 

[kernals12]

I assume you mean demand, because so many people were broke?

What would happen in that case is that prices would fall. Which they did, by 30% between 1929 and 1933.

 

[Riain]

What would happen in that case is that prices would fall. Which they did, by 30% between 1929 and 1933.

And yet that wasn't even nearly enough to drag the US would of the Depression! Which suggests that some other things might be useful, such as building some battleships and tanks that the armed forces have a legitimate need for.