Tomorrow’s Paul Krugman column is a little unusual, Why We Fight Wars. It is based on some economics: namely that for advanced economies, wars are always a loser. It reminds me of my days in graduate school. We were looking carbon dioxide emissions throughout the 20th century. And we were all surprised that they went way down during World War II. But soon enough, we realized: even though there was a lot of war going on, the amount of commerce actually went way down. Bottom line: wars are bad for the economy.
Krugman’s interest is mainly in why we continue to fight wars when it isn’t in our national interests. Think about Hitler for a moment. He had a very strong economy and he could have kept the Rhineland and consolidated his power. It’s not like Poland was that great a prize. But as Krugman noted, wars are usually good for the leaders of countries:
But I think the issue is more general, and it isn’t limited to war. It is often in the best economic interests of some part of the population to harm the economy. For example, war is very good for weapons manufacturers. In his film Fahrenheit 9/11, Michael Moore presented a nice sequence about all the money to made in the aftermath of 9/11 as well as before, during, and after the Iraq War. So even though the Iraq War cost our country at least a trillion dollars, it worked out really well for some people.
Last week, Krugman’s column was on a related issue, Inequality Is a Drag. It was about the Standard & Poor’s report, How Increasing Income Inequality Is Dampening US Economic Growth, and Possible Ways To Change the Tide. But neither the article nor the report made the obvious point about the reason we have ever rising inequality: it is great for a small group of very powerful people: the oligarchs and those who do their bidding.
The issue that we will eventually need to deal with is the power of these oligarchs. They don’t have the interests of the country in mind. And it simply isn’t true that by distorting the political system to benefit themselves they make everyone richer. It’s even possible that their own long term interests are harmed by this behavior. This kind of short term thinking without regard to its effects has led to historically low taxes on the rich, extremely high inequality, and a crumbling middle class. But at the same time, the rich seem to think that they are excessively put upon. As I wrote the other day in StarPower: the Game That Shows We’re All Doomed, over the last three decades “we have gotten a class of [rich people] who have convinced themselves, not that the game is fair, but that it is unfair—to them.”