Sustainable Economic Returns

John Maynard Keynes, in his General Theory of Employment, Interest and Money, advocated deficit spending during economic downturns to maintain full employment. It is fair to say the theories of Keynes have been embraced by U.S. economic planners, and Presidents, for several decades – and each decade seems to have outdone the preceding one. But what sort of government deficit spending? During the 1930′s we built dams and power plants. During the 1950′s and 1960′s we built the interstate highway system and sent astronauts to the moon. During the 1980′s we invested in our military and won the cold war. These programs delivered a temporary stimulus to the economy, but they also yielded lasting benefits. The physical infrastructure, the strategic dividends, and the technological spinoffs outlasted the spending programs. There was a return on investment beyond the temporary stimulus – and this is the crucial difference between what we’ve done before, and what we’re doing now.

A good example of where deficit spending should go, but isn’t, is the F-22 Raptor, a fifth generation fighter that development began on over 20 years ago. Originally the F-22 was intended to replace the F-15, America’s current air-superiority fighter, and at least 750 of these advanced aircraft were supposed to be built. Today, with only 186 planes built, President Obama has canceled the F-22 program and their assembly lines are scheduled to be dismantled.

One would think the lessons learned during the Cold War – that deterrence depends on fielding an equal or greater military capability than your rival, or that national rivalries are real and enduring even into this age – would be remembered and acted upon. One would think the hard lessons of appeasement gone awry – such as when Chamberlain gave up the Sudetenland in 1938 and proclaimed “peace in our time” to the world – would also be remembered. One would think the benefits of investing in our high-tech military – the countless industries and amenities we have produced using technology that was once purely defense-related, from advanced composites to the internet – would be remembered. But apparently memories are short in Washington these days.

If you want to better understand what an amazing piece of technology the F-22 represents, an outstanding source of information is the article “The Sixth Generation Fighter,” written in October 2009 by John A. Tirpak, Executive Editor of Air Force Magazine. In this comprehensive summary of what the F-22 can do, Tirpak describes the generations of fighter development from the 1st generation, such as the German ME-262 which was the first operational jet fighter, through today’s advanced 4th generation fighters, which are actually characterized as Generation 4, 4+, and 4++. Today’s F-15SE fighter is considered a Generation 4++ fighter, and ranks with the Russian Su-35 as the most advanced fighter in the world. But the 5th generation F-22 offers more capability than 4th generation fighters in several important ways.

The F-22 has “all-aspect stealth,” meaning it has virtually no radar signature. All its weapons are internal, only deploying outside the skin of the aircraft when they are being launched or fired. It has extreme agility. It has “full sensor fusion,” providing the pilot with total awareness of the battlespace in all directions, and the ability to engage multiple threats simultaneously. It has “integrated avionics,” allowing a formation of F-22s to, for example, each shoot several missiles at targets and have the missiles interact to each identify a separate target. It can “supercruise,” which means it can fly for extended periods of time at supersonic speed without requiring afterburners.

If you want to learn more about what America’s failure to invest in the full complement of 750 F-22s means, read “The Fate of the Raptor,” originally published by Mark Helprin in the Claremont Review of Books in the Winter of 2009/10 and later appearing under a different title in the February 21st, 2010 edition of the Wall Street Journal. Abandoning the F-22 in order to produce the marginally cheaper F-35, a multi-use, far less sophisticated fighter that barely qualifies as a 5th generation aircraft, is a decision that is almost inexplicable. An Air Force source told me the real reason Washington chose the F-35 was political – the parts for the F-35 are manufactured in nearly every State, meaning a lot of Congressmen and Senators protected jobs in their districts. But the gains to a broader assortment of local economies is more than offset by the overall loss to our national economy, as we deploy an inferior weapons system, and regress technologically as we dismantle the F-22′s manufacturing lines.

When discussing preferable ways to engage in deficit spending, of course, this isn’t just about the F-22. This isn’t even just about strategic military spending – although our government’s failure to deploy the F-22 in numbers, and our failure to-date to launch a long-lead 6th generation fighter program, is an egregious case of missed opportunity. But missed opportunities abound. Along with 5th and 6th generation fighters, if we are to legitimately embrace Keynes during this economic downturn, we should be sending humans back to the Moon, and launching a manned Mars mission. The benefits to our technological prowess and industrial base alone justify these expenditures.

Back down on the earth, if deficit spending is indeed our economic elixir, we should be engaging in responsible development of domestic fossil fuel reserves and building nuclear power plants. We should be constructing desalination plants, canals and reservoirs (above and below ground), and we should be building and upgrading our bridges and freeways. All of these projects could be public-private partnerships, and could rely on deficit spending. But along with the temporary economic stimulus they would bestow, they would provide sustainable economic returns in the form of effective military deterrence, ongoing technological leadership, and assets of infrastructure that would yield permanently cheaper energy, water and transportation.

Instead, today we have interpreted Keynes at his worst, perverting his principles to justify massive deficit spending only to allocate money to public sector employee paychecks and pensions – borrowing and taxing and running up trillions in deficits not to invest in our future and our security, but to perpetuate their over-market, unsustainable compensation packages. If someday the U.S. can no longer deter her rivals, and faces another catastrophic war of uncertain outcome, remember 2009, the year the U.S. President killed the F-22 program to instead use Keynesian debt to pay government workers to live the life to which they had become accustomed. Similarly, when these never-ending, ever-expanding debt bubbles burst and utterly refuse to reflate, remember what returns might have accrued if we had invested those deficits to rebuild our nation, our technology, and our security, instead of feeding the insatiable maw of a unionized government.

2 comments to Sustainable Economic Returns

  • Erichhelm Herzfelder

    While your point about the need for federal stimulus borrowing (against the collateral of the value of the US$ currency relative to the other major world currencies) to be done for investments that yield long-term strategic returns on investment, your example of the F-22 vs. the F-35 may be short-sighted.

    The F-35, as a multi-role, single engine fighter aircraft gives it more value if we are entering a post-manned-fighter era, as could very well be the case. One must hope America’s strategic military spending understands this and is preparing to deploy, under such an assumption, appropriate swarm, sensor, robotic, photonic, and space technologies.

  • Dave

    I agree with the above commenter that you are way off base using the F-22 as an example of good federal spending. It is quite the opposite really, and has only survived this long because of lobbying and political influence.

    The F-35 will be the most advanced fighter in the world, after the F-22. Together they will be basically as useful as the F-18, F-16, F-15, and F-14 in our current wars in Iraq/Afghanistan and probably in most of our future asymmetrical combat situations. The raptor and other low-cost robotic systems should pick up the burden on ground surveillance and station keeping, with fighters used less and less as such technologies are improved. The pilots for the aircraft, are, after all, much more expensive and valuable than the machines.

    Nuclear power, on the other hand, would be a great place to plow federal dollars. Green nukes could really transform the American strategic and environmental landscape, but the political will and funding must be found.