recall from my days in the Big Red One?
We did our own dirty dishes and laundry,
and our cooks wore uniforms when not
in the kitchen.
But “butter” may be just as good for
the economy. Contractors and new heavy
equipment would be needed to rebuild
bridges and highways, modern schools
could replace those now in disrepair,
money could be made available for better
hospitals and medical research. College
debt could be paid off and new programs
created to avoid such debt. Research into
new technologies unrelated to armaments could be funded, and maybe poverty decreased.
It may also be better for “millennials.” As
Steven Rattner, a Wall Street executive, reported in the New York Times two months
ago, the under 34s are having a hard time.
Their median earnings dropped from
$37,355 in 2000 to $33,883 in 2013, and
for the best educated, the drop was $3,472,
with college debt averaging $35,051. Help
to pay that off is “butter,” but it is Congress that decides whether the nation gets
Ken Brownlee, CPCU, is a former
adjuster and risk manager based
in Atlanta, Ga. He now authors and
edits claims-adjusting textbooks.
Guns or Butter
The argument is ancient, but the impact on insurance is crucial
Idon’t remember my economics pro- fessor’s name from that 1962 class, but I sure remember the textbook, even though I traded it for a different one
the next semester: Economics: An Introductory Analysis, by Nobel Prize-winning
economist, Paul Samuelson. (Economics
is necessary when one works full-time
and commutes to college full-time.) What
I remember most about the text was the
lengthy discussions of “guns or butter,” the
basics of politics from Greek and Roman
times. Will we spend our bounty on war,
or will we improve the world around us?
When this was written in August, it was
hard to guess what Washington would do
about the October 1 spending deadline.
There are many options, but given our
constipated Congress, it is hard to know
whether they will do something and get
off the pot, or let the opportunity pass and
shut down the nation as they have done before. It is a war of wills. [Fortunately, they
did not shut down the government again.]
“President Barack Obama has signaled
his intention to bust, once and for all, the
severe 2011 spending caps known as sequestration,” reported Lisa Mascaro of
the Tribune News Service on August 1.
“He’s vowed to reject any GOP-backed
appropriations bills that increase government funding for military without also
boosting support for domestic programs
such as Head Start….” It is the typical ancient “guns vs. butter” game.
Given our crumbling infrastructure
and increasing poverty, guns have been
winning in recent decades. Not only are
we increasingly shooting each other in
schools, churches and theaters (not to
mention at traffic cop stops), but Congress
could have rejected the Iranian nuclear
deal, opting for some military option —
more guns. The Associated Press reported
August 4 that the GOP believes it has the
votes to disapprove the Iran nuclear deal.
However, this time guns didn’t win.
Impact on Insurance Claims
There is reasonable economic theory that
war is good for the economy. It boosts
manufacturing of new military aircraft,
replacement of older nuclear submarines,
design of new surface ships, and the production of bombs and bullets. But it is no
longer with an M- 14 rifle that a soldier
marches to war, but with high-tech equipment that is expensive to build and is vulnerable to IEDs in a land war. Consider
the cost of equipment damaged or abandoned in Iraq and Afghanistan. Eventually we turned to drones to do our fighting,
killing enemies and civilians as well from
hidden satellite-control bunkers in California or Nevada. So, do we really need all
those new ships, troops and aircraft if we
don’t go to war with Iran?
“Gearing up” the military is probably good for the insurance industry too.
New factories are constructed that must
be insured, employees require Workers
Compensation, and small towns around
military bases have a boom as thousands
of new recruits show up for training. Civilian contractors are also involved in deployment; airliners need to deliver troops
to the war zone, construction crews to
build landing fields, and other firms to
provide meals and do laundry. Whatever
happened to old-fashioned KP duty that I