Война силами хайтека | Всё перевернулось с ног на голову (English subtitles) @Max_Katz
Discussions of a wartime economy often float the idea of military spending being an investment rather than a waste of money. Like, there’s no big difference between building a smartphone factory and a drone factory. Economy-wise, both would be an investment in technology, innovation, and the future. That’s the theoretical basis of military Keynesianism. No, we aren’t just creating jobs by diverting the workforce from economically productive industries. We aren’t just purchasing the gizmos that will soon hit a residential block without benefiting the economy.
Instead, we’re investing in brainpower. We’re creating high-output jobs and spawning tech companies. Some proponents of this theory are even citing Russia's GDP that allegedly keeps going up in spite of the war troubles. Today, we’ll scrutinize and compare the stats behind a war’s capacity to change the economy and society, past and present.
But before we kick things off, let me remind you about one thing. If you have trouble loading YT videos, find the link below to claim a 30-day free trial from our partner’s VPN tool. !Military Keynesianism! Our show has copiously discussed the paradoxical trajectory of Russia’s wartime economy. The outbreak of the war saw an array of the most perilous economic scenarios unravel. That included an exodus of Russians fleeing abroad, a blizzard of sanctions, a loss of foreign investment, no access to cheap loans, and the slumping ruble. Those were all the signs of economic trouble.
Going by those ugly downtrends, the majority of pundits and commentators predicted that the economy would fail. There’d be no economic growth, they asserted. Today, we know that most of those experts and commentators got it wrong. Russia’s economy proved to be remarkably adaptive. The market mechanisms helped it survive, bounce back, and handle the ongoing war whether by hook or by crook.
Meanwhile, the government pumped eye-watering fortunes into the defense industry to spur the production of military junk and uniforms. As a result, the downturn of 2022 wasn’t that dramatic. It cost the national GDP merely a single percentage point. In 2023–24, the trend was reversed. The economy was steadily growing at more than 4% per year.
The government had the funds to sustain the growth spurt. In 2022, it posted record-high sales of natural gas. As the Russian fossil fuels were about to be sanctioned, Europe began purchasing them in advance. The prices soared, helping Russia pocket record-high revenues. Putin was being showered with cash.
It was a perfect scenario for Russia’s federal budget. The government was making it big both in terms of the high prices and the sales volumes while pumping the revenues into the defense industry. It got the armaments it needed while propping up the economy. Once the sanctions targeting the Russian fossil fuels came into effect, the exporters managed to find new markets: mostly India and China. Granted, it wasn’t smooth sailing at all. The delivery came at a higher price point. Getting paid for the exports proved a major challenge. But the businesses were doing their job. Things worked. And contrary to the forecasts and common sense, the economy kept growing.
Everybody knew it wasn’t natural. Normally, economic growth is precipitated by the new technology spurring the output. Higher childbirth or immigration rate leads to more working-age people. A surge in investment engenders more resources to produce more goods and services.
The economy ends up producing increasing amounts of in-demand stuff. But after the war started, Russia’s economic growth was anything but organic or natural. Rather, it was inconsistent, lopsided, and fragmented. As some industries boomed, others were stagnating. Worse yet, the entire sectors of the economy were shrinking. But that didn’t look like a big deal really. The blossoming industries made up for the failures of others. And the GDP growth, however fuzzy and unreliable a metric, was quite solid.
There are two academic theories offering their assessment of a similar scenario. Military spending benefits the economy. Others argue it may be a major liability. Our channel has consistently claimed that the war doesn’t benefit the economy. After all, they’re having people slaughtered. The investment in the civilian sector has been all but ebbing. The output growth is hamstrung by the sanctions. Tech imports prove to be a major issue. But we’ve just listed some compelling facts.
Three-plus years into the war, we can clearly see that for two years, the government ensured steady economic growthby stimulating the economy with war costs. It looks like there was efficiency to it. It looks like the economy was thriving off the war. This line of reasoning is totally embraced by the economists who don’t see the difference between various types of investment. Like, military investment is just as good as any. That’s the stance advocated by military Keynesianism. Let me roughly explain what it is. <But first please make sure to watch our brief commercial.
ADS Let’s keep rolling and stay on the subject of military Keynesianism.> Every once in a while, an economy goes through a crisis where a plethora of available resources, like personnel and production capabilities, doesn’t translate into growth due to the lack of funds. One way to overcome it is by sprinkling more money into the economy. E.g., the government may start building new hospitals or highways, expand welfare packages, or lower the taxes.
Alternatively, it can pay the arms factories to re-equip the military or enlist more soldiers who’d be collecting their wages. This strategy is called military Keynesianism. Such projects, whether military or civilian, are meant to spur aggregate demand and create jobs. They prompt a normal cycle involving an increase in both revenues and costs, which will lead to a growing economy.
History suggests it could indeed be effective. For instance, during WW2, the U.S. invested in military production, which helped the country combat the Great Depression. That’s the case the Russian TV propaganda often brings up. Similarly, the U.S. economy grew amid the Korean War. Simply put, the government was pumping the money into the economy via military spending and fueled economic growth.
There are other upsides to military spending, too. Like, R&D starts out by designing new armaments and other war-related tech, only to later benefit civilian industries. Think combat mosquitoes. I’m kidding, but that’s basically the point of it. A lot of tech conceived for military use only has later spilled out to benefit humanity. In the 20th century, the flow of defense technologies into civilian industries was quite understandable. The entire 20th century was, by and large, shaped by the two world wars and the ensuing Cold War.
The rise of aviation and of jet aircraft, in particular, and a surge in commercial aviation that began in the late 1940s owed to the tech race featuring Hitler and the Allies. Large passenger aircraft were once conceived as bombers and other military planes. Commercial pilots were mostly former flying aces. The Manhattan Project along with the Alan Turing-led Enigma crack effort sped up the onset of a computer-driven world whose benefits we’re reaping today. Otherwise, an iPhone would’ve never seen the light of day.
The space missions, satellite TV, new comms and navigation capabilities—everything related to space research— are all by-products of the superpowers’ drive to design the rockets capable of traveling intercontinentally to deliver nuclear warheads. They weren’t planning on splurging fortunes to launch an atomic clock into orbit so that you could track your pizza delivery driver’s route or find a potential date nearby. The Americans spent billions of dollars to create the GPS system so that the guided missiles could hit the targets and fighter jets stuck to their intended routes. The biggest example would be ARPANET. That wide-area packet-switched network powered by the TCP/IP protocol suite, the precursor to the modern internet, wasn’t intended for you to be able to watch this vid.
It was meant as a decentralized American network to withstand a nuclear attack. No matter how many strategic assets were to be incapacitated by the Soviets, the Americans would be able to mount a retaliatory strike. But now we're enjoying the internet. Why would tech progress follow this pattern?
It’s just that the defense goals allow for huge expenses designed to fund cutting-edge R&D. But businesses need and do just that, too. Except they need to comprehend the planning horizon, the timeline, and the way this R&D may yield a sellable product. True, these days, everybody knows what a computer is and how it should be sold.
But let’s recall the advent of the ENIAC machine, the first-ever programmable general-purpose computer. Nobody believed a bulky 30-ton machine managing 357 multiplications per second could be used for anything but calculating a thermonuclear explosion. Nobody believed that 30 years down the line, the machines capable of performing 1,000s and millions of operations per second would be sold en masse to households. Or that even the creators of this machine would later be using iPhones. Under the defense programs, the government can afford to pay tens of 1,000s of scientists and engineers, invest in crazy expensive equipment, and build nuclear reactors and rockets without expecting an immediate effect.
Or any other effect. What else can nukes be useful for? But private businesses can’t. However, what these businesses can do is make use of the military tech by-products once those no longer serve their original purpose. It’s this synergy that helped create the world of today. That used to be true.
!No Longer! But the current war has shown us that things now work differently. The most groundbreaking innovation this war has ushered in are the UAVs, a civilian-minded innovation. DJI was never intended as a defense corporation. In fact, it sought to offer game-changing solutions to the movie industry, agriculture, and home video experience. And it’s this company that has affected the course of this war more than the Rostecs and Lockheed Martins combined. True, the combat drone industry has now ballooned beyond comprehension.
But if it hadn’t been for DJI’s Mavic UAVs that first figured out the recon missions and then grenade launching, we wouldn’t have a burgeoning FPV drone scene. While the military experts were pondering a new type of mind-blowingly expensive precision-guided missiles, the battlefield was taken over by civilian-use tech. The same goes for the comms. The budgets spent on the top-secret military comms systems, satellite comms, and advanced command and control systems proved to be a big fat waste of money. Both militaries in this war are now using the consumer-market messaging apps, such as Telegram, Signal, and Discord. That’s what turns out to be the best command and control communications system.
Civilian-use tech has proved to be more flexible, reliable, and predictable as well as much cheaper than any military-purpose R&D. Each powerful military now has its satellite comms systems. But when the real war broke out, it turned out that Starlink, never intended to be used on the battlefield, was running rings around them all. In the 21st century, the trend was fully reversed. It wasn’t the hot war that revolutionized our life courtesy of the new-fangled tech.
It’s the three decades’ worth of civilian-use tech growth that have reshaped the battlefield. In fact, the civilian industries’ growth has led to the point where a grocery list your wife has just DM’d you uses the kind of encryption that trumps that of the nuclear missile launch codes. Each electronics store offers pocket-sized aerial recon devices that would’ve made Agent 007 jealous.
Detailed maps that show everything down to the tiniest bush and shed are now an easily downloadable smartphone app. In the post-Cold War era, the biggest drivers of tech progress have been privately owned tech corporations as opposed to the governments running huge military-industrial behemoths. The perception of military spending as being an investment in future progress was spot-on 40 years ago. But presently, they no longer stack up. Far from it, the war is straitjacketing the research, engineering, and production capabilities by using it for non-productive activities.
These capabilities could be creating better drones for agriculture rather than for manslaughter. The current war has made one trend glaringly obvious. There are no positive by-effects the military R&D is furnishing civilian industries with. Instead, it’s the civilian-use tech that’s reshaping the battlefield. It turns out, there’s no palpable indirect impact these research findings and latest tech are having on the economy.
But there’s also a direct impact. Military spending surely triggers economic growth, just like any other government investments do. That’s inarguably true. A new drone factory creates new jobs.
The money invested in building a drone increases the GDP by exactly this amount. But we’re talking a long-term effect. Each dollar invested in ARPANET or GPS brought billions of dollars to the U.S. economy half a century thereafter. These days, though, the production of drones or any other military-purpose tech, apparently, isn’t leading to the emergence of full-fledged tech giants.
We aren’t witnessing the tech that resulted from the manufacturing of UAVs spurring the production of in-demand goods whose market value would survive the war and justify the government defense contracts. So far, there’s no reason to believe it’s anything but a purely mechanical GDP growth and artificially created jobs. We can’t see the advent of a fledgling new industry that’d be booming 20 years from now thanks to these defense contracts. Right now, civilian technologies are being expended in arms production.
The arms production is stripping civilian industries of the workforce and brainpower. Far from cementing the foundation for future growth, the potentially sprawling industries are being handicapped by the defense industry as they enjoy no access to investment, employees, or intellectual resources. Right now, we realize that once the war grinds to a halt, the war-specific jobs will be rendered obsolete. Personnel shortages will give way to unemployment. The tech companies that could’ve emerged just won’t. They had no resources to do so. Let’s get back to the fundamentals of Keynesian theory and military Keynesianism, in particular.
The theory addresses a woe-riddled juncture where the economy is navigating a major crisis. Lots of people are jobless. Factories are out of operations. The economy is overfilled with unused resources. That’s where the government can throw in extra money, create new jobs, and rekindle the hitherto unused production capabilities, thus spurring growth. In Russia, though, the government pumped tons of money into the economy at a time where there was no surplus of personnel, no unused capabilities, and no readily available shot at new tech and resources. In the end, what the overfunded defense industry did was divert the available resources from civilian industries rather than amassing them. Far from using them efficiently, it only thwarted their growth. The investments in fundamental science that were emblematic of WW2 and the Cold War era did propel mankind into the future.
Those were never intended as investments in the future. The archenemies were just trying to annihilate one other or get hold of a fitting piece of tech. Instead, they ended up lavishing us with the perks we’re using today, including computers and aircraft.
That sure made sense economically. Building a specific sub, aircraft carrier, or missile may have been a waste of money. But designing them spawned the kind of tech that’d later pay off big time. That’s not what’s happening today, though. The war expenses have no delayed effect. An assault drone may be getting more sophisticated by the day.
But this sophistication comes from the tech borrowed from civilian industries. The people and the resources employed for this war aren’t being invested in the future. They could be producing commercially successful goods and drawing foreign investment. Instead, they’ve been turned into the tools of the federal budget waste. Although the use of military spending to promote growth and the accompanying military Keynesianism theory did ring true for a specific period in human history. But they no longer ring true today.
See you tomorrow!
2025-05-26 16:41
