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The Employment Effects of Downsizing the U.S. Military
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Abstract
This study focuses on the employment effects of military spending versus channeling some significant part of the military budget into alternative purposes.� We begin by introducing the basic input-output modeling technique for considering issues such as these in a systematic way. We then present some simple alternative spending scenarios, namely devoting 1billiontothemilitaryversusthesameamountofmoneyspentforfivealternatives:taxcutswhichproduceincreasedlevelsofpersonalconsumption;healthcare;education;masstransit;andconstructiontargetedathomeweatherizationandinfrastructurerepair.Ourfirstconclusioninassessingsuchrelativeemploymentimpactsisstraightforward:1 billion spent on personal consumption, health care, education, mass transit, and construction for home weatherization and infrastructure will all create more jobs within the U.S. economy than would the same 1billionspentonthemilitary.Wethenexaminethepaylevelofjobscreatedthroughthesealternativespendingprioritiesandassesstheoverallwelfareimpactsofthealternativeemploymentoutcomes.Wethenconsiderwhatwouldbetheimpactonemploymentoftransferringall138 billion in funding that went to the Iraq war in 2007 into alternative peaceful purposes. As we show, a transfer of funds of this magnitude would enable the U.S. government to provide, for example, health insurance for the 45 million U.S. residents who are now uninsured, and still provide funds for significant investments in education and energy conservation. A transfer of the Iraq budget into these alternative purposes would also expand employment in the U.S. by between 600,000 – 1 million jobs, depending on how exactly the $138 billion were allocated.�