The Liberals Defence Industrial Strategy is likely to be an economic disaster. While the plan to stimulate arms production will generate substantial corporate profits, there will be meagre economic benefits for most Canadians or new jobs.
Two months ago Mark Carney announced a new Defence Industrial Strategy to further militarize the economy, universities and government institutions in a bid to reach the NATO spending target of 5% of GDP on war. According to the prime minister’s statement, “The Defence Industrial Strategy positions Canadian industry to take advantage of $180 billion in defence procurement opportunities and $290 billion in defence-related capital investment opportunities in Canada over the next 10 years, with an anticipated $125 billion downstream economic benefit by 2035. The Defence Industrial Strategy will create 125,000 high-paying careers, increase our defence exports by 50%, raise the share of defence acquisitions awarded to Canadian firms to 70%, and grow Canadian defence industry revenues by 240%.”
Since the announcement government officials have hyped up different elements of the strategy. They’ve suggested this plan to plough ever more public funds into the arms industry will be a major economic boost.
But a new International Monetary Fund report pours cold water on the claims. It concludes that for every extra dollar well off countries, like Canada, spend on their militaries it will boost their economy by the same amount. “Overall, the aggregate effects on economic activity from increased defense spending are likely to be modest,” the IMF experts noted.
A Le Devoir article — “Les dépenses militaires auront des retombées économiques «modestes», prévient le FMI” — on last week’s IMF report points out that a previous study from the international organization looked at the economic benefit from other types of public investments. The October IMF report found:
“In developed countries, an increase in infrastructure investment equivalent to 1% of GDP had a long-term impact of 1.5%. The multiplier effect was almost double, at 1 to 2, for investments in health. The ratio exceeded 1 to 3 with investments in education or research and development, and approached a multiplier effect of 1 to 3.7 when combining these last two priorities. These ripple effects can be even greater when governments adopt best practices for spending money, and much greater still in developing countries, the IMF explained in another chapter of the October report.”
In other words, public spending on the war machine stimulates far few economic benefits than other types of public investment.
While the Liberals hype the creation of 125,000 well-paying jobs from the Defence Industrial Strategy, the cost of each job is high. According to the plan, the number of “defence” industry jobs would rise from 81,200 to 206,000, which works out to up to $4 million for each new job.
Arms production is generally capital-intensive. Its large investments in equipment — rather than workers — is conducive to high profit margins. Many times more jobs are created for each dollar invested in daycare or education than arms purchases. Healthcare spending usually creates about 50% more jobs while education and daycare can be as much as twice as many.
Just as important, orienting an economy towards war production creates a constituency for supporting war as US President Dwight E. Eisenhower’s 1961 speech about the military industrial complex described.
Disturbingly, there’s been little pushback to Carney’s Defence Industrial Strategy. Unions have been largely quiet as has the NDP (Avi Lewis has referenced it critically). I’ve only seen one article and press release about the defence strategy from an anti-war perspective.
Mark Carney’s Defence Industrial Strategy is a pillar in the largest militarization of Canada in 75 years. It will addict the Canadian economy and some workers to making weapons of war. It must be challenged.
On Wednesday at 6:30 EST leading anti-war activist and researcher Tamara Lorincz will speak online on the Defence Industrial Strategy as part of the “Capitalism can’t be fixed” Wednesday Webinars. Register.
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