What I've Learned

Welcoming Remarks by James Galbraith, Dimitri Papadimitriou, and Warren Mosler

James K. Galbraith, Chair

Welcome. On behalf of Economists for Peace and Security, and especially my vice chairs, Mike Intriligator and Richard Kaufman, who are here, other members of the board, I would like to extend to you a very warm welcome to this first, and what we hope will be a series of conferences of members and friends of Economists for Peace and Security in the years ahead.
            EPS was founded--now Thea, help me, how many years ago?--eighteen years ago in an effort to give voice and organization to members of the economics profession who were concerned about the costs of war, the obstacles that conflict places to economic development, and also about the possibilities that are foregone when a country devotes far too much, far more of its resources than it needs to to the military dimensions of security. We believe, and we believe across a very wide spectrum of talents and persuasions, preoccupations, research interests in the economics profession, that we have a role in these discussions, that the question of cost has historically been decisive in the outcome of policy decisions over war; but that the point of decision has historically come too late, that these issues are generally not properly raised in advance, in the rush to military commitment, but that they emerge afterwards, as the burdens and the foregone chances come to weigh on those who have made the commitment and who are bearing the price.
            We think that as economists as a group, who are by in large united on this proposition, ought to be playing a larger role in the policy discussions than we as a profession have done in modern times. And in recent years I think it’s fair to say that our position has in fact gotten wider recognition, and in part because of our efforts. We set out, a few years ago, to effectively dominate the news coverage awarded to the American Economic Association at those annual meetings where we control the grand total of two sessions; but after the last of those meetings, or maybe it was one before, I did a Google news on American Economic Association a few days later. There were 77 hits, and 74 of them referred to the work of Economists for Peace and Security, and that was a paper co-authored by Joe Stiglitz and Linda Bilmes. Linda will be here tomorrow, I guess, giving the real full breakout of the costs of war in Iraq. And more recently, as many of you know, Linda’s work has been at the center of the enormous realization of scandal associated with the failure to prepare, which is essentially a failure to budget, essentially a failure to plan for what is and should have been perfectly predictable, the requirements of wounded veterans for medical care when they return to the United States. A quintessentially economic issue on which, I must say, we have been, through one of our fellows, among the most active voices.

So I’m very proud of what we have been able to do so far, and I’m very pleased with this particular meeting. The board and Thea and I set out in planning this meeting to do something original and to do something creative. And what we thought we would do is to bring together a very wide range of people, including economists who have been working with us closely for a long period of time, including specialists in security policy, in foreign policy, including some people from the activist community, including some people who have experienced working in post-conflict environments and in the economic reconstruction of those environments; to bring them together for two days’ talk about the issues that are of specific and common concern, and try to develop from this going forward projects of collaboration, of research, and of public action that will over a certain time advance the cause that we have in common, which is to try to bring about a greater recognition of the economic issues associated with war and peace.
            I want to say that this conference in particular would not have been possible without, first of all, the brilliant management of Thea Harvey in bringing it together. I should also like to mention the support of the Kaufman Foundation. That was an extremely helpful and extremely timely endorsement of our efforts. I’ll come to other sources of support in a second.
            But I most of all would like to begin by expressing our appreciation to the Levy Economics Institute and to its president, Dimitri Papadimitriou, who is our host here. But he’s not just our host here, and not just one of my really closest friends over many years; but also has been the host and provided this wonderful setting as a home for Economists for Peace and Security. And I have to say, if you have a one-person non-governmental non-profit, you really should have an office building like this one. It balances everything out. So we are just delighted not only to be part of the Levy Institute, but to be here this evening. And Dimitri, also thanks for arranging this rather excellent spring day.
            And with that I would like to ask Dimitri if you would come up and say a few words.

Dimitri Papadimitriou:

            Thank you very much, Jamie. I too want to welcome to the Levy Institute and to this conference, which I have nothing to do with. This is one of the rare occasions where I really have to sort of be a listener and not to have to worry whether the presenters will be here, the discussants will be here, the transportation will take place on time, and anything else. I think that the logistical details are beyond my control.
            But I do want to say that it is especially important for the Levy Institute to have the Eocnomists for Peace and Security housed here. I hope that we’re providing a welcome home for the work that you do. The importance of this work I’m not going to into in detail, because I think that Jamie has most eloquently done that, and no one can dream to do anything better than that.
            But I think what it is important is clearly that there are issues that we economists tend to forget. And certainly the issues of peace and security play a very important role in terms of the prosperity, poverty, employment, other kinds of issues of an economy which are really dependent on how fiscal policy, how military policy, actually affects the well-being of a society. So looking through the program, one no doubt will see that these are the issues that are going to be covered. I’m sure some of the presentations will be thought-provoking, I hope infuriating, because in some ways things can get done that way, when people get angry and begin to discuss things. Because ultimately, I think, the conclusion is one of the best.
            So I welcome you, and enjoy the conference.
            I wish I could take the credit for the weather; but as it is customary here, we usually give the credit to the organizer of the conference. That goes to Thea. So if you want to applaud someone for the weather, this is where you should direct it.

JG:
Before I introduce our evening speaker, there’s one other person I would like to ask to say a few words of welcome and tone-setting for the meeting that’s about to begin. And I should say a little bit about how I know this person. I’ve gotten to know him over a number of years, initially through his joint involvement in the various aspects of the post-Keynesian economic community, and later on, over just a wide-ranging conversation that we carried on in Colorado, in St. Croix, and on every other opportunity where we had to meet, including we share one of the great modern forms of early--is it early adult dementia? An impossibility to delay the reply of emails, so you can have a higher-volume email correspondence with Warren Mosler than with just about--or between Warren and me, since we both share this problem--than just about any two individuals going.
And so I would very much like to ask Warren Mosler to come up and say a few words of welcome.

Warren Mosler:

            Thanks, Jamie.
            I assume Jamie’s got me at this conference to be as vocal as possible. I bring a level of practical, operational knowledge, I think, that is very often missing. When I hear things I try and ask what’s really going on, so when he told me about your organization I was asking certain questions about war and what’s happening. He starts talking about the cost of war, and my responses are, Well, you know, if you’re at anything less than full employment, all anybody sees is benefits of war. And the cost isn’t the monetary cost; the cost is the real cost. Well, if you’re at less than full employment, what’s the real cost? Everybody sees the stock market booming, everybody sees more job opportunities. People have jobs in the defense industries, and people have jobs in health care when people are getting shot up, and these are people who didn’t otherwise have these opportunities.
            I also tend to look at things from the very macro level, which is that— What are we doing that promotes war? Well, one of the main things we’re doing promoting a policy where we use unemployment to, say, control inflation, or something else, and these types of things are actually promoting war.
           I use simple examples on the monetary side. For example--and I’ll be using these when we talk--but if the government decides they need to sell bonds to pay for Iraq. So they’re going to sell $70 billion worth of bonds. And so you’ve had a business, you’ve done pretty well, and you run a restaurant, and you happen to have $70 billion in cash. It’s

not earning any interest. I’m going to buy some of these bonds, help the government fight the war. And so you go into the Federal Reserve with your $70 billion in cash and say, I want to buy some of those 5 percent bonds. They say, Good, thank you very much. And they count ‘em out. It will probably take ‘em all day to count that money. And they give you your bonds, and they’re going to pay you interest. And you go home. What do they do with that $70 billion as soon as you close the door and walk out? Anybody else know what they do with that money? They throw it in the shredder.
            Why are they borrowing $70 billion, paying interest on all that money, and then throwing it in the shredder? If you pay your taxes in actual cash, same thing. Oh, we need this money for Social Security. Oh, very good, I’m going to help out. I’ve been a waiter. I haven’t been declaring my income. Here I come to pay my $10,000. I’m going to help Social Security. Thank you very much. Here’s a receipt for your taxes. Close the door. Bam. It goes into the shredder. There’s something very interesting going on here that’s going to be applicable. And I don’t want to presuppose too much, but when you start talking about the cost of what’s going on, and you start talking about the dollar cost, you might see my hand going up at the end trying to point out exactly what’s happening and what the ramifications are for this whole argument.
           Because what I see happening at the macro level is I see everything out there promoting war, and I don’t see any of these talks or any of this notion of the real cost or anything else having any deterrent value whatsoever at the real level. In fact I see it going the other way.
            But anyway, I’m going to cut this really short. We’ll be talking about full employment at the end--I guess that’s when I give my talk--and the value of that in what’s happening.
           Thank you very much for indulging me.

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