Q&A: The multiplier effect of violence containment spending

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After I spoke on Wisconsin Public Radio a few weeks ago, a listener wrote me with an important question. In the interview, I said that the Institute for Economics and Peace has calculated that the multiplier effect of reallocating our current violence containment spending would be about 2 to 1. That means that money spent manufacturing and purchasing guns, tanks, police uniforms, and even security cameras could generate twice as much economic activity if it were instead spent on books, computers, school uniforms and movie cameras. I later said that we’re missing out on the multiplier effect when we spend money on violence and violence containment.

Brian wrote me with this question:

Would the purchase not be an economic multiplier for the company that received the order, it’s employees and families and everything they spent money on?

The multiplier effect is the economic concept that every $1 spent generates more than $1 in economic activity. And the answer to Brian’s question is, yes.

It’s correct that manufacturing violence containment has some economic multiplier. I should have specified — it is significantly limited compared to other industries. Let’s take a computer and a simple explosive device as an example:

The firms that manufacture computers and explosives both generate economic multipliers for each $1 in sales. The firms pay employees, suppliers, and other vendors, who in turn pay other firms and individuals. Employees of both businesses buy groceries, go to the movies, pay the mortgage, pay their taxes, etc. The difference in the flow-on effect is chiefly in the economic activity generated (or not) after the product is manufactured and sold.

The computer serves as an input to a number of other activities: a student’s education (which generates economic benefits for a lifetime), the operations of other firms, or maybe even the creation of a new business. The explosive device does not create any new economic activity. In fact, if used, it is likely to destroy wealth (homes, factories, etc.) and the infrastructure that makes future economic growth possible (roads, ports, power grids, etc.). And so the flow-of effect of spending money on violence or violence containment is limited, or even negative!, compared to spending money on computers.

This is one example, and it obviously gets more complicated. For example, hiring a security guard may generate a net positive return for, say, a bank. But from a macroeconomic perspective, those human resources could be productively used manufacturing computers, used by business schools to train new entrepreneurs, who develop new products, and employ more factory workers, and so on.

The goal is to start categorizing our economic activity in a way that allows us to understand the impact of violence. “Manufacturing” as a category of economic activity includes the production of computers, toys, shoes, guns, fighter jets, and drones. “Violence containment” as a category let’s us measure the economic impact of the subset guns, fighter jets, and drones.

It does get tricky when we use drones, for example, for more than defense purposes. But, using the example I mentioned on air, we know that $40 million for drones on the border will not be producing economic flow-on benefits. We could, alternatively, create those benefits by caring for and schooling the children that have arrived here, thus adding a host of young people to our future work force. And if you are worried that we won’t have jobs for them, well, I’ll note that $40 million at the mean US income would employ about 1,000 social workers, educators, and grocery store and restaurant proprietors, to name a few, and their families and our economy would certainly enjoy the multiplier effect of that spending. The beneficiaries of that spending can be expected to create new jobs — history predicts that well enough.

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Fewer wars and less peace? What to do about it.

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Last month, the Institute for Economics and Peace released the 2014 Global Peace Index. The results are frustrating: the world has been getting less peaceful for the last several years. And at the same time, the number of wars between countries is also declining. How is that possible? Read my analysis of the 2014 Index report on Pacific Standard:

In short, the nature of peace is changing. Breakdowns in peacefulness are becoming more decentralized, and peacefulness relies more heavily on social structures and non-state actors as opposed to exclusively governments and formal militaries. Peace is becoming more democratic, if you will. Given the severity of organized, inter-state conflict in the 20th century, the trend of declining militarization and international war implies that we have made progress in solving 20th-century problems.

The rise of internal conflict, in all its forms, demonstrates that people are unsatisfied with their governments, economies, and social structures. We don’t need complicated econometrics to tell us that—the Arab Spring movements, the anti-austerity protestors, and even ISIS have made their dissatisfaction abundantly clear. Meanwhile, violent markets—like the drug trade—are growing as opportunities in formal, non-violent markets disappear.

Click through for the full article.

The Pacific Standard site doesn’t do comments, but I’d love to hear your thoughts and questions here or on social media. Do you think this analysis makes sense? Are we doing the right things to address our 21st century problems? Do you have an innovative idea for building peace?

Feminist Economics Syllabus

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A brilliant resource from the Lady Economists blog. It can seem hard to find alternative perspectives in economics (although there are many if you look closely…) and so here’s a whole list on feminist economics.

Lady Economist

16501553-abstract-word-cloud-for-feminist-economics-with-related-tags-and-terms Feminist economics is a thing, which some non-economists are incredulous about when I tell them that is what I do. I’ve written about it a little bit on Lady Economist, but it’s always worth expanding on. Many economists might also write it off as fringe or not serious enough, but this is a whole other can of worms. When I describe it to people, I usually say that it is twofold. First, feminist economics seeks to understand the way in which gender shapes the economy and people’s economic experiences. A classic example of this would be the study of the gender wage gap . And second, feminist economics also explores the way in which gendered thinking influences the study and methodology of economics itself. Economics tends to be very masculine, not only the proportion of men in the field , but also in the way “good” economic theory is judged…

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It’s Time to Talk About the TPP

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Today is an international day of action to protest the Trans-Pacific Partnership, a 12-country free-trade deal, in the works for over a year, that is being negotiated by national representatives and over 600 corporate lobbyists but the text of which has not been shared with the American people. In 40+ cities in the U.S., Mexico, and Canada, activists will publicly make known their opposition to this trade agreement. But a great many more of us are at our desks today, or at home with our kids, and will be relying on our news organizations and our politicians to tell us the pros and cons of the TPP.

The trouble is, the TPP isn’t being discussed in Congress, President Obama didn’t mention it in his State of the Union Address, and it’s getting very little mainstream media coverage. For two reasons: first, the negotiations are being held in secret (although a number of drafts have been leaked); second, the Obama administration has requested “fast track” authorization to conclude the deal, meaning that he could sign the agreement without giving Congress any opportunity to debate its contents.

Over 50 organizations serving different missions – from environmental groups to farmers to open internet activists – have come out against fast track, and 151 Democrats in the U.S. House have pledged to vote against it. Senate Majority Leader Harry Reid has said he doesn’t support it, and so likely won’t be calling a Senate vote on it any time soon, and even the Wall Street Journal reports that both Democrats and Republicans object to giving the President such unilateral power in an area the Constitution delegates to Congress.

At a moment when our executive is known to be spying on us and our neighbors and has launched more drone strikes and authorized more deportations than any prior president, we would do well to remember the checks and balances that have previously served us.

Opponents of the TPP itself site a number of objections. In general, opponents of free-trade agreements argue that they disproportionately harm the middle and working classes, such as the Mexican agricultural workers and U.S. manufacturing laborers who lost their jobs in the wake of NAFTA. Environmental groups say the TPP harms the planet in several ways, and Doctors Without Borders is concerned that the TPP will further prevent those in developing countries from accessing critical medicines. But possibly most troubling in the post-Citizens United, corporations-are-people world is the way the agreement privileges corporations over actual people and the planet and alters the mandate of our governments.

“The investment portion of the TPP creates something called ‘investor-state dispute settlement.’ What this means is that foreign investors are allowed to sue governments over lost prospective profits. A corporation can sue a country if it feels that nation’s regulations — environmental, worker protection — might impede its ability to make a profit,” writes journalist Andy Douglas.

The trade that would be governed by the TPP represents approximately one-third of all global trade and 40% of the gross world product, NRDC’s Jake Schmidt told National Geographic. That’s not nothing. We can’t afford to ignore the effects of 40% of the world’s economic activity. In a world where the 85 richest people have the same wealth as the 3.5 billion poorest, where “climate change is a fact“, where we’re running out of oil, and fish, and water, we are in no position to be so cavalier.

So we need to talk about the TPP. It’s time to debate the Trans-Pacific Partnership, and the rest of our trade agreements, out in the open. President Obama gave a very moving, and relatively progressive, State of the Union address this week, but I think we should be concerned when he asks for unilateral power to enact something so massive but doesn’t bother trying to convince us it’s a good idea.

The piece of legislation that would enact fast track authorization is officially called the Bipartisan Congressional Trade Priorities Act of 2014, and you can track it here. (This so-called bipartisan bill currently has only two Republican sponsors; President Obama has not been able to find a member of his own party willing to co-sponsor.)

I realize that our current Congress has been called the least-productive in history, and they’re grating our nerves and wasting our money with government shut-downs and endless arguments about why we shouldn’t have health care or reproductive rights. But they remain our representatives, sent to Washington to do a job as outlined by our Constitution. Let’s hold them accountable to doing that job, and let’s not allow an over-powered Executive take it away from them. Call your representatives in the House and Senate and ask them to publicly oppose the Trade Priorities Act of 2014. And don’t be afraid to remind them that 2014 is an election year. It’s time for our elected officials to demand Congressional debate and talk about the TPP in Washington, or to talk about it at home.

“Mexico’s Moment” – for peace?

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The need for a radical re-visioning of Mexico’s security and peacebuilding strategy is increasing.

Mexico has made the news quite a bit recently. On the one hand, 2013/2014 is being called Mexico’s Moment. Economic reforms are being praised by the international community, Mexico’s S&P credit rating has been raised, and M is the first letter of the next BRICs: the MINTs. On the other hand, while homicide rates appear to have dropped in 2013, vigilantism is increasing – a development that implies a more complex conflict rather than progress toward peace.

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ICYMI, #economicviolence

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Last Friday, the complicated term #economicviolence began trending on Twitter in the U.S. after Andy Smith, Suey Park, and Prison Culture initiated a tweet chat. People shared personal experiences, and the statistics that represent those stories in aggregate.

Of course, before long, tweets along the lines of “get a job,” and “get a dictionary” began to appear. Accordingly, as my job is to deal with the issues and ideas of economic violence, I want to discuss a few definitions. (And that’s not to say others aren’t already articulating these ideas well. I just hope to add to the chorus.)

Violence is a notoriously difficult thing to define. It seems straightforward at first – we can all immediately picture a fight, a war, murder, or rape.

And yet there is a lot of harm and pain in the world that is seemingly difficult to classify. For example, too many of us are familiar with the way language can be violent, even in the absence of physical contact between two people. Whether property damage is violence is a classic question, especially among activists.

There is also a great deal of clearly preventable injury and death that does not appear to come directly from an individual – the death of a child from hunger or from a disease easily cured in a richer part of the world; the illness suffered by a homeless person in a city full of vacant and foreclosed homes.

Or there is clear violence, but from an amorphous source, such as war waged by The United States. (Who, exactly, is The United States?)

And for all forms of harm – either directly inflicted or of a source more difficult to identify – there are the cultural norms that make us comfortable with its use. We may believe capital punishment or a “just” war are necessary evils, but they are violent nonetheless.

These different kinds of harm are known as direct violence, structural violence, and cultural violence.

Direct violence refers to observable incidences of self-directed, interpersonal, or collective violence, including physical, verbal, or psychological acts and acts that inhibit or insult our basic needs and/or physical persons.

Structural violence refers to the systemic ways in which a given social structure or social institution harms people by preventing them from meeting their basic needs.

And cultural violence is the ways in which aspects of our culture – art, media, political and economic narratives – legitimize the use of direct and structural violence.

Economic violence can be, and is, all three.

On paper, we’ve changed the rules (in the U.S.) so that neither direct nor structural economic violence should remain. Women and Americans of color – responsible for the vast majority of the unpaid and underpaid labor that made the wealth of white men possible over the course of several centuries – are now legally allowed to participate in the economic rule making (via voting) and cannot be officially barred from the spaces of power and privilege (university classes, board rooms, golf courses, etc.). But as groups, we  still work from a structural disadvantage.

Personally, my family’s story looks like the American dream. You could attribute the lack of harm, illness, and injury in my life to my hard work and that of my parents and grandparents. But my race, citizenship, and class privilege have meant I’ve had help: I’ve gotten a loan when I needed it, been given the benefit of the doubt in a court room, been able to take unpaid internships, and have had access to professional networks that I did not build. It is a fact that not all Americans can say the same, and that they do experience harm and hardship in their lives because our culture and social structure do not make these benefits available to all.

In the post-financial crisis economy, the difference between economic privilege and not is homelessness, hunger, imprisonment, illness, and increased exposure to direct violence. Economic privilege affords safety: safe working conditions, safe neighborhoods, cab rides late at night, somewhere to go for help, and the assumption of legitimacy when we need to call on police.

Violence is a complicated element of humanity, and the injury or harm one person experiences may not look like direct violence at the individual level. But when we step back, for a broad view of the structure and the culture, and we see that the same harm is repeatedly inflicted upon individuals from the same groups, it becomes clear that violence is in fact taking place. In part, we find it to be violence because our culture and social structure are our own creation. We make the rules, and we can make them differently.

Predictably, it didn’t take long for the #economicviolence hashtag to fill with anger (and misconceptions) about communism and socialism. I’m partially motivated to present this larger framework around economic violence because I think that responding to a concern about harm inflicted upon people by the current economic system with hyperbole about alternative economic structures really misses the point.

Shortly before Howard Zinn passed away, I was fortunate enough to hear him speak. He shared that, in his experience, when the average person is asked if everyone should have access to health care and education, they say yes. When asked if the poor should be provided with homes or if corporations should be given the opportunity to build high rises and earn more profits, people say that the poor should be given homes. He gave several examples and concluded by noting that we may call these things socialism, but by and large, when asked about the realities without the vocabulary, this economy that provides for all is the one we want to live in.

I am not aware of anyone in the United States advocating for a USSR-style centrally planned economy – that the government should tell us how many shoes and light bulbs and toilets will be produced and when and where and by whom. Where the market works, we’re happy to work it. But the economy is our own creation, and if we seek to create it in a nonviolent way that reduces harms and supports the health and happiness of our neighbors, that isn’t something to argue about. That’s something to build together.

The Butcher, the Baker, the Brewer, and the Peacebuilder

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“The Butcher, the Baker, the Brewer, and the Peacebuilder: Opportunities, Strategies, and Metrics for the Role of Business in Building Peace,” in the journal of Business, Peace, and Sustainable Development

My first journal publication is out!

This past spring I attended and presented at the conference Peace Economics, Peace Metrics, and the Role of Business, co-hosted by the Institute for Economics and Peace and the American University Kogod School of Business. A short report-back that I wrote was featured on the U.S. Institute of Peace’s International Network for Economics and Conflict blog, and now a full analysis of the conference proceedings and the trends and opportunities for peace economics is appearing in the first issue of the new journal Business, Peace and Sustainable Development.

You can purchase the first issue, including my article and the work of my colleague, Daniel Hyslop from IEP, on violence containment – another project I collaborated with IEP on a few years ago – at the link above.