Field Marshall announces the founding of Greater Lambston.

[Sheep]

The Colony of Greater Lambston has been founded as a clony of the Armed Republic of Sheepsta. Field Marshall Dunning has installed his son General Jerry Dunning to the post of Prime Minister of Greater Lambston.

Named after the first of the Sheepstan capitals, largely destroyed during the protectorates affair, Greater Lambson is a large island lying of the west coast of the main continent of Apolyton. Known before as number 21.

Sheepstan military forces have yet again received a boost in funding to enable adequate security in Greater Lambston. Sheepstan military funding is now at more than 35% of total GDP.

HEIL DUNNING!

[GeneralTacticus]

OOC: I'd very much like to see how you justify spending 35% of your GDP on the miltiary without causing a total economic collapse, a la USSR.

[Drogue]

Surely he means 35% of tax revenue. That would be an enormous drain, but just about possible.

However, it has been said before by American economists and politicians that military spending can create a boom. Even though in terms of economics that money is effectively wasted, in that military provide no economic use, the simple fact that spending has increased can create enough jobs, and enough of a multiplier effect that it could outweigh the original outlay of capital. In other words, spending on military could actually create a boom in the economy, as long as it is spend on domestically produced arms, not on imported arms.

[Whaleboy]

But that money actually spent on the military has to come from somewhere, which is obviously the government. Whether that is being redistributed back in the form of salaries or not is surely irrelevant, at least in the short-medium term while those contracts are being fullfilled.

If people are working in a private sector, then surely the money they generate is not coming directly from the government coffers, and thus the taxes they pay are actually causing those coffers to rise?

[GeneralTacticus]

Surely he means 35% of tax revenue. That would be an enormous drain, but just about possible.

That would amount to the same thing, given that he has a 100% tax rate.

However, it has been said before by American economists and politicians that military spending can create a boom. Even though in terms of economics that money is effectively wasted, in that military provide no economic use, the simple fact that spending has increased can create enough jobs, and enough of a multiplier effect that it could outweigh the original outlay of capital. In other words, spending on military could actually create a boom in the economy, as long as it is spend on domestically produced arms, not on imported arms.

Oh, I'm very well aware of that. And I'm also well aware of the fact that spending a third of your GDP on something totally non-productive is an excellent way to flush your economy down teh toilet. He might be able to sustain that level of spending briefly, but not for any extended period of time, and it would rather distort his economy to boot.

[Urban Ranger]

Originally posted by Drogue
In other words, spending on military could actually create a boom in the economy, as long as it is spend on domestically produced arms, not on imported arms.

Yes and no.

If the weapons aren't sold, they represent a return of 0 on the investments. In other words, they are a monetary blackhole.

On the other hand, if there are sufficient spin-offs entering civilian sectors, that might do something positive. However, it is impossible to gauge any such effects.

[Drogue]

Not impossible.

The point I was making was that it can create more money than it loses. In the sense that it does not matter what the government spends it on, if the government spends more money, it can be put back into the economy. Spending with 0 return, if it creates more jobs, can be a good thing. Boondogling is not always bad.

[GeneralTacticus]

Tell that to the Soviets or the North Koreans. Hurling a third of your GDP into military spending means taking it away from spending on other areas that are actually productive (and note, also, that if the aim is simply to create jobs, this can be done far more efficiently by spending on other areas).

[Drogue]

I wasn't saying it worked in Russia or Korea, I was saying that if it is an issue with a strong enough multiplier effect, than it will create more wealth than it loses. Obviously in those nations it was not. And I was not saying it was the most productive thing to spend your money on, simply that it is not always bad, and will not necessarily cripple your economy.

[GeneralTacticus]

Given how innefficient it is at creating jobs, putting 35% of your GDP into the military would pretty much cripple your economy, simply because the size of such a committment would magnify the innefficiencies to crippling proportions.

[Drogue]

That depends. It could well do, however in some situations it won't. Over long periods of time you are usually right, but not always, according to the theory (not that anyones actually tried it AFAIK).

[GeneralTacticus]

I don't think you quite understand the proportions we're talking about here. 35% means that over one in every three dollars worth of stuff produced by their economy goes into producing weaponry, stuff to sustain it, or support for the military - all of which is, to a greater or lesser degree, wasted, weapons production just about totally. He might be able to sustain such levels of spending [i]briefly[/], but given that he's acting as if this was a relatively minor increase (maybe a moderate one, but certainly not a major one), so he'd have had to be sustaining similar, though smaller, levels of spending for quite some time.

[Archaic]

[OOC]So, I presume this general will of course be going to war with the new Holy Empire after that coup, along with New Griffith....or are they just going to sit back and ignore the fact that there's been a total change of regime in Sheepsta like New Griffith's already done last time?[/OOC]

[Sheep]

Just wait until the military stats are posted. Spending is about 10% of the entire budget in Sheepsta, a marked decrease. It is only at this high level due to the hostile intent of many other nations.

[Archaic]

It is only at this high level due to the hostile intent of many other nations.

That's besides the point. There's still a limit to how high ones military can go. Just because there's a potential threat doesn't mean you can have a military larger than you can possibily support.