Perspectives: Guns and Butter

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“More perennial wisdom from our esteemed colleague Rinaldo Brutoco!  Read on!

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Guns and Butter
Stagflation or Taxes

By Rinaldo S. Brutoco

The following Perspectives column was published in the May 5, 2022 (online and printed) edition of the Montecito Journal as well as on the World Business Academy website.

A macroeconomic argument circulating during World War II stated that the nation couldn’t afford both “guns and butter”, pitting the costs of waging war against luxuries like silk stockings and abundant food choices like creamy milk fat. In fact, this saying originated decades earlier, with the passage of the National Defense Act of 1916 as the US ramped up to enter World War I. As originally articulated, it was about the choice between using nitrates for gun powder or the same nitrates for fertilizer. Hence, the dichotomy of using nitrates for wartime gunpowder (the ‘guns’ in this case) or for fertilizers to create more food (the ‘butter’).

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