"Down throughout history, war has been an accelerator for technology. You might notice, however, that most of our current 'high' technology is derived from the NASA space program. It turns out that not only is space travel an accelerator for technology, it's a much better accelerator than war. The implication is that nations who invest in space technology will out-compete those who are stuck fighting wars."
-- David Hurst
I'll put on the devil's advocate hat and mention that the space programme was derived from the Third Reich's rocket bomb programme. Meanwhile, NASA is technically a branch of the US military, and the main initiatives for the space programme were to compete with the USSR, partly for prestige and partly out of fear that a Soviet space advantage could translate into overwhelming military superiority.
And we'd need a more solid argument for why space travel is a better accelerator than war; given that being able to fight wars (or defend oneself) is of more immediate practical use to nation-states than the prestige and theoretical scientific advancement of putting astronauts or probes on the moon or Mars.
Interestingly enough, I just saw this today in my Guardian RSS feed: http://www.guardian.co.uk/space/article/0,14493,1345460,00.html
"US ready to put weapons in space"
I think the important point being missed here is that, ideally, no one fights wars in order to promote technological innovation. Technology can prevent and/or mitigate some of the horrors of war, but ultimately it's about killing people.
That's the real down-side point about war, not that it's less efficient at creating tech innovation.
Also, the space race was a cold war strategy. It fit into an ideological and geopolitical race to the bottom, which is one of the reasons its success was so amazing.
This comparison between the economics of space tech and more overtly war-oriented tech serves the same purpose: It fits into a political argument, the terms of which are set by people who want to design machines used to kill other people. Since the terms are set by the 'other side,' it's not a winning argument. There's a percieved need for armaments, and a way to make a bunch of money should a war break out. There's no percieved pressing need to explore Jupiter, and it's not going to be a cash cow.
Since when is NASA a branch of the US military?
I will agree that NASA grew out of cold war hysteria, but it has never been a branch of the military.