Bryan Caplan  

Peacenik Sound Byte of the Day

The Best of Times, the Worst o... Deficits ad Absurdum...
From War

U.S. military spending - Dept. of Defense plus nuclear weapons (in $billions) - is equal to the military spending of the next 15 countries combined... [O]f the top 15 countries shown, at least 12 are considered allies of the U.S.

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COMMENTS (18 to date)
The Snob writes:

In the modern world, limited force is more expensive than overwhelming force. Once you've mastered the process of building an atom bomb, the cost of demolishing a city that way is a lot cheaper than doing so with conventional forces. Likewise, artillery shells and iron bombs are pretty cheap, while smart bombs and cruise missiles cost serious coin. Not to mention the cost of professional, disciplined, volunteer soldiers compared to conscripts, who are more prone to using excessive force in dealing with non-combatant populations.

In other words, it's cheap to have a military force you'd never be able to use.

caveat bettor writes:

Perhaps it may behoove an economist to scatterplot the defense outlays of each country as a percentage of GDP. Then it might clarify if the US subsidizes the defense of its North American or European allies.

For example, Canada only spends about 1.4% of its GDP on defense while its generous southern neighbor spends about 3 times its respective GDP, and includes Canada under its umbrella (e.g. NORAD).

One could perform similar comparisons on charitable giving, pharmaceutical costs, intellectual property, automobiles, electronics, United Nations payments ...

dearieme writes:

"[O]f the top 15 countries shown, at least 12 are considered allies of the U.S."

But would they be if not for:

"military spending - Dept. of Defense plus nuclear weapons (in $billions) - is equal to the military spending of the next 15 countries combined..."?

Carl The EconGuy writes:

As the previous comments point out, a lot of our so-called friends are free-riding on our defense expenditure -- or so it would seem, right? I think that was a correct characterization of the Cold War days. I'm not so sure it applies to the current War on Terrorism situation.

The hypothetical is this: if we don't provide the defensive umbrella for our partners, do you think they'd increase their own defense expenditures instead? If you believe that, you should be strongly in favor of decreased US defense expenditures.

But I don't think we can take that risk. I don't think the Europeans would have taken on the Serbs without the US. I know they would not have done anything about Afghanistan/Iraq without the US -- and it does not matter whether you are for or against that war, for the purposes of this discussion.

I think we've already faced a structural change in the world. Other nations may free ride on our defense coat tails, but they peaceniks in those countries are now so entrenched that you cannot count on any substitution effect if we were to stop covering them. I'm not even sure we can count on our allies' NATO commitments any more.

So, that means that we're no longer providing free umbrellas, we're producing a big umbrella for our own benefit -- and we need that umbrella to cover some "friends" out there. We need that large expenditure because we're now the only democracy left who's willing and capable of going to war. The Brits are clearly no longer the strong allies they used to be, and we cannot count on them anymore. I think we've lost the Canadians and the Aussies too. We're alone, for better or worse.

That is, we're big because we have to be.

Steve Sailer writes:

Last time I checked, in 2006, the US had 47-49% of all global military spending. We spent 4% of GDP on the military vs. 2% for the whole world. Heck, we spent a higher % of GDP on the military than Iran did! We have, for example, 80% of all aircraft carrier-based warplanes in the world.

Isaac K. writes:

Carl, to be accurate:
"That is, we're big because we CHOOSE to be."

Our choice of military expenditure is just that - our choice.
It may be fueled by moralistic policies and foreign intervention, neither of which I will pass any judgement on, but it is still a choice.

If the Europeans didn't "take on the Serbs," it would be because they made a choice that it wasn't worth their time/effort/etc.
America did it because of a moral agenda to stop them.
All well and good.
But, ultimately, it is not being forced upon us, it is something we CHOOSE TO BE.
Besides - who do we have to go to war against? who are we spending Billions of dollars fighting?
Not a nation. a series of splitered, interconnected groups bound by ideology.
We are fighting a different kind of war. This isn't a matter of simply deposing another government by force, it is, at its essence, a war between concepts, ideas, and beliefs.

And that war, I believe, doesn't need to be fought by having everyone huddle under "our" umbrella.

Tom writes:

Do you think cutting military spending drastically would cause the US to be more likely to get into a major conflict or less likely? I think if you really wanted to "resist war" - especially a major war - then you would be in favor of a stong military. If your goal, however, is just to reduce military spending, then this does not necessarily translate in to a reduction in war, it might actually provoke a military attack. Does this group suggest what the optimal amount of US military spending would be to reduce the likelihood of war?

ryan yin writes:

Aren't some of these expenditures misleading given the lack of conscription in the US? My understanding is that abolishing the draft led to a big capital-for-labor substitution in the US, which might be both a welfare improvement AND increase apparent US expenditures. Steve Sailer's example of carrier-based aircraft seems like a case in point here (the US seems to spend an unusually large percentage of its defense budget on its air force & navy, two branches with very high capital/labor ratios).

The War Resisters website notes they generate their estimate of US military expenditures in part by assuming there would always be balanced budgets absent military spending. Is this reasonable?

Bob Knaus writes:

Defense spending as a % of GDP is easily available on the Internet. Try the CIA Factbook:

Note that the US is #28 at 4.06%, well below such terrors to the world as Saudi Arabia at 10.00% and comfortably below our NATO ally Turkey at 5.30%. Or our other NATO ally Greece at 4.30%.

Plus, whodathunk El Salvador would require 5.00% of its GDP to keep the peace? And the Maldives at 5.50%? What, they are going to be invaded by frogmen from India, disguised as tourists???

The reason the US spends so much on defense is... the US has a really really large economy compared to anyone else.

Just so it's clear, I'm a conscientious objector.

Jonathan writes:

Bob Knaus --

I don't quite see why military spending as a percentage of GDP is the relevant metric for this analysis. Shouldn't military spending be a function of the size of the threats you face, the amount of resources (natural, human, and otherwise) that you need to protect, and the citizenry's risk preferences more generally?

I think you also ignore that military costs almost certainly have fixed and variable components. Perhaps the reason Maldives has such a high rate of military spending as a function of GDP is because those fixed costs are greater relative to their GDPs -- not because they are somehow overspending (or we are underspending)

And this doesn't even touch on how our military spending is further elevated by the increase in risks created by other aspects of the government's defense spending.

Either way, seems really hard to argue that our optimal level of military spending should be higher rather than lower.

Jim Glass writes:

The "sound byte" is very simplistic in the argument it is presumably making.

Note a couple facts: Both world-wide military spending and US military spending have been steadily declining over the long run as a portion of GDP for a couple generations, and this is unquestionably good.

Is this good thing unrelated to the US spending as much as it does on the military in dollars? Maybe not.

Say that after WWII in the Pacific the US took the pacifist/paleo-libertarian route in 1946: "We won, we're going home, you're all on your own from here on", and disbanded the Pacific fleet.

Now the US isn't keeping Japan disarmed, there's no unchallengeable US fleet acting as the cop between Japan and China, Japan-China-Korea, China-Formosa, etc.

Japan, then, as an island nation must rebuild its fleet to defend itself -- remember that it has hostile Soviet Communist forces already holding its northern-most isles -- and after having been nuked, you know what kind of weapon it is going to go straight on a beeline to get.

Now the Chinese and Koreans ask themselves: "What happened the last time the Japanese built a big navy?" What are they going to do? And the Formosans see the Chinese ... and then Americans remember they have interests in the Pacific too ("remember Pearl Harbor"). It's easy to imagine a Pacific armed far more highly than ever with America re-armed to deal with it. Total world military spending, way up.

Or consider Europe after WWII if Americans had gone pacifist, like the West did after WWI. Today, in stark contrast to its prior 1,000 years up to 1945, western Europe is so demilitarized it wouldn't know how to fight a war if it had to. Literally. Of course, that's only because it's been under the US umbrella for generations -- with the US military coming in to solve its problems like Milosevic when someone has to (for all they say "thank you".) But if we'd forced them all to re-arm up after the war, would the world really be a better place for it?

So it's easy to imagine that much less US military spending would have led to much more world-wide military spending, then leading to more US military spending again, but in a much worse situation overall.

But as it is -- even with the US accounting for almost 50% of world defense spending in dollars -- as a portion of GPD, U.S. military spending has fallen from 14% in the 1950s to 4% today (even after the big increase for Iraq etc.).

That's a good thing too.

Also, as noted in another comment, the US is only about 28th in military spending in terms of GDP. Which makes a lot of nations look a lot more war-mongerish than the US. I mean, c'mon, comparing dollar amounts is bogus, when we are by far the biggest economy in the world.

If you compared the dollar amounts the US spends on education to the amounts spent by the same countries on the peacenick list "The Netherlands ... Canada ... Italy ... South Korea..." the USA would look like a nation of Einsteins.

(And in 2009 the US won't spend $1.449 trillion on the military either -- that's only 2.25 x the CBO's figure of $644 billion).

Jesse writes:

If you've got a big military, you might as well use it. Aren't there some obvious public choice points to be made about the size of our military sector?

Jacob Oost writes:

Actually, in Jacob's Perfect World, that's about the percentage of the budget the federal government would spend on defense, maybe even more. See, my Perfect federal government would have its budget slashed to the bone, down to the basic functions listed clearly in the Constitution, with a few "for the general welfare" (not "specific" welfare) powers thrown in there too. I think defense and law enforcement is one of the most important things a government does, and yes, I think the size of the economy is a very important metric in this analysis. Not the only one, but a very big one.

Gary Rogers writes:

With spending like that, why would we ever need a stimulus package?

8 writes:

If the whole world re-arms, whose weapons will they buy?

I think we've found our stimulus plan...

Mr. Econotarian writes:

The US FY2007 spent 4.65% of GDP on "Defense" plus another 1.82% of GDP on police, courts, and prisons (this includes federal, state, and local spending).

El Salvador may send more on its military because 1) it has a recent history of civil war where 180,000 people died 2) in 1969 it was involved in a war with its neighbor, Honduras and 3) I suspect the military is involved in a lot of policing today, because of the drugs gangs that have sprung up in the country and 4) the military is called out to handle earthquakes and landslides

Bob Knaus writes:

Yikes. I guess some folks missed the toungue-in-cheek nature of my comment. Of course government spending should be based on need, whether it's guns or butter.

How much did the citizens of Sparta spend on defense as a % of GDP? Doesn't really matter, does it? Their actions immortalized them in a way that the militaries of Saudi Arabia, or the Maldives, or El Salvador, never will.

Jacob Oost writes:

Mmmmm, maldives. I love those on my potato skins.

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