Military Expansion, Economic Decline: The Impact of Military Spending on U.S. Economic Performance

Military Expansion, Economic Decline: The Impact of Military Spending on U.S. Economic Performance

Military Expansion, Economic Decline: The Impact of Military Spending on U.S. Economic Performance

Military Expansion, Economic Decline: The Impact of Military Spending on U.S. Economic Performance

Synopsis

This work provides an analysis of North Korea's nuclear controversy from a variety of perspectives, including: nuclear reactor technology and technology transfer; economic sanctions and incentives; confidence-building measures; environmental challenges; and the views of Korea and the major powers.

Excerpt

When it comes to defense spending, economics is clearly not the only issue. America can afford to spend whatever percentage of the gnp that is necessary for its security. in 1944 about 42 percent of gnp went to the military. Equally clearly, however, there are important economic issues to be taken into account when determining defense spending.

From an economist's view, an mx missile is like a toaster. Both are forms of current consumption; that is, neither contributes to our ability to produce more economic goods and services in the future.

All societies must set spending limits on current consumption, defense and non-defense, to provide for the economic future. If defense spending must go up, then private consumption must come down.

If we pay for defense by drawing the funds out of physical investment, civilian research and development, or educating and training our labor force, we then will be undercutting the long-run survivability of the very economy that we need to sustain defense spending.

The economic world is also changing for Americans. While the United States since World War II has carried a larger military burden than its military allies (as measured by the fraction of gnp devoted to defense), what was once fair and easy has become unfair and difficult.

Where we once had a much higher per capita income and, from the point of fairness, should have been carrying a heavier economic burden, we now have allies with approximately the same per capita standard of living. Where we once had a huge technological lead and did not have to worry about being able to compete in world markets, we now have competitors who are our technological equals in civilian products.

As a result, there are now real questions as to whether we can continue to spend more than our military allies but economic competitors.

Traditionally, "spinoffs" have been suggested as compensating benefits to the costs of military expenditures. Indeed, the original civilian jet airliner was a modified military cargo plane.

But there is reason to believe that whatever the degree of "spinoffs" in the past they are fewer now. Military hardware, as it increasingly moves into space, simply has requirements so specialized that there is little commercial applicability. Although enormous resources have been devoted to the space shuttle over many years, for example, as yet no economically productive uses for it have been generated.

For all these reasons few matters are as important to understand as the . . .

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