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Saturday, January 7, 2012

Today's Double-Speak

As part of efforts to rein in government spending, the Obama administration has declared its intention to cut the military budget.  Considering the fact that the US spends more on the military than practically all other nations combined, this makes sense.  Nevertheless, a debate has begun over the potential effects of military cutbacks.  National security is an obvious concern, but economists, politicians, and others worry that military spending cuts will increase unemployment and lead to a decrease in technological innovation, the military being a chief driver and consumer of research and development ("A Shrinking Military Budget May Take Neighbors with It").

Many economists point out, however, that military spending actually provides less "bang for the buck" than other forms of government investment:
"Military spending does not compare well economically with many other forms of government spending, some experts say. Professor [Robert]Pollin calculated in a recent analysis that $1 billion in spending on health care produced an economic benefit about 14 percent larger than spending on defense. The impact of spending on transportation, education and energy were even larger."
Case closed? Well, not exactly:
"Some economists, however, argue that such studies fail to account for the economic value of security and stability. The crucial benefit is not what defense spending provides but what it prevents, Joshua Aizenman, a professor of economics at the University of California, Santa Cruz, and Reuven Glick, a researcher at the Federal Reserve Bank of San Francisco, wrote in a 2006 paper."
So, if I understand that last point correctly, the economic benefits of military spending arise not from any increases in productivity generated by the spending, but by "savings" generated by not having to spend money on other things. But, what would these "other things" be? Presumably, the things that military spending prevents are threats to national security--which would necessitate military spending. In other words, spending money on the military reduces the necessity to spend money on the military. Makes perfect sense!

Enjoy that "peace dividend," everybody.

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