Less Bang for the Buck
Military spending drains and distorts the civilian economy.
By Thomas E. Woods Jr.
To get a sense of the impact the U.S. military has on the American economy, we must remember the most important lesson in all of economics: to consider not merely the immediate effects of a proposed government intervention on certain groups, but also its long-term effects on society as a whole. That’s what economist Frédéric Bastiat (1801–50) insisted on in his famous essay, “What Is Seen and What Is Not Seen.” It’s not enough to point to a farm program and say that it grants short-run assistance to the farmers. We can see its effects on farmers. But what does it do to everyone else in the long run?
Seymour Melman (1917–2004), a professor of industrial engineering and operations research at Columbia University, focused much of his energy on the economics of the military-oriented state. Melman’s work amounted to an extended analysis of the true costs not only of war but also of the military establishment itself. As he observed,
Industrial productivity, the foundation of every nation’s economic growth, is eroded by the relentlessly predatory effects of the military economy. …Traditional economic competence of every sort is being eroded by the state capitalist directorate that elevates inefficiency into a national purpose, that disables the market system, that destroys the value of the currency, and that diminishes the decision power of all institutions other than its own.
Throughout the Cold War, politicians and intellectuals all over the political spectrum could be heard warning of the catastrophic economic consequences of reductions in military spending. The radical left in particular, as part of its critique of American state capitalism (which it sometimes conflated with pure laissez-faire), lent important support to that position. As Marxists Paul Baran and Paul Sweezy warned: “If military spending were reduced once again to pre-Second World War proportions, the nation’s economy would return to a state of profound depression, characterized by unemployment rates of 15 per cent and up, such as prevailed during the 1930s.”
Yet these politicians and intellectuals were focusing on the direct effects of discontinuing a particular spending stream without considering the indirect effects—all the business ventures, jobs, and wealth that those funds would create when steered away from military use and toward the service of the public as expressed in their voluntary spending patterns. The full cost of the military establishment, as with all other forms of government spending, includes all the consumer goods, services, and technological discoveries that never came into existence because the resources to provide them had been diverted by government.
Not All Growth Is Good
Measurements of “economic growth” can be misleading if they do not differentiate between productive growth and parasitic growth. Productive growth improves people’s standard of living and/or contributes to future production. Parasitic growth merely depletes manpower and existing stocks of goods without accomplishing either of these ends.
Military spending constitutes the classic example of parasitic growth. Melman believed that military spending, up to a point, could be not only legitimate but also economically valuable. But astronomical military budgets, surpassing the combined military spending of the rest of the world, and exceeding many times over the amount of destructive power needed to annihilate every enemy city, were clearly parasitic. Melman used the term “overkill” to describe that portion of the military budget that constituted this kind of excess.
By the 1960s the U.S. government, in its strategic aircraft and missiles alone, was capable of unleashing in explosive power the equivalent of six tons of TNT for every person on Earth. “Now that we have 6 tons of TNT per person in our strategic missiles and aircraft alone,” Melman wondered, “have we become more secure than when we had only 1 ton of TNT per human being on earth?”
The labor, time, and other resources that were used to produce this overkill material were taxed away from the productive population and diverted from the creation of civilian goods.
Out with the phony conservatives, the Tea Party movement says. We want the real thing. But the real thing, far from endorsing global military intervention, recoils from it. The conservative cannot endorse a policy that is at once utopian, destructive, impoverishing, counterproductive, propaganda-driven, contrary to republican values, and sure to increase the power of government, especially the executive branch.
The conservative temperament shuns utopian schemes, and seeks instead those finite but noble virtues we associate with hearth and home. These are the things the conservative is supposed to delight in and defend. Nathaniel Hawthorne once observed that a state was about as large an area as the human heart could be expected to love, and G.K. Chesterton reminded us that the genuine patriot boasts not of how large his country is, but of how small it is. As Patrick Henry said, “Those nations who have gone in search of grandeur, power and splendor, have always fallen a sacrifice and been the victims of their own folly. While they acquired those visionary blessings, they lost their freedom.”
The above is less than half the essay. More gory details here: [link to www.amconmag.com