The Benefits of Guns vs Butter

In economics there's a classic model of the limits of production called the "guns versus butter" curve. A society that spends more on military spending will have less to spend on other things like consumables, social spending, etc.

Recently on Foreign Policy, blogger Stephen M. Walt offers some interesting comments on a New York Times op-ed piece which berates America for being the lowed of 33 advanced countries in an Intermational Monetary Fund index measuring everything from unemployment to the global wellness index to student test performance (Canada, by the way, ranks second behind Australia).




Walt's point concerns what the IMF index doesn't measure.

He adds two ratings to the IMF index. One is percentage of Gross Domestic Product dedicated to defense spending, the other is defense dollars spent per capita. If you sort by the guns metric rather than by the butter metric, the USA ranks second in the index at 4.48% of GDP spent on defense ($2,290 per person). Only Israel spends more, at 7.41%. By comparison, Canada spends 1.19% of GDP on defense, below countries such as Norway, Portugal, and Cyprus.

Here are Walt's conclusions:

But surely the amount the U.S. currently devotes to "national security" has two negative effects. First, it encourages a lot of other countries to free-ride, leaving Uncle Sucker to pick up the slack in places like Afghanistan but also in some other areas (such as East Asia). Second, it cannot help but divert money that could be used for other valuable social purposes (education, health care, national infrastructure, personal consumption, etc.). We could even spend the money we need to fix things like dams. Spending that money wisely at home would leave many Americans better off and facilitate long-term economic growth.

I'd also argue that a somewhat smaller military and a foreign policy that was less geared to overseas intervention would also diminish anti-Americanism in many places. Over time, fewer people would be joining anti-American terrorist groups and calling for further infringements on civil liberties here at home. Doing somewhat less might encourage others to do more, and some states might even compete to try to win our favor, if we were more selective in whom we agreed to protect. But those are different issues.

In other words, while we in the rest of the developed world might feel smug about the state of our societies, the USA is picking up a disproportionate share of the tab for our collective security. If the USA scaled back, as it will almost certainly have to do in the next few decades, the rest of us might find ourselves haveing to make hard choices between guns and butter.