CDZ Just why does the U.S. spend so much on its military? To what end?

Thanks! don't know why I thought we were such a presence there.
We used to have a very big presence there. There's been talk of restoring that presence.
 
If we are not actually using our military to stop other countries from behaving badly, what ARE we doing with it?

Exactly.

The issue that concerns me, and what prompted me to create this thread is that of the opportunity cost associated with our military spending. At one of the references I note below, you'll come by the following:

Theoretically, spending on defense could affect economic growth in both negative and positive ways. On one hand, military expenditures can impose opportunity costs on a nation. That is, aggregate economic growth could suffer as resources used for defense—including capital, labor, and land—become unavailable for potentially more productive uses that could support long-term economic growth. At the same time, defense spending can benefit an economy—for example, by creating or maintaining a climate of national security necessary for both domestic and foreign private investment to flourish. Other examples of benefits include sizable public infrastructure investments, development of advanced technology, and skilled training of workers.

Past research has generally found that increased defense spending boosts overall economic growth in the short run, especially during times of external security threats (Aizenman and Glick; Landau). Some researchers also find the long-run benefits of defense spending outweigh the long-run costs (Atesoglu 2004). Still, many studies find high levels of defense spending are a drag on economic growth in the longer run, as productivity is generally found to be higher in other sectors of the economy (Cuaresma and Reitschuler; Mintz and Huang). In addition, some researchers suggest that wartime casualties could impose both short-term and long-term costs to soldiers and their families that are difficult to measure (Blimes and Stiglitz).​
Yes, the sheer magnitude of military expenditures -- 80% of individual federal income tax revenue -- means that it has to have a meaning impact on the U.S. economy. The question, however, is whether that's really the most productive use of our collective treasure. It's clear, by the fact that scores of nations that aren't being invaded and so on, that such an expensive military isn't needed to protect a nation's interests, even a big nation like Canada, Russia, China or the U.S. Cost of things isn't it either if Russian and Canadian expenditures are any indicator. (FWIW, the Russian military consists of 1.8 million units.) I point out Russia and China in particular because they are not military allies to the U.S.; thus they don't gain any collateral benefit from U.S. military spending that in turn would allow them to spend less on their own militaries.

If our biggest adversaries don't need to spend so much on their military to keep us at bay, why should we need to spend more to keep them at bay? They aren't exactly militarily allied with one another and they are just as concerned about perceived incursions by us and our allies as we are of them. Certainly Russia is, and we don't keep enough NATO strength aligned at the Russian border to do a damn thing to stop Russia if it were to launch an offensive. As earlier noted, we -- Obama didn't and Trump hasn't said a word about it -- aren't actually doing a thing militarily to counter or deter China's "land creation."

So, in terms of opportunity cost, there's a lot we could do for our citizens, things that would be directly beneficial both now and as investments in the citizenry's long term increase in prosperity. At the very least, if we cut defense spending by $300B, that $1200 per adult citizen (250M) that could be spent or saved as each person sees fit. Now that's a "tax cut" that can have a meaningful impact in a whole lot of people's lives. Nevermind ways in which the government could exploit it buying power to spend $300B on things like education and training to boost the skills of underemployed people who cannot obtain the jobs that are unfilled and that require higher levels of skills than they have. Maybe it could be used to facilitate lower health care or health insurance costs.


I've always thought, since Iron Mountain, that the military spending is necessary to keep the American economy cranking. Is that now debunked?

U.S. defense contractors can fairly safely rely on the US government to support their business if all other customers disappear, and the US government obviously has the ability to sustain such support. So, yes, government spending provides some measure of "crank" to the U.S. economy, about 4% of GDP. The U.S. defense/aerospace industry, obviously, has as its largest customer the U.S. government, followed by other allied governments. You can get a sense of the breakdown in terms of government spending on that industry here. In summary, "the aggregate arms sales (including domestic procurement and exports) of the100 largest arms-producing companies in the OECD (Organization for Economic Cooperation and Development) and developing countries totaled approximately $157 billion in 2000. US arms sales accounted for 60% of that total. West European OECD accounted for 31%, other OECD (Japan, Canada, Australia, Turkey) accounted for 6%, and “developing countries” (Israel, India, Singapore and S. Africa) accounted for 4%."

Mark Nackman wrote a paper arguing for the positive benefits of aerospace and defense spending as a means of economic stimulus. The government published in 2009-2010 a paper that provides an objective analysis of "industry-level effects of government purchases in order to shed light on the transmission mechanism for government spending on the aggregate economy." Other useful references:
That's all just objective information. Does that information suggest the notion is "debunked?" No. What does suggest the notion no longer holds much water is that services comprise ~80% of the U.S. economy. According to BEA, in 2009 services accounted for 79.6 percent of U.S. private-sector gross domestic product (GDP), or $9.81 trillion. Services jobs accounted for more than 80 percent of U.S. private-sector employment, or 89.7 million jobs.



The manufacturing sector, however, accounts for about 12% of economic output, making it more than five times smaller than services.​

If governmental military spending still plays a major role in the economy, it'd have to come from purchased military and defense related services not tangible products. DoD and quasi-military agencies purchase defense (related) services -- advisory, support, and staff augmentation -- but I don't know the quantitative value of those contracts -- it's so often lumped into a nebulous term, "contracting" --so I can't say just what share of GDP it entails.

For a historic perspective...

At the start of the 20th century, defense spending averaged about one percent of GDP. Then it spiked to 22 percent at the end of World War I. Defense spending in the 1920s ran at about 1 to 2 percent of GDP and in the 1930s, 2 to 3 percent of GDP.

In World War II defense spending peaked at 41 percent of GDP, and then declined to about 10 percent during the height of the Cold War. Thereafter it declined to 3 to 5 percent of GDP, with surges during the 1980s and the 2000s.

usgs_chart2p31.png

Given the above, I think it accurate to say that defense spending is material insofar as no business that benefits from it wants to lose it -- some businesses exist solely because of government defense spending -- but as a driver to the overall economy, it hasn't the same role it used to and defense spending being cut by half wouldn't be ruinous to our economy.
 

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