You've attempted to underestimate the significance of the military sector, despite its size being similar to human capital investment measures. We certainly wouldn't do the same with human capital.
To suggest the military sector plays no significant role you have to adopt very specific schools of thought.
I did not say that the military plays no significant role. Or if that is what I conveyed, that is not what I meant to convey. What I am saying is that the military is not the primary nor the main driver of technological innovation nor economic growth in the United States.
The military spends $80 billion on R&D. That is a lot of money, no matter which way you cut it. However, I checked on Bloomberg today to see what the 3000 largest publicly traded companies spent on R&D, and that total was $210 billion. Then if you include privately-held companies, that number is somewhere around $225-$250 billion. So what happens in the corporate market is far more important than what happens in the military market.
I will address what I expect your retort to be below.
Nope. I'm demonstrating the error in your argument. The size of the military burden is certainly sufficient to have a substantive influence on the dynamics of US growth.
If your argument is that military spending, net, is wasteful, and that the money would better be spent on education in terms of economic productivity, I would not disagree. If your argument is that the military is the primary driver of technological breakthroughs, I would disagree.
I referred to education spending. I did not refer to every form of human capital investment. The size of public education expenditure is a key variable in any country's economic outcome.
Right. $900 billion is spent by the government on education in the United States, compared to $515 billion on the military plus another $160 or so billion off balance sheet for the wars in Iraq and Afghanistan. $80 billion is spent by the military on R&D. Another $10 billion is spent by aeronautical and defense companies. The World Bank estimates that the US spends ~2% of its GDP on private education, or just south of $300 billion. Thus, total education spend in America is about $1.2 trillion, roughly double that of the military.
Raw data comparisons of R&D budgets aren't going to help you. First, we don't know their nature. A mature product, for example, will generate interest in minimising costs (ensuring little output in terms of technical progress). We need to refer to military R&D directly.
Data comparisons is a fair approximation on the effect of research spend in America. Why? You can make the exact same argument about military spending. There are all sorts of mature military technologies as well. There is nothing to suggest that the military is engaged primarily in ground-breaking Buzz Lightyear technologies whereas the private sector R&D is basically plodding Hatch-Waxman add-ons.
Private spending is about 3x that of military spending. To suggest that private R&D spending has less of an effect on the economy than military R&D spending assumes that the efficacy of government spending is 3x that of private market spending. That seems a tad absurd, given that the military once routinely spent $700 for toilet seats and $100 for hammers.
To suggest no effect, you have to focus on crowding out effects where scientists & engineers are skewed towards less productive areas. These effects certainly exist, perhaps accounting for the relatively consistent evidence of negative growth effects in the case of Britain and her smaller arms sector. However, that evidence isn't so forthcoming in the US.
I did not say there was no effect.
A few years ago, I sat down with some Ph.D.s in physics who worked in the Reagan administration on the Star Wars program. You talk about crowding out - I asked why they went to work for the administration and they said it was because their budget was virtually limitless. Anything they wanted, they could have. However, despite the enormous amounts of money spent on Star Wars, there was precious little to show for it. Now, if your argument is that government spending is wasteful and could have been better spent elsewhere, then that is a great example. However, in terms of the efficacy of government spending vis-a-vis private spending, not so much. Having spent a considerable amount of time in both the public and private sectors myself, I have a hard time believing that government spending is 3x more efficacious than private spending.
You're continuing to make erroneous comparisons. Spin-off technologies obviously refer to civilian technologies. We therefore have no reason to assume that they will be restricted to 'defence companies'
Right, but it is unreasonable to assume that ~1% of the patent creation would have a multiplier effect of 30x-40x in the private sector, such that 30%-40% of the patents filed in America can be traced directly or indirectly back to military spending. It isn't the case.
