You cannot examine the what the world would look like if there was no military spending; that's a counterfactual. But we know from essential economic science that spending money on non-productive activity does not serve to increase the general economic welfare. In the US alone there are 2 million people serving in the military. Many are endlessly training for a war that most likely will never take place, others are glorified janitors, and the rest are in administration running the training and janitorial work. Imagine if the labor productivity of 2 million people were put to better use. Building houses and products and services that we all need and enjoy rather than mucking about in a field somewhere with $12000 of equipment on their back. (The division of labor is a major argument in economic circles against mandatory conscription)
Of course, militaries are important. The events in Ukraine prove this. But I don't think there is any point in trying to argue that they are good or irrelevant to the economy.
Right, but it's not exactly "non-productive", from the article:
> One way in which defence spending might be said to boost the economy is as a jobs programme. [...]
> Defence spending may deliver better returns as an undeclared form of industrial policy. [...] On average, they found that a 10% increase in government-financed R&D leads to a 5% increase in privately financed R&D in the targeted firm or industry. Moreover, there are knock-on benefits for productivity.
And yes, it's true the military research provides benefits and applications outside the military, (GPS for instance), but if your goal is R&D, it's far more efficient to invest in R&D for R&D's sake, not retroactively justify massive military excess because of knock-on effects.
We spent two trillion dollars in Afghanistan. Imagine what that could have done for our country's energy and transportation infrastructure.
I wonder how much of this is that as a very best case for poorer countries, the military expenses are an attempt to guarantee minimal sovereignty and stability. Poor countries which are well-protected client states of a larger power may not need to spend anything on military.
Whereas for wealthy countries, marginal increases in military spending are generally towards force projection. This is often used to decrease costs associated with international trade…so there’s potentially a direct return on additional spending.
For example, our leadership in overthrowing[0] the government of Guatemala to ensure continued access to unconscionably one-sided contracts for the United Fruit Company (now “Dole” fruit company).
The USA still gets >85% of our pineapple from Costa Rica and Guatemala, which was secured via direct forceful subjugation as well as military spending to quietly support favorable factions.
I don’t think all our wars are directly profitable to the winning belligerent, certainly the GWOT has not given USA access to enough resources in the Middle East to offset the cost. But these indirect benefits of forceful interventions absolutely do at least subsidize our military, and may often make the marginal spending above the minimum necessary for sovereignty, profitable.
Small countries generally can’t leverage this “marginal profitability” so all their military spending is purely a cost center. Potentially necessary, but costly.
Even if the wars in the Middle East greatly increased our GDP through deficit spending, or lost money but enriched the powerful owners of defense companies, those profits came from destroying unbelievable amounts of value in other countries. Completely demolished infrastructure and millions of deaths.
I wonder how much richer USA businesses would be if that money had been poured into schools post-9/11 instead of into literal destruction of value overseas. People born then would be graduating now with greatly increased skill and ability. USA businesses would have far greater access to top talent, at significantly lower cost.
I wonder how much richer the world would be if we’d poured that money into creation, building, and education instead of into destruction and partial reconstruction.
Obviously I also wonder how much value the world might be missing out on from the intellectual capacity of South Korea if USA hadn’t spent money on a military intervention there.
The money for the global war on terror was enough to immediately build 50% more schools (reducing class sizes from 30 to 20), pay all K-12 teachers $100,000 (in 2006 dollars), and buy every K-12 student a new high end MacBook every year.
Lord knows how much internet, highways, railways, port facilities, and manufacturing facilities we could have built with that money. Perhaps we wouldn’t have a shipping crisis right now.
I don't get that part of your (otherwise excellent) comment. If the US (and the UN) hadn't taken part in the war in Korea, South Korea wouldn't exist and the reunified country would have looked like something like either current-day North Korea or China and might not have gone through a similar economic boom, which allowed the intellectual capacity to get to work (and export the results of their work, which wouldn't have happened in a North Korea-style outcome)
South Korea is expected to have roughly a $35,000 GDP per capita this year (barely behind Japan at $39,000; they're certain to overtake Japan this decade).
Vietnam is at around $4,100.
It's definitely implausible that South Korea would be anywhere near so well off had the US and UN forces not prevented North Korea from conquering them.
One wonders, regardless of regime, how much better off North Korea would be if it similar trade opportunities as South Korea. Or how much worse South Korea might be without generous western economic aid.
UAE/Qatar/Saudi/Kuwait for example, are doing well on a per-capita GDP basis despite being absolute monarchies / authoritarian states. Perhaps their ruling families are a bit better than the Kim family, but perhaps the Kim family would have been better if they’d received similar levels of western support and constant access to top advisors instead of isolation.
It's a nice quote, but it's not backed up by the research.
>[...] A basic regression reveals no consistent relationship between GDP growth and military spending for the 38 countries in the OECD.
>A sprawling body of research has come to a similar, albeit more nuanced, conclusion. In a discussion paper at Monash University in 2014, Sefa Awaworyi Churchill and Siew Ling Yew examined 42 separate studies. Effects are generally quite small, but they found two distinct categories: military expenditure in poorer countries is often detrimental to growth, whereas in wealthier countries it is more likely to be beneficial. One possible reason, they suggest, is weaker governance in developing countries; a big military budget is a juicy target for corrupt officials. Another possibility relates to the gun-versus-butter framework. The potential returns on civilian investments, from health care to education, are so great in poor countries that military spending has a particularly high opportunity cost. In rich countries with good schools and hospitals, the opportunity costs ought to be lower.
https://www.economist.com/finance-and-economics/2022/04/16/w...