Military Spending And The American Economy

Expenditures on defense affect a lot more than the deficit

One of the articles in Is Militarism Fading? (IC#20)
Originally published in Winter 1989 on page 16
Copyright (c)1989, 1997 by Context Institute

Militarism is getting pressured in a variety of ways, but none so plainly visible as its rising economic cost. The following is condensed from Gary Chapman’s speech to a Calvert Social Investment Fund Town Meeting, held June 4 of this year in San Francisco. Gary is Executive Director of Computer Professionals for Social Responsibility (PO Box 717, Palo Alto, CA 94301).

The Calvert Social Investment Fund (CSIF) does what few financial institutions do: they go directly to their shareholders with questions about important issues, ask for their input, and respond to their feedback. In addition to the interactive Town Meeting at which Gary Chapman spoke, CSIF has also polled its shareholders on the military spending issue (receiving a high 35% response rate) and planned the creation of a separate education and lobbying organization to promote shareholders’ views. For more information on the Calvert Group’s socially responsible investment programs, write them at 1700 Pennsylvania Avenue NW, Washington, DC 20006.

In the fifteen minutes that I will be speaking here today, the United States government will spend approximately $8,680,556 on defense. Since 1981, when President Reagan took office, the U.S. has spent over $2 trillion on defense. What’s $2 trillion? If you were to have a bank teller count out that money for you in one hundred dollar bills, you’d be at the teller window for about 6,300 years.

What does all this money buy?

It buys a lot of things, but we have to ask if it buys us more security. And we also have to ask how all this spending on defense affects the economy as a whole, because any reasonable standard of national security has to include an economy that provides a decent standard of living and a measure of economic security for all citizens.

Even though the defense budget has doubled in size during the years of the Reagan administration, and even though we have just witnessed the largest build-up of our forces in peacetime history, defense spending is not a huge percentage of our economy. Currently the U.S. spends between 6 and 7% of its Gross National Product on defense, which means 93 or 94% of our economy is dedicated to other things. Supporters of increased defense spending are quick to point out that 7% of GNP for defense is lower than in other periods of peace, such as the 1950s, also a period of economic growth; and these people say there is no reason a $4 trillion economy cannot sustain this level.

This is true in the abstract. The U.S. should be able to support a defense spending level of 7% of GNP, all other things being equal. But I want to briefly point out three specific features of our contemporary situation that make the defense budget an extraordinary burden on our economy.

First is the character of defense research, development and production. In the United States, approximately 40% of all scientists, engineers and technical professionals work in the defense sector. This is a colossal diversion of talent and intellectual resources to what is essentially a non-productive enterprise.

Let me give some examples from the field of computer science. Computers are often viewed as a key technology for future productivity, so it is important to make wise decisions about how we develop this field. Our estimates, which have been confirmed by other reports, indicate that about two-thirds of all computer science research in the United States is funded by the Department of Defense. At some of the more prestigious university departments – such as Stanford, MIT, and Carnegie-Mellon University – up to 90% of the departmental budget can come from the Pentagon.

The character of the research is also changing. Funding for computer science in the U.S. is moving away from basic research, which has many commercial applications, and toward applied research, which is more related to specific military requirements. In fact, the more developed military systems become, the less applicability they have to the commercial sector. In the meantime, the field of computer science in Japan and Western Europe is almost entirely free of military influence, and research in those countries is explicitly and effectively related to the international marketplace. The U.S. is running the risk of spending itself into oblivion by funding the wrong kind of research and development.

My second point is that the U.S. finds itself in the relatively unique historical position of having a military alliance with economic competitors, and a military confrontation with an economic inferior, one so far behind that there is almost no profile for comparison. In modern times this situation is unique – in all the other modern confrontations that produced war, the belligerents were both military and economic competitors.

We have a rather serious dilemma in our current situation. If we were in an arms race with an economic rival, our economic spending would tend to equalize and our economies would likewise adjust to each other. Our percentages of spending on guns and butter would tend to rise and fall together.

But in the present circumstances, our economy is in competition with those of countries we are sworn to defend. Our spending on guns goes up while their spending on butter goes up. If we shift our standard of living to provide more weapons, they can shift their standard of living to provide for more long-term capital investments in basic industries. You can’t buy a tank or an MX missile made in Japan, and you can’t buy a VCR made in the United States. Our basic industries are getting eaten alive by foreign competition, our scientists and researchers are preoccupied with Star Wars and other weapons systems, and we may slowly fall into second class status and a lower standard of living.

My last point is that in opening this discussion, I suggested that we are paying for the arms race on a daily basis, but this is really misleading. At the moment no one is paying for the arms race. It is being financed. For the last eight years we have been spending up to the limit on a $2.6 trillion credit card. The combination of tax cuts, increased defense spending, and providing the barest level of social services that we can humanely tolerate has led to an accumulated debt that has turned the U.S. from the world’s largest creditor nation to the world’s lagest debtor in less than eight years. This is historically unprecedented, a world record-breaker. The bottom line in this disaster is that we are leaving to our children two burdens for which they will find it hard to forgive us: we are leaving them a world armed to the teeth, and all the bills that made that possible.

Someone else summed up my feelings on this whole issue rather well, about 23 years ago. Former General and President Dwight D. Eisenhower said, "We need an adequate defense, but every arms dollar we spend above adequacy has a long-term weakening effect upon the nation and its security." This is a much broader and more reasonable view of national security than the one currently in vogue in Washington.

We need to think in terms of sensible investment, because even high school students know that you cannot have both all the guns and all the butter money can buy. Even the youngest consumer knows the difference between running a deficit to buy something that will pay off handsomely in the future, and running a deficit to buy things that will be used up and thrown in the trash. Our leaders need to relearn these early lessons.

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