Today in Philadelphia, in a speech focused on military policy, Donald Trump criticized Hillary Clinton as “trigger-happy” and as a politician focused on “destruction” over diplomacy.
Continuing a theme he has embraced since at least the South Carolina primary this year, Trump continued with his position that American foreign policy in the Middle East and Afghanistan has been a failure. Specifically, Trump referred to the “6 trillion” dollar price tag of the wars in Afghanistan and Iraq and declared:
We could have rebuilt our country over and over again. Yet after all this money was spent and lives lost, Clinton’s policies as secretary of state have left the Middle East in more disarray than ever before. ... Had we done nothing, we would have been in a far better position.
Trump also emphasized the need for a less bellicose stance toward Russia.
These are all good observations. Unfortunately, Trump in his speech also called for a massive military buildup, an end to sequestration, and more government spending.
Specifically, Trump’s plans include:
- 61,000 new active Army personnel
- 77 more Navy ships to bring the total to 350
- More Marine Corps units
- More fighter jets
Not surprisingly, Trump wasn’t exactly “specific about how he’d pay for the buildup.”
How Much Military Spending Is “Necessary”?
The Trump campaign cites the Heritage Foundation as its source for “needed” totals in personnel and equipment.
The Heritage Foundation is famously hawkish, of course, and presses incessantly for more military spending. But, both Heritage and Trump are essentially relying on conclusions based on numbers picked out of thin air.
The US — even in inflation-adjusted terms — engages in more military spending now than during the Cold War. Moreover, contrary to myths repeated by conservative pundits, military spending has not experienced anything even resembling significant cuts. Looking at the past decade, we see there is more military spending today than during the height of the Iraq War:
Total defense spending is estimated to be $711 billion in 2015, compared to $721 billion in 2014. That’s a decline of 1.2 percent, year-over-year. But total spending remains up 68 percent over 2001 levels, and up 22 percent over the Cold War peak year in 1986. During the eight years of George W. Bush’s presidency (2001 through 2008), the federal government spent $4.7 trillion on defense. During the seven years of the Obama years, from 2009 through 2015, the federal government spent $5.3 trillion.
In other words, with the exception of the years 2009–2014, the US taxpayer is spending more on military spending than ever before.
Moreover, there is a massive gap between what the US spends on the military and what the rest of the world spends. In 2015, according to SIPRA, the US spent $597 billion on military outlays in 2015, not counting the deferred personnel spending known as “Veterans Administration” spending.
The next largest spender on military outlays is China, which spent well under half as much as the United States, at $ 215 billion.
Indeed, adding up the next nine biggest-spending nations — for a total of $639 billion — the US still nearly comes out on top.
Moreover, most of the other top-ten countries in terms of military spending are US allies such as the UK, France, India, and South Korea.
In cases of nations where the US has declared foreign nations to be rivals, as in the case of China, military spending largely goes to land forces which are of no threat whatsoever to the North American mainland.
When it comes to modern and advanced naval equipment, the US is at an even larger advantage.
Of the 20 active aircraft carriers in the world, the United States has 10 of them. China has exactly one. The US has three times as many destroyers as both China and Russia. The US has one-third more nuclear powered submarines than Russia, and has 8 times more nuclear subs than China.
And, simple comparisons like these do not account for the technological superiority of American naval equipment, especially when compared to Russia which is still largely reliant on Soviet-era equipment.
While it is true that the United States does not enjoy total global hegemony — thanks to the reality of nuclear weapons — it will never achieve this. An additional frenzy of military spending will not make it so.
Without Markets, How Can We Know the “Correct” Amount of Military Spending?
So, it is simply not true that the US is in a trough of military spending.
But, what is the “correct” amount of military spending?
Since military spending relies on the political process and not the market process, this is an impossible question to answer.
Political scientists have long noted the peculiarity of military spending that results from the fact there are so rarely any functioning markets for military equipment. Unlike most other goods and services in the world, there’s no way of knowing — without major changes to the status quo — how much people would pay for military defense services in private transactions. There are virtually zero private sector customers for heavy tanks, artillery, and gunboats. It is unlikely that there are any private parties anywhere in the world that would consider it practical to purchase an intercontinental nuclear missile or an aircraft carrier.
Thus, these weapons “markets” are really just exchanges that result from purely political decisions made about government spending. And, without price signals, we have no idea of how people value these items in the same way we know how much they value a washing machine or an automobile. Every day around the world, people voluntarily part with specific amounts of money to purchase cars and appliances. The same voluntary transactions do not take place for warships.
As a result, any declarations about the proper number of aircraft carriers or Marine Corps units are strictly a matter of opinion. A government planner may decide that a certain number of tons of steel should be devoting to building more naval vessels, but we have no way of knowing how the actual producers of wealth (i.e., the taxpayers) would have spent that money had they been allowed to keep it. Essentially, the US decides on the correct number of tanks in the same way the Soviet Union used to decide on the “correct” number of shoes or loaves of bread.
Naturally, anyone who understands the essential role of market prices would be left asking himself if the taxpayers would have elected to spend money on steel at all, or would they have directed their resources toward something else?1
In the absence of market prices, the fact is we don’t know, and any claims made by politicians or government officials or “experts” are nothing more than that: claims and opinions.
We do know that when government does spend on equipment and personnel, they are diving up the prices of those resources, whether they be steel or labor. That is, taxpayers pay for military spending twice. They pay up front in the form of taxes. Then, they pay a second time as prices and scarcity are increased for goods that the government has removed from the marketplace by purchasing them.2
Does More Spending Mean Better Outcomes?
The shallowness of Trump’s thinking is further emphasized by other claims such as his pointing to the alleged fact that the Navy now has fewer ships than in 1917. It’s debatable to whether or not this claim is even literally true, but given the realities of modern aviation, missile technology, and naval technology, making comparisons with a World-War I-era navy is a bit like complaining about how the Army now has “fewer horses than it did during the Civil War.”
But note how the lack of functioning markets and prices leaves us arguing over the number of pieces of equipment rather than the actual defense capability of a navy. Without consumers to provide value to defense services, we are left quibbling over the number of boats, as if this statistic equated to or corresponded with the actual amount of defense services demanded by ordinary people.3
If private corporations employed these same tactics, a company’s prospectus would be based on the number of automobiles owned in a company’s fleet rather than on the amount of profit and value produced by the company. Indeed, a private company seeks to keep down overhead costs such as a fleet of cars and trucks. Many politicians of course, behave in exactly the opposite manner when it comes to military spending.
Ironically, many conservatives use the same approach here that they eschew in other areas of government spending. If military effectiveness is measured in the number of boats purchased, then should not public education be measured in terms of the number of textbooks purchased or staff positions filled? Rightwingers frequently — and correctly — dismiss the idea that more spending on education necessarily means more educated people. Unfortunately, this same logic is often not extended to military spending.
Trump is Half Right
Trump wants more spending, but has no plans to make any significant cuts to social benefits to do so. In reality, this will all add up to a lot of deficit spending, more future taxation, more monetizing of the debt, and more stealth taxation through money-supply inflation.
In spite of this, though, there is a small amount of wisdom to be found in Trump’s speech in that he at least appears to have figured out that the US’s habit of invasion and nation-building is both unsustainable and economically disastrous.
Trump need not commit to any additional military spending, however. He merely needs to end current military interventions, and scale back the US government’s immense network of costly military bases and deployments. This not only decreases costs right now, but cuts down on future veteran-related costs in the long term. As Ron Paul has noted, if the US government is concerned about its combat veterans, as it claims, it should stop making so many of them.
Ryan McMaken is the editor of Mises Wire and The Austrian. Contact: email, twitter.
- 1The essential role of prices in allocating goods was developed early on by Ludwig von Mises and later also developed by FA Hayek in his essay “The Use of Knowledge in Society.” Percy Greaves provides an additional explanation here.
- 2In chapter 12 of Man, Economy, and State, Murray Rothbard explains how government spending is just as problematic as government taxation, and how spending distorts markets and prices.
- 3Fundamentally, prices tell us how much people value a good or service, and all value comes from the consumer. In other words, in a functioning market, the consumers determine how much of a good or service is provided in the marketplace. If the consumers do not value something, it will no longer be offered in the market. Since military spending does not respond to market prices, we do not know how much consumers value it. Politicians and voters may claim to value it at a certain level, but without demonstrated preferences expressed in the marketplace, true values are based on nothing more than guesses and ideologically-motivated claims.
