Let's stick to rates, people.
The other day I made the point that our propensity to talk about spending in terms of absolute levels but taxes in terms of rates biases the whole debate towards doing things through spending cuts. I personally think talking in terms of rates or percentages makes the most sense. In a growing economy, with inflation, I don't really care that this is the "biggest budget in American history" or the "biggest deficit in American history". Do you notice how you hear those phrases every year? It's because the economy is growing.
This applies to defense spending as well. For some reason it is particularly hard to get this reported in per capita or as a percent of GDP terms. When you do a cross-country comparison we dwarf everyone else, but when you look at defense spending per capita or as a percent of GDP things start to get a little more reasonable. Throw in the fact that if we reduced our security spending, all of our allies would increase it and it looks even more reasonable. You may not like that we are the de facto guardian of the free world (I am fine with some aspects of that arrangement and less fine with others), but lets not pretend that spending levels are associated with some underlying American violent psycopathy. There are very good reasons for the levels we spend.
1. We are the leader of the free world when it comes to security issues.
2. We have more people and wealthier people. The value of national security is higher and we can afford it. It's the same reason rich people have body guards and I don't.
3. Our military is a force for scientific and technological boundary-pushing. We buy more expensive stuff.
4. Evenly matching the capabilities of your potential enemy is really dumb national security strategy.
Much of this would be clear if we made sure our fiscal talk stuck to rates and percentages rather than absolute numbers.
The argument is not that there aren't cuts to be made to the military. Everyone knows this. Repeating this point that I already know doesn't mean you've somehow bested me. In fact the Pentagon itself is often in the lead of telling Congress that a lot of the weapons systems they appropriate funds for are just a waste of money.
If you want to reduce the defense budget you get us out of Afghanistan and downsize our presence in Germany and South Korea (even if we want to continue providing a security umbrella, why do we need such a big foot print there? It's not like the Red Army is going to be coming over the horizon or anything). Cut specific weapons systems we don't need.
Don't cut defense indiscriminately in the middle of a recession and make exclamations about perfectly sensible discrepancies between countries in raw defense spending and then call me the hysterical one.
Every time Nick Rowe writes a macro post...
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