Wednesday, February 13, 2008

Defence and GDP ratios

The Heritage Foundation (here) writes a snippet on The First Duty Of Government 13 February:

Writing in Human Events, W. Thomas Smith, Jr. (Defense Spending Crisis reminds us of Adam Smith’s first duty of government: “protecting the society from the violence and invasion of other independent societies.” To that end Republican lawmakers are pushing a proposal to set a floor on military spending at 4% of GDP. Congressional Quarterly reports that sponsors of the resolution (H J Res 67) point out that the percentage GDP spent on defense today is low compared to other eras. Not including supplemental funding for Iraq and Afghanistan, the fiscal 2009 budget spends about 3.6% of GDP on defense. During the Korean war that percentage was 13-14%, during Vietnam it was 7-9%, and during World War II it was 37-38%. House sponsor of the legislation, Rep. Trent Franks (R-AZ) told CQ: “This is the only way we can stop the inexorable slide on national defense.”

Defence spending should be appropriate to the credibility of the threat and the capability of the enemy (real or potential). That requires an authoritative analytical study of the credibility and capabilities of potential threats. That defence spending is a certain percentage of GDP is a consequence of the budgeted spending; it is not in itself a safe indicator that the defence posture is properly met or whether what is spent on defence is a prodigal waste.

In so far as defence spending is a deterrent, what it costs is always lower than the costs of war. Adam Smith famously noted that ‘defence is more important than opulence’, because without defence opulence would be at risk.

Adam Smith was conscious of the after effects of the fall of Rome (5th century) and how it set back Europe for near on a thousand year until commerce began to revive by the expansion of trade.


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