Blog the 3rd: In which Alice falls through the Looking Glass and Discovers the Military (Act I)

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Act I

Over the course of human history, people have come to equate military with security. The biggest and the strongest are the best protected, top of the food chain, kings of the jungle. This basic premise behind stockpiling weapons is a proliferated truism, which motivates colossal injections into defense spending by governments worldwide. Having more guns equal more peace seems like an oxymoron (emphasis on the moron) but what happens if we take the equation at face value?

The military has to be important. If it weren’t, would America allocate almost 54% (i.e. approx. $599 billion) of discretionary spending to the defense budget per year? Probably not. We are rational actors and basic economic principles dictate that if the supply of missiles, assault rifles, LAVs, and drones is so great, demand for these products must be equally high.

But is it? Is it really?

Once upon a time, when dragons scorched the earth and damsels in distress were a thing, few expenditures were more important than the military. Soldiers were miners who wielded swords and spears instead of the pickaxe and whatever else miners use. A newly occupied region promised inflows of gold, lumber, farmland, furs, and other valuable resources. In this scenario, investment into the armed forces was rational and lucrative – greater military capacity translated to rising wealth from all the righteous conquering. Using the military to extract resources directly contributed to increased utility for the king, the queen and (hopefully) their subjects.

Unfortunately, the twentieth century introduced pesky nuances like the Hague Conventions (followed by all that Geneva business), which rendered military “resource extraction” (read: invasions) illegal. And, given that the earth hath run out of unchartered territories, there is ostensibly nothing left to conquer (righteously or otherwise).

Here’s where it get’s interesting.

Having lost a core function, state militaries are now tasked with one remaining responsibility – protection (from rogue law breakers). This development shifts the purpose of defense spending from being the means to an end, to being an end in and of itself.

From an economics perspective, a country’s military provides a public good (namely, security) that is both nonrivalrous and nonexcludable. Which is to say, all citizens are covered by the blanket protection of a nation’s armed forces and “consumption” of protection by one citizen does not take away from that of another. Normally, free-market competition drives producers to supply goods at optimally low costs. Governments, however, monopolize security and, encouraged (or unnerved) by the military spending of their neighbours, often resort to greater and greater military investment. (Ironically, in this instance a different sort of competition actually drives the cost of the good upwards.)

But how is this possible? Why do citizens, whose taxes pay for the military exuberance, fail to protest the endless race to an imaginary finish line? Don’t free market price signals block inefficient spending? Granted, the elasticity of demand when it comes to security is probably fairly low, but I’m not saying we should have no protection, just that it doesn’t make sense to keep investing into better protection, given that the laws of diminishing marginal returns tell us that, at this point, the marginal utility derived from each additional rocket-launcher is infinitesimal. So why can’t we stop buying rocket-launchers?

INTERMISSION.

(continue to Acts II & III)

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