The Worst Kind of Stimulus

By virtually all accounts, we are now in the midst of a global recession that shows no sign of improving anytime soon. During an unprecedented economic downturn like this, you might expect governments to be cutting back on unnecessary spending and pouring all their scarce resources into shoring up their economies and salvaging their imploding banking sectors. And you might think that, with the World Bank now warning that developing countries face a financing shortfall of up to $700 billion, wealthier nations would be husbanding their cash in case their help is needed.

But you’d be wrong. In fact, governments around the world are throwing billions into the one sector of their economies that will probably do the least good for the world: their military-industrial complexes.

The United States is a case in point. Last month, the Obama administration released a budget blueprint for the upcoming fiscal year that included $534 billion for the Department of Defense, as well as $130 billion for the wars in Iraq and Afghanistan. At $534 billion, President Barack Obamas Pentagon budget is $9 billion, or 1.7 percent, greater than the previous years budget after adjusting for inflation.

Rather than immediately reducing defense spending, as some U.S. liberals have called for, the Obama administration plans to institute change by providing more money for U.S. military personnel and less money for high-priced weapons systems. Given the manpower-intensive requirements of Iraq and Afghanistan, prioritizing men and women in uniform makes sense. Nevertheless, the usual complex of corporate-political interests stands ready to thwart any effort to recalibrate Pentagon spending.

Lawmakers on Capitol Hill are all too eager to aid defense industry lobbyists campaign to stifle progress; even under favorable economic conditions, members of Congress hate to cut funding for weapons built back in their home districts. Even after the Democratic partys takeover in 2007, Congresspeople have insisted on funding programs their constituents wanted but the Pentagon said it didnt need, such as the F-22, DDG-1000 destroyer, and the alternate engine for the Joint Strike Fighter. President Obama may have every intention of ending the days of giving defense contractors a blank check, as he said last week, but powerful entities block the road to reform.

The United States is hardly the only country ramping up military spending in 2009. China announced it would increase its defense budget by 15 percent over last years level. India said its increase would be a staggering 34 percent. And while Russia plans to submit a defense budget that is approximately 15 percent less than last years, it still intends to spend $111 billion over the next three years to purchase new weapons and modernize its armed forces.

Meanwhile, the United States remains far and away the global leader in overall defense spending. Consider that in 2007, the most recent year for which accurate data is available from the International Institute for Strategic Studies, the United States spent more on defense than the next 14 highest spending countries combined; accounted for 43 percent of the worlds total defense spending; and spent five times more on defense than China, eight times more than Russia, 85 times more than Iran, and 100 times more than North Korea. (These calculations were made using the highest possible budget estimates for these countries, whose precise spending levels are unknown.)

Despite its overwhelming dominance in overall spending, the United States did not have the fastest growing defense budget in the world between 2005 and 2007, the most recent period for which an accurate assessment is possible. That distinction belongs to Kazakhstan, which saw its defense budget increase by 84 percent. Other countries with booming budgets during this period included Angola (80 percent), Ukraine (57 percent), Jordan (57 percent), and Slovakia (55 percent). The United States, China, and Russia had more modest growth rates of 17 percent, 27 percent, and 33 percent, respectively.

In light of this rampant growth, the obvious question is: Why the unyielding surge in international defense expenditures? One explanation is that perceptions of threat have increased worldwide thanks to the ascension of previously inward-focused countries (such as China and India) and non-state actors into more prominent international roles. As countries survey the security environment today, they see more sources of potential danger than ever before. This fear is easy to act upon in the globalized international defense market, where armaments can be obtained from various state and private sources.

The greatest danger, of course, is that all this defense spending will set off a global arms race. History has shown that when one country elects to spend more on its military, other countries feel they have no choice but to accelerate their own defense buildups in response.

Will global defense spending slow down if economic conditions do not improve? Its doubtful. While there may be modest reductions on a country-by-country basis, economists agree that the worlds most powerful countries can still afford to spend as much on defense as they deem necessary without seriously endangering their national economic solvency even if other kinds of spending, such as for infrastructure or education, are ultimately more socially desirable ways to create long-term growth. If 2009 defense budgets are any indication, the profligate overall growth in global military expenditures does not appear likely to cease anytime soon.