Monday, May 17, 2010

Correction and commentary on U.S. Military Spending, Of Japan, the F-22

I earlier wrote that defense spending is roughly at 7% of U.S. GDP, but just googling it, puts it at 4.16% (including the two on-going wars) in 2008 and simply wikipedia-ing it shows that military spending shrank in absolute terms (along with the size of the economy) from 2008 to 2009. And, of course, 7% of about $13 trillion or so is about $900 billion (it's less than $700 billion), so that 4% figure looks right.

Note: I took the chart on the right from wikipedia, but I'm not a big fan of the other graphs that look at U.S. defense spending in terms of  per-capita spending on income defense in fixed U.S. dollars which does not take into account a richer U.S. economy (a better graph would be that as  % of GDP per year)...

U.S. military spending as a share of GDP does not at all seem that high (I think 7% would have been fairly close to historical peace time highs of the Reagan years, but 4% while we are still "fighting" two wars does not seem at all that bad), but I'd think it's unfair to criticize the level of military spending whether domestically or from an international perspective.

In fact, California has lost a lot of jobs because of reduced military spending back in the 90s -- (I believe) Southern California has traditionally had a hi-tech aerospace industry that had traditionally maintained a lot of high paying jobs -- until well Northman-Grumman formed (I believe the merger did away with the largest U.S. defense contractor headquartered in Southern California... And, on a side note, it's been a while since Los Angeles stood as the corporate headquarters for any major U.S. corporation --  the last major one to have been headquartered in L.A. was Atlantic Richfield Corporation (ARCO), which is now a part of good ol' BP or which was until recently known as British Petroleum).  

But, in the aggregate, the defense industry continues to be a huge exporter to the rest of the world. For example, Japan's airforce has nice F-15J's (I'm guessing J stands for Japan). And, South Korea has some nice, well, F-15K's (again, I'm guessing K stands for Korea). And, on a side note, I'd think it'd be a good idea to export those F-22s to Japan as the U.S. looks set to be unable to afford to build anymore F-22s unless, well, a rich Japan, which is eager to buy these planes, does indeed buy them and, of course, it'd be a nice way to "reward" the Japanese and re-affirm the U.S.-Japanese alliance while the U.S. doesn't have to close down the F-22 assembly line...

The current administration, which has done a fantastic job regarding North Korea (and South Korea, if they send Secretary of State Clinton within the next month or so and pass the KORUS FTA) , seems to be doing a rather feeble attempt to tell the Japanese how important they are to the United States (of course, not as feeble as the Japanese Prime Minister looked as he rather meekly explained the necessity of having U.S. troops stay in Okinawa). And, it looks like they are the only major country the U.S. would eventually be willing to sell the F-22 to and the only country with the means to purchase them).

But, anyways, the point is, well, I don't think military spending is at all too high and it ensures the U.S. will continue to be at the forefront of the sciences (e.g. the two national labs - Lawrence Livermore/Los Alamos that is behind the U.S. nuclear weapons program are managed by University of California -- well, at least, partially -- as a result of espionage by Chinese scientists at Los Alamos). In fact, if anything should be done, well, the U.S. should continue to encourage allies to spend more (e.g. Japan(~0.9% of GDP or so), South Korea (~3% of GDP is still not that high as, well, let' see North Korea spends about a quarter on defense)).  

Now, I think it's a bit unfair to criticize "rising" U.S. military spending, which when set as a moving average looks pretty constant as a share of GDP (3% to 4%) even as you leave in the two wars from 2000 to 2011 in the above graph (consider that the U.S. economy has been in recession during most of 2008-10). Moreover, that graph that I link to makes the U.S. spend a lot more than it does, but it should considered that the Chinese do not at all leave fully disclose their military spending).

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