How Much Wealthier Without the Defense Expenditures?

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I took a walk and it occurred to me that I could put the costs of excessive defense in another dramatic way. Upon my return I found an e-mail expressing the view that while this tax and spending is a moral outrage (which I’d agree it is), Americans had benefitted from it by plundering the “riches” of the world. This I find very implausible because of the magnitudes involved, and it ties in with what I was going to say anyway. To me, this sounds like a leftist or Marxist critique. I don’t buy it.

Consider. Since the median income is $50,000 a year, in order to make back $12,000 spent overseas in the form of consumption here, the plunder would have to be 25% of that income. This seems way too much to expect. For Americans even to make $50,000 a year required a long development and a huge amount of capital per person. Could Americans possibly extract 25% of that amount from far poorer nations overseas year after year after year? It seems highly unlikely. What riches are these that have been extracted for the average Joe? The kinds of things that have made people better off like cell phones, DVDs, and computers aren’t extracted from overseas. Maybe oil is supposed to be cheaper, but it sure doesn’t look it.

Now, here’s the other way of looking at it. Suppose that in the next 40 years, each household saves and invests $12,000 a year and gets a return of 3 percent a year. How much will they have at the end of that period? Answer: $900,000. Now imagine that something like this has been going on for the past 40 years in real terms. Is it plausible that each American household (the median) feels $900,000 better off now for having plundered the world over that period by spending so much on their military and empire? I don’t believe it.

The answer to all of this is always the same with me. Give every American (household) the choice or option of contributing this $12,000 a year to a government of its choice that supposedly provides it with a benefit for it, even if it’s plunder. Let Americans individually decide the matter. Make government voluntary. Then we will have a market test of the worth of the empire to each person.

7:24 am on July 6, 2012