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Posted on August 20th, 2012, by

The US spends more money on its military that the rest of the world combined. With no rival superpower, is this necessary? If yes, is this money being wisely spent? If no, should this money be spent by the government on domestic priorities, spent on aid to impoverished allies, or returned to the taxpayers?

 

The U.S. administration continues to increase federal spending on the navy and marines. Moreover, most of the money which had been assigned for articles recognized as less important will be transferred from the new budget exactly to the military needs.

The president noted that the defense budget, including expenditures for the navy and marines, is being increased for the army to be able to perform their tasks. In order for these costs to be reasonable, the cost of tens of billions dollars on the items acknowledged even by the military as a waste of money will be reduced. It is better to leave the funds for social sector, as well as for the creation of the Armed Forces of the 21st century.

Twenty-five years ago, the planet, divided into two opposing camps, was spanned by the Cold War. However, this opposition, which demanded great efforts and costs from the greatest powers of the planet, has proved to be a stabilizing factor. Superpowers controlled their satellites, and despite the huge amount of stockpiled weapons and rigidity of rhetoric the number of local conflicts, occurring simultaneously in the world, has been relatively stable.

The collapse of the Eastern bloc, and then the Soviet Union undermined the existing balance, and the likelihood of conflicts in the world has increased dramatically – new players tried to fill the power vacuum that inevitably led to new local wars. The peak of these conflicts took place in the early and mid 90’s. Statistics is approximately the following: in 1972-74 there were 25-30 simultaneous conflicts in the world; in 1985-86 the number increased to 30-35; in 1992-93 it reached 45-50. After the mid 90’s the number of conflicts sharply dropped, but it starts to grow again in this decade.

By the end of the 1990s, NATO, and particularly the United States demonstrated a clear commitment to solve both its own problems and the problems of the world from a position of strength – using the indisputable superiority in military power. After the terrorist attack on 11.09.2001 this desire has led to the U.S. invasion into Afghanistan and Iraq. The original aim, the destruction of terrorist organizations and as a consequence reducing global terrorist activity, has not been achieved. Both countries struck by the civil war with foreign intervention, regarded as occupation, became breeding grounds for terrorism, killing mostly civilians.

As a result, the increased of the risk of military conflicts have led many countries to increase defense spending, improving equipment and training of their armed forces. This trend has touched all regions of the world – from Southeast Asia to Latin America.

Apart from the increased conflict risk, military spending is affected by another factor – a significant increase in the prices of weapons and military equipment of the new generation. This explains, in particular the phenomenon of reducing the number of combat-ready units with an increase in defense spending. Suffice it to say that modern fighter aircraft costs from 30 to 100 million dollars and above, while 25-30 years ago the price of jet fighters rarely exceeded 8-10 million, which makes a significant difference even in the face of the objective cheapening of the dollar over the past years.

As a result, today the United States is forced to gradually reduce the number of major weapons – from aircraft carriers to the armored personnel carriers. The same applies to other developed countries. However, as we can see, reducing the number of weapons in the arsenal of developed countries does not increase peace in the world.

According to SIPRI (Stockholm International Peace Research Institute) estimations, the most significant war costs in 2008 were spent by the U.S. (607 billion dollars) followed by China (84.9 billion dollars), France (65.7 billion dollars), Britain (65, 3 billion dollars) and Russia (58.6 billion dollars).

The U.S. defense budget for the next year will make about 680 billion dollars. This time it was decided to allocate for military purposes 30 billion more than last year. And although in the period of long and difficult recovery from the crisis the Government cannot afford such amounts, Congress has already approved the document.

According to analysts, the increase in funds allocated to military spending, will only increase the country’s budget deficit, already undermined by the anti-crisis measures and the general fall in incomes. In order to deal with this situation the Government has decided to initiate issue of Government Treasury bonds. The volume of transactions will be the largest in the history of the country. In the course of trading, investors will be offered treasuries amounting to 123 billion dollars. And this, in turn, will only increase the external debt of the United States, which is likely to exceed the threshold limit of 12.1 trillion dollars set by Congress.

According to experts, one of the major reasons for the fall of the effectiveness of the U.S. economy is the Pentagon’s incredible military spending, including spending for the war in Iraq, which is actively absorbing taxpayers’ money and contributing to an outflow of funds from the civilian sector.

Increasing military spending and spending on social programs in the period of full occupation of resources the state will inevitably fall in an inflationary trap. This situationusually arises in the context of the budget deficit, when the state’s expenditures exceed revenues. At the militarization of the economy such situation becomes typical.

The militarization of the economy also causes inflation for some other reason, which is not related to the state budget deficit: it exhausts the resources of the society. The civil sector starts falling behind; the growth of consumer complex slows down, while it actually materializes cash income of employees. One of the main factors responsible for launching the inflationary process is the monopoly. By reducing competition, it leads to a decrease in supply, due to which high monopoly prices are established and held.

However, hypertrophied evaluation of some factors affecting inflation, no matter how great their role is, and underestimation of other factors cannot serve as a methodological basis for the study of inflation. In a modern market economy there cannot exist distributive functioning of such processes as, for example, price increase determined by different factors unrelated to each other.

Excessive military expenditures are typically referred to internal factors of inflation, as they contribute to the loss of social wealth; create additional financial demands at the expense of military spending without corresponding input of goods into circulation; generate the increase of state budget deficit and the rise of public debt.

In the new draft budget, military expenditure makes 514.4 and 70 billion dollars for the war in Iraq and Afghanistan with the total budget of the country in 3.1 trillion dollars. According to some researchers, the overall Pentagon budget, including indirect costs reaches 1 trillion dollars. Thus, the U.S. military spending exceeds the consolidated military spending of all other countries. Chalmers Johnson called this phenomenon “military Keynesianism”¯.

Though according to Keynes military spending supports the demand (including demand in the civilian sector), this demand is as effective as in the case, when the money are spent for investments in the development of the country’s infrastructure, into construction and development of civilian industries, which is more beneficial than the excessive production of military equipment. But the problem is that the U.S. still cannot stop the war machine, which gathered speed during the Cold War, actually continuing the arms race related to the development of anti-ballistic missile defense, creation of possibilities for instant global striking, establishing a large number of military bases around the world, etc.

Opponents of such a militaristic policy argue that while the U.S. spends enormous resources on the development of assassination technologies, the President of this country is actively trying to provide health services to 50 million Americans, who are now lacking them.

Factually, the problem of health is much more important and serious at the moment. An example of this is the case, when 8 thousand people – mostly the unemployed – filled a stadium in Los Angeles, where free health services were provided by the clinic, working mainly in third world countries.

Analysis of blood in the U.S. can cost $ 500, while regular dental care can cost a sum of money exceeding one thousand dollars. The question is whether this brings any into the world and American society in particular. At the same time, military budgets of the United States always have the support of a large number of US legislators. There is hardly any state, the employment rate in which does not depend on the defense industry in one way or another.

In 2008, 42% of the world spending in the sphere of defense was accounted for the U.S., which didn’t include expenditures of the country on military actions. Meanwhile, the number of the starving worldwide reached the target of one billion people. However, today, the lobbyists of the Congress are trying to profit working on a simple law, which is intended to provide medical aid to millions of poor people, Afro-Americans and Hispanics overwhelmingly.

Another position of huge military expenditure is the development and procurement of military robots, which are to produce a revolution in the methods of warfare. But while the robots controlled by transnational corporations, can replace soldiers in conquest wars, there’s no one, who’s able to stop transnational corporations seeking new markets for their products.

Thus, military spending reduces the effectiveness of the U.S. economy. Surely, these expenditures play a significant role in the economy, for example, they could finally help overcome the effects of the Great Depression. During the era of the Cold War, U.S. military machine was increasing swelling, capturing ever larger parts of the U.S. budget. However, the strengthening of military industry has led to an outflow of capital from the civilian sector, which has also been complexified by the outflow of jobs to developing countries. As a result, the U.S. has gradually begun to lag behind in the production of many types of civilian products.

It is important to remember that the U.S. economy has a lot of competitive industries: information technology, electronics, microelectronics, computer and automobile industries, agriculture, pharmaceuticals, retail, etc. The U.S. could easily produce relatively expensive, but high quality goods. The monster created in the Cold War should change. The development of the civilian economy in the United States would be able to solve the notorious problem of the deficit and external debt. If, instead of increasing military spending, to allocate some funds for helping borrowers (for example, by subsidizing interest rates), as well as to expand housing and infrastructure in the budget, it would be far more useful than spending huge sums on the war in Iraq, the need for which is actually a big question.

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