U.S. Military Spending Compared to Everyone Else
Posted by Jason Apollo Voss on Jun 15, 2011 in Blog | 2 comments1 July, 2011 marks the deadline for the raising the debt ceiling in the United States. Republicans are wanting dramatic reductions in spending before they will agree to raise the debt limits. What you won’t hear is the United States could immediately cut its spending by cutting military budgets. Let’s take a look at U.S. military spending compared to everyone else.
At the close of 2010, the United States alone accounts for 43% of total global military spending! The next closest country on the list also happens to be the world’s second largest economy, China. The Chinese account for a paltry 7.3% of total global military spending. So the U.S. spends almost 6x as much as the nearest country.
In absolute dollar terms the difference is: U.S. military spending of $698 billion – Chinese military spending of $119 billion = $579 billion! Tell me that wouldn’t have a positive effect on U.S. economic growth if invested in U.S. innovation or debt reduction.
What about Russia, who many consider to be a more imminent threat to global stability than the Chinese? Russia accounts for 3.6% of total military spending. In absolute dollar terms the United States outspends the Russian by $639.3 billion.
The remaining 7 countries in the top 10 military spenders are countries that the United States considers to be allies. So total spending on the part of the U.S. and its allies totals $1,040.1 billion ($1.04 trillion), as compared to $177.7 billion by the United States’ political rivals. That’s a difference of $862.4 billion. Another way of putting this is that for every $1.00 that China and Russia spend, the United States and its allies spend a whopping $5.85!
Now the value of any investment has to be evaluated based on return. Presumably that gigantic military budget on the part of the United States (and to a much lesser extent, its allies) is purchasing security and a sense of security. Yet, poll after poll says that Americans feel less safe after September 11, 2001 than before. So what exactly is it that military spending is purchasing?
Jason
Great column on our excessive/untouchable military budget!
Unheard of for a financial analyst!
Why is it that interest in economics/investing seems to always go hand-in-hand with a reactionary political outlook??
Hi Michael,
Thanks for the comment – always nice to know that what you are writing is appreciated.
I know that the question you posited was a rhetorical question, but I actually wanted to provide an answer. I think that most of human behavior is delimited by archetypal behavior. The financial analyst archetype is pretty concrete: white, male, Ivy League educated, for the Northeastern U.S., from a wealthy family, and conservative.
People on both sides buy into this archetype. That is, those who want to be a financial analyst will adopt the archetype in a wholesale fashion. But then those who don’t fit the mold of the financial analyst archetype will steer clear because they don’t feel that they are “one of them.”
Buying into the archetype would not be a problem if people were making conscious life choices, but largely the choices are indulgences of the subconscious.
In my book, The Intuitive Investor, I share an anecdote of a San Francisco technology conference I attended on September 10, 2001 where I saw Michael Dell speak. It was when Dell was atop the tech world so nearly everyone from the financial community (very small) was in attendance. I took the time to count the audience: over 1,000 people in attendance. Of that number there were 13 non-white males in attendance! Of the 13 there were 8 women and 9 ethnic minorities. Some of the women were also ethnic minorities.
In the last ten years this has shifted to some degree, but finance is still overwhelmingly a white male dominated business. Check out my post “Wall Street Is A Cult.”
Lastly, when I was a white male coming out of graduate school at the University of Colorado I stated in my cover letter to financial firms: “You spend lots of time trying to create a diversified financial portfolio, but what about your human resources portfolio?”
Keep your comments coming and thanks for reading!
Jason