I love to see the idea of cost analysis considers in regards to the warfare state. No one else seems to be...In a recent paper, economists Christopher Coyne and Thomas Duncan paint a dire picture of the harmful effects of the permanent war economy. Most studies focus on total military spending (measured in either real or nominal dollars) to show the enormous growth in such outlays over the past 15 years. A few studies focus on the size of the Pentagon's budget relative to total federal spending, or to the economy as a whole, and claim that such costs are, in fact, quite modest.
But Coyne and Duncan, who are both affiliated with George Mason University's outstanding economics department, take a different approach. The true costs of the military-industrial complex, they explain, "have so far been understated, as they do not take into account the full forgone opportunities of the resources drawn into the war economy." A dollar spent on planes and ships cannot also be spent on roads and bridges. What's more, the existence of a permanent war economy, the specific condition which President Dwight Eisenhower warned of in his famous farewell address, has shifted some entrepreneurial behavior away from private enterprise, and toward the necessarily less efficient public sector. "The result," Coyne and Duncan declaim, "is a bloated corporate state and a less dynamic private economy, the vibrancy of which is at the heart of increased standards of living."
The process perpetuates itself. As more and more resources are diverted into the war economy, that may stifle—or at least impede—a healthy political debate over the proper size and scope of the entire national security infrastructure, another fact that Eisenhower anticipated. Simply put, people don't like to bite the hand that feeds them.
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