It’s often observed that the United States spends as much on defense as the next 10 or so nations combined. As Congress begins to consider the annual National Defense Authorization Act, it should recognize that this commonplace is simplistic, inaccurate, and serves only to undercut our own defenses.
In his final State of the Union address, President Barack Obama dismissed criticism of his defense policies as “political hot air” with the comment that the United States “spend more on our military than the next eight nations combined.”
That wasn’t an original claim. In fact, it’s a cliché. The number of nations varies, but the core of the assertion never changes: the United States spends more than a collection of other nations does, and therefore spends enough, or too much. But as my colleagues Rachel Zissimos and Thomas Spoehr demonstrate in a new paper, this assertion is wrong. It doesn’t take into account the fact that costs aren’t the same in every country.
If you’ve ever been to China, you know that your dollar goes further there than it does at home. Economists have a way of dealing with this: the concept of purchasing power parity accounts for the fact that some economies are more expensive than others.
It’s true that if you add up the budgets, the United States spends about as much on defense as the next eight nations. But that makes no more sense than assuming that a hotel room in Bucharest costs as much as one in New York City. Adding up budgets doesn’t tell you how much defense everyone is actually buying, because the prices they’re paying are different.
And since the point of a defense budget is to buy defense, we should compare what actually gets bought, not what is nominally spent. After all, we’re not worried about Chinese defense spending. We’re worried about how much they can buy with what they spend.
Once you adjust for the fact that the United States pays United States prices, you find that we buy only a little more than China and Russia combined. This has nothing to do with the Pentagon’s inefficiency. It reflects a fundamental fact about the U.S. economy.
China has lower prices than the United States because it’s poorer and less efficient than us. We are always going to get less bang for our defense buck than our competitors because U.S. workers are very productive and hence earn high wages. Fundamentally, that’s a good thing.
There are other reasons why the simplistic comparison offered by Obama — and others — is irrelevant. We don’t like to take casualties. We try to avoid causing unnecessary civilian casualties. Those things are good, too. They’re also expensive.
And then there are the operational considerations. The United States has global reach. All other players are regional powers. The United States also has a lot more logistical and resupply capabilities because of the way it fights and how it provisions its forces. Those things are expensive, too.
In theory, we could change how we fight. We could be willing to accept high casualties. We could sacrifice more men and use fewer machines. We could make our troops forage in the fields for food, like the Russians. But, rightly, we’re not going to do that. And since the way we fight is determined by culture and history, we likely couldn’t even if we wanted to.
The effect of some of these factors can’t be calculated. But when you put them all together, we probably buy about as much defense as Russia and China put together. We’re not beating them: we’re matching them. And since they’re not our friends, that’s not much of a margin.
Anyone who says we’re blowing our adversaries off the field isn’t just wrong. They’re encouraging us to be complacent. And that’s no service to the peace of the world — or the security of the United States.
This piece originally appeared in Newsday