Sunday, October 14, 2012

Why the US is Broke

The bar chart below illustrates how US defense spending exceeds what the rest of the world spends on defense combined.

Global Defense Spending 2010 [click to expand]

No wonder the US is broke...

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4 comments:

Jerry McAlwee said...

As I've written extensively on this subject (Dr. Mcgibbon can attest to my credentials), a few comments.
1) This is a 2010 chart and reflects the superposition of several peaks in defense spending. It is important to note that defense spending goes in cycles. We are now in a down-cycle and our "lead" has all but disappeared.
2) Since the WSARA in 2009, about 50% of the workforce at most defense contractors has been laid off, fired, or changed industries to avoid job loss.
3) What matters most is not how much you spend but the ROI and relative change given the strategic threat basis. The US has routinely carried many of the defense costs for our allies so a vertical analysis as shown isn't accurate. We have many defense responsibilities for other countries and so US defense spending is really an aggregate of many countries including Japan, Canada, Germany, and most NATO countries.
4) The defense spending by China, Russia, and others has much lower accuracy than the reporting on our defense spending.
5) I'll be the first to point out waste, fraud, and abuse by US contractors; however, defense spending has routinely forged the foundation for advanced manufacturing, advanced materials, etc. that provide countless spin-offs. E.G. - the microwave oven, Boeing 747, etc.
6) With no new major US ships or major defense platforms commissioned the past three years, how can one blame defense spending when the national debt as nearly doubled. All the existing national debt was accumulated while hundreds of platforms were developed, commissioned, and won the world a baseline of freedom.

Jerry McAlwee said...

As I've written extensively on this subject (Dr. Mcgibbon can attest to my credentials), a few comments.
1) This is a 2010 chart and reflects the superposition of several peaks in defense spending. It is important to note that defense spending goes in cycles. We are now in a down-cycle and our "lead" has all but disappeared.
2) Since the WSARA in 2009, about 50% of the workforce at most defense contractors has been laid off, fired, or changed industries to avoid job loss.
3) What matters most is not how much you spend but the ROI and relative change given the strategic threat basis. The US has routinely carried many of the defense costs for our allies so a vertical analysis as shown isn't accurate. We have many defense responsibilities for other countries and so US defense spending is really an aggregate of many countries including Japan, Canada, Germany, and most NATO countries.
4) The defense spending by China, Russia, and others has much lower accuracy than the reporting on our defense spending.
5) I'll be the first to point out waste, fraud, and abuse by US contractors; however, defense spending has routinely forged the foundation for advanced manufacturing, advanced materials, etc. that provide countless spin-offs. E.G. - the microwave oven, Boeing 747, etc.
6) With no new major US ships or major defense platforms commissioned the past three years, how can one blame defense spending when the national debt as nearly doubled. All the existing national debt was accumulated while hundreds of platforms were developed, commissioned, and won the world a baseline of freedom.

Anonymous said...

Jerry, The facts are, the US could do the same job, with half of the expenditure. The majority of the equipment purchased will never be used in a real battle situation. The US Defence budget is being paid for by the Chinese, and other countries lending funds to the US. The US debt will have to be paid for, and the quicker the US comes to terms with this the better.

Dr William J McKibbin said...

Jerry, are you not troubled by the reality that the US spends more on defense each year than the rest of the world combined...

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