Military policy

One of the positive things to come out of our foreign policy over the last few decades has been that we have been singularly successful at reducing the security-based problems that have afflicted trade throughout history.

At the end of WWII, with Europe and East Asia in economic and political shambles, the US consciously assumed the role of “global sheriff.”  Ever since then, the US has been showing the flag with carrier task forces and other military displays, quietly (and, sometimes, not-so-quietly) reinforcing the message that it’s in everyone’s best interests to keep the peace, and especially to leave international trade alone. The results have been staggering, compared to previous periods of global history – international conflicts, instead of spilling over and destroying regional trade, have tended to be contained inside one or two countries; the sea lanes, which are the arteries for international trade, have been remarkably clear of any kind of threats to shipping.  We may feel like the world will never really be at peace, but truthfully it has never been more peaceful.  This peace has had a great positive impact on global GDP, although getting specific about how much of an impact is difficult.

Sidebar:  Free-riders

Acting as the global policeman isn’t cheap, of course, but the costs to our economy are (usually) balanced by the benefits they produce.  Much of the money spent on the military is economically unproductive, or could at least have been spent on something much more productive.  However, without our investment in maintaining the Pax Americana, it is hard to imagine the last 70 years without major regional wars of conquest that would have set the global economy back in a major way, costing the US far more.

Military spending has always been (and probably always will be) a balancing act – spending too much on the military wastes money and resources; spending too little would leave us powerless in a world that, for all its increasingly peaceful nature, can still erupt in violence all too easily.  So the goal is to have a very effective military, one which other nations and organizations respect and (at least a little) fear and which is capable of projecting power effectively, but not pay so much for it that you beggar the nation in making, maintaining, and using of it.  Spending smarter is thus a key factor in military expenditures – how much impact can you make for each dollar invested?

Sidebar:  Wasting Power

 

Back to the Impact of Foreign Relations on the Economy

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