Military Power is Built On Economic Foundations

The NY Times is running a great graphical depiction of the costs of 9/11 ~ which they compute to be $3.3 trillion. About half of that, $1.649 trillion is attributed to war funding (Irag and Afghanistan). The breakdown can be seen at left.

As a nation, we chose to fight in Iraq and Afghanistan, but chose not to pay for the conflicts. This decision has led to greater accumulated national debt ($14.5 trillion and rising, roughly $1.2 trillion of which we owe to China). Admiral Michael Mullen, as Chairman of the Joint Chiefs of Staff, famously said that our national debt is the greatest threat to American national security.

Edward Mead Earle wrote an article in the 1940s about Adam Smith, Alexander Hamilton, and Friedrich List and the “economic foundations of military power.” In it, he reported something startling and counterintuitive ~ that the most committed market economists were similarly committed to pay-as-you-go military forces and operations.

Regarding Adam Smith, author of The Wealth of Nations and the father of the laissez-faire school of economic theorsts, Earle said:

 

“Furthermore, he objected to war chests, as well as to war loans, as the principal means of financing wars. He favored heavy taxes instead. Wars currently paid for ‘would in general be more speedily concluded, and less wantonly undertaken’ by governments, and ‘the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for.'”

Smith also supported some protectionist measures:

 

“Smith was not averse to protective duties when they were required for reasons of military security. ‘It will generally be advantageous to lay some burden upon foreign, for the encouragement of domestic industry when some particular industry is necessary for the defense of the country.'”

Even the progenitor of a hands-off economy found that national defense and foreign intervention should be paid for with direct taxation. President Lincoln understood this, and signed into law the Revenue Act of 1861, the nation’s first income tax, to pay for the Union effort during the Civil War. Rationing and war bonds in the Second World War. That tradition ended with the Iraq and Afghanistan Wars. Tom Brokaw as well as scholar Andrew Bacevich have recently attacked this policy:

“The ongoing cost of American wars since 9/11 comes to about four hundred billion dollars per year; those are just war costs, not the Pentagon’s full budget. If you divided that by the number of taxpaying households, the result is approximately three thousand dollars per household. So if we were to pay for our current wars, the average household tax bill would go up by some three thousand dollars per year. If our government told us we needed to pay another three thousand dollars per year, the American people would be instantly reengaged with the wars undertaken in their name.”

Conclusion

Perhaps, at the time the two wars began, it was a sound economic decision to put the conflicts on the national credit card. When the wars continued for longer than early estimates predicted, and direct combat turned to armed nation building and counterinsurgency, it would have been prudent for the administration to change course for the wars financial support. While challenging politically it would have been both the correct thing to do and important for the overall long-term health of the nation. As a result of the abdication of a fundamental tenet of American war-fighting, the nation has become relatively apathetic to Iraq and Afghanistan, and the country has lost relative economic, political and military power to the rest of the world (most notably China).

Author: ML Cavanaugh

Unequal parts strategist, assistant professor, wordsmith, runner, wine-o, reader, philosopher of firepower, and hopeless lover of three ladies named Rachel, Grace, and Georgie.

One thought on “Military Power is Built On Economic Foundations”

  1. I came to this page and some others through google search after learning about the current NATO exercises in the black sea. I am really in agreement with the conclusion of this post where the last line says most notably China. That is exactly what I think too. Though this article is from 2011, I see this corelating some current events. I liked the post at http://www.awaitedelement.com/2015/03/new-world-order-nato-exercise-11-march.html as well. There is really the economic connection to all wars and I wonder what if we get rid of economy at all at a global point?

    Like

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