2008/12/14

Military procurement in 2009/2010

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I've tried to hammer an insight into my audience:
Military spending levels are partially wasteful and for many countries too high these days.

I stick to this and am convinced that it's extremely important.

There are complicating exceptions, though.
One such exception is a superficially paradox effect of the current economic crisis:
Most of the Western governments attempt to turn their nation's economies around with additional government spending.
That's a questionable concept that depends almost entirely on two multiplier variables (that tell about how much economic activity is being kicked off by private and by public spending) - and a yes or no should depend on how much you trust the econometrics (that's the science field that attempts to calculate these multipliers).
Maybe it's right to increase government spending right now, maybe not.

To relocate government investment and consumption from 2011-2013 into 2009-2010 has certainly advantages (especially the addition of debt) with small additional disadvantages in comparison to simple "more spending".
To renovate a government building in 2009 instead of in 2013 or to buy training munitions in 2010 instead of in 2012 seems to make sense, even if you don't trust the multipliers.

This means that there's the superficially paradox situation that an unsustainable military budget should very well get additional money in the short term (to fix economic problems that were partially created by wasteful governments) - but such a short-term budget increase needs to be followed by a return to a sustainable level (in the medium term even below that one).
Please note that this is not an increase in spending for the next five years - the spending in that period should indeed decline. I meant merely a shift of spending from the medium term to the short term as part of economic stabilisation policy.

Sven Ortmann

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