2011/08/10

Public debt and the military

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Maybe you expect some commentary on the effect of public debt on security policy on this blog?

Nahh, I paid attention to that combination back in 2008, when it wasn't fashionable and when it did not look as if a "very serious" person writes "very serious" stuff when you wrote about it.

2008/10:


Long story cut short:

In my opinion
a huge public debt is an important dampener for arms races and baseline military expenditures in peacetime. A badly indebted country becomes less likely to cope properly with a rising threat.

France and especially the UK of the 1930's are good examples in my opinion.

S O
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9 comments:

  1. "France and especially the UK of the 1930's are good examples in my opinion."

    Well, if I recall correctly, Nazi Germany went into war expenses overdrive in the late thirties. They almost forced themselves into war.

    But, until late 1941, it had a satisfying return on investment ratio (considering only military aspects).

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  2. The aggressor has the advantage of choosing the time of war. This includes the ability to go into an unsustainable mode during the preparation for war.

    The defenders - not sure about the probability of war - need to keep a sustainable mode. The amount of war preparations possible in such a sustainable mode is 1:1 reduced by the need to pay the creditors for old debt.
    Britain went to war with several capital ships lacking modernisations because of their peacetime military budget limits.

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  3. Yes, but isn't this also the plight of these vast colonial empires that, on top on their colonies, had to maintain a strong european presence, and play the role of "world police" ?

    If we examine the "newcomer" to the game at that time, the USSR, then the heavy investment in armaments in the early thirtieswas profitable in the long term, even if we only consider the armement industry (in German "Tiefenr├╝stung - http://de.wikipedia.org/wiki/Tiefenr%C3%BCstung#Tiefenr.C3.BCstung )

    Even if the T-26 had become obsolete by 1941, its vast numbers (manufacture, logistics, coordination etc.) gave the strategic experience needed for the "deep operations" concept also formulated in the early 30's, along with experiment with Christies suspsension (-> T-34) and the KV-2 tanks.

    My view is that the KV-2, much more than the french Somua or B1 bis, was responsible for the shift in usage of tanks during WW2, because it belonged to a different doctrine.

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  4. The effect of the empires on the military strength in Europe is difficult to tell, but it's irrelevant for the ceteris paribus effect of public debt anyway.

    We seem to have different ideas of what "profitability" means, but it's certainly not the same as sustainability (which was indirectly mentioned in my previous reply).

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  5. Allright, having read the two aforementioned articles.

    If you follow what is going on recently on markets, debt and money are also weapons in another form of warfare. The clearest, earliest example coming to my mind was what triggered the creation of the Euro, namely repeated attacks by George Soros and other speculators against the European Monetary Serpent system, back in the 90's.

    Soros knew that, using massive amounts of money, he could make a currency leave the Serpent, and that automatically european nations would respond so as to take the attacked currency back into the serpent. If the french franc was suddenly worth less than its rate to the deutschmark, european central banks would buy huge amount of francs to prop it up. Fromt he perspective of George Soros, it meant not only predictability, but even automaticity.

    One can ruin whole economies that way. Someone explained me once that this was what broke Japan in the early 90's.

    As of tomorrow, or next week, France, Belgium, Italy and Spain will forbid "short selling" on their markets, following orders from the ESMA (European Market Authority), which is a kind of Headquarter in this war.

    So nowadays money itself is a weapon, and it can inflict defeats as costly to a state as Dien-Bien-Phu.

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  6. Back on the debt vs military configuration theme.

    We could say it's a dilemma between having a standardized and up to date weaponry on one hand, and having a sound budgetary policy on the other hand.

    Which is not something one country can decide. If we take only for example rifles between the 1860's and the late 1890's.

    First we have cap & ball firing rifles. Then breech loading rifles appear, and while you can still save costs while adapting former muzzleloaders, it is only a transitory measure which is militarily not so great. Then you have metallic cartridge rifles appearing such as in the Gras rifle, and then rifles with tubular magazines. In the end you have smokeless powder rifles using stack magazines.

    Either you let several standards live together in the same army, or you have to standardize your equipment at a given time.

    The french issued the Lebel rifle (tubular magazine) from 1886 on, and although slightly obsolete was their primary rifle in WW1. Its ammunition, and many surviving rifles, were still in use in WW2 and until the end of the Algerian War 1962.

    It is not an optimum like the Gewehr 98 / K98k system was, but it was a somewhat acceptable solution. Its delayed and incomplete replacement in the 30's allowed scarce ressources to be allocated elsewhere, for instance in newer tanks.

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  7. SolSys
    I'm afraid you misunderstand Soros and the Exchange Rate Mechanism.

    The UK, declared that the £ was worth a set number of DM's.
    Soros Disagreed.
    So, he bought lots of DM's, and sold lots of sterling to buy them.

    The British Government ran out of DM's, was forced to admit that the pound was not worth its set rate of DM's, and Soros became a wealthy man.

    The only thing that broke the UK was the government insistance that reality was wrong and it was right.

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  8. SolSys
    phased introductions can work too.
    1st brigade gets new kit
    2nd gets hand me downs
    3rd gets even older hand me downs
    ect

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