2017/01/31

Human sacrifice and military spending

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The President of the United States is scheduled to visit a school in Boston, and 250 schoolchildren form up as a choir to sing. He's not terribly interested in singing schoolchildren, so he combines this photo op with a meeting with the Chief of Naval Operations.
CNO: About the submarine fleet ...
POTUS: You want that additional submarine.
CNO: Yes, we really need ...
POTUS: I see. Look, here are my secret service agents with their guns. Take their guns, kill the entire stupid choir and you'll get your submarine for free from the shipyard.
CNO: Mr. Presid...
POTUS: Don't worry, I'll pardon you right away.
CNO: That's not my problem with the proposal. We don't do this.
POTUS: You don't kill children to get a submarine?
CNO: Never!
POTUS: You think? Interesting.

- - - - -


A principle in efficient allocation of resources is to get the marginal utility (marginal rate of return) right. In simple terms, this means that if you have 10 coins and four investment options, each costing 5 coins, but yielding 3, 6, 7 and 8 coins return after a month, you better choose to invest only in the 7 and 8 coins return options.
To spend 5 coins to get 3 back is an obvious mistake, but to spend 5 coins to get 6 back is also a mistake if you could get back 7 instead.
Obviously, you cannot invest in the 6, 7 and 8 coin options because your budget is limited.
This is an economic principle; maximise returns for a given budget (ceteris paribus).

The "7 coins return" option in the above case would be the marginal utility; the least return you got for expenditure. It's not the same as the average rate of return, of course.

Likewise, when returns are fixed (say, save one life) and costs vary and you have 10 coins to save lives, with the options to save lives costing 2, 3, 5 and 10 coins then you better not spend 10 coins to save one life, but to save three. To save all four is beyond your budget limit. Your marginal utility should be one life saved for 5 coins.

- - - - -

This is an important concept, for when a legislator allocates public money through his vote on a budget he should understand that if for example the department of health stops paying for medical services when these would cost 5 million $ per life saved then the department of transportation should not spend 10 million $ on road safety per life saved. That's like killing two people by cancer to save one from death by car accident. Both departments should have a common and identical limit and yes, there has to be a limit. We live in a resources-constrained world.

The U.S. government didn't understand or at least didn't apply this, and almost certainly still doesn't, but that's not really the topic here. The topic is human sacrifice and military spending.

An important thing that pacifists usually understand and "pro-military" folks usually don't seem to understand is what I mentioned above and the concept of opportunity costs.

There are opportunity costs to all spending, including to military spending. Whenever you spend USD 2.6 bn on for example a single submarine, you cannot spend this public money on something else any more.

Some may have read the links, others won't, so I'll quote; The Environmental Protection Agency of the United States of America considered the value of a life in 2010 as to be USD 9.1 million (unless it's a VIP, I suppose). So essentially a policy that would cost USD 920 million and would be expected to save 100 lives in the USA would not be considered worth it based on the lifesaving effect alone. This was the higher limit - the Food and Drug Administration had its limit at USD 7.9 million. Both should have the same limit of course.

Let's pick the USD 9.1 million figure. The United States Navy has 59 nuclear attack submarines (SSN) in service. To add another one (or to replace one to avoid dropping to 58) costs about USD 2.6 billion. 2,600/9.1= 285.71
USD 2.6 bn; that's the value of 285 lives. Let's round this to 250, for saving more may see escalating costs per life saved.

To buy a single Virginia class SSN is equivalent to not spend on a program to save 250 children lives from poor families from cancer or pollution.

Economically it's also equivalent to the following:

In order to get a new Virginia class submarine, 250 school children line up in a parade. The CNO goes to them, unfolds a barbers knife and cuts one children's throat.
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Finally, he's done.
285 children's lives were sacrificed so the USN can get another SSN.
That's quite a mess!

As a CNO, such an admiral would have no qualms "justifying" that the navy needs another Virginia class submarine. Would he have an as easy life justifying cutting the throat of 285 children?
Certainly not.  

But that's exactly what he should be able to do if he was actually "justifying" the purchase.

I suppose it's obvious by now that the USN cannot really justify the purchase of a new Virginia class submarine. It can only voice its wish for one.
Officers are almost never educated to make such a decision correctly. They are merely educated to implement such decisions. This tells a lot about how much weight their advice on military spending should carry, even before considering the principal-agent problem.

The weighting of pro and contra, including a consideration of the opportunity costs, this enforcement of equal marginal utility of all government departments' pending needs to be done at the political level. Anyone who thinks that a navy or a think tank could possibly come up with a justification for buying a nuclear attack submarine has been fooled or is fooling himself/herself.

So the national government - specifically  the legislative branch which holds the budget authority - should do this, and then the executive branch should implement the budget, always keeping in mind how important the marginal utility is.

That's how it would work in a perfect world, which won't be achieved. It does on the other hand educate us on what's wrong, and HOW wrong it is.

Furthermore, now you have a figure (value of life ~ USD 10 million) that will help you to make sense of the military spending. Those huge figures are otherwise very abstract, without real meaning. What's USD 10 billion? Only a look at opportunity costs can give us an idea of what this means.

related: 

S O


P.S.:
"285 children's lives were sacrificed so the USN can get another SSN." was not mere polemic. This is happening - albeit through neglect, not through barber's knifes. Future generations may consider it to have been no less barbaric.

Maybe you found this piece to be unusually forceful, more confrontational than usual and even politically incorrect. That's because I decided to reframe issues that I have written about in the past already, this time for greater effect. The 'gloves have come off' at least for once. The "pro-more military spending!" crowd lives in a pleasant bubble where they ignore the opportunity costs and instead enjoy fantasies of military power greatness. They don't deserve this comfort.

If you want to read more about an economic theory interpretation of such events, read about "externality"; that will explain to you why a CNO doesn't pay attention to the opportunity costs.
.

12 comments:

  1. The "Yet one more." list definitely makes things more tangible, thanks. Makes you question everything around public spending, and even around privatw spending.

    However, also got me thinking that, for example, if you get the defence balance on the low side and are not able to deter or defend against attack, then the cost (value) of each human life would drop dramatically.

    Life becomes very cheap in a war...

    Perhaps this argument could be used to excuse higher spending levels in defence as opposed to healthcare. If many people die of heart disease this will not lead to a catastrophic loss of human life and cheapening of the same.

    Or is there something in the argument I am missing?

    ReplyDelete
    Replies
    1. I wasn't arguing for no military spending. It's just that when you have 59 SSNs it's really difficult (impossible) to make a case for another such boat when the opportunity costs are this high.

      No war gets deterred only with help by #60 that wouldn't have been deterred by 50 boats, or 40, or 30, maybe 20.

      Delete
  2. The main failure in this argument is, that you can deter every enemy and it is a failure because you think, every enemy will act reasonably / logical. As you noticed for yourself in many of your last posts, most humans do not think in logical, wise ways. So military spending should not be primarly about deterrence, but about winning a war so fast als possible and in modern actual warfare to win the opening of the war, the first battle as fast and as desicive as possible.

    And losing such a war would lead to much higher costs in comparison to the costs of a strong army. Therefore, more weapons are better than fewer weapons.

    Efficiency is of cause very important, but not to spare military spending, but to get the highest military fighting power which one can afford without overusing / wear off the economical basics of this power.

    In a wider context this means, that one should not restrict thinking about military spending only about specific weapon systems, but about industrial / technological potential and how every aspect of the economy could be used militarily.

    PS: there are so many humans on this earth, a human life become less and less worth. You can buy a human (literally) in most parts of the world for a fragment of the sums you mention here. Moreover human lifes can be replaced by robots (cheap swarms) which would also lead to a more aggressive / imperalistic foreign politics because you must no longer risk many western lives in warfare.

    ReplyDelete
    Replies
    1. There got to be a rule to determine the right amount of military spending at least in theory. Without it, nobody would have a clue about what's the right level.
      ---------
      There's also a problem that I wrote about several years ago; there's hardly such a thing as military power only good for defence since fortifications have mostly become obsolete.
      Thus deterrence cannot reasonably rest on the ability to defeat your neighbour quickly and reliably. Such deterrence could only be had by few powers or alliances, leaving all others insecure and motivated to launch an arms race.
      There's little reason to expect only the benevolent and peaceful countries to reach such a superiority and to expect the potentially aggressive countries to be content with their inability to defend themselves.

      In fact, the NATO-Russia relationship shows that superiority will be exploited for aggressive policies and the inferior power will seek more military power. And this was a natural experiment with MAD. If any, this asymmetric relationship should have succeeded.
      Similar Russia-Ukraine; the inferior power maintained a rather useless mini military and the superior power turned aggressive despite a rather recent guarantee of sovereignty.
      ------------
      I disagree that lives have become less valuable. In fact, billions of poor people of the world have received a substantial economic lift in the past 20 years. The valuation of life has rather grown, though there are still huge differences.
      Besides, the value of life as considered by the Indian government for example only matters in regard to Indian budgets (which shows how insanely wasteful their military is).
      The valuation in Germany of life is important for the German government, the valuation of life in the USA is important for the US government.

      Delete
    2. "So military spending should not be primarly about deterrence, but about winning a war so fast as possible and in modern actual warfare to win the opening of the war, the first battle as fast and as desicive as possible."

      I agree with you that an economic argument like this fails in the real world because humans don't act particularly rationally.

      I'm curious about the "winning a war as fast as possible" thing. The US is currently in the longest war in our history, and there's no indication that we'll stop participating anytime soon, or any clear statement of the objectives that we're trying to achieve. There's no one who could sign a meaningful instrument of surrender - so the other side can't even give up. In effect, our current war will last as long as we want it to last.

      I assume the congress and executive keep the war going because they get benefits from the spending required to sustain the effort. War is a jobs program for the defense industry and a retirement program for the general officer corps. And being tough on the bad guys seems to play well with the electorate.

      So what is the incentive to trade off guns -vs- butter for a way to win wars quickly? Seems like there are better outcomes (for the US) to be made with a low intensity long-running conflict.

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    3. With regard to defence (not deterrence) of Europe only the Russians are anywhere near plausible aggressors. To end the war favourably and ASAP should in this case be about reaching a white peace (status quo ante confirmed, no reparations etc.).

      The problem why the Americans cannot get done with their wars in a sensible time is that they're extremists in warfare where modesty of ambition should rule.
      http://defense-and-freedom.blogspot.de/2009/11/extremist-warfare.html

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    4. Part 1 of 2
      Of course we could add up the cost-benefit balances of German 'Mittelstand' companies helping Saddam Hussein with exotic industrial hardware essential to any hopes of producing chemical weapons. US Troops kept running into these Weapons of Mass-Destruction even in 2011 on the way out of Iraq, at least according to e.g. 'lefty' New York Times and National Public Radio' and various medical emergencies for troops unprepared for Sarin etc.

      Or we could add up similar such reams of copious columns and lines in the ledger of lives, horrors and nightmares caused by the absence of the two+ German Peace-Divisions as part of the post Nobel-Peace-Prize Obama Administration decades-commitment with an Alliance of the Willing to Iraq that Chancellor Merkel could have offered as a gesture before history and the world to pay forward the debt incurred by Germany across many many decades of benevolent occupation by at times 6 allied forces to help stabilize and grow a post-Nazi democracy and what would become a major economy. If Germany and Japan were worth decades of massive fiscal and military commitments to build these democracies, why was this Arab nation Iraq not worth the support by Europe's Left and Right ?

      For instance, both supporters of Israel on the one side, and those of Palestinians on the other should have supported a decades-long commitment to help build the first Arab Democracy based on a semi-secular Shia-&-Sunna-mixed polity of the many inter-married families of often well-advanced professional and vocational attainment, all to show the way out of absurd iron-age religious fixations.

      Like the Regime-Change in Germany and Japan of '45, the Regime-Change in Iraq could (still can)have developed into an astonishing middle-eastern case-study of combining Allied stabilizing Peacenik- Divisions, accelerating constitutional advances to support political muscle-tone, all integrated with 21st-century training and industrial-cultural transfer mechanisms to have local folks focus on perfect welds, reliable contracts, predictable logistics and increasingly self-governed 'Iraqi' definitions of free market economics, democratic principles and self-determination far away oppressive sheikhs, mullahs, generalissimos lording over a people forever.

      Delete
    5. Part 2 of 2
      Instead of running a presumably noble set of numbers, we get to count the Iraqi lost lives based on no such peace-commitment, or just the numbers generated by 71% of Kurdish women being subjected to genital mutilation.

      And that before running lengthy EXCEL Spread-Sheets on sitting idly by watching Syria, when a pacified Iraq would have allowed a northwestern Iraq Persistent Observation to produce a perfectly-enforceable NO-FLY-ZONE triangle together with NATO southeastern Turkey and the sole democracy in the Middle East, Israel.

      Alas flamboyant decadence suggested otherwise.
      Apart from the inactivity-generated Syrian nightmare, deeply ironically the inevitable and thus self/European-triggered refugee-wave has and will generate eye-watering costs to European fiscal structures, and its political structure, not to mention the ugly blood-stain on its ethics.

      So, we get to add up blood-&-gore, economic- and political costs based on pious myopia.

      The IRAQ LIBERATION ACT OF 1998 based by 100% Senate, 85% House, and signed into US Law by President Clinton (incl. support by Bernie Sanders !) outlined the project for Iraq quite well. And this Super-Power produced a military success.

      But then a more or less racist indifference by so many democratic leaders towards the Iraqi's right to Democracy threw so much opportunity away.

      Far beyond pedantic pencil-&-paper games, a major advance in the progress of civilization in the Middle East has at least been delayed, if not ruined. Darkly unethical indeed. And, yes ‘costly’ to all.

      At least this attitude is costing Europe a lot as well…

      Will lessons be learned ?

      Delete
  3. SO:

    >Thus deterrence cannot reasonably rest on the >ability to defeat your neighbour quickly and >reliably. Such deterrence could only be had by few >powers or alliances, leaving all others insecure and >motivated to launch an arms race.

    Which they would loose because they lack the economic basis for such a arms race and would therefore ruin their economical fundament - so it would harm and weaken them, which is better than any deterence without this effect.

    This means moreover that any logical / wise thinking leaders are forced to join strong alliances which would also be very good and would stabilise the geostrategical situation.

    >I disagree that lives have become less valuable. In >fact, billions of poor people of the world have >received a substantial economic lift in the past 20 >years.

    This lift cannot be sustained for long because the earth lacks the ressourcse for this. The substantial economic lift of to much humans will lead to more and more wars (climate wars, water wars and so on) and breakdowns of states and regions in the next decades.

    And even in the countries in which many people become richer the difference between rich and poor become bigger and bigger. So the live of many humans become more valuable, but at the same time the live of many other humans become less and less worth. You can literally buy a human life in much parts of the world for only some hundred dollars.

    ReplyDelete
  4. Kelly:

    The incentive should be the costs. To wage this low intesity long running conflict result in enormous costs (which are higher than the costs of a much stronger military without such a confict) and it ruins the military power because the fighting power,
    discipline, fighting ability and so on erodes.

    Without the costs of this conflicts you could easily maintain a stronger bigger military. Which means also more soldiers, therefore more jobs for the officer corps and even more weapon buys for the military-industrial complex.

    Moreover armament / preperation for war should not be for low intensity conflicts, not for deterence, but for real wars.

    So it would be much more useful for the US military, weapons industry and so on to stop their senseless low intensity conflicts, to arm the military for low intensity conflicts but to prepare for the next peer war, real war, total war - which will come.

    Preparing for the last war, or the current low intensity fighting is making yesterday perfect and will inevitably result in a catastrophic military disaster which especilly the US cannot afford without falling down.

    ReplyDelete
  5. SO:

    >There's little reason to expect only the benevolent >and peaceful countries to reach such a superiority >and to expect the potentially aggressive countries >to be content with their inability to defend >themselves.

    Of cause. And some countries will start an arms race and will arm them as much as possible even without any logical reason. Some will be aggressive even without superiority and will wage wars which they will loose. Take Japan in WW2 for example.

    Exactly for this reason you need today a stronger first strike / first counterstrike capacity because no country today would survive a strong enemy first strike and could then after it begin to arm itself. It would collapse after the first decisive battle.

    Exactly because of that you need today a military which is as strong as affordable, and has a maximised first counterstrike capacity and is organised and distributed to avoid a "Pearl Harbour" scenario because today the western states would not win after such a "pearl harbour" event but loose the entire war inevitably.

    The over specialisation of the armed forces for low intensity conflict and waging all this small colonial occupation wars are the biggest strategic failure in this context, like the wear down of the japanese army in china which was also one of the main reasons japan had no chance at all and manouverd himself in every aspect (political, economical, militarily) in a hopeless position.

    ReplyDelete
  6. Best I can do with Schnabel is to agree to disagree.

    Anon; to arms race is to waste. The political art should be to AVOID arms races, not to exploit that one could "win" them. I thought that THIS VERY ARTICLE should have made that clear.

    ReplyDelete