Economic Consequences of Military Spending

Abstract

The great success of the nuclear freeze referendum in the recent elections can fairly be interpreted as popular support for winding down military spending. At the same time, there obviously also exists an effective consensus in the United States for significant, sustained increases in military spending. An increase or decrease in military spending involves a shift among government programs or a transfer between public and private purchasing power. In all cases the changes will inevitably absorb some idle resources, bid others away from alternative uses, and leave idle yet others now in use. This is so because any economic activity requires a distinct combination of labor skills, of manufacturing and service sector infrastructure, of dependence on imports like specific minerals, and so on. Particular menus of public spending, coupled with implicit or explicit industrial and trade policies, have a direct impact on such aspects of the quality of life as the amount and types of work that need to be done and the nature of educational and training requirements. Even in the absence of deliberate long-term economic policy, the structure of our economy will change in the future as it has in the past. During this century the composition of the American labor force has shifted, individual sectors have grown and declined, and the importance and composition of trade have changed with the transition from agriculture to