Defense Outlays Research Articles

Germany Debates Defense: The NATO Alliance at the Crossroads , and: Conventional Deterrence (review)

BOOK REVIEWS John Garofano, editor Germany Debates Defense: The NATO Alliance at the Crossroads. Rudolf Steinke and Michael Vale, eds. Armonk, N.Y.: M.E. Sharpe, Inc., 1984. Conventional Deterrence. James R. Golden, Asa A. Clark, and Bruce E. Arlinghaus, eds. Lexington, Mass.: Lexington Books, 1984. Reviewed by William Hoffman, M.A. candidate, SAIS. NATO is in the midst of the most serious debate about its defense posture since the advent of flexible response. Observers on both sides of the Atlantic are pouring forth with plans, prescriptions, and revisions of a strategy that will strengthen the alliance and prepare it to face the era of nuclear parity. There is particular interest in exploring ways to defend Europe and decrease reliance on nuclear weapons. Both of these volumes explore the possibilities ofsuch a policy. Germany Debates Defense presents the perspective of the German Left on the issue of NATO strategy. A collection of essays from German journals, it covers the widest possible range of radical alternatives to NATO's posture. The essays include critiques of establishment assessments of the military balance and proposals for a new policy for Germany in Europe, including a piece by Peter Brandt, the son of the former chancellor, which advocates a neutral, reunified Germany, and a section of articles discussing "alternative" defense strategies. This discussion of new strategies is particularly valuable given the dearth of materials in English on these ideas. Also of special interest are Egon Bahr's "The German Question of European Security" and Gunter Gaus' "Social Democratic Peace Plan." Both authors are prominent members of the Social Democratic Party (SPD), and their views provide insight into that party's evolving attitudes toward defense. Germany Debates Defense is valuable because it gives American readers an exposure to a point of view seldom expressed on this side of the Atlantic; Conventional Deterrence, however, gives the opposite perspective. This book reflects the views of American moderates. The authors almost unanimously 285 286 SAIS REVIEW advocate a buildup of conventional capabilities, but not on too great a scale. They are in agreement in their analysis of the nature of deterrence, asserting that deterrence of war is enhanced by preparation to fight one. But they are not proponents of conventional retaliation; more specifically, they believe that a conventional attack on NATO can be deterred by powerful conventional forces ready to defend. While this perspective has much validity, the book suffers by not including other views of the requirements of conventional deterrence. Nevertheless, the essays are generally good, especially those dealing with the military balance in Europe. The editors, all army officers with extensive experience in Europe, have organized the book well. Conventional Deterrence will provide the interested observer with a good summary of factors involved in the equation of NATO security. Maritime Strategy or Coalition Defense. By Robert Komer. Baltimore: University Press of America, 1984. Revising U.S. Military Strategy. By Jeffrey Record. New York: Pergamon Press, 1984. Reviewed by William Hoffman, M.A. candidate, SAIS. Much ofthe present consternation over America's defense policy stems from the apparent paradox of increased defense outlays and heightened American vulnerability. This situation leads many observers to advocate changes in either our security posture, our defense budget process, or, more fundamentally, our foreign policy as a whole. Recent works by Robert Komer and Jeffrey Record address these issues, and while Komer propounds the merits of traditional U.S. security policy and describes the dangers of passively moving away from it, Record recommends some basic changes in the postwar orientation of American defense policy. In Revising U.S. Military Strategy, Record focuses on the imbalance between U.S. objectives and available resources. He divides his work into two parts: a historical examination of U.S. strategic doctrine explaining the origins of the present mismatch between ends and means, and a set of propositions for redressing the imbalance. Record believes the chasm between commitments and capabilities is wide and extremely perilous for U.S. national security. His proposals reflect what he feels to be the gravity of the situation. Komer, on the other hand, worries less about the ends-means dilemma than he does about the navy. In Maritime Strategy or Coalition Defense...

Fluctuations in Soviet Defense Spending

Despite our efforts to understand the dynamics of the arms race, we know little about the causes of short-term fluctuations in USSR military spending. This article attempts to shed new light on the domestic causes of these fluctuations, with special emphasis on Soviet economic conditions. It is found that annual shifts in military budgets are responsive to the magnitude of the economic burden that defense outlays represent in a given year and to the stage of the five-year planning cycle the Soviet economy happens to be in. With respect to the latter, the military sector fares least well relative to the civilian sector at the beginning and end of the five-year period, but compensates for this toward the middle of the cycle.

SOME IMPLICATIONS OF THE ECONOMIC IMPACT OF DISARMAMENT ON THE STRUCTURE OF AMERICAN INDUSTRY

SUMMARY To investigate some of the major structural problems which might arise from disarmament, an input-output model was constructed specifying three full-employment patterns of end product deliveries which might reasonably be expected for the year 1970. The purpose of the model was to measure the impact of varying compositions of final demand accompanying a reduction in defense expenditures on the production capabilities of sixty-six processing sectors. Each disarmament pattern was stipulated with respect to a specific level and composition of defense expenditures in conjunction with a compensating policy offset. The relative impact on total industry requirements was discerned by comparing the derived output levels of each industry under the alternative policy formulations. An analysis of the computational results lead to the following five major conclusions: 1. A fifty per cent reduction in defense outlays, offset by compensating increase in expenditures within either the private or public sector, will affect the industries producing weapons substantially but will have little effect on supporting industries. 2. The magnitude of the shift in final demand postulated was not large enough to pose structural problems. 3. The derivation of the indirect requirements indicated that the processing sectors are quite consumer oriented. Indeed, this dependence was so strong that substantial shifts between other major categories of final demand were dampened considerably. 4. Industry sensitivity to variations in final demand patterns was diminished markedly by the pattern of accompanying intermediate demands. 5. The effect of public policy was not significant to the output levels of industries supporting the military oriented industries.

Israel's Export Problem and Its Policy Implications

During the first few years of Israel's existence, its economic planners placed major emphasis on progress towards the solution of basic long-run problems. These problems concerned economic development, economic absorption of mass immigration, and the economic burden of large defense outlays. While the short-run problem of the unfavorable trade balance was not ignored, it was relegated to second place in Israeli economic planning. A large-scale inflow of unilateral payments enabled the economic planners to carry on their long-run objectives without having to worry too much about the current deficit in the balance of payments. It was generally assumed that once the primary goals were reached, the balance of payments problem would take care of itself. In recent years, however, there has been a shift in emphasis. State planners are still concerned with the long-run objectives, but are being urged constantly by independent economists to give higher priority in the formulation of investment and other policies to the pressing short-run problem. Perhaps the most important reason for this shift is the prospect of a sharp decline in the inflow of capital within the next few years. At the rate at which the German reparations to Israel are being used up, they will be exhausted by 1963.1 Private contributions and transfers as well as public capital import will also taper off before long. This decline will seriously interfere with all phases of domestic production, since two thirds of Israel's imports are currently financed by capital import, and local production depends heavily on imported raw materials, spare parts, and fuel.2 The only way to minimize the impact on the economy of the transition to a self-supporting stage is by increasing exports.

Accelerated Amortization and Industrial Concentration

A S the pages of this journal testify,' economists recently have displayed a lively interest in the trend of industrial concentration. Those fearful of increased concentration in years to come are likely to be particularly concerned over the implications of continued heavy defense outlays. Although the evidence is far from convincing, many believe that the World War II mobilization program intensified industrial concentration. The issue examined in this article is whether a particular mobilization measure, accelerated tax amortization, has contributed toward increased concentration in American manufacturing industries during the current defense build-up.