A new blog post by former IMF economist Warren Coats ties military spending to welfare spending in an interesting way, by describing the incentives both types of government spending have to increase in cost and decrease in quality.

In his post, Coats writes (bold emphasis mine):

Our promise to provide security to most of the world suffers from the same moral hazard as does an overly generous welfare state.  Incentives matter. When access to welfare is easy and the level of support is generous, more people will choose it over taking a job that doesn’t interest them much.  When President Bill Clinton signed “The Personal Responsibility and Work Opportunity Reconciliation Act of 1996” (PRWORA) on August 22, 1996 (with strong Republican support), he fulfilled his campaign pledge to “end welfare as we have come to know it.” The law ended welfare as an entitlement by introducing tighter conditions for receiving it. Welfare costs dropped following adoption of the law.

The United States spends more on its military than the next 14 largest military spenders combined (China, Russia, UK, France, Japan, Saudi Arabia, India, Germany, Brazil, Italy, South Korea, Australia, Canada, and Turkey). We are policing/protecting most of the world. This has two negative effects. The first, similar to chronic welfare recipients, is that other nations spend less on their own defense, taking a free ride on the United States’ ability to keep the world safe for everyone else. The second is that by diverting so much of our productive resources into the military, we reduce the resources available for developing and strengthening our economy. It is our powerful economy that underlies our influence in the world as much, if not more, than our military power. Moreover, our military might is made possible by our economic power.

The comparison between military and welfare spending is not something made very often, but it is an important one because of incentives. Concerns of military spending cronyism here at home aside, ever-increasing USA military tells allied countries they do not need to worry about their own national defense: the USA will always be there to come to their aid.

That may have been possible somewhat before the bills started coming due, but no longer. Military spending, just like entitlement spending, must be subject to spending reductions if we are going to preserve this country’s status as an economic powerhouse that is able to defend itself when the need arises.

Everything has a cost–including maintaining the most powerful, capable military in the world. It appears that can be done easily without current levels (and increasing levels) of military spending.