Does America need to defend everybody?

Frank Sonnek, frequent commenter on this blog, has found some interesting data and raises some interesting questions about our defense budget:

our military spending exceeds ALL global military spending if you don’t count china, which spends about 15% of what we spend.

some analyses relate military spending to GDP, but I am not sure what the relevance of doing that is, as opposed to absolute spending.

let’s say we cut our military spending to be maybe 1/2 of the next top military spenders combined…. would those nations not work to defend peace and commerce? are we unfairly subsidizing the peace rather than having other nations chip in their fair share of spending?

http://www.economist.com/blogs/democracyinamerica/2010/10/military_spending

and now look at this chart:

http://www.globalsecurity.org/military/world/spending.htm

and this one… the pie chart is sort of eye-popping. the usa represents nearly half of ALL global military spending according to the pie chart.

http://www.globalissues.org/article/75/world-military-spending

Summary: I am really challenged to believe that significant cuts in the military will threaten world peace.
It would appear that the United States of America really is the policeman of the world and budgets accordingly.  Is it that we are enabling other countries to spend so little on defending themselves that they can afford free health care and all of those other welfare state benefits?  Does our status as leader of the free world mean that we have to have the capability of defending every other country, as well as our own?   Couldn’t we expect our technological superiority in warfare, expensive as it is, to result at some point in savings?
Granted that national defense is one of the few legitimate functions of the federal government and that it has to remain an important priority in this still-dangerous world, given our massive deficits, should our defense budget be scaled back?

The end of the Euro?

The European economy is in a state of crisis, to the point that some people are thinking that the Euro, the pan-European currency (except for the British pound a few others), may be finished.  Some businesses are planning what to do if the Euro ceases to exist:

International companies are preparing contingency plans for a possible break-up of the eurozone, according to interviews with dozens of multinational executives.

Concerned that Europe’s political leaders are failing to control the spreading sovereign debt crisis, business executives say they feel compelled to protect their companies against a crash that can no longer be wished away. When German chancellor Angela Merkel and French president Nicolas Sarkozy raised the prospect of a Greek exit from the eurozone earlier this month, it marked the first time that senior European officials had dared to question the permanence of their 13-year-old experiment with monetary union.

“We’ve started thinking what [a break-up] might look like,” Andrew Morgan, president of Diageo Europe, said on Tuesday. “If you get some much bigger kind of … change around the euro, then we are into a different situation altogether. With countries coming out of the euro, you’ve got massive devaluation that makes imported brands very, very expensive.”

via Businesses plan for possible end of euro – FT.com.

That wouldn’t help American exports.  But it would mean the dollar would suddenly become very, very strong.  That sounds like a good thing, but it would probably mean more dollars flowing out of this country into foreign imports and investments.

What might the breakup of the Euro mean for the American economy?

Boycott or Buycott?

The Occupy Wall Street folks are planning to “occupy” publicly traded retailers in their efforts to protest American big business.  They are calling for boycotts to stop corporate profits.  In response, Tea Party folks are calling for everyone to go out on so-called Black Friday to buy lots of stuff, thereby supporting American business and helping the economy.

Anti-Occupy Wall Street” groups are taking on the protesters of “Occupy Black Friday” with “BUYcott Black Friday.”

Liberate Philadelphia/Liberate America, a Tea Party coalition of groups countering the “Occupy Wall Street” movement, are challenging the latest move by Occupy Wall Street protesters to occupy or boycott publicly traded retailers on Black Friday by instead encouraging consumers to shop on Black Friday to help the economy recover.

“At a time when our economy is most fragile and ratings agencies are talking about another downgrade of the U.S. credit rating, it’s completely irresponsible for Occupy Wall Street to attempt to bring the U.S. economy to a halt on the busiest shopping day of the year,” Liberate organizer and a spokesman for the Tea Party, John Sullivan, stated in a press release.

via Tea Party Activists Challenge ‘Occupy Black Friday’ With ‘BUYcott Black Friday’ – CNBC.

If any of you witness any Occupying when you go out for the pre-Christmas sales, please report it here.

My own sense is that any attempt on the part of Occupiers to camp out at Walmarts, Targets, and Best Buys and to interfere with people trying to buy Christmas presents will turn the actual 99% of Americans decisively against them.  And that Democratic politicians, including the president, who came out in support of the Occupiers will rue the day.

Since part of what is holding our economy back is reportedly the lack of consumer spending, would it be a patriotic gesture to spend a lot this Christmas?

The Penny Plan for deficit reduction

Florida Republican congressman Connie Mack has put forward an ingenious approach to deficit reduction:  cut one penny (1%) from every dollar spent for six years.  This modest across the board reduction would be in place of the percentage increases every year that have become the norm (so that even talk of reductions are actually reductions in the rate of growth).   Even some liberals are coming out in favor of this option.   One of them, ex-Clinton official Lanny Davis, explains how it would work:

Mr. Mack’s bill, H.R. 1848, would cut one-penny-out-of-every dollar actually spent by the federal government from year-to-year for the next six years, from FY 2012-FY 2017. Beginning in FY 2018, there would be a budget cap of 18% of GDP (the average federal revenue as a percentage of GDP over the past 30 years). And by FY 2019 America would finally have a balanced budget – that is, assuming revenues naturally increase from the current 14.8% of GDP to 18% of GDP by 2019, after which the budget would be in surplus.

There is an automatic spending cut “trigger” under Mr. Mack’s plan – one he came up with well before the trigger used in the recently passed national debt ceiling bill. If congress failed to enact a budget implementing the one-percent-actual-spending cut required under Mr. Mack’s measure, then there would be automatic, across-the-board actual cuts in all federal programs to meet the one percent reduction, and that means all: in defense, Social Security, Medicare, Food Stamps, defense and national security spending, everything.

Mr. Mack’s plan may seem draconian to some. It would cut the accumulated budget deficits by an estimated $7.5 trillion over ten years – more than three times the amount achieved by the debt ceiling deal congress approved last Tuesday. . . .

Democrats need to find a spending cut formula that they can live with. The Mack Penny Plan seems a good place to start — it is simple, it makes common sense, and with some adjustments protecting the poor and the unemployed, it could be seen as fair even to many of the most liberal Democrats.

via Why Rep. Connie Mack’s Penny Plan Is Worth A Second Look | Fox News.

What do you think of this idea?

Luther on big business

Thanks to Tom Hering for this quotation from Martin Luther, On Trading and Usury, 1524:

Of the companies I ought to say much, but that whole subject is such a bottomless abyss of avarice and wrong that there is nothing in it that can be discussed with a clear conscience. For what man is so stupid as not to see that companies are nothing else than mere monopolies? Even the temporal law of the heathen forbids them as openly injurious, to say nothing of the divine law and Christian statutes. They have all commodities under their control and practice without concealment all the tricks that have been mentioned; they raise and lower prices as they please and oppress and ruin all the small merchants, as the pike the little fish in the water, just as though they were lords over God’s creatures and free from all the laws of faith and love …

… How could it ever be right and according to God’s will that a man should in a short time grow so rich that he could buy out kings and emperors? But they have brought things to such a pass that the whole world must do business at a risk and at a loss, winning this year and losing next year, while they always win, making up their losses by increased profits, and so it is no wonder that they quickly seize upon the wealth of all the world, for a pfennig that is permanent and sure is better than a gulden that is temporary and uncertain. But these companies trade with permanent and sure gulden, and we with temporary and uncertain pfennigs. No wonder they become kings and we beggars!

via Comments ‹ Cranach: The Blog of Veith — WordPress.

Now I don’t think this means Luther would Occupy Wall Street if he were here today, but there is quite a bit here:  He opposes monopolies, which are always anti-free-market.   (The paradox that the free market will create businesses that try to prevent the free market from working against them by establishing monopolies was noted by Marx, but I believe conservatives agree with this problem.)  He also seems to want “strong money,” as opposed to inflationary and easily-manipulated soft currency.

Luther speaks as a theologian, not as an economist, as if that field existed then as it does today, but doesn’t this strike a chord?

Congress fails again

Back in August, Congress averted a government shutdown at the last minute by kicking the can to a “Supercommittee” that was assigned to find $1.2 trillion in savings.  The incentive was a provision that if the bipartisan task force failed to do so, $1.2 trillion would automatically be cut, with half from social programs (to get the liberals to co-operate) and half from defense (to get the conservatives to co-operate).  The deadline for an agreement would be Thanksgiving.

Well, that would be this Thursday and it is evident that no agreement is likely, with the sticking points being the same ones that stymied Congress back in April:  Democrats want not only cuts but new revenue, and Republicans won’t agree to any tax increases.

But doing nothing will be just as good, given the automatic cuts that will take place (though not until 2013).  Right?  You would think so.  That was the agreement.

But now the word is that Congress will renege on that deal by adding back what would have been cut out of  social programs and national defense!

Supercommittee Expectations Wane on Tax Divide – Bloomberg.