Caveman Books

The Caveman Explores Economics & Politics

Thoughts About Economics

Part I.

Part II, THE INVENTORY ... MODEL OF MONEY

Part III, The Overall Model

Part IV How Much Cash Is Needed In An Economy?

Part V, Money Needed ... Determined By Production Increases

Part VI, How Do Profits Impact ... An Economy?

Part VII Assets

Part VIII Summary

Part IX, Money and Fractional ... Reserve Banking

Part X, Government

Caveman Articles

Money

Government and Taxes

Creating Money & Inflation

Tax Rates VS. Tax Receipts

Taxing The Rich

Government Debt

Government Stimulus



 

 

 

 

 

Defense: The main purpose of government

 

Almost surely, the budget/debt limit agreement will cut defense spending. First off, we have a “super” committee of 12 Congress people who will try to achieve the objectives of another $1.5 trillion in budget cuts. With 12 members, compromise will have to be the order of the day because each member will have their own private preferences. There is simply no way that a majority of members will vote to keep military funding at current levels. But if the committee cannot agree on the $1.5 trillion in cuts, then an across-the-board slice is made of all budgets, regardless of the priority of any particular budget item. Defense will get the same cut as a nonsensical study of bugs in the desert.

 

Surely, there is waste in the Defense Department and surely one could question the need for certain defense programs. But the main purpose of government is to protect its citizens. Defense has to come before even third-rail programs like Social Security and Medicare. And far ahead of boondoggle programs like agriculture and energy. Many of these programs were inaugurated during the time when the nation thought the government was the answer to every problem.

 

Since then, we’ve come to understand that, as Reagan said, the government is not the solution to the problem, but instead IS the problem. Obama’s attempts to revitalize the economy is further proof that the government cannot drive the economy upwards, it can only place a wet blanket over the economy through taxes, spending and regulations.

 

Social programs like Medicare are highly popular but so are floats in the local parade where candy is thrown to the audience. Free is always a popular come-on, but there is no free lunch. Somebody eventually pays. The float throwing the candy is sponsored by somebody and that candy cost is borne by somebody. If a company, then higher prices reflect the cost of free candy. If a charity, lesser services are provided to accommodate the cost of candy. The self-interest of the company or charity may well be served by giving away candy, but we have to realize it is not free. It probably is similar to an advertising cost which does nothing to enhance a product or make it cheaper, but is necessary to make the organization viable.

 

Defense is far from a free handout, though some will suggest that contractors get a freebie. Having been a contractor, I can vouch that no free handouts are available. Competition is the rule of the last 20 or so years and the opportunity for any special treatment is extremely limited.

 

All of this said, defense must justify its expenditures in terms of any threats facing the nation. Were all the world nations peaceful, a defense budget could be trimmed to a minimum, just enough to be prepared in case any one nation decided to be warlike. But that is far from the case. China is building an immense military structure, for what reasons we do not know. Muslim extremists openly state their intention to destroy the Western Civilization. Russia is a big question mark with still a sizeable military. And then you have lesser threats that cannot be totally ignored like N. Korea, Cuba and Venezuela. At least, we need the intelligence to keep an eye on these rascals.

 

The country needs to decide first and foremost what size of military it needs, almost independent of the budget. The military should be funded first because the primary function of government is protection. I say almost independent of the budget because spending too much on defense might kill the economy and the country would fail anyway. This happened to the Soviet Union during the Cold War and resulted in the eventual demise of the Soviets. But we are far from that situation. We are spending bundles on programs that are not essential and not within the main purpose of government.

 

Some might argue that protection against poverty in old age is a valid security concern. But those efforts can all be accomplished by responsible individuals and families who plan for the certainty of old age. No family can plan for or handle the threats of domination by a foreign power. That is why a government was formed in the first place, for mutual protection.

 

It is time for us to get our priorities straight.


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