A nation’s choice between spending on military defense and
spending on civilian goods has often been posed as “guns versus
butter.” But understanding the choices of many nations’ political
leaders might be helped by examining the contrast between their
runaway spending on pensions while skimping on military
defense.
Huge pensions for retired government workers can be found from
small municipalities to national governments on both sides of the
Atlantic. There is a reason. For elected officials, pensions are
virtually the ideal thing to spend money on, politically speaking.
Many kinds of spending of the taxpayers’ money win votes from the
recipients. But raising taxes to pay for this spending loses votes
from the taxpayers. Pensions offer a way out of this dilemma for
politicians.
Creating pensions that offer generous retirement benefits wins
votes in the present by promising spending in the future. Promises
cost nothing in the short run — and elections are held in the
short run, long before the pensions are due.
By contrast, private insurance companies that sell annuities are
forced by law to set aside enough assets to cover the cost of the
annuities they have promised to pay. But nobody can force the
government to do that — and most governments do not.
This means that it is only a matter of time before pensions are
due to be paid and there is not enough money set aside to pay for
them. This applies to Social Security and other government pensions
here, as well as to all sorts of pensions in other countries
overseas.
Eventually, the truth will come out that there is just not
enough money in the till to pay what retirees were promised. But
eventually can be a long time.
A politician can win quite a few elections between now and
eventually — and be living in comfortable retirement by the time
it is somebody else’s problem to cope with the impossibility of
paying retirees the pensions they were promised.
Inflating the currency and paying pensions in dollars that won’t
buy as much is just one of the ways for the government to seem to
be keeping its promises, while in fact welshing on the deal.
The politics of military spending are just the opposite of the
politics of pensions. In the short run, politicians can always cut
military spending without any immediate harm being visible, however
catastrophic the consequences may turn out to be down the road.
Despite the huge increase in government spending on domestic
programs during Franklin D. Roosevelt’s administration in the
1930s, FDR cut back on military spending. On the eve of the Second
World War, the United States had the 16th largest army in the
world, right behind Portugal.
Even this small military force was so inadequately supplied with
equipment that its training was skimped. American soldiers went on
maneuvers using trucks with “tank” painted on their sides, since
there were not enough real tanks to go around.
American warplanes were not updated to match the latest
warplanes of Nazi Germany or imperial Japan. After World War II
broke out, American soldiers stationed in the Philippines were
fighting for their lives using rifles left over from the
Spanish-American war, decades earlier. The hand grenades they threw
at the Japanese invaders were so old that they often failed to
explode. At the battle of Midway, of 82 Americans who flew into
combat in obsolete torpedo planes, only 12 returned alive. In
Europe, our best tanks were never as good as the Germans’ best
tanks, which destroyed several times as many American tanks as the
Germans lost in tank battles.
Fortunately, the quality of American warplanes eventually caught
up with and surpassed the best that the Germans and Japanese had.
But a lot of American pilots lost their lives needlessly in
outdated planes before that happened.
These were among the many prices paid for skimping on military
spending in the years leading up to World War II. But, politically,
the path of least resistance is to cut military spending in the
short run and let the long run take care of itself.
In a nuclear age, we may not have time to recover from our
short-sighted policies, as we did in World War II.
COPYRIGHT 2013 CREATORS.COM
