Debt and the great powers

Sven at Defense and Freedom cites some interesting statistics about debt as a percentage of GDP in Europe and Japan. It's certainly bigger in many cases than I expected. However, I'm not 100% sure of the conclusion:

This government debt situation has certainly implications for the ability to spend the same or more on military power in the future. The Grand strategy of NATO and its nations should attempt to avoid large arms races due to its mature and not vital enough economies/societies/governments.

The next several years will be the real test of how much debt constrains military power--at least for the United States. Assuming a more parsimonious regime than the debt-happy Bush Administration and Congress of 2001 to 2007, how fast can the US government return to a point where it can afford to fight another regional war? And even if it can't afford it, will the United States fight future wars anyway? Would it be restricted to the Operation DESERT SHIELD/STORM model, in which other countries that benefit from US military action help pay the bill?

In the last few weeks, we may have just seen the biggest constraint on future American military action: the interconnectedness of national economies. We were already likely to see a revival of multilateralism in US foreign policy, after the Bush Administration's failed experiment in weak coalitions and unilateralism. Now, we know that, if expensive military venures weaken the US economy, the cascade effect will hurt other economies as well. Even if a future President didn't want to embrace multilateralism, other countries might not leave us much of a choice.

Comments

[Sven Ortmann]

There needs to be a huge reduction of consumption in the U.S. (both private and government) - the nation won't arrive at a black trade balance (the deficit is at about 6% GNP) and the necessary savings rate (up by 6-10% GNP) without a huge reduction of consumption. An alternative would be a huge economic boom solely used for these purposes, which is unrealistic.
"Joe Sixpack" can expect to have a reduction of his real consumption by about 10-20% in 5-10 years, even without losing his job.

It's open to the U.S. government to influence this adaption/correction, and I believe that a reduction of the military expenditures (cuts back to Clinton-age size at most) is one of the least painful ways. It won't suffice on its own, though - the gap between reality and sustainable is much greater than the Leviathanic (para)military expenditures are.

I'm not sure that the U.S. government does/will soon understand the nature of the problem, though. Attempts to increase private/public consumption are aimed at going back to the unsustainable past condition - which won't happen. The goodwill of foreigners who financed U.S. consumption with credit is exhausted.

The topic wasn't only about the U.S., though. It was rather an attempt to shatter old and outdated perceptions. Japan might be a huge industrial nation, but it's not fit for a huge arms race despite its large economy. The same applies (to a lesser degree) to some medium and large European states and of course to the U.S.

Btw, I had a follow-on article;
http://defense-and-freedom.blogspot.com/2008/10/public-debt-military-expenditures.html

[Ian]

There's the further problem that the current American way of war is exceedingly cost inefficient. Expect American forces to be weakened by budget cuts at the same time that the sort of militias they might expect to fight may actually be strengthened by an economic downturn. Increased poverty is likely to increase recruiting for organizations like Hezbollah; militias with a civilian social services branch will become increasingly popular, not to mention that they will have available increased numbers of desperate young men.

Fighting a land war in Asia looks ever less attractive.

[Microsoft Outlook 2010]

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