Military Spending: How Much Is Enough?

Military spending, the defence budget, is the first element in the value chain producing security. In principle, governments should determine how much is enough by adjusting military expenditure to the point where the marginal security benefit of a little more military expenditure is equal to the opportunity cost. The opportunity cost is what could be gained if the money was used for other government expenditures, like health and education, or used to reduce taxation, which would allow higher private consumption. While this is a useful framework, reality is more messy, partly because of the difficulty of measuring the marginal security benefits and partly because states are not unified rational actors that could make such decisions. Instead decisions arise from competition between groups. Some, like the arms manufacturers and the military, may have an interest in higher military expenditure and in presenting the threats as more pressing than they are. Others, like the general public, may have little interest in strategic calculation or awareness of potential dangers.