America: The Leveraged Leviathian

Jon Hoffman, a military historian, took issue with my post on America's AIG Defense Policy.

His email is reprinted here with his permission:

I'm not sure your analogy between the financial crisis and the Dept of Defense holds up very well. The concept of financial leverage (basically using a small amount of actual money to control a much larger pool of financial assets) has no obvious connection to the way our defense program is run, except that both are bound to a degree by past actions (which could be said of just about everything). A certain amount of defense spending is tied to 'exotic' future products in the form of new technology, but I don't see the analogy of failed connection to underlying assets.

Much of the technology is in the form of improvement to legacy systems such as tanks, planes, and ships, or their ability to communicate and process information. If your point is that new spending should pursue entirely new ways of fighting that break all ties to the past, you would be making a leap of faith that would be risky in the extreme. In sum, your analogy needed much more explanation to make it clear and useful.

Your statement that the US far outspends China on defense is true but hopelessly simplistic and not very useful. A large chunk of US spending is on manpower, which costs orders of magnitude more for us than it does for China. We are also funding expensive current wars, requiring the replacement of worn equipment and other expenses that do nothing to improve capability. If you want to seriously compare our military capability to theirs, then look at the numbers and quality of troops and major weapons types. I feel confident we are still ahead of China in most areas, but not by an order of nearly 6 to 1 as you suggest. We may be well ahead in terms of nuclear weapons, but their utility is limited to dissuading the Chinese from launching that sort of attack against us and are unlikely to figure in any other scenario given the obvious constraints on actually using them.

Furthermore, while we have capable allies in the region, we cannot entirely count upon them in a crisis with China and therefore it would be imprudent to calculate their strength as if it were our own. Do you think Japan would come to the defense of Taiwan, given its constitutional and pacifist limitations? Would South Korea come to the defense of Japan, with whom it has longstanding enmity? Would Taiwan help out anywhere else in the region if China blackmailed it with threats of missile attacks?

Your overall point that we need to discipline defense spending is correct, but I think you need to employ stronger and more easily understood arguments to support it.

My response after the jump: