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Pensions vs. military spending: A losing battle

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By Thomas Sowell
Tuesday, Feb. 19, 2013, 9:00 p.m.
 

A nation's choice between spending on military defense and spending on civilian goods often is construed as “guns versus butter.” But understanding the choices might be helped by examining the contrast between politicians' 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. Creating pensions that offer generous retirement benefits wins votes now by promising spending in the future. These promises cost nothing in the short run — and elections are conducted 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 do so. This applies to Social Security and other government pensions.

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.

So 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.

The politics of military spending are just the opposite. 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.

Amid 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 World War II, the U.S. had the 16th largest army in the world, right behind Portugal.

This small military force was so inadequately supplied that its training was skimped. American warplanes were not updated to match the latest warplanes of Nazi Germany or imperial Japan. During World War II, 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.

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.

Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University.

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