Posted by: erichosemann | October 25, 2009

National Defense as a Public Good.

Bryan Caplan of Econlog says it’s not.

Here is his proof:

1. For national defense to be a public good, the social benefits of its existence must exceed its social costs. (From the definition).

2. The social benefits and costs of national defense are the sum of all people‘s willingness to pay. (By definition).

3. On average, people’s willingness to pay for their own physical security is higher than their willingness to pay to reduce the physical security of others. (My critical assumption, which I’ll call Limited Malevolence).

4. If no country had national defense, people’s average physical security would be higher than it is now, because the danger which any given country’s national defense deters is attacks from the national defense of other countries.

5. Since the existence of national defense reduces people’s average physical security (from 4), and people’s average willingness to pay to increase their own physical security exceeds their average willingness to pay to reduce the physical security of others (from 3), the net social benefits of the existence of national defense are negative.

6. Therefore (from 1 and 2), national defense is not a public good.  QED.

I’d like to go deeper into each of the points of his proof, but for now I’ll just do something kind of scattershot.

In a post entitled “Why Most Economists Are Hawks, and Why They Might Be Wrong,” Caplan asks the reader to imagine what would happen to the frequency of suicide bombings if Israel killed the families of suicide bombers.

Why wouldn’t a suicide bomber–a person who has nothing to lose–pre-emptively kill his own family so that Israel couldn’t have the satisfaction of doing so?  Suicide bombers tend to believe in an eternal afterlife in which they’ll reunite with their loved ones (provided they and their loved ones are pious enough) so the amount of utility they get from their loved ones in the here and now is a moot point.  In his thought experiment, he assumes both the suicide bomber and the Israeli derive the same utility from family members.  This might not be the case.  Interpersonal comparisons of utility might work between two similarly financially and ethically endowed persons in the same society, but they might break down across wide cultural gaps.

This theoretical suicide bomber might value his own life and the lives of his family members much less than his Israeli counterpart.  Could it have been said that citizens of the Soviet Union valued the lives of their compatriots much less than citizens of the United States did theirs?  After all, the number of lives liquidated in the name of preserving the revolution numbered in the tens of millions.  Mao was similarly extravagant in his brutality.  The Cultural Revolution too cost millions of lives.  Given this tendency of human nature to compound suffering over time, isn’t the whole “American Experiment” thing of greater value than an experiment prominently featuring mass slaughter?  It looks much more attractive when compared to societies in which liquidating the opposition was considered necessary for the general good.

In this light, the national defense spending of a free society is a sort of conspicuous consumption; it is a signal to societies in which the value of an individual life approaches zero that free societies value it more.  I suppose it is more like a Hansonian health insurance signal.  It tells the rest of the world just how much the collection of individuals in a free society values their freedom.

Furthermore, just because the cost to provide for national security is lower than what people spend to protect themselves on average doesn’t mean national security isn’t a public good.  We live in a society that tends to value concentrated benefits and dispersed costs.  National defense is a dispersed cost.  Imagine the size of the military-industrial complex if national defense spending per capita equaled what people spend to protect themselves.

The dispersed cost of national defense is well worth it if national defense forces terrorists to take years to devise new ways of killing Americans.  In a world without national defense, invaders would merely pick off free states one at a time.  Given the number of international flights occurring each day, this would not be hard to do.  Presuming all those free people were proud enough to think only their type of freedom was worth preserving, doing so would be relatively easy task for the terrorists, and absent some kind of global hegemon like the U.S., there would be barriers to the establishment of nation-spanning defenses.

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