ABSTRACT
The question for Americans is not whether their economy can be saved by defense cuts, but whether those reductions will lead to improvements in national productivity and international economic competitiveness. Comparing the United States (US) to Japan, for example, critics of defense spending have pointed out that America had been devoting a far larger portion of its Gross National Product to the military and a far smaller portion to private investment. Cuts in defense budgets should lead inevitably to jumps in investment, productivity, and competitiveness. Private consumption and government spending on nondefense programs have typically been considerably higher in the US than in Japan. To speak of a simple, inverse relationship between defense and investment is to ignore the larger and more complex four-way trade-off among defense, investment, consumption, and nondefense government spending that took place in the past.
