The Game Theory of Military Spending | Economics Explained
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Is $2.2 trillion per year wasted on the military, or is this massive spending necessary to defend the freedoms we enjoy. In this video we explain why military spending may be a necessary evil using the prisoner's dilemma and reframing some narratives about military spending you may have heard.
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what was with that B-pawn B-pawn opening? That was really weird.
Jesus loves you â€ïž please turn to him and repent before it's too late. The end times described in the Bible are already happening in the world.
Downvoted for stating / implying that hunger can be eliminated. As a economics student, you should be well aware that hunger cannot be eliminated by implied definition. It is essentially the (economics) law that there must be hunger
i LOVE HOW You used china as an example at 8:35 when the united states has consistently spent over 2 times as much as the next 10 countries combined, also the usa started more than 80 wars in the past 100 years even after the soviet union fell and the supposed world would be at peace the united states did not disband nato after the ussr dissolved and continued to build up its military and getting involved in a trail of conflicts
if anything the prisoners dilemma proves that north korea and russias actions are correct, because if they did not develop their military they would end up like libya, iraq, chile, afghanistan ,guatamalla, haiti, nicaragura, bolivia, el salvador.
quick correction - John Nash was not the founder of Game Theory. That honor generally goes to John von Neumann who published a paper in 1928 called "On the Theory of Games of Strategy".
Yeah but matpat founded game theory
Correct.
Even more serious problem though: the prisoners dilemma is a "dominant strategy"; i.e. a concept that existed before the the Nash equilibrium. Every dominant strategy is an equilibrium, but the opposite is NOT true.
The reason this problem is famous is that the dominant strategy leads to an outcome which is not Pareto optimal (meaning that the two criminals can do better by cooperating rather than being selfish as game theory demands).
This game of "first" makes no difference in economics or math. It doesn't help any understanding of the concept. It's also unlikely that either of them were the first humans that understood and communicated Game Theory.
If his DNA is still knocking about we should make at least 100 clones of him.
Institute of Von Neumanns.@@johnnysilverhand1733
John Nash is famous for playing Russel Crowe
One of my favorite quotes is from Dwight D. Eisenhower's Chance for Peace speech in which he states: "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed." "This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children."
Eisenhower warned us of the military industrial complex yet left it a powder keg for JFK to dismantle... which he tried... so they dismantled his head.
Neo liberal economics is extending this to the already wealthy. We can watch in realtime the crumbling of infrastructure while the rich make off with great heaps of money.
Yeah, its either that or the blood and rubble of everyone and everything you worked for. No hard feelings here mate.
@@miniaturejayhawk8702 I don't understand your statement.
@@apsoypike1956 how so?
Finally someone has used the PPP adjusted military spending, more money does not equal more resources or military equipment
Particularly the framing that is frequently reported about America spending more than the next 10 countries, 7 of which are their allies. But adjusted for PPP it's only the next 3, none of which are allies...
â@@EconomicsExplaineddude India is an ally of USA, it's just not a vassal state of USA.
Example being QUAD membership.
â@@hemshah1567Never fool. It's just united against china.
Cappy from Task and Purpose here on YT did a deep dive into the US Defence Budget. Fully 30% of their Budget disappears instantly on Rent for Property the Defence Dept has, and on Welfare payments to retired personnel. None of the other Countries mentioned are putting that in their Defence Budget, if they're paying it at all.
And it's safe to say India's Freelance. After their association with the British, they're not in a hurry to get in bed with anyone yet.
The problem is trust. If two parties trust each other and cooperate with no barriers they can achieve an incredible amount more than if they held back. Trust makes you vulnerable and in a world of billions of people only a small number in power need to be untrustworthy for things to fall apart.
No one can be trusted to not abuse the position of power over others; that was the reason that the founding fathers formed a government that included separation of powers, but this was abandoned when congress enacted the home land secur ity act. Now all agencies of government are controlled by an unconstitutional administrative body that literally makes its own policies and regulations, not subject to any oversight. Nine 11 was a coup.
Not trust.
Security.
Trust is not enough.
It is never enough.
@@ethribin4188 If you have a significant other living in your house and you have knives in the house, you have no security of them not stabbing you in your sleep. there is no security from them poising you. But you don't worry because you trust them. You don't need to hold a gun to people's heads and threaten them 24/7
Game theory is entirely predicated on people not trusting each other.
@@glowingfatedie so maybe not the best way to look at the world or military spending then eh?
A few years back I looked up which countries in the world were suffering famines. I learned that famines were only occurring where government or paramilitary forces were restricting access to food, to starve people into submission. Sudan and Yemen specifically. We had enough food to feed the world. Civil wars were the problem.
And as the history of Rome taught us, throwing money at a political and or military problem isn't a solution by itself.
Yes, it's a distribution/access issue.
The famine in Somalia was entirely because militias were stopping/seizing food aid shipments.
Humanity creates much of it's own tragedies.
Wasnât always like that, 35/40 years ago use to be paid commercials of people starving in Africa and India.
The world for decades, has OVER PRODUCES FOOD like 10X
where have you been?
I think you mean that paramilitary forces were restricting *foreign* aid. Yemen, in particular, was not producing enough food to feed itself. But, hey, Singapore doesn't produce enough food to feed itself, and it's one of the world's richest countries.
If a society isn't food self-sufficient -- and there are many that are not -- the only recourse is to import food from outside. If supply chains get disrupted, whether by malice, incompetence, or natural disaster, famine is always going to be a risk. Look at what the war in Ukraine has done to food availability in Africa and Turkey just recently.
Historically, there have been nations, like China and Japan, that have significantly reduced military spending and development to focus on internal affairs. And they were successful for a time. However, one (China) became a victim of more expansionist powers, the other (Japan) saw what happened to the first, and had to do a century of development in a few decades. There's also the tragedy of the Moriori, a pacifist people wiped out because they refused to compromised on their peaceful beliefs. And that's just recent history - ask where are the famous pacifist nations of history compared with the great empires built by blood and conquest?
Peace is great and all, but everyone has to want it. And I mean everyone, because if one refuses to go with the program, they'll be able to threaten others into doing what they want.
I wonder if they had nukes but had a stipulation to only use them if attacked. Would that cause peace? Especially if they said we'll shoot nunerous where the politicians live and work of aggressor nation. North Korea seems to be employing that strategy a bit and no one wants to invade them. đ
This is precisely, why I criticize anarcho ways in economics. It's the same principle. The moment there is no government, the one with greatest market power, and that person will eventually manifest, becomes the state and begins to behave as such very much including the use of force. The moment you ban guns, the first to break the law becomes the law, because there is nothing to stop them.
Exactly, only deterrence and submission are true forms of peace. Everyone says we live in the most peaceful era ever but this isnt historically accurate at all.
The most peaceful times were whenever there were the fewest countries. Those few countries were almost always large empires that conquered almost all of the known world at the time. All other countries were simply too small to pose any real threat to said empires and so things largely remained stable until said empires finally ended up collapsing under their own weight.
If anything the most peaceful time in history was the late 19th century because by that point the world was almost completely carved up. Either that or the 1920s, where pretty much everyone was either too broken or poor to fight a conventional war.
I century of development in a Few decades....now I see where that subplot in Attack on Titan was inspired from.
@@looseycanon I'm Australian mate. We banned Guns here a long time ago, and no criminal here has 'become the law'. Same with most of the World. Of course, we weren't starting from the same place as the US, where every household could arm a Platoon.
yay, Game Theory! This is an area of Economics I'd love to see discussed more
It's a great tool for understanding decision making
agreed
The "we could eradicate world hunger with 300b" part seems far fetched, totally ignoring the logistics nightmare of delivering the food to literal war zones and dictatorships, where they would be confiscated immediately and never reach those people...
I think the 300 b are not gonna be used to ship food there. But develop the country so it produce its own food or making the citizens productive enough, that the country can buy enough food.
300 billion over a decade would not feed the world. Maybe it will fix it for one year but it would not solve world hunger that's so absurd. While it's spread around a lot. The US population alone donates over 450 billion a year. That's not even including our government.
@@Mark_badas Remember the episode of EE about Iran. Even if a country has all money/resources to develop it doesn't mean their leaders will want it to develop, falling back to the food problem with extra steps.
â@@Mark_badasin that case, 300 trillion won't be enough. That's not a problem that can be solved with money.
Far-fetched and naive.
Interestingly, the Emu War was actually a by product of surplus from a war. Essentially some farmers needed emus dealt with and some bright spark pointed out there was lots of ammunition left over from the Great war... and so they used it.
If there had been no WW1, there would have been no Emu war.
Dear lord imagine if Haber was Australian.
EE videos; 90% economics content
10% Hilarious stock footage
I've heard military spending and warfare described as the most economically inefficient aspect of human society.
However, the thing about the military is that you don't need it until you need it and if you need it and you don't have it you're in for a very bad time.
exactly
You can also view it as an insurance. Sure it sucks, but when things go south you want that return
Which is also a wrong way to see it. Because if you don't have an army, your chances of being invaded go through the roof. And if you have a massive one, you will never be invaded and you will even get to dictate world policy in your favor by leveraging your power over weaker countries.
Or you can just get nukes, that works too.
In cooperative game theory, the players choose the best outcome for everybody under the grand coalition. (The 1,1 solution) However, it requires some additional assumptions, such as the players sharing information beforehand, and actually cooperating.
It also assumes everybody has similar enough goals, sees the various options in the same way, and plays/acts the same way.
The same problem can be shown when people say Putin isn't a rational actor any more. Well he isn't reading the situation the same way, has different cost/benefits, is willing to pay different costs, and isn't looking for the same outcome.
France & Germany are still salty about how the UK handled Brexit, so they block a UK general from heading NATO. Macron has his own power aspirations, so he suggests a parallel pan-EU military that is not bound by NATO obligations. Germany wanted to keep cheap gas, so they get Nord Stream 2 after Russia seizes Crimea.
No two (major) parties has entirely the same goal.
Two Australians posting videos about defense economics. This is an unexpected Sunday but a welcome one.
Could you do a video on the economy of Wold of Warcraft? I went through your old economy of MMO videos & wish you did one. Of course, it's the biggest MMO economy which I bet you & your staff would have a blast analyzing. Can't get enough of your vids. You've taught be more about economics multiple times over anything I learned in high school.
Considering that FF14 has almost double the population (~20 million subs) that WoW ever had at its most popular (~12 million subs, circa 2010), and that WoW has massively shrunk from its Wrath of the Lich King days, I find the claim dubious that WoW has the biggest MMO economy.
It'd still might be interesting because of the wow token and how it's directly connected to real life economies as bots take the gold and sell it cheaper than Blizz prices, which you can only assume a majority of those buyers live in places where they could not afford to play it otherwise. I'm not really sure of the consequences overall but I'm guessing that it inflates the gold value of the token while evaporating the value of anything farmable, effectively hurting Blizz.? However, Blizzard has been truly pathetic at getting a handle on bots where it is very easy to wonder if this black market is actually hurting them or if they are somehow benefitting. They are adding tons of insane gold sinks lately which I guess would keep regular players a need to buy tokens. Botting has been extremely profittable though for these companies selling wow gold for real money and has been for a very long time. @@StochasticUniverse
so many interesting topics on this channel week after week, very consistent quality content, thank you
Aside from game theory, there is also the human psych that comes into play. When I was in college our group did a survey as part of our term paper about human competitiveness, and we used videos game genres to determine subconscious preference of "competitiveness". A huge portion of respondents chose either Hack & Slash, FPS, and pretty much any genre with some kind of action/violence involved. Meanwhile non-violent competitive games (the likes of Tetris, Animal Crossing, Sim City, etc.) almost didn't get any votes. The other group did the survey in the guise of sports and their respondents preferred contact sports such as boxing, basketball, football/soccer, hockey (both ice and field) because these are more exciting and also have tendencies for athletes to be engaged in altercations especially in heated matches, rather than non-contact sports like golf, bowling or chess because these are boring and the participants are more likely to simply shake hands rather than engage in fist fights lol. It shows that it is human nature to feel superior and some sense of pride when we are dominant violently (maybe not directly but at least in some ways). In a nation's perspective, military might is an aspect that measures a country's global dominance, and in a sense it also give its people a sense of national pride and superiority. We want things to be civil but our subconscious says otherwise.
seems like you're drawing some big conclusions about human nature for the size and quality of this study. Did the study have equal representation of men and women? what about age ranges outside the late teens and esrly twenties?
Is it possible that the results you obtained were a result of asking individuals from a particular society that promotes violence and aggression rather than reflecting an underlying trait in all humans?
I don't know man. Fps games are just superior in mental demand, strategic depth and intensity of competitiveness. If you want to be truly great at fps games you need to be extremely good at many things. Slow pace games have very one dimensional skill requirements and very low intensity and a sometimes a high availability barrier (like golf ) and you don't have the same immediate rewards. Most people never being able to afford to participate enough to get good at these exclusive non contact sports. I just don't think that the study itself allows any conclusion from what you have described about it.
I think philosophy also plays a role behind the cause of war.
I think people have an instinctual desire to be a part of something bigger than themselves, something that will continue to exist after they're dead. A country is a good example of what I'm referring to and what's a better way to show love for one's country than by joining the military.
Which is weird because most PvP games are not even good games; the entire gameplay experience gets carried by the dopamine and testosterone rush of being able to dominate someone else in competition. The best single-player PvE games usually have deeper mechanics and better actual gameplay. But, hey, just goes to show you that people will do anything for a cheap hormone hit, even subject themselves to playing a toxic game with which they have a love-hate relationship like League of Legends. :P
@@andrewlucas246Violence and aggression are definitely underlying traits in all humans. Hence why every country has fought wars, duh.
Every human does have an endocrine system, after all. You have entire body parts that are dedicated to squirting funny juice into your blood, and sometimes the funny juice leads to conflict. It can't really be helped. Comes with the primate territory, really.
Feeding the military industrial complex increases GDP which prevents an official recession from occurringâŠâŠso never ending wars is the name of the gameâŠâŠ
Also why the US doesnât have single payer healthcare.
Neoliberalism is a mental disorder.
the MIC is based
In the age of mercantilism the only way to grow an economy was by taking land from others. Since the industrial revolution economies have grown by innovation. Modern warfare is anachronistic, it belongs to the age of mercantilism. It costs nothing to share ideas.
US style "housing bubble" (that is chinese and many other country chosen way)
Buying food for people wouldn't eradicate hunger- it would cause a population spike that would ultimately increase hunger. The only way to eradicate it is for people to develop the economic resources to feed themselves.
Exactly.
@@Shineon83 And there's the issue that such food wouldn't reach its target population anyway, given the corrupt or dictatorial governments standing in the way.
That's completely ignorant and ridiculous. Today, more people die of obesity than starvation. Furthermore, the world's population is actually expected to decrease; many countries are having fewer babies than the fertility replacement level of 2.1 children per couple.
@@gabedarrett1301Africans breed more than they can feed.
learnt alot from this, great video EE!
Thanks for explaining this, it was very interesting.
Biggest free rider: Canada
A G7 country (barely, but still) and a 27th ranked military (1.29% of GDP)
Who would they need to defend from? I can see why they might spend less than nations with an extensive history of invasions.
On the geopolitical level i feel its important to correct the nuance that America 'defends' everyone else. They dont do that for free. Obviously. Economists know nothing is free. The shortest way i can put it is: they handle the military stuff so we do what we're told. It's a client state arrangement, not charity.
I disagree with your assessment. The entire point of globalization was to contain communism. US obligation towards the world order started to unravel under Bush, jr. Through to Biden. The US, at best, has a modest gnp to gdp ratio and in economic terms, does not enforce any sort of membership to anything beyond military alliances.
Defends everyone else from themselves?
Which is why Germany never went for those pipelines with Russia or the UK never went with that Brexit idea.
thats a clean very clean statement for a single word called "bullying." đ
@@lkjhfdszxcvbnm From others who 'broke the rule' either just pirate or China. Most have good arrangements and benefits from the current statue quo so they are ok with it.
very thought provoking as always thank you!
That purchasing power parity comparison was great, and not something I've heard before. Great additional perspective to this whole conversation.
0:44 - Can we dispel the fiction that global hunger is an issue of capital alone. More often than not, it is a question of political stability.
Wait until this guy finds out about âuse or loseâ budgets.
Don't quote yourself
Great video. Explains a lot of doubts I've had
Thank you. The world almost makes more sense to me now! Also, I looked up that Utopia sketch on CZcams, good stuff!
I love the fact that Latin America is like "bruh, this guy over there is just spending 800b, I won't even try"
Think about Central America with Costa Rica that doesn't even have a standing military.
In Brazil we try. We are the biggest spender in Latin America. And yesterday our goverment approved an adicional of 52bi BRL in military spending until 2026
Including the construction of a new class of Nuclear Submarines
Look up Monroe Doctrine
@@gleitsonSallesare you fighting ever expanding fleet of chinese "fishermen boats" ? or are argentinians planning new coup ... though US can via corporations stab too, so better "keep them honest" like other comment said of keeping your locks locked.
Your channel is the best for learning and reflection about global economics - keep up the good work.
It's a great introduction! Picking up topics from this channel and then researching them in more detail on others can be a fascinating way to spend an afternoon
Thanks for the analysis EE!
Thanks for the content!
I think there may be 2 unaccounted for factors that you didn't cover:
1. The military(at least in the US and I think many other countries) is also used as a rapid response workforce for emergency situations(often natural disasters). I think it goes without saying emergencies like natural disasters hurt economic output, I think it's probable that having a rapid response workforce respond to emergencies probably lessens the economic hit of the emergencies compared to not having this AND finally while it's arguable that this could be done without the military having the military do this is likely the easiest political/practical way to have a large workforce that is ready to be deployed quickly with the correct skill sets.
2. You said that some skills learned in the military aren't economically transferable to civilian life(probably mostly infantry and munitions experts), I'm not sure if this would be considered a 'skill' per se BUT all members of the military also receive comprehensive training and conditioning to be more organized, disciplined and productive, paired with the recruitment base of the military primarily being from low education, economically depressed communities, it's likely all skill sets of military personnel go on to be more economically productive than they otherwise would have been whether or not the specific skills they picked up in the military are being used OR whether or not they also pursued easier access to higher levels of education provided by the military. Obviously some in the military become less productive due to trauma BUT I would speculate that at the macro level, retired infantry personnel are more economically productive post service than people in similar education/locality circumstances even though they aren't applying their skill sets directly.
Obviously both things are logic/anecdote driven so it'd be interesting to see if there are stats out there confirming or disproving my two assertions.
Solving world hunger will not be done by giving a man a fish. All that does is make way more people who will need to be fed.
Thank you for sharing this great content
You're welcome!
The one thing about Americaâs massive expenditure is that is does facilitate the US getting greatly increased influence in geopolitical affairs. Both with the sway it holds over its allies for being their security guarantors, as well as with their rivals and neutral states that they can push around with their soft power. The ROI is difficult to quantify for this enhanced influence, but itâs undoubtedly quite valuable, as otherwise other states would not jostle for even a share of the hegemony that the US enjoys.
Great video! It must also be said however that one of the biggest issues in defence economics is that you canât quantify or really measure defence output (does spending another billion dollars on defence make us a billion times more secure? Defence is a product, but how much of it are we getting per dollar spent on it?). What is hinted at in the discussion of PPP is the idea of defence as a tournament good that must always increase in relation to rivals. Seen this way, the right amount of defence must always give us a greater capability than our enemies (or be enough to impose too great a cost for any benefit they may receive from attacking - deterrence).
And the obvious questions are:
1. Is the threat real, or is the alarm being manufactured for other reasons?
2. Does international law always apply. I mean, if the Russian invasion of Ukraine is against international law, and is so called out, and the western invasion of Iraq is against international law, and is so called out, but we agree with one and disagree with another, what does this say about "defence" decisions?
a friend of mine was a somewhat high ranking soldier turned finance manager in one of the military branches, they were telling me stories and i would ask how much is a 50cal round or other popular consumables/ equipment ballpark cost. he had no idea, i guess its treated like other government tax pools, just one gigantic slush fund every hungry hippo is trying their best to get full.
Thatâs a fantastic idea⊠make sure all military training includes education on costs.
or he doesn't wanna tell u
@@JamielDeAbrew Sounds good until you realise there are tens of millions of different items the military buys, prices of which change regularly. Wouldn't change anything either.
What you're asking about is Procurement, not Finance.
It's quite well known that some of those military contractors charge outrageous prices. $5 for a pencil kind of thing
Always an interesting video from EE.
Super good video. Good job đ
War created civilization, and this is a better form of raiding. The first wall that existed long before agriculture, let alone money, was invented. The tools of the state, the centralization of power, mobilizing populations, crafting and mining exist to feed the machinery of war. You just take peace and prosperity for granted. Peace is not self-sustaining, natural or inevitable. Peace is a constant effort, a conscious effort.
When the U.S. spends $1,000 and China spends $10 on the same hammer, then then amount of dollars spent doesn't truly represent the effectiveness of either hammer.
great video
this is one of the best videos recently....
honestly an interesting topic, I never thought i'd learn something like this haha
You did miss out on the part where armed forces are used for humanitarian or natural disaster relief (even if that is just a secondary benefit against their real purpose).
I love that Utopia episode.
"Which country?"
"I don't want to say."
"Why not?"
"I wouldn't want to raise tensions."
"Where?! "
"In this room." đ€Ł
Would love to watch, do you have a link to the sketch?
I am quite happy that the Great Emu War has been mentioned on this channel!
11:05 Don't know why you wrote that Portugal has 20 US military bases because it only has one in the Azores (Lajes)
I think this video should also point out that the u.s. military helps support the u.s. as a reserve currency and regulate how oil transactions are ultimately carried out.
This has an effect of making the u.s. dollar worth more, so the military partially pays for its self in some ways between new tech, gps, the internet, and the u.s. dollar currency system.
I think you left out one very important point! The US (also Russian) military budgets may seem disproportionate, but they also bring money in by developing weapons that other nations purchase.
Money that doesn't really get spent on their people
@@fuad000100 Defense companies pay the same taxes as any other companies. I know, it's a real shocker they don't work for free, I was also shocked to learn it when I was 3 years old.
Very interesting video đ
Love your work đ
Greetings from India đźđł
You lock your doors to keep your neighbors honest. And so everyone in the neighborhood owes their shared peace and safety to not providing undue temptation to others.
To all the arguments of "Yeah, but that was developed by the military and helped your life" I have 1 thing to say.
What if all that money was spent directly to search for solutions to improve people's life instead. Imagine how much better off we would be.
Not at all because someone on the other side of a border would have come and taken our stuff. Ask the precolombian peoples how not getting bogged down by an arms race worked out for them.
Yes, "if there were no people doing bad things, only good things would ever happen". That's very true.
It's about incentives. Just looking for things to make life marginally better doesn't align incentives (look at Samuel Langley and man powered flight), but requiring something or else you will lose a battle>war means that you make things that work or you lose everything. It's evolution.
@@V1489Cygni Yeah. The main thing that could have helped them would have been medicine. As that was more of a factor during the initial colonization. Moreso than military.
@@EconomicsExplained Don't know much about Langley, just his wiki article. But the marginal betterment of the previous iteration is not the general result of research? Yes, sometimes big discoveries are made, but generally it's only one step at a time.
Also, losing a battle is quite vague, as the battlefield can be economic.
@@violent_jiggler With that heat, better eat the evidence quickly.
Very well video
LOL-Love that you used pics of your producers for the âcriminalsâ đ
âEvery gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.â
Dwight D. Eisenhower
Same can be said for handcuffs. Or locks. Or antivirus.
Eisenhower warned us of the military industrial complex yet left it a powder keg for JFK to dismantle... which he tried... so they dismantled his head.
@@V1489CygniWhich way do you mean? Is military spending depriving us of handcuffs, locks and vaccines? Or are you suggesting handcuffs, locks and vaccines are depriving hungry people of food?
@@CarFreeSegnitz the second. None of those things are free. None would be needed if everyone behaved all the time, in which case those resources could be spent elsewhere but that's just not how it works.
Not that I don't admire the man, don't get me wrong.
Investing in alternate income streams should be the top priority for everyone right now especially given the global economic crisis we are currently experiencing, Stocks, gold, silver, and virtual currencies are still attractive investments at the moment.
Starting early is the best way to getting ahead of build wealth, investing remains the priority
â@@popsarah7805True
Last year I was working full time budgeting groceries, unable to afford date nights, and missing time with my kids. Now I learn how to make money online. Now I'm a SAHM, homeschooling and making profits every week.
â@@jeremygood3246Having a job doesn't mean security rather having different investments is the real deal
I'm looking for something to venture into on a short term basis, I have about $6k sitting in my savings
It's a simplified viewpoint of the military spending and motivations because it briefly explaines individual participants motivations And what factors in that motivation effect thier decision making
This really makes me wonder just how far the economies of the world would develop if there was no war... or at least if there was less war.
Very intersitng video! and definately gained a new perspective with PPP factored in! Great to see a refreshing perspective on such a complex and controversial issue. Lots to think about for the future! One question, I'm not sure its fair to assume the biggest threat to the world is China, playing the two superpowers as USA = Good and China = Bad. There are no good sides in war and both countries are finding it harder to cooperate with competing world orders.
They are trading partners, but also strategic and ideological rivals. Conflict is not inevitable but both are preparing for the possibility.
To calculate by PPP is nonsense, it does not take into account the quality of goods and services, and BIG corruption, yes in China the salary of the military is less, but the quality of training of the soldier is worse, as they do not have such military experience as in the U.S., and in China much worse treatment of ordinary soldiers that badly affects their psyche and subsequently and on military combat readiness. The pay is low, but the quality is also worse. Also take for example the aircraft carriers of China and the USA, Chinese aircraft carriers are many times cheaper, but their quality is much worse, because they are not nuclear as in the USA. And do not forget about corruption, which is very developed in China, and because of this the prices for military services, materials, construction can be specially inflated to enrich the local government elites and all this can not be seen in the official statistics. Also do not forget the PPP formula is very unstable and depends very much on who counts and how they count and where the data come from (and they are taken from official sources of the CCP, which is known for its falsification).
â@@rei_zxNope fool it is very realistic. Pay is high as well as output in china for their currency so, it is the only reliable metrics for measurement.
@@rei_zx I'm not trying to start an argument mate, but you're underestimating China. I have no insight into their corruption, but I can see ours fairly clearly. No doubt it exists over there, but the quality of goods just improves every year. I work for a mining company in Australia, and we're currently running 300 tonne Chinese trucks by remote control from a thousand Miles away, and been doing so for 3 years without a major problem. Now we're trialling self driving machines. And their aircraft carriers are going to electromagnetic launchers - I'm not even sure if the US has perfected those yet.
Indeed. China has as much or even more to lose from unsafe global shipping lanes than anyone else
Reducing global poverty and hunger could lead to a boom in births and a even larger group that needs food and shelter, thus even more money needed to feed and house the increased population.
when people have more money and girls get education they have less kids
Hello Thomas Malthus. Maybe you oughta take a look at birth rates in stable rich countries compared with those in "conflict zones"
@jacobjones630 Unfortunately poor countries do have higher birth rates, usually because most of the children die young. Wealthy countries do not have as many children partly because they are not facing that same issue. If poor people were given food they would still be poor but not as many of their children would die young, especially from malnutrition. It is anyone's guess if these people would reduce their birth rates if more of their children are surviving. (Another reason wealthy people don't have lots of children is because they are worried about the expense of raising a child, including food. If the cost of having children is reduced because the government is funding food needs, it could intice all people to feel they can afford to have more children.
Quality of life increase generally always goes hand in hand with a drop in birth rate. Better QoL -> more education -> more free thinking independent mindsets -> greater migration to large urban population centers -> less space -> busier jobs -> less kids
Japan's rapid upscale in QoL from WW2 till the 90s has lead to a staggering drop in birth rate. The replacement birthrate is 2 (2 kids for 2 parents) , they are at 1.3. South Korea are 0.8. Meanwhile in Africa its at 4.1.
Economy is not a natural thing its a human made so more human mean bigger Economy look at China and India they will be biggest Economy in 50 years and richest because of their population
Ah yes another video telling all of us that we're greatly valued assets! That's so nice đ
@EconomicsExplained where did you get the stock footage of the soldiers in rooms around computers?
Working as a govt financial manager I'll say... Very little of that amount goes to actual weapons that destroy things while most of it puts food on the tables of millions of families
Investment in a military and conflict are two separate arguments. Much of military spending is done as a deterrent to conflict. Had Ukraine have been able to properly deter Russia action, the additional money spent on this conflict, waste of resources, human life, and rebuilding after the conflict. The world has had one of its most peaceful periods in history with globalization that could not have been secured without investment in the military.
We need armies to protect us from all the armies out there đNow tell me how the good guys with guns keep our country safe from gun violence.
@@jacobjones630 Thatâs not their job. Donât be an idiot. If it wasnât guns it would be knives, cars, chemicals, or something else. Happens in every country. We need families to take better care of their mentally ill or have somebody take care of them.
@@chillxxx241 You aren't going to terrorize a shopping mall with a knife or a car and you can't buy a bomb in walmart. And NO, it does not happen in other countries at the eye watering levels it happens in the US. That's like saying it snows sometimes in texas so minnesota shouldn't worry about snow. The circular logic of needing guns to stop guns takes all the responsibility off the shoulder of the firearms manufacturers who have made fortunes flooding the nation with lethal weapons. The people with all the money have the most responsibility to give back to the society that let's them make it in the first place.
Can you make a video focusing on the personal economics of war? Basically, the ways in which the military is a better (and worse) job / career over other employers?
For example, militaries nowadays have sophisticated equipment such as aircraft that need to be maintained and operated, and the military will teach you how do these things for free (financially). Personally for me, in my country, the military paid for my undergraduate and master's level engineering education.
I know the military isn't everyone's employer of choice but it would be cool to see a video of how it stacks up to other employers and maybe the kind of demographics the military may or may not appeal to.
What is the name of the journal that contains the JSTOR article âSmooth SailingâŠâ?
Military spending causes considerable innovation: semi-conductor, carbon composites (carbon fiber), portable electronics, the internet, and many more innovations. Social welfare programs: social security, Medicare/Medicaid, and welfare do not cause much, if any, innovation. Welfare programs cost over 4x (federal and state combined) the military budget in the USA, and welfare program spending is just consumed, it doesn't create anything that drives perpetual economic growth.
Consumers would *like* something to work and perform its function, but the military *needs* it to do so.
It keeps people alive though... Not something you economics psychos seem to value outside of their ability to make someone else incredibly wealthy.
@@EconomicsExplained That's definitely not true. In construction for example, innovations have a need, should we build to current standards. For example if concrete doesn't have the compressive characteristics needed, or the tensile strength needed (suspended concrete, and/or rebar in concrete) then a building will collapse. If an individual needs a remote connection to perform work for a large bid or contract that could prove their ability to pay their bills for months to years to come, if their Internet, camera, or laptop do not work, it could prove an inability to provide for their family which is a need. An economy is much more complex that a conventional economist realizes, typically a conventional economist will narrow it to 1 or 2 variables such as the Fed, the military, the .... But in all reality modern society has a significant need for billions of technologies to work, from plumbing to communications.
Welfare was introduced as a defensive measure. FDR convinced his elites they had to give something or have everything taken by the fashionable socialism. Weâre in that age again.
@@lberholdI commented to other video this viewpoint.... my viewpoint is that peacetime (US) military spending is risky that there is no feedback if those R&D, new equipment actually work as you said where is no direct need and feedback of people dying, while in civilian world there is faster feedback when something doesnt work, people dont buy or switch laptop brand to do their work. Eg semiconductors which also are used in military applications wouldnt succeed as fast as those have been without extensive business and consumer use causing bigger competition and investments than military spending alone every could hope for.
As a foreigner living in France, it was terrible to hear you speaking French, but I share your pain bro ...
Fortunately I can't hear myself speaking đ
Yes, Utopia is one the best shows!
NATO countries suffer from the Free Rider Problem. Europeans don't spend much on defense because they freeload off the defense provided by the American taxpayers.
Tbf most European countries don't need a large military. The biggest threat to them is Russia and Ukraine has shown that they aren't that big of a threat.
@@davidk.d.7591 Ukraine is in rubble, millions have fled, the economy is in ruins, and there isn't a guarantee that they get their territory back. The lesson here isn't the lack of Russian threat.
With the exception of France, Europe can't even protect their overseas interests. Without America help, Europe doesn't have the capability of taking on ISIS in Libya or Syria, doesn't have the capability to stop Iran from cutting off their oil shipments, or prevent China from monopolizing the most important international shipping lanes. The US is protecting EU national security interests *for free.*
The EU collectively spends the shame share of their GDP as the US.
Thanks EE. As always thought provoking. A small (or big?) issue with your purchasing parity assessment of US military spending is that you've ignored the odd American habit of hiding their military spending in other large buckets. The reported "Defense" spending is actually primarily for international force projection. Defense is provided by the gargantuan Homeland Security department. The entire nuclear deterrent is squirreled away in the Department of Energy. Then there are various military capabilities maintained in the labyrinth of "intelligence" organizations; some of these are included in other military budgets, some not. So, your conclusion that US military spending is sensibly in line with game theory when measured in purchasing parity may falter when the US military budget is more realistically double the Pentagon budget alone. The obvious argument would be that other countries may engage in similar accounting/semantic games. But arguably this is not the case to anything like the same extent and you end up discussing the influence of the Military Industrial Complex and other matters which I'm sure is not your intention!
Yes, other countries do the exact same thing. China spends more on internal security than defence, and that includes military grade forces. Russsia had a massive stockpile of weapons to consider as well. You're not special
Also depends what kind of military spending we're talking about. Often conscripted soldiers also act as emergency disaster relief personnel during peace-times. Example if a water pipe bursts somewhere in Finland, its the army reservists who get a call and give pure water canisters to the neighbourhood.
Military tech has often led to civilian tech.
Think about the internet without the US military's ARAPNET?
Would the internet eventually have come about? Probably, but much later and not as developed as it is today.
"Would the internet eventually have come about? Probably, but much later and not as developed as it is today."
Probably wouldve been far more proprietary if it was the big tech that created it.
How much would it cost when losing a war or an armed conflict? I fear you may not have factored this into your equation.
how much of it is efficient spending? how much of it is corruption? maybe if we spent more on education, food, medicine we wouldn't have as many angry people wanting to fight
lol education also has corruption and the more money you put somewhere, it gathers greedy people around
Nice
Military spending is like insurance. You hope you never have to activate it, but if you do, you sure are glad you paid the premium on time.
But the us is like having 3 insurences on the Same thing,
That's what the USA says. But I don't see how invading countries for oil can be seen as insurance.
Minor point of correction at 11:05, neither Puerto Rico nor Guam is a country, both are territories of the United States.
Very good video, very precise, very clear. Thanks a lot
As a fellow Aussie, Iâve become very aware of our upwards inflection at the end of every sentence after somehow ending up of linguistics TikTok, and although Iâm just one viewer and am in no way suggesting that you have to, I feel like your videos might benefit just a tiny bit from varying your inflections sometimes. You do you tho bro.
Fush and chups?
Slight correction at 12:14, India is an ally of USA, it's just not a vassal state of USA.
Example being QUAD membership.
It is not fool
Strategic Partner
This basically makes it inevitable that China invades Taiwan, since as the likelihood of peaceful reunification declines, and China becomes encircled by the US and its allies, and locked out of vital technologies, and they face economic and demographic issues, then from their point of view, the risks to an invasion become less than the risk of doing nothing.
This is a rediculousy simplified statement that ignores the complexities of the issue.
It also makes no sense whatsoever. China doesn't actually feel threatened by invasion. They have been always military weaker than the US/UK/Japan and so on. The whole "getting encircled by the US and its allies" and Taiwan as their enemy is just an idea created by their own propaganda to foster nationalism. If they invade Taiwan they will lose their best propaganda tool and severely hit their own economy. They gain a volcanic Island that will have lost all its value (their population). This would cause some serious trouble within the CCP.
@@CarrotConsumer Then please enlighten me on the various complexities, I will await your response.
âItâs dumb but itâs the logical kind of dumbâ made me hit like
11:55 stuff is cheaper, but so is the quality
Wait. Why did you factor for PPP? Do guns and fighter aircrafts have different prices in different countries? I get that food etc. for the upkeep of personnel would require this adjustment, but how much of military spending is on that vs. arms, ammunition, technology and research? And how many of these require PPP adjustment?
Labour costs, Material costs differ across countries. Technical expertise aside.
Military equipment build in China is going to be cheaper than military equipment build in the US. This is true also for research cost etc. All are affected by different salary levels.
It make sense to apply it across the board. But keep in mind that the value is not intended for this use so thd actual "military equivalent purchesing power" value is probably slightly off. By how much is anyone guess.
Also personel salaries are a big chunk of military in countries around the world. So even if no domestic military industry is present it's still a good estimate.
Note: salary as a percentage of total spending is not that big, but there are other spending chapters that are excluded from salaries but actually should be included, like pention, veteran benefits, etc. Those are all expenditure on personel even if strictly speaking they are not salaries.
The fact that you can eradicate hungry just by the increase in defense spending alone
I find that very hard to believe. $330 billion over 10yrs. will "eradicate" world hunger. And then what after that? Sounds like some fairytale cooked up by the WEF.
Even if that $330B laid the groundwork for educational infrastructure etc, resources would be needed to maintain thereafter. And even if the resources were magically available everywhere on earth, some regions are very inhospitable due to certain climatic weather patterns etc. You cannot eradicate certain realities of nature, of life.
Yeah, but then we would cut off a fraction of a percentage of the profit of defense contractors and we can't have that.
North Korea? Pretty sure their starving population got eradicated.
Eradicating hunger isnât a one time cost, thatâs a silly thing to say. Itâs giving impoverished people and nations tools for stability, education and prosperity. Itâs not a purely a money problem.
Indeed, it's an investment, not a cost. Jeff bezos alone could end world hunger if he wanted to, but our leaders decided we need more wars for the poor and yachts for the rich, instead of helping all humans
That's because we learned its a lost cause. We tried donating money before but alas the nations with starving people are also the nations with currupt leaders that steal the donations for themselves and let their people starve.
I used to get lost all the time before GPS, or at least consumer street navigation GPS, even with a pile of maps in my car and printing out Map Quest directions. The kids just donât know what they missed out on.
That purchasing power parity is the reason why the US should "outsource" its military to India.
They can let us produce jets, ships, helicopters under licence cheaply.
It will help both countries vastly.
But the US is very suspicious of our intentions. To be fair so are weđ
That's game theory right there
You are stupid! There is a much better country for USA to "outsource its military". That country is called Russia.
The US trusted China with its manufacturing and got wholesale intellectual property theft in return. The US is the single biggest source of military innovation, itâs under constant threat of theft.
Unrelated, but the stock video chess moves are all hilarious.
I remember learning game theory from The Great Courses. It's really neat to be able to analyze a situation mathematically and understand why things happen and what the optimal choice may be. However, game theory can produce very naive results that don't reflect real life, when the theorist makes incorrect assumptions. At least for a while, it had a bit of a reputation for confidently telling consumers they're stupid and irrational, because it made naive predictions with oversimplified problems and didn't stop to think about the bigger picture. So, before you buy into a game theory result, buyer beware: check the shaky assumptions it's built on and see if they apply to you, so you're not risking suicide by good deal, etc.
Me immediately checking notifcations for the promised Economics Explained video on Poland be like-
Americans are about to learn why they don't have universal healthcare.
and everyone else will learn why you spend billions on our weapons
Nice retort. Not sure the tradeoff is worth it, but you're definitely right about the money.
Was curious about this, and the average for a European welfare state was around 20% - 25% of GDP. Military spending in the US is less than 5% for the past 40 years.
Even if you were to significantly cut military spending, you still wouldn't get what Europe has.
In fact, the US already spends close to what Europe does on welfare (20% GDP).
It is just horribly mismanaged.
Not really, it's more to do with the medical industrial complex not the military one. Those corporations are the real demons of the world and especially the usa
@@quintessenceSL This is by design; everything in the US is deliberately created in a top down/trickle down fashion. The ultra wealthy have to get the first cut in every segment of society from healthcare and stimulus to welfare and charity.
Interesting
It's still worth speculating the potential of that spending having gone directly into scientific research into technological development. How much further our technology could've gone by now if used solely for that purpose.
It doesn't matter the amount of military spending that happens, which tends to drive other countries' military spending, but WHO is spending it and what they're likely to do with it.
You can show Chinese military spending as if it's an equal number vs. American spending, except it's not. One dollar of US spending is not the same thing as 1 dollar of Chinese spending because it costs the US a lot more to do anything with their dollars.
The Chinese have had a big build up compared to the US even though they spend less. Part of these is the systems are not as well made, and this is fact, but the Chinese strategy is numbers over quality. The other thing is it costs the Chinese less to make things.
So simply looking at spending is not an equal comparison. In which case getting that info from an economic channel doesn't help much, and instead you need to watch channels based on the military instead to get a better understanding of why who spends what.
For instance NATO countries are supposed to spend at least 5% of their GDP towards military spending. Considering Russia invaded Ukraine and that never would have happened had Germany been spending 5% of their GDP on military, well, it kind of highlights once again why it matters who is doing the spending. Instead what happened is Germany was feeding the Russian govt. with money from the oil/gas it' been buying without counteracting it, and the Russians invade Europe. Germany took this to heart, and they SHOULD take it to heart, and are now spending more than 5% to make up ground for what they weren't spending.
And this is why this "world hunger" and simply looking at a boost in spending, OUTSIDE of the context as to WHY, is meaningless. The WHY matters a whole lot.
And don't blame the West for Russia invading Ukraine. No one held a gun to Putin's head, and what he did was SUPPOSEDLY based on a theoretical expansion of NATO. Well first, that's NATO's right. No country gets to attack another country simply based on alliances. That's a nonsensical argument. Don't make it on this comment thread. Next, by attacking Ukraine, Putin got EXACTLY what he didn't want, an expansion of NATO and that WILL include Ukraine now. This is what the Ukrainians want (not the Russian Ukrainians) just like they want to be part of the EU. The economic ties of a country are not a justification for war. Once again don't try to tell me that on this comment thread. Every country has a right to determine what's best for them.
So, taking a snapshot in time and looking at military spending and then doing the same a few years later is a meaningless thing. PERIOD.
And I didn't even START to talk about inflation.
dude the NATO requirement is 2%
@@avroarchitect1793 The point is the same regardless, only the dollar amount changes. If Germany had been spending 2% since 2006 Russia NEVER would have thought about invading Ukraine because the only reason they did is they felt NATO couldn't deal with a response. Germany being the no. 4 economy, had they been spending at least 2% not only would have had the equipment but also better training to deal with this mostly on their own.
Of course they also felt the EU would mostly stay out of it because of their reliance on Russian oil.
I'm sorry I'd rather be dead than a military slave to an enemy, so that whole world hunger thing is laughable. History is full of horror stories of being a slave under occupation. Germany should have known better.
This video explains why the U.S. doesnât have public healthcare
No, it does not. America spends a lot, a lot on healthcare. It is politics, stupid.
Not in the slightest. The US as a whole could halve its healthcare spending by switching to public healthcare, thus more resources available for other activities such as military. American healthcare is all about profit, squeezing money out of demand inelasticity (people in acute health crisis donât have time to shop around).