Is America Financing European Socialism?

[Teallaura]

Okay, first off, this is from an economic POV - not a 'socialism is evil' or other political POV. If you want to pursue that avenue, feel free to start a thread in Poli Sci.

This idea was thrown out in a TV show I saw recently. I see some justification for it but haven't explored it well enough to take a position yet. The thesis is that were European nations spending on defense what they would be were the USA not providing much of their defense, socialism would not be possible on the present scale, if at all. Moneys going presently into entitlement programs would likely be diverted to defense spending or taxes would have to be raised even higher.

Thoughts?

[Solly]

Yes, we spend less on defense, something like 15%GDP as opposed to 30% for the US I believe - someone correct me, but we were your buffer states against godless communism, so you had to pay for it. Plus Germany was not allowed to re-arm, so you had to pay for the cover there too.
But we down sized ages ago, as the threat diminshed, whereas you just invaded other coutries for something to do :poke:

[Teallaura]

Well, you could have let the godless communists take over if you'd wanted too; we'd have let you (maybe :wink:) - however, we didn't see a big 'Get out USA' movement back then. :teeth:
Does raise the point of is there any real need, from a US POV for us to still maintain the same level of support? Germany probably won't start bombing Britain again if allowed to rearm now - but how comfortable would Europe really be with that? With the EU creating an economic powerhouse, maybe it is time for the US to divert its resources elsewhere? We can always invade somewhere else (the Bahamas maybe :teeth:) - just kidding on that last bit.

[Solly]

This is all in good spirits by the way :teeth:


Well, you could have let the godless communists take over if you'd wanted too; we'd have let you (maybe :wink:) - however, we didn't see a big 'Get out USA' movement back then. :teeth:

unfortunately, you let them have half of europe, in a pact the people on the ground didn't get to vote on. We didn't se a sudden US concern for infant democracies in europe back then either.


Does raise the point of is there any real need, from a US POV for us to still maintain the same level of support? Germany probably won't start bombing Britain again if allowed to rearm now - but how comfortable would Europe really be with that?

You don't have the same resources here. Quite a lot of Americans left Aircraft Carrier Britain in the 90s; same for Europe. But what you have here is part of your NATO committment, esp in Turkey


With the EU creating an economic powerhouse, maybe it is time for the US to divert its resources elsewhere? We can always invade somewhere else (the Bahamas maybe :teeth:) - just kidding on that last bit.
Europe wants to create a european army and fast reaction force; it might have helped in Bosnia. It's the US who got the jitters, and reminded us of our committment to NATO. It's not for want of trying on our part. Pluys, we wanted to boost our amrs industry by supplying China, but you guys said no, and then supplied pakistan.

[Arnold]

With the EU creating an economic powerhouse

That's just propaganda. What they are really creating is an unemployment powerhouse.

As far as your OP I agree that the US subsidizes Europe's socialism along with much of the rest of the world.

[Solly]

What a pity it doesn't subsidise its own.

[Teallaura]

This is all in good spirits by the way :teeth: 'Natch!


unfortunately, you let them have half of europe, in a pact the people on the ground didn't get to vote on. We didn't se a sudden US concern for infant democracies in europe back then either. As I recall, Europe had the jitters on this one - they'd had enough of war (understandably so).


You don't have the same resources here. Quite a lot of Americans left Aircraft Carrier Britain in the 90s; same for Europe. But what you have here is part of your NATO committment, esp in Turkey True, but it's still not insignificant. Turkey seems to me to serve US interests more so than Europe in as far as needing our help and having strategic reason for us to supply it.


Europe wants to create a european army and fast reaction force; it might have helped in Bosnia. It's the US who got the jitters, and reminded us of our committment to NATO. It's not for want of trying on our part. Pluys, we wanted to boost our amrs industry by supplying China, but you guys said no, and then supplied pakistan. Hmm, not sure I fully agree - but even so, that was what, ten years ago and a completely different admin? Might be possible politically to revisit the issue now - or maybe when anti-American feelings aren't running so high. That kind of thing only worsens the jitters. As a general rule, you don't want nation states that hate you to arm themselves. :teeth:

[Solly]

http://www.globalissues.org/Geopolitics/ArmsTrade/Spending.asp

World Military Spending

Global military expenditure and arms trade form the largest spending in the world at over $950 billion in annual expenditure, as noted by the prestigous Stockholm International Peace Research Institute (SPIRI), for 2003.

The main reason for the increase in world military spending is the massive increase in the United States, which accounts for almost half of the world total.... In the absence of [appropriations for the new war on terror, and on Iraq], US military expenditure would still show a significant increase, but at a much slower rate, and world military spending would show a rise of 4 per cent rather than 11 per cent in 2003.

US Military Spending

... While US military expenditure is set to continue to grow and will continue to propel world military spending, the pace is likely to fall back somewhat in the next few years. In the longer term it is doubtful whether current levels will be economically and politically sustainable.

The U.S. military budget request for Fiscal Year 2005 is $420.7 billion

Consider the following:

* The US military budget is almost as much as the rest of the world's.
* The US military budget is more than 8 times larger than the Chinese budget, the second largest spender.
* The US military budget is more than 29 times as large as the combined spending of the seven “rogue” states (Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria) who spent $14.4 billion.
* It is more than the combined spending of the next twenty three nations.
* The United States and its close allies account for some two thirds to three-quarters of all military spending, depending on who you count as close allies (typically NATO countries, Australia, Canada, Israel, Japan and South Korea)
* The seven potential “enemies,” Russia, and China together spend $116.2 billion, 27.6% of the U.S. military budget.

http://www.globalissues.org/images/USvsWorld2004Top25.gif

I think there's room for some cut backs, if your milito-industrial complex will allow it.

[Teallaura]

Oh yeah, start using real facts, why don't you? :brood:

(:wink:)

Okay, so we could cut back (closing bases as we speak, actually). But what about the OP? Would European socialism be adversely affected if the US cut back its contributions even more? I get the impression you think not, correct?

[TheOneAndOnly]

The thesis is that were European nations spending on defense what they would be were the USA not providing much of their defense, socialism would not be possible on the present scale, if at all.

Europe has few if any military enemies who pse any sort of threat to our soicety. We could build a dozen or so aircraft carriers and have them patrol the ocean blue, but for what? It's a waste of money. We don't need to spend stupendous amounts on defence. In the unlikely event that war broke out and Europe was threatened, we are industrialised enough and technologically advanced to start up a war industry to defeat the enemy.


Moneys going presently into entitlement programs would likely be diverted to defense spending or taxes would have to be raised even higher.

At the moment America can't afford its own military expenditure. America is the most indebted nation (that's government debt and personal debt) in history. America relies on China and Japan propping up their bond markets and buying dollars to support its economy.

[Arnold]

Europe has few if any military enemies who pse any sort of threat to our soicety. We could build a dozen or so aircraft carriers and have them patrol the ocean blue, but for what? It's a waste of money. We don't need to spend stupendous amounts on defence. In the unlikely event that war broke out and Europe was threatened, we are industrialised enough and technologically advanced to start up a war industry to defeat the enemy.

America's enemies are Europe's enemies.




At the moment America can't afford its own military expenditure. America is the most indebted nation (that's government debt and personal debt) in history. America relies on China and Japan propping up their bond markets and buying dollars to support its economy.

America is the most indebted nation because it is the most properous. The world economy is based on borrowing (i.e. investing, bonds, treasury notes, etc.) This is not a bad thing, although the large personal debt is a cause for concern, probably encouraging a deeper recession the next time around. But these things are cyclical and a recession will reduce this problem - till the next time.

[TheOneAndOnly]

America's enemies are Europe's enemies.

I don't think Europe views Iran as an enemy. A nuisance maybe, but not really an enemy in the way America sees it.


America is the most indebted nation because it is the most properous.

No. America is indebted because it is living way beyond its means. America imports twice as much as it exports and is heavily indebted to China and Japan.


America is the most indebted nation because it is the most properous. The world economy is based on borrowing (i.e. investing, bonds, treasury notes, etc.) This is not a bad thing, although the large personal debt is a cause for concern, probably encouraging a deeper recession the next time around. But these things are cyclical and a recession will reduce this problem - till the next time.

America's current economic problems are not cyclical. America is simply too indebted, $7 trillion federal debt. I've heard $30 trillion if you add state and personal debt. If America was a company it would be insolvent. This money is going to have to be repayed in some way or another. Foreign central banks are going to want their pound of flesh sooner or later.
And then there's the budget deficit. America simply cannot afford to spend what it spends. Money has to be created by selling bonds to Japan and China. They're not going to keep financing America forever.
And then there's the dollar, which is slipping into oblivion. The fact that China shrewdly pegs its currency against the dollar mewans that their trade surplus with America will barely be affected. Similarly Japan's heavy intervention in the money markets means they too can still retain their large surplus with America.
In short China is slowly strangling America.

[Arnold]

I don't think Europe views Iran as an enemy. A nuisance maybe, but not really an enemy in the way America sees it.



No. America is indebted because it is living way beyond its means. America imports twice as much as it exports and is heavily indebted to China and Japan.



America's current economic problems are not cyclical. America is simply too indebted, $7 trillion federal debt. I've heard $30 trillion if you add state and personal debt. If America was a company it would be insolvent. This money is going to have to be repayed in some way or another. Foreign central banks are going to want their pound of flesh sooner or later.
And then there's the budget deficit. America simply cannot afford to spend what it spends. Money has to be created by selling bonds to Japan and China. They're not going to keep financing America forever.
And then there's the dollar, which is slipping into oblivion. The fact that China shrewdly pegs its currency against the dollar mewans that their trade surplus with America will barely be affected. Similarly Japan's heavy intervention in the money markets means they too can still retain their large surplus with America.
In short China is slowly strangling America.

The sky is not falling. These things are cyclical. If it was the crisis you contend the markets would react in kind. They don't because it is not nearly as drastic as you picture it. And when things do get ugly (as they always do) a recession will happen and correct the necessary imbalances.

[Ryokan]

Yes, we spend less on defense, something like 15%GDP as opposed to 30% for the US I believe - someone correct me, but we were your buffer states against godless communism, so you had to pay for it. Plus Germany was not allowed to re-arm, so you had to pay for the cover there too.
But we down sized ages ago, as the threat diminshed, whereas you just invaded other coutries for something to do :poke:
Like Kosovo?

Or Afghanistan?

The truth is, European military forces would have been unable to respond to a terrorist attack on their own soil or the creation of Greater Serbia in their own back yard, and probably expanded ethnic conflict in Eastern Europe, without the US spending. Europe freeloads of the US.
And the average European state spends something like 1-2% on defense, vs. the US 5%. And that spending is largly on personnel, not hardware, like modern equipment or even transport equipment. And most of the defense spending is oriented towards disaster control. Europe could not maintain global stability, or stability at home, without the US military.

[Arnold]

The US economy took an almost 2 trillion dollar hit in the months following 9/11 and it absorbed it almost effortlessly (and the 9/11 hit came on the heals of the tech bubble burst and Enron/Worldcom/Tyco/Global Crossing/etc. scandals which cost the economy many, many more trillions). If the US economy was going to collapse it would have happened after all of these hits, but they only managed to induce a very light recession for two quarters (actually recent fed number revisions even suggest that by strict definition it was not even a recession). The US economy is extremely robust, able to absorb multiple hits with ease.

Be happy...

[Ryokan]

Well, you could have let the godless communists take over if you'd wanted too; we'd have let you (maybe :wink:) - however, we didn't see a big 'Get out USA' movement back then. :teeth: The communist did. :lol:

Does raise the point of is there any real need, from a US POV for us to still maintain the same level of support? Germany probably won't start bombing Britain again if allowed to rearm now - but how comfortable would Europe really be with that? With the EU creating an economic powerhouse, maybe it is time for the US to divert its resources elsewhere? We can always invade somewhere else (the Bahamas maybe :teeth:) - just kidding on that last bit.
Two points: One, the vibrant part of the European economy spends alot more on defense than say, the Germans. Europe may have a vibrant economy, but it needs to restructure its social programs and subsidies to do so. Until then, it is going to be outpaced by Asia and the US. That extra 2% of the US economy buys alot of stability globally, which is good for everyones economy.

[Ryokan]

http://www.globalissues.org/Geopolitics/ArmsTrade/Spending.asp

World Military Spending

Global military expenditure and arms trade form the largest spending in the world at over $950 billion in annual expenditure, as noted by the prestigous Stockholm International Peace Research Institute (SPIRI), for 2003.
Which isn't bad, really, considering how many trillions of dollars are in the global economy.

The main reason for the increase in world military spending is the massive increase in the United States, which accounts for almost half of the world total.... In the absence of [appropriations for the new war on terror, and on Iraq], US military expenditure would still show a significant increase, but at a much slower rate, and world military spending would show a rise of 4 per cent rather than 11 per cent in 2003. Which wqas brought on by the wars in Iraq and Afghanistan.


US Military Spending

... While US military expenditure is set to continue to grow and will continue to propel world military spending, the pace is likely to fall back somewhat in the next few years. In the longer term it is doubtful whether current levels will be economically and politically sustainable. Once the wars are over, it will be tempting for both sides of the aisle to cut, like the Clinton admin and republican congress did.


The U.S. military budget request for Fiscal Year 2005 is $420.7 billion

Consider the following:

* The US military budget is almost as much as the rest of the world's.
* The US military budget is more than 8 times larger than the Chinese budget, the second largest spender. If you factor in cola adjustments for soldiers, and use the actual, rather than state announced figures, its closer to 2 to 1.

* The US military budget is more than 29 times as large as the combined spending of the seven “rogue” states (Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria) who spent $14.4 billion.
* It is more than the combined spending of the next twenty three nations.
* The United States and its close allies account for some two thirds to three-quarters of all military spending, depending on who you count as close allies (typically NATO countries, Australia, Canada, Israel, Japan and South Korea)
* The seven potential “enemies,” Russia, and China together spend $116.2 billion, 27.6% of the U.S. military budget. So? It is much cheaper to invade you land bound neighbors than project power around the world, something we have to do, but people like China don't/


http://www.globalissues.org/images/USvsWorld2004Top25.gif

I think there's room for some cut backs, if your milito-industrial complex will allow it. Once we have one in Iraq, certainly.

[Arnold]

The tech bubble burst is best illustrated by looking at the NASDAQ stock exchange where the majority of the tech companies affected traded their stocks. Before the burst the NASDAQ had reached over 5000 points in its index. Within 2 years it had fallen to just over 1000 points. This represents 10's of trillions of dollars. It has since rebounded to hover around 2000 points for the last two years.

[Ryokan]

Europe has few if any military enemies who pse any sort of threat to our soicety. We could build a dozen or so aircraft carriers and have them patrol the ocean blue, but for what? It's a waste of money. We don't need to spend stupendous amounts on defence. In the unlikely event that war broke out and Europe was threatened, we are industrialised enough and technologically advanced to start up a war industry to defeat the enemy. But what if a fascist dictatorship, like pre Gulf War Iraq, decides it wants to gulp up strategically important states thousands of miles away? Or Russia gets that idea? Could Europe stop them without the US? No. Major states don't invade each other now because they know the US won't let them get away with it. Without our guns to make them play nice, Europe would be living in alot less friendly neighborhood.




At the moment America can't afford its own military expenditure. America is the most indebted nation (that's government debt and personal debt) in history. America relies on China and Japan propping up their bond markets and buying dollars to support its economy. Kinda. If the Chinese and Japanese quit, it would be bad, but not as bad as, say, when Japan's bubble burst. But I know you disagree. And if we got seriosu about debt reduction, the Japanese economy would collapse, sending shock waves through Asia. We need a slow debt reduction.

[Digraph]

[QUOTE=Teallaura]Moneys going presently into entitlement programs would likely be diverted to defense spending or taxes would have to be raised even higher.[\QUOTE]

Also consider the fact that defense spending is in one sense an entitlement program itself. Part of the reason the military has such a powerful influence on US policy is that many people - soldiers, defense contractor employees, and business owners that operate outside military posts rely exclusively on government spending for their livelihoods.