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The costs and externalities of engaging in military intervention are high. These costs are not limited to merely monetary expenditures. The price is also borne in the loss of life, productivity, civil liberties, economic freedoms, and so on. Historically, countries have long justified war efforts through comprehensive political campaigns. Demonizing the opposing regime and stressing the moral imperative of defeating the adversary. Propaganda campaigns can work wonders, persuading the masses that the armed conflict is a “just” war, but it is not the only variable at play. If the costs of going to war were more direct and salient to the public, constituents would be less apt to approve of military intervention abroad. In the decades since World War II, most of these campaigns have been more about nation-building than actually defending the United States and its allies. If the connection between the cost of war was more linear it would be reasonable to surmise American citizens would be screaming with indignation about the prospect of their tax dollars being used to “spread” democracy.

The question is how do we make the connection between the cost of war and military efforts more conspicuous to the taxpayer? A radical suggestion would be to privatize defense. To some extent, there is a lot of merit to this argument. There are also a lot of well-formulated objections. Any conventional application of Coase’s Theorem would like to view defense as a public service that cannot be provided by private firms. Due to ambiguity regarding property rights and the high transaction costs of providing defense services. The issue of unclear property rights is by far one of the strongest arguments against privatizing the production of defense services. Even as economist Chris Coyne points out in a recent paper, those free-rider problems are inevitable. In Coyne’s example, if missile defense services are provided to a city, one house that has opted out cannot be excluded from protection (Coyne & Goodman, 2019, p. 6). It was maybe inordinate to organize defense efforts on a national scale versus a regional threat. Example being when Russia annexed the Crimean Peninsula. This threat was confined to a specific region of Ukraine versus Russia posing threat to the whole country (Coyne & Goodman, 2019, p.2).

Another flaw in the free-rider argument is even when defense is provided by the government there are still people who receive service without contributing. American citizens who evade taxes still receive the benefits of state-provided defense. The homeless and unemployed who also do not contribute to the tax pool also enjoy the benefits of defense provided by the United States. The problem becomes that free-riders exist regardless if defense is provided by the government or private firm.

All the counterarguments aside, if people could see on a monthly or quarterly basis how much they were spending on foreign wars, they would be less apt to be ambivalent about these military campaigns. This is a fact that is displayed in the ubiquitous Public Choice maxim of dispersed costs and concentrated benefits. No service provided by the government is “free”. This merely an illusion created by the distribution of the cost of government programs and services across many taxpayers. Typically, there is quite a bit of mystery surrounding how tax dollars are allocated. Unlike a private-sector invoice that is itemized, how much, and how it will be specifically used.  Epitomizing the phenomenon of fiscal illusion. Severing the link between government spending and taxation creates confusion. By keeping the taxpayers’ ignorant, various government departments have more fungibility with how tax dollars can be used. Side-stepping any potential for accountability. This applies to all government spending, even defense and military expenditures. By reestablishing this link between war and taxation, every-day citizens would be more apt to question the efficacy of sending the military to a third-world dictatorship to reinvent them as a liberal democracy.

Government officials cannot be trusted to help facilitate the process of reconnecting direct costs of war with the corresponding military campaign. Few congressmen would go along with this policy. On the off-chance, taxpayers did start receiving itemized expenditure reports, who is to say that they will not be falsified. The only viable option would be allowing private firms to provide military-grade defense services to civilians. Effectively allowing for private competition in the provision of defense services. That could include private defense clubs, neighborhood militias, HOA funded auxiliary defense agents, or even larger corporate firms providing similar services. Whether you are picking up a rifle to participate in the neighborhood militia or you are paying a monthly bill for a corporate defense firm, you have skin in the game. Either you are paying with your safety and time or you are paying monetarily. Both contingencies align incentives towards avoiding frivolous conflicts. No one wants to pay exorbitant rates to receive defense services that do not even directly benefit their safety. Nor does anyone want to risk their life over minor conflicts. Objectives such as nation-building or ideological indoctrination would be off the table. Due to the high costs of such endeavors, most people would be much more cautious about engaging in such conflict. Confining most uses of military force for self-defense rather than offensive objectives.

4 thoughts on “Privatizing Defense- Reconnecting the Link Between War and War Time Spending

    1. Thank you. I have been wanting to write about privatizing defense for awhile now. Sometime in the near future there will be more ramblings from me on the topic.

      In the meantime I will finish up my food poisoning trilogy and part III of Native Americans and property rights.

      Liked by 1 person

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