Thursday, 14 October 2010

Dealing with the Deficit! (3) - Cutting Defence.

Of Military spending, Trident, Cuts, Cabbages and Kings (And why the sea is boiling hot and whether pigs have wings - well, not really.)

This article follows on from previous articles outlining the economic arguments around the Coalition's budget plans and introducing the structure of the public finances and the plans for reducing the deficit.  It's followed by looking at popularly proposed schemes for cutting the deficit more efficiently/morally by raising taxes and cutting ring-fenced spending and a final article on fairness and (my) opinion of the government's plans.   I've separated them out to try to keep them shorter.  

The current government's approach to cutting the deficit is to take a broad based attack on the problem, raising some money in taxes, and also taking money from across government departments (apart from ID and Health) as well as capital spending and welfare, at varying rates decided on due to various other considerations. All these choices can and have been questioned, most completely by the Labour party's plans, but also by a range of commentators and public bodies. As Polly Toynbee notes, 'What's your cut?' has become a popular game in the media, with various people suggesting their own swinging cuts of things they just don't care about, or they claim are unimportant, or of raising taxes they claim are painless or intrinsically 'fair' compared to the government's plans. These suggestions can be divided into two classes, those such as the Labour party's, which take a similarly broad approach to the coalition, though differing in detail, and those that take a narrow approach and suggest massively attacking a few narrow areas of policy, believed to be particularly unworthy by the suggester, with the belief that this could mean saving most of the pain elsewhere. (Though of course there's also a range in the middle.) These narrow suggestions seem to be uniformly based on the principle that their proposers believe there to be vast pots of money somewhere either just waiting to be painlessly taken in taxation, or being totally wastefully spent that can just be excised without much harm to our general body politic.

These suggestions seem to be largely motivated by the belief that our financial problems are not complicated, deeply based and systematic issues with our economic and political structure but rather a simple problem with an obvious and largely cosmetic solution. The problem with this idea is that it is total bunk, and with most of these ideas underwritten by faulty logic or data. A common thread with these ideas is that either the tax rises proposed could not easily raise nearly as much money as suggested, or the simple spending cuts would not save nearly as much money as their starry eyed proponents would hope, at least not without causing serious damage. These suggestions can be roughly divided into right-wing ideas and left-wing ideas, though both share similar characteristics, as they do with other similar examples of simplistic, near conspiratorial thinking.


The first category for bizarre left-wing approaches to solving the budget deficit is the stop-spending-money-on-defence school. The most bizarre and radical form of this idea comes from Simon Jenkins who proposes saving £44 billion a year by entirely eliminating the armed forces, and thus saving the entire defence budget. Yes, you heard that correctly.  But sentiments along the same lines, if a lot less precise, are expressed widely as a throwaway line by left-wing commentators.  A lot of the desire to be rid of defence spending seems to be based on an emotional dislike of funding things whose sole purpose is to wage war. This is an understandable concern. Ask any person whether they'd rather spend money on healing the sick, educating the ignorant, or purchasing new and better ways to kill people, it is pretty clear, which anyone would chose. There is also the fair criticism that post-Cold war the level of traditional military threat to the UK is unsure.

However, sadly the world is not so simple. In defence of the armed forces there are a number of serious points. Despite the progress mankind has made, we still live in a dangerous world where violence rages all around us. Although Britain itself is relatively unlikely to be invaded anytime soon there are many calls on our armed forces, whether defending British territory abroad, such as the Falklands, or in fighting threats against other peoples and innocent countries. Nor can we be sure that this state of affairs will continue. Europe enjoys unparalleled peace and prosperity, but around exists a deeply unstable world. Whether Russia, the Middle east, China, Africa or other areas the danger of violence increasing in an increasingly populated world struggling over natural resources, changes in climate and political and economic problems. And the terrifying truth is that it only requires a brief period of military unpreparedness to have terrible consequences. We maintain armed forces all the years we don't need them because the possible risk of a situation when we do need them is just so great. Also, an inability to defend ourselves is itself a temptation to less morally scrupulous groups to attack us, knowing we are not strong enough to resist. Even if one does not go as far as Simon Jenkins tentatively suggests there is a temptation to say, well, why don't we hold minimal armed forces then. But this is not a real option, there is no point having a military that cannot quite win in a conflict, considering the damage that can ensure that is hardly better than having no military at all.

Even ignoring this though,although the moral argument that we should not be spending such vast sums on what are in effect weapons of death is a powerful one, but I would say there is an equally powerful opposite argument. As far as the world is a dangerous place, and it is, and this is something we must be aware of then we have an active duty to both provide for our own defence ourselves and also to maintain capability to help others. Europe today has a habit of spending relatively little on defence and criticising the USA for spending relatively more. But this is disingenuous in as far as Europe still benefits from he implicit or explicit protection of American forces and strength, as it did to a huge extent in the Cold War and also the 2nd World War before that. More generally, even if we ourselves are not threatened we have a moral duty to help others who are. And others are most definitely threatened. Neutrality and isolation, a la, Switzerland or Ireland or Sweden, is nice for us, but it sucks for everyone else, and in the larger analysis is really an abdication in the face of evil. We no more really have a moral option of walking by on the other side of violence and military oppression than we do of poverty or sickness or ignorance, and this fact carries the corollary of we, who can afford it, maintaining the military forces to help others who cannot afford it. Whether the first world war, the 2nd world war, the Korean war, the gulf war, Sierra Leone, Kosovo, Afghanistan, the Falklands, fighting pirates off Somalia or peace keeping engagements around the world our military forces are primarily engaged in defending others, often for our own benefit as well, but significantly in defence of those who cannot defend themselves. Indeed, except for the example of Iraq, that particularly divisive conflict, then the main examples of the failure of peacekeeping efforts are examples of the western world not acting decisively enough to stop great evil, whether in Rwanda or in Srebrenica or elsewhere. Elsewhere in a more continuous example, today the security of Taiwan is probably only guaranteed by the promise of military support from the United States in the event of any conflict. Otherwise it is highly likely Communist China would have destroyed this small country. The sad truth is that in a dangerous world we must be able to defend both ourselves and all other peoples of the world, even as we work for a reduction in arms and the threat of force in international and intranational politics. And this is not to mention the central role our military has in relieving disaster zones around the world. Along with our international aid spending, our defence forces are our main ability to actively project our power around the world for the better.

That would be the moral case for military spending (as odd as that may sound), but assuming one does not go quite as far as the complete abolition idea for our armed forces there are practical issues as well. Unlike some departments, such as Health, Education, Welfare, spending on Defence held pretty much flat in real terms throughout Labour's 13 years, while public spending in total increased by around 60%. Our armed forces are already stretched thinly after years of running the forces on an effectively frozen budget. We are also still engaged in a war in Afghanistan, putting additional pressure on the military budget. On top of this defence effectively already has its own internal deficit. Military procurement is legendarily bad value for money. We sink huge sums into purchasing equipment over several years, and by the time it comes it is largely out of date for the threats we face. We are, in procurement terms, always fighting the last war. Also due to the financial pressures of War in Iraq and Afghanistan eating into the military budget the government attempted to save money by stretching out the contracts for major purchases for the armed forces. Like other instances of, effectively, borrowing money over the long term this just means that we end up paying more money in the end, than we would have originally. Talk of inefficient procurement may make it sound as though there is plenty of room for efficiency savings in the armed forces, and hence strengthening the argument for cuts, but what it does mean is that although there is considerable scope for doing things more efficiently in the future, in the present we face looming bills from prior mistakes that we cannot get out of. We would have trouble maintaining our armed forces at their present standard even were funding to remain the same due to this looming internal deficit. In the face of even relatively modest cuts (compared to other budgets, as is planned now) we are going to lose a significant part of our military capability.

That is the broad argument surrounding the inability to solve the deficit through attacking military spending. One important sub-set of this argument is the widespread argument that scrapping the Trident nuclear deterrent should be the first call in cutting the deficit, advocated in a limited sense by the Lib Dems and more strongly by the Greens, SNP, Plaid, as well as a host of organisations and commentators. This bears even greater immediate appeal than the standard cut-the-military argument. Nuclear weapons, by definition, can never be actually used except to deliberately cause massive civilian casualties. Their only legitimate purpose is deterrence. Especially in a post-Cold War world there seems relatively little purpose holding expensive nuclear weapons. There is a problem with this, though, similar to the argument above. The number of unstable countries either with nuclear weapons or seeking to gain them continues to increase: China, Russia-ish, North Korea, Iran, Pakistan and possibly others. As more countries gain nuclear weapons the possibility of an unstable future situation involving nuclear blackmail at the hands of one of these non-democratic countries increases and this is something that is deeply to be avoided as once we get in that situation there is no way we can respond. There is also a feasible argument that nuclear weapons actually reduce conventional conflict, by making it not worth people's time. Between their founding in the late 1940's and their acquiring nuclear weapons in the 1970's Israel and its Arab neighbours and India/Pakistan engaged in three wars each, but since these states acquired nuclear weapons there have been no major wars. On a grander scale the threat of Nuclear war may have contributed to the peaceful (at least in Europe) conduct of the Cold War, that could so easily have turned into a 3rd World War of immense proportions.

If we accept the importance of some respectable nation having nuclear weapons to counter the possible threat from less stable nations, soon or even in the relatively more distant future, then there comes the criticism that it is unnecessary for us to maintain nuclear weapons, as some people correctly suggest there is no conceivable situation where we would use nuclear weapons independently of America. So why not just let them pay for them and scrap our own capability? The argument is, again, moral. To push the responsibility of maintaining a nuclear capability for the "good guys" onto the USA is to abdicate a responsibility to others. It is to say that it is acceptable for American taxpayers, soldiers, politicians etc to bear the essential responsibility of defending the enlightened world in this most extreme manner, with the danger of retaliation that entails, but it is not a danger and cost that it is worth us bearing. This is an abdication of moral responsibility, and a remarkable one at that, seeing as how it explicitly places us as a strategic dependent of the United States. What is particularly odd about this is that it is generally the same people who claim to be most worried about the UK being subservient to America, or following too closely America's foreign policy, who advocate most strongly that we abandon this major independent capability for independent action and policy and effectively cede this entire area of independent strategic policy to the US in its entirety.

That is, again, the theoretical case for maintaining our nuclear deterrent. The practical issue in terms of deficit reduction is that even entirely scrapping Trident and our whole Nuclear deterrent would not save that much money. And this itself it not something that any major political party supports. Pre-election the Lib Dems went the furthest in supporting an alternative cheaper system than Trident, though they never actually said what system. This is one of those topics for which reliable statistics seem most in need. Numbers given for the actual cost of the Trident system and its renewal vary dramatically depending on the person giving them, as well as contextual factors such as whether figures given involve just the cost of purchasing the system, the cost of running it over the next parliament, over the entire lifetime of the system or something else. And of course those who give the statistics do not make this clear when they give them. Possibly depending on which of these features one takes into account or just what your ideological bias is, it is possible to read statements running from £20 billion to as high as £100 billion I read in one commentary piece, for the cost of replacing the Trident system.

 Actual official estimates for replacing the system, as opposed to whatever numbers column writers come up with, tend to be at the lower end of this continuum, with estimates in the range of around £20 billion for replacing the system and around £1.5 billion annual running costs. It is only possible to get the higher range estimates for costs should we take the possible costs over the entire life-time of the system, some 20-30 or more years. Looking at the total cost of a nuclear deterrent is a reasonable thing to do in general but in a conversation about a budget deficit it is not, since that is mainly concerned with annual cost. One could take a similar approach and produce monstrous figures that the cost of housing benefit is £400 billion, but neglect to mention that is over the next 20 years. On an annual basis, assuming the cost of purchase is spread over a 20 year period, Trident makes around a £3 billion a year contribution to the deficit. Getting rid of it is evidently not going to solve our budgetary problems or really even make more than a small dent in the hole. And these savings are for the outright scrapping of the nuclear deterrent. Trident is already assessed as one of the cheapest long term option for an independent nuclear deterrent. Any other system, even if was cheaper, would still have significant costs running in the billions of pounds and so relative savings would be even smaller.

This is not to say that some savings cannot be made in planning for the nuclear deterrent. It is possible to lengthen the lifetime of the Trident system by refitting submarines and missiles, rather than replacing the system now, as well as reducing from the current level of Continuous At Sea Deterrent (CASD). Full replacement could be put off until we don't have a desperate budget crisis and there is more money to go around. It is estimated that postponing Trident's replacement could save some £11 billion over the next 5-10 years. This is definitely worth doing in a time when money is tight, and the nuclear threat over the next few years is tight. But neither cuts to defence nor the nuclear deterrent particularly are either a wise nor useful solution to cutting the budget deficit, except as small part of a much wider program of savings and tax rises.

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