Blood and Treasure: On Military and Economic Thinking

This article argues that there is little difference between military thinking and true economic thinking, which is different from accounting-budgetary thinking. Most of the substantive disagreements between military commanders and economists stem from objective difficulties in predicting the future and quantifying the important components of risk, cost, and benefit. Other disagreements result from vested interests or mere egotistical issues. The article will also explore the problematic manner in which the defense budget is drafted, specifically, the lack of clear directions from the cabinet regarding national security posture and priorities and the absence of significant military bodies outside the defense establishment. Reforms instituted in the United States during Robert McNamara’s term as Secretary of Defense and as a result of the Goldwater-Nichols Act of 1986 are instructive in this regard. In 2007, the Brodet Committee attempted to change the process for drafting the defense budget, but was not successful.