.

*The President of the United States is scheduled to visit a school in Boston, and 250 schoolchildren form up as a choir to sing. He's not terribly interested in singing schoolchildren, so he combines this photo op with a meeting with the Chief of Naval Operations.*

*CNO: About the submarine fleet ...*

*POTUS: You want that additional submarine.*

*CNO: Yes, we really need ...*

*POTUS: I see. Look, here are my secret service agents with their guns. Take their guns, kill the entire stupid choir and you'll get your submarine for free from the shipyard.*

*CNO: Mr. Presid...*

*POTUS: Don't worry, I'll pardon you right away.*

*CNO: That's not my problem with the proposal. We don't do this.*

*POTUS: You don't kill children to get a submarine?*

*CNO: Never!*

*POTUS: You think? Interesting.*

- - - - -

A principle in efficient allocation of resources is to get the marginal utility (marginal rate of return) right. In simple terms, this means that if you have 10 coins and four investment options, each costing 5 coins, but yielding 3, 6, 7 and 8 coins return after a month, you better choose to invest only in the 7 and 8 coins return options.

To spend 5 coins to get 3 back is an obvious mistake, but to spend 5 coins to get 6 back is also a mistake if you could get back 7 instead.

Obviously, you cannot invest in the 6, 7 and 8 coin options because your budget is limited.

This is an economic principle; maximise returns for a given budget (ceteris paribus).

The "7 coins return" option in the above case would be the marginal utility; the least return you got for expenditure. It's not the same as the average rate of return, of course.

Likewise, when returns are fixed (say, save one life) and costs vary and you have 10 coins to save lives, with the options to save lives costing 2, 3, 5 and 10 coins then you better not spend 10 coins to save one life, but to save three. To save all four is beyond your budget limit. Your marginal utility should be one life saved for 5 coins.

Likewise, when returns are fixed (say, save one life) and costs vary and you have 10 coins to save lives, with the options to save lives costing 2, 3, 5 and 10 coins then you better not spend 10 coins to save one life, but to save three. To save all four is beyond your budget limit. Your marginal utility should be one life saved for 5 coins.

- - - - -

This is an important concept, for when a legislator allocates public money through his vote on a budget he should understand that if for example the department of health stops paying for medical services when these would cost 5 million $ per life saved then the department of transportation should not spend 10 million $ on road safety per life saved. That's like killing two people by cancer to save one from death by car accident. Both departments should have a common and identical limit and yes, there has to be a limit. We live in a resources-constrained world.

The U.S. government didn't understand or at least didn't apply this, and almost certainly still doesn't, but that's not really the topic here. The topic is human sacrifice and military spending.

**An important thing that pacifists usually understand and "pro-military" folks usually don't seem to understand is what I mentioned above and the concept of opportunity costs.**

There are opportunity costs to all spending, including to military spending. Whenever you spend USD 2.6 bn on for example a single submarine, you cannot spend this public money on something else any more.

Some may have read the links, others won't, so I'll quote; The Environmental Protection Agency of the United States of America considered the value of a life in 2010 as to be USD 9.1 million (unless it's a VIP, I suppose). So essentially a policy that would cost USD 920 million and would be expected to save 100 lives in the USA would not be considered worth it based on the lifesaving effect alone. This was the higher limit - the Food and Drug Administration had its limit at USD 7.9 million. Both should have the same limit of course.

Let's pick the USD 9.1 million figure. The United States Navy has 59 nuclear attack submarines (SSN) in service. To add another one (or to replace one to avoid dropping to 58) costs about USD 2.6 billion. 2,600/9.1= 285.71

USD 2.6 bn; that's the value of 285 lives. Let's round this to 250, for saving more may see escalating costs per life saved.

USD 2.6 bn; that's the value of 285 lives. Let's round this to 250, for saving more may see escalating costs per life saved.

To buy a single Virginia class SSN is equivalent to not spend on a program to save 250 children lives from poor families from cancer or pollution.

Economically it's also equivalent to the following:

In order to get a new Virginia class submarine, 250 school children line up in a parade. The CNO goes to them, unfolds a barbers knife and cuts one children's throat.

And another.

One more.

Yet one more.

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Finally, he's done.

285 children's lives were sacrificed so the USN can get another SSN.

That's quite a mess!

That's quite a mess!

As a CNO, such an admiral would have no qualms "justifying" that the navy needs another Virginia class submarine. Would he have an as easy life justifying cutting the throat of 285 children?

Certainly not.

But

__that's exactly what he should be able to do__if he was actually "justifying" the purchase.
I suppose it's obvious by now that the USN cannot really justify the purchase of a new Virginia class submarine. It can only voice its wish for one.

Officers are almost never educated to make such a decision correctly. They are merely educated to implement such decisions. This tells a lot about how much weight their advice on military spending should carry, even before considering the principal-agent problem.

The weighting of pro and contra, including a consideration of the opportunity costs, this enforcement of equal marginal utility of all government departments' pending needs to be done at the political level. Anyone who thinks that a navy or a think tank could possibly come up with a justification for buying a nuclear attack submarine has been fooled or is fooling himself/herself.

So the national government - specifically the legislative branch which holds the budget authority - should do this, and then the executive branch should implement the budget, always keeping in mind how important the marginal utility is.

That's how it would work in a perfect world, which won't be achieved. It does on the other hand educate us on what's wrong, and HOW wrong it is.

Furthermore, now you have a figure (value of life ~ USD 10 million) that will help you to make sense of the military spending. Those huge figures are otherwise very abstract, without real meaning. What's USD 10 billion? Only a look at opportunity costs can give us an idea of what this means.

Furthermore, now you have a figure (value of life ~ USD 10 million) that will help you to make sense of the military spending. Those huge figures are otherwise very abstract, without real meaning. What's USD 10 billion? Only a look at opportunity costs can give us an idea of what this means.

related:

S O

P.S.:

"285 children's lives were sacrificed so the USN can get another
SSN." was not mere polemic. This is happening - albeit through neglect, not through
barber's knifes. Future generations may consider it to have been no less barbaric.

Maybe you found this piece to be unusually forceful, more confrontational than usual and even politically incorrect. That's because I decided to reframe issues that I have written about in the past already, this time for greater effect. The 'gloves have come off' at least for once. The "pro-more military spending!" crowd lives in a pleasant bubble where they ignore the opportunity costs and instead enjoy fantasies of military power greatness. They don't deserve this comfort.

If you want to read more about an economic theory interpretation of such events, read about "externality"; that will explain to you why a CNO doesn't pay attention to the opportunity costs.

Maybe you found this piece to be unusually forceful, more confrontational than usual and even politically incorrect. That's because I decided to reframe issues that I have written about in the past already, this time for greater effect. The 'gloves have come off' at least for once. The "pro-more military spending!" crowd lives in a pleasant bubble where they ignore the opportunity costs and instead enjoy fantasies of military power greatness. They don't deserve this comfort.

If you want to read more about an economic theory interpretation of such events, read about "externality"; that will explain to you why a CNO doesn't pay attention to the opportunity costs.