I’ve written that our defense budget is bloated based on expenditure comparisons to other countries. Last year, in Defense One Frederico Bartels published a rebuttal that establishes the point that using currency conversion rates is something of an irrelevancy:
If you account for differences in reporting structure, purchasing power, and labor costs, you find that China’s 2017 defense budget provided 87 percent of the purchasing power of American’s 2017 defense budget.
This runs counter to the conventional wisdom that the United States spends more on its military than the next 12 countries combined or that China lags annual U.S. military spending by close to $400 billion. Those misleading comparisons are based on simply converting Beijing’s reported defense budget from yuan to dollars by applying a market exchange rate. That produces a distorted picture. We must take into consideration several key factors to arrive at an accurate understanding of just how much Beijing is investing in its military.
And then, of course, is the problem that Communists and truth are not often bedmates:
One key factor—and perhaps the main one that makes accurate comparison so challenging—is how Beijing accounts for its military research and development. Put simply, it doesn’t include it in any of its reports on military expenditures.
And then there’s the problem of comparing fundamentally differing items, qualitatively speaking, and how money fits into the gig:
Further complicating accurate comparisons are the unique characteristics of China’s party-run military, such as military-civil fusion, usage of state-owned enterprise, theft of intellectual property, and the embedding of party organizations in private companies. Some of these elements, even if known, are simply unquantifiable. Thus if we seek to compare the resources Beijing dedicates to defense with what other countries are doing, our only recourse it so remove all military R&D from the calculations.
This sort of thing forces me to re-examine my position on our defense budget. Perhaps, most importantly, it’s a reminder that asking amateurs – or even less-than-amateurs – for their opinions is a fool’s errand.
