There is always money for defence spending.
As Europe has discovered, mention security and money can be found. €800bn was in the EU at a summit in Brussels yesterday.
Global bond markets might have been jolted by Germany's newfound ability to borrow.
Other countries are supposedly facing bigger bond funding costs.
The poorest in Europe, and the environment, will supposedly be made to pay for it. But when it comes to armaments, money is always available.
But, of course, money is also always available for other purposes as well, including the relief of poverty and the protection of our future by managing climate change. There is just no political will to deliver those things. As modern monetary theory rightly says, once a parliament has created a budget for an item of spending, it is not a question of how or from where the money will be found - it has been willed into existence by the legal instruction from a legislature to its central bank that the payment be made. There is literally no more to it than that.
There can, of course, be discussion as to the consequences of that diversion of resources to arms manufacture and armed forces enlargement, but what reaction is required depends on circumstances.
If the economy is not at full employment (and few are) then money creation can happen without compensating activity like taxation being required: the new money creation simply takes up slack in the economy and puts it to use. There is nothing more to note.
Assuming full employment exists (and it is rare) then tax is required, not to fund the new activity because it has already been funded by new money creation and it cannot be funded twice, but to instead reorganise the economy to free up resources currently used for consumption that must be foregone to ensure capacity for the new defence related activity is created. And since the only people with consumption that can be foregone on the scale required are those with high incomes and wealth, they must pick up the tab; nothing else works.
The rules of this game are really that simple.
If only we could have elected politicians who understood this, and who also understood that the same logic applies to poverty alleviation and climate change programmes. Then the world really would be a better place. Right now, we're a long way from that.
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“Why is there always money for war”
Because the wrong questions are always posed by a state and in turn “the military” is always the final “answer” to a mis/dis functioning political system.
Trivial example: Franco-Prussian war? Bismark’s way of unifying Germany (= pull in Bavaria). Large numbers of dead people were irrelevant (to Bismark). Alsace-Lorraine to Germany, led directly to WW1 and then WW2. Violence & military in lieu of imagination/cleverness. Plenty of other example – big countries bullying small ones (cos they can/might is right) etc etc. Bismark (& Hitler and Stalin) all instructive examples of how a thug/criminal gets away with one act of violence & then implements more.
Gets worse – Poland wants nukes (& you can be sure they have the money and capacity to make them).
Had meeting with a Commission and EP chap today. We do not think Europe is even asking the right questions = what are we really looking at here vis a vis Russia and the USM.
Couple that to the generals always fighting the last war (yeah – Russian BTGs were going to do so well in Ukraine – in 2022 – seriously look at the articlles that were written – I saw identical styles in 1940 (US) and Gulf war (1991). Total detachment from reality (you will ask how I saw the 1940 stuff – that is for me to know & you to wonder).
Ah but Victor Orban, in an absolutely classic textbook demonstration of using ‘the economy’ to justify your politics, says there is no money: https://www.reuters.com/world/europe/hungary-pm-orban-financing-ukraine-would-ruin-europe-2025-03-07/
Funny that…
Geert Wilders says the same thing. We can’t afford to give money to foreigners. According to his rhetoric, those rearming Europe are traitors because the real enemy isn’t Putin. It is a false enemy created by anti russian propaganda.
There’s going to be plenty of money now, Richard. Last night (our time) Trump signed an Executive Order setting up a Federal Crypto Reserve. Suffice to say in the corrupt White House that some people bought up crypto in large amounts yesterday – before the announcement. Anyway, Rachel Maddow has the full story. I thought her comparison of crypto to a craze on children’s toys (Beanie Babies – which I don’t think took off in the UK) – or we could think of tulips – was an excellent one. With the chief grifter now president of the US we’re in for plenty of this. https://www.msnbc.com/rachel-maddow-show
This will end in tears
Thank you, both.
Richard and readers may be delighted to read: https://www.fstech.co.uk/fst/Labour_Peers_Cryptocurrency_Consultation_Sparks_Regulatory_Scrutiny.php.
Thanks Ivan. Listened to this – isn’t she excellent!
So in short, he has actually managed to digitise his ego, detach it from the material world, financialise it and set up a trading system under his own control. One could not make it up. Musk will then complete the picture by rendering the whole world a hologram, before blasting himself off into space. Pure sci-fi! George is right, it is indeed a religious vision.
And yes, it will end in tears. These people have contempt for the material world, I think it frightens them. The Beanie Babies comparison is apt. They are little lost boys…. it is an escape fantasy.
But it does point to an answer: get out there. Get your hands dirty. Build things. Talk to people. Walk. Listen. Exchange. Collaborate. Assess. And delete anything with no connection to the world that is real and substantive – my thinking point for the next few days.
She is Joanna, and Rachel has a very interesting history too, so well worth reading her entry on Wikipedia. Trump has a special dislike of her and another of her MSNBC colleagues – Lawrence O’Donnell, who has the hour after Rachel’s show.
I first followed both of them in the run up to the first Trump presidency. And since then have got into a routine of watching Maddow, Chris Hayes (also very good) and Lawrence O’Donnell every day. Obviously, they mainly cover US related material, but they all have backgrounds in politics/policy studies/government so they know their stuff, and all have authored various books. Additionally, O’Donnell was a writer on the West Wing after a long stint as the Chief of Staff to a US Senator.
War money buy influence. Allies are in your debt, and the enemy have to rebuild.
War is regarded as the ultimate solution. Rather, it represents the ultimate failure.
Failure of diplomacy, failure of economic policy, failure to anticipate, to engage with other countries, failure to negotiate, failure to engage with international law, failure to engage with the UN.
There were jokes about Russia joining NATO in Putin’s early days – but that would never be good for the military-industrial complex. ;War is peace’. We always need an enemy, an axis of evil – so useful to keep the population in line , and to avoid improving people’s lives.
All the years of the ‘peace dividend’ , when defence spending trended down ,was largely spent looting the Russian people’s state assets by the oligarchs club, of which Putin is one, networked through the City of London and offshore havens etc etc.
Doesn’t excuse Putin’s invasion, but the idea of NATO ‘boots on the ground’ at Russia’s border as ‘peace keepers’ couldn’t be more absurd. Starmer must know this .
It’s the UN that does peacekeeping – yet not a mention – Europe and Starmer seem to have bought into the ‘big power’ model of international relations – and going along with his undermining of the UN and other international institutions .
The best contribution war makes is questions like yours, the answers to which make us look ridiculous as a species.
I suppose war is a bet of sorts – an expense that will result in the enrichment of the aggressor, or the protection of riches by the victim – both economic outcomes.
I think that nationalism has its role too, identity is worth fighting for it seems, rather than the lived quality of that identity (poor, ill, cold, frightened, abused, exploited). I bet it is nationalism that thrives in the well off who rule us and who have been rewarded the most by what they are defending.
“Rather, it represents the ultimate failure.”
If I could suggest another point of view. My understanding is that in the East, war is seen as a continuation of diplomacy, rather than a replacement (sort of an escalation, eg expelling diplomats > economic sanctions > military action). The West seems to have missed this, with its calls to “defeat Russia”.
Where the combatants are mismatched (US/NATO v Iraq) a win is possible, where the combatants are equal (NATO v Russia) a win will not be possible. Only a negotiated solution will resolve this, not more weapons.
Clausewitz wrote war is a continuation of policy by other means.
The Americans, perhaps having such a large military, have been very bad at remembering that. They have some good analysts but the White House circles too often over ride them e.g. as when many officials warned them last year (and in the UK and EU) that Israel’s response was disproportionate and they were in danger of complicity in war crimes.
Putin, I keep saying, doesn’t want to march into Berlin. He wants to neutralise eastern Europe to present as a triumph to his people for his version of MAGA. It would also enable him to apply pressure on those countries’ foreign and even domestic policies-as in Belarus or Finland in the Cold War. If he can do that without war, it is a Clausewitzian victory.
He is also keen to discredit the EU. If Ukraine had joined then the practices of a relatively free media, elections and commerce would have filtered back to Russia challenging the official narrative of promoting a mystic form of nationalism (as taught by Ivan Ilyin ) and religion, and a centralised Oligarchic economy.
Any ‘neutralised’ state which doesn’t comply with Russia risks a ‘special military operation’ like we saw in Georgia, where he entered the country and destroyed their defences, and which we could see in the Balkans or the Baltic states -if they survive as free countries.
Tom Snyder’s Road to Unfreedom provides much of the rationale. He also points out the aspects of American politics which facilitate such a future.
Europe needs the means as well as the will to resist that for our reasons. Only then can we negotiate from a more secure position.
Well said Richard.
Yes, money is always ‘found’ when ot comes to war.
Makes me want to swear.
@ Colonel Smithers
https://www.taxresearch.org.uk/Blog/2025/03/07/why-is-there-always-money-for-war/#comment-1009839
You mentioned:
https://www.fstech.co.uk/fst/Labour_Peers_Cryptocurrency_Consultation_Sparks_Regulatory_Scrutiny.php
and Lord Iain McNichol.
All I need to know is that Iain McNichol was Gen Sec of the Labour Party during a time of administrative and disciplinary chaos, that featured in the (buried) Forde Report, although strangely he managed to avoid being mentioned by name.
So more cryptocurrency failure, with cryptocorruption thrown in for free (or rather, for payment).
Couldn’t be happening to a more deserving peer. Of course Starmer will immediately withdraw the whip and suspend his party membership (not).
Von Clausewitz got it backwards — diplomacy and other policies are only pursued when war is not a practical option. Capitalism and war are inextricably linked — the destruction lays the seeds for fresh exploitation and profit extraction.
I think you see looking for a correlation when other explanations work better.
My comments not appearing. any reason?
No idea
I have not deleted any
Sorry Richard, I find the tone of this missive rather annoying.
Western Europe was right to scale down defence spending after the cold war.
The USA’s broader policy of economic wellbeing through defence spending is not helping at all.
But the fact of the matter is we have basically just accepted that NATO is dead in the water so Europe needs serious money to get us weaned off USAid.
The threat on our doorsteps (not Trumps) is priority #1 as farvas I’m concerned. We will not throw Ukraine out with the bathwater.
Sometimes the global situation calls for action.
I didn’t deny the need fur defence spending.
I just did it was a choice not to fund other essential types of spending.
You seem to have missed my point.
The way you framed the argument – why are politicians seemingly less willing to create money to alleviate poverty or help the planet – can take a back seat whilst we have a genuine military threat on our dangerously close to our borders.
It doesn’t read as if you accept the need for ramped-up European military spending anno 2025, rather that it’s simply another Neoliberal policy that makes life harder for the don’t-haves.
I am surprised it’s being read that way.
But if I have the emphasis wrong, apologies, although I think the point is entirely valid. Without social spending there will be no support for military spending.
Events are moving quickly, given Trump’s questioning last month of NATO’s Article 5, which holds that Nato members will come to the defence of an ally which comes under attack, and his threat to NATO members this month: ‘If they don’t pay, I’m not going to defend them’ (as it’d the expense would be personal). Furthermore, Trump’s colonial rhetoric (expanse into Gaza, Canada, Greenland, Panama Canal and policy of bullying by economic-tariffs) might even provoke a response that is deemed (by Trump) to be an attack on America, to which NATO countries are currently bound by this Article 5.
This puts a further question against the future of NATO, and so questions the centrality of NATO in the terms of reference for the current Strategic Defence Review 2024-2025 https://www.gov.uk/government/publications/strategic-defence-review-2024-2025-terms-of-reference/strategic-defence-review-2024-2025-terms-of-reference): ‘The Review will be conducted with the following parameters in place:… # NATO will remain the cornerstone of UK Defence. The SDR will look at enhancing the UK’s contribution to the Alliance and sustaining a “NATO first” defence policy, while protecting vital UK sovereign requirements and strategic reach.’ (Section 7. Bullet point 2).
This UK strategic defence review is due to report in the coming months, but I suspect Europe needs its own defence agreement, which is not so bound up with NATO, and the terms of the strategic defence review are therefore already dated.
The terms of reference affect, for example, the issue of replacing the T1 Typhoons, as
Sharon Graham (General Secretary of Unite has observed (https://www.theguardian.com/commentisfree/2025/mar/06/british-defence-jobs-uk-jet-american-f35-typhoon), which is a significant immanent spend. But much of our military technology is dependent on American supplies, American technology, American Intelligence/surveillance, which all means is dependent on American permission.