{"id":267623,"date":"2025-11-07T11:17:14","date_gmt":"2025-11-07T11:17:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/267623\/"},"modified":"2025-11-07T11:17:14","modified_gmt":"2025-11-07T11:17:14","slug":"guns-versus-butter-canadas-military-industrial-complex","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/267623\/","title":{"rendered":"Guns versus butter \u2014 Canada’s military-industrial complex"},"content":{"rendered":"\n

According to the\u00a0Mark Carney Liberal doorstopper piece of economic fiction, the 2025 Canada Strong\u00a0budget<\/a>, Ottawa plans $81.8 billion in new military spending that will help boost the economy and create thousands of high-paying jobs. \u201cOur government is making a generational investment in defence that will create good, high-paying careers for Canadians, and strengthen our economy and collective resilience.\u201d The new military spending \u201cwill create good, high-paying careers for Canadian workers and drive investments that strengthen our economic, infrastructure, and collective resilience.\u201d Ottawa, it repeated, will \u201creform defence procurement to make it easier and faster to buy Canadian-made equipment \u2014 supporting our domestic defence industry and creating high-paying careers.\u201c<\/p>\n

Unfortunately, the idea that defence spending and investment automatically boost economic activity and growth is far from being a solid pillar of economic theory. As the pressure grew on Canada to increase defence spending to up to five per cent of GDP as part of an expansion of NATO commitments, various economists issued papers over the past year that cast doubt on the links between defence spending and economic benefits.<\/p>\n

Earlier this year, an RBC Wealth Management\u00a0commentary<\/a> inconclusively answered the question: \u201cWhat does greater defence spending mean for Canada\u2019s economy?\u201d Applying short-term multiplier analytics, it looks like defence spending could have a \u201cstimulative effect.\u201d The benefit is mostly the result of higher multipliers associated with defence spending. Over the longer term, however, \u201cit gets trickier.\u201d The negative aspects of defence spending include possible \u201ccapital leakage, fiscal overspending, and the risk of diverting resources from more productive sectors of the economy.\u201d<\/p>\n

This is where we get to the \u201cguns versus butter\u201d debate.<\/p>\n

Another paper captured the historic economic and political debate around military spending. Montreal economist Annabelle Fournier, in \u201cMacroeconomic Effects of Increased Military Spending in Canada: A Review,\u201d\u00a0recalled<\/a> a bit of history. \u201cThe debate \u2014 ongoing for over 50 years \u2014 persists in the economic literature under what is referred to as the \u2018guns or butter dilemma.\u2019\u201d<\/p>\n

Fournier, chair of macroeconomics and forecasting at the Universit\u00e9 du Qu\u00e9bec \u00e0 Montr\u00e9al, said the guns versus butter debate highlights the \u201ctrade off\u201d between rising defence spending and the funding of other sectors such as health, education and infrastructure. One study found that the impact of military spending in Canada was either slightly positive or even negative.<\/p>\n

Story Continues <\/p>\n

Fournier concludes that research suggests \u201cthat the economic impact of increased military spending in Canada will depend closely on the specific types of expenditures undertaken, its military characteristics (capital intensity), and its ability to generate spillover effects within a military-industrial complex.\u201d Which means that the\u00a0deeper\u00a0Canada\u00a0becomes involved in the international military expansion boom,\u00a0perhaps the\u00a0economic impact will be\u00a0positive.<\/p>\n

A\u00a0European Commission\u00a0summary<\/a> of the economic impact of higher defence spending failed to find positive evidence. \u201cThe available studies aligning with the Keynesian view argue that military expenditure stimulates aggregate demand, creating jobs and driving investment, particularly during economic downturns,\u201d said the EC paper. On the other hand, the \u201cneoclassical approach\u201d to higher defence spending \u201chighlights long-term crowding-out effects as higher military expenditure can reduce private investment and increase fiscal deficits.\u201d The EC also casts doubt on Keynesian multiplier effects. Some studies support the defence-growth theory, \u201cwhile others find negligible or negative effects.\u201d<\/p>\n

So\u00a0we are left with the\u00a0distinct\u00a0possibility\u00a0that\u00a0Canada\u00a0is unlikely to\u00a0benefit\u00a0economically\u00a0from joining the\u00a0expanding NATO\u00a0military-industrial complex<\/a>, a famous phrase coined by former U.S. president Dwight D. Eisenhower during his farewell address<\/a>\u00a0in 1961.<\/p>\n

Eisenhower is also credited with reiterating the guns versus butter tradeoff during his first formal speech<\/a>\u00a0on assuming the presidency in 1953:<\/p>\n

\u201cEvery gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its labourers, the genius of its scientists, the hopes of its children.<\/p>\n

\u201cThe cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people \u2026<\/p>\n

\u201cThis is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. \u2026 Is there no other way the world may live?\u201d<\/p>\n

To curb the military-industrial complex, Eisenhower envisioned a process by which all nations would \u201cset an agreed limit upon that proportion of total production of certain strategic materials to be devoted to military purposes.\u201d Today, Canada has joined an international movement that aims to increase military spending to a new higher limit, claiming it will produce growth and higher-paying jobs.<\/p>\n","protected":false},"excerpt":{"rendered":"According to the\u00a0Mark Carney Liberal doorstopper piece of economic fiction, the 2025 Canada Strong\u00a0budget, Ottawa plans $81.8 billion…\n","protected":false},"author":2,"featured_media":267624,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[123170,49,48,123171,123168,3606,123169,58745,44],"class_list":{"0":"post-267623","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-canada","8":"tag-annabelle-fournier","9":"tag-ca","10":"tag-canada","11":"tag-defence-industry","12":"tag-defence-procurement","13":"tag-defence-spending","14":"tag-economic-benefits","15":"tag-military-spending","16":"tag-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/267623","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=267623"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/267623\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/267624"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=267623"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=267623"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=267623"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}