Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
Upside of Inequality Oxford Unintended Consequences

AI Summary. Years of European defence underspending have created a stock problem—depleted weapons, hardware, and technology, plus gaps in operational capacity, full-spectrum battlefield capability, and personnel—that higher spending can only fill slowly. Europe's cumulative shortfall against NATO's 2% of GDP target is about €850bn, and exceeds €2,650bn measured against US spending near 3.5% of GDP.

Chris Marsh Money: Inside and Out
Date Posted:

Since 2014 the US has spent $8.4T on defense, more than double the rest of NATO’s $3.8T. Europe’s shortfall relative to the 2% target since 2014 was €2.65T. @GeneralTheorist notes that increased flows may not address the underlying “stock” issue.

Can higher defense spending quickly close Europe's accumulated military stock gap?

Core argument: European NATO members' cumulative defence spending shortfall relative to the 2% of GDP target since 2014 totals EUR850bn, with Germany's gap largest in absolute terms at above EUR200bn and Italy's about EUR150bn.

Much of the discussion about increasing defence spending in light of recent geopolitical developments fails to acknowledge that this protracted underspend has left a stock problem—a depleted stock of weapons, other hardware, and technology; but also gaps in operational capacity, full spectrum battlefield capability, and personnel. As such, while increasing defence spending today is welcome, it will only fill the “stock” gap slowly. Consider the cumulative underspend by NATO countries over the past decade relative to the 2% target and relative to US spending in % of GDP. Data provided by NATO only begins in 2014. Germany’s shortfall to 2% is largest in absolute terms and cumulates to above EUR200B, Italy about EUR150B, etc. The aggregate shortfall for Europe is EUR850B. To reach further and “catch-up” with the US spending closer to 3.5% of GDP Germany would need to spend an additional EUR550B (or EUR800B in total), Italy and France would need to spend above EUR400B in total, and so on. The aggregate shortfall for Europe since 2014 exceeds EUR2,650B.

Takeaways by Macro Roundup® AI

  1. European NATO members' cumulative defence spending shortfall relative to the 2% of GDP target since 2014 totals EUR850bn, with Germany's gap largest in absolute terms at above EUR200bn and Italy's about EUR150bn.
  2. Matching US defence spending closer to 3.5% of GDP would require Europe to have spent more than EUR2,650bn since 2014, including EUR800bn in total for Germany and above EUR400bn in total each for Italy and France.
  3. Protracted underspending has left a stock problem—depleted weapons, hardware, and technology, plus gaps in operational capacity, full spectrum battlefield capability, and personnel—that higher defence spending will fill only slowly.

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  • America, Jump-Started: World War II R&D and the Takeoff of the US Innovation System — From 1940 to 1945, the US Office of Scientific Research and Development engaged industrial and academic contractors in more than 2,200 research contracts worth over $9bn in 2022 dollars, despite no pre-war tradition of funding externally performed research. At the war's height, the US government funded the research behind nearly 1 in 8 US patents.
  • The Intellectual Spoils of War? Defense RD, Productivity and International Spillovers — The authors estimate that a 10% increase in government-financed R&D, largely defense, is associated with a 4.3% rise in privately funded R&D across OECD countries, indicating "crowding in" rather than "crowding out." They also find international spillovers raise private R&D abroad, though the overall effect on US productivity growth is modest.
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