Watson Institute for International and Public Affairs
Costs of War

Impact on Public Investment

Over one half of the federal government’s total assets  buildings, aircraft, ships, vehicles, computers, and weapons  are used for national defense. In 2000, the Pentagon’s total assets were valued at $1.1 trillion. Total Pentagon assets have steadily risen since then, amounting to $1.8 trillion in 2019.

Public investment in non-military assets  all the public buildings, roads, mass transit systems, water and sewer systems, public utilities, recreation facilities and so on  has held steady since the mid-1970s, but at about half the rate of accumulation of the 1950s and 1960s.

Investments in core infrastructure have a direct impact on the performance of the private economy. The private sector benefits from public investments in roads, water systems and other goods. Such benefits are in addition to the direct benefits that public investment confers to the population: roads help people get around and improve the efficiency of businesses.

While the private economy benefits from military spending on durable, physical assets (defense contractors being an obvious example), there are no “spill-over effects” in terms of the long-run productivity of the rest of the private sector.

In addition to productivity losses, over-investment in military assets has other opportunity costs, including lost environmental and employment opportunities. Federal funds could instead be channeled to green investments, including green manufacturing and upgrades of the electrical grid and other energy systems, which would create more jobs while lowering energy use and emissions.  


Key Findings

  • While investment in military assets produces economic gains, investment in non-military assets stimulates comparatively more economic growth in the private sector.

  • If public investments in military assets had instead been made in public education, this would be enough to return the country’s schools to good condition.

  • A decrease in military investments would enable an increase in investments in infrastructure, including clean energy, water and sanitation and public transit.


Recommendations 

  • To clarify the policy choices being made, the Congressional Budget Office (CBO) should produce an annual cost-benefit analysis of investments in military assets versus investments in alternative public infrastructure such as public education, clean energy and transit.

(Page updated as of September 2023)