Guns or Butter?
“Guns versus butter” is a macroeconomics phrase that illustrates the dilemma that nations face in deciding their spending priorities. The more they spend on their military (guns), the less they can spend on food for their poor and other domestic needs (butter).
In making this very important decision, Europe has chosen butter over guns. The wealthy European countries that compose the bulk of the Organization for Economic Cooperation and Development (OECD), an international consortium, spend 2.5 percent of their total economy (gross domestic product, or GDP) on their militaries. In contrast, the United States spends 5.1 percent of its economy on its base military budget, which does not include costs for veterans’ benefits, for the Iraq and Afghanistan wars, and military spending that falls outside the Pentagon’s budget.
The European nations’ decisions to limit their military spending allows more spending for social needs. As a result, observes one economics writer, most Europeans have “universal health care, deeply subsidized education (including free university tuition in many countries), modern infrastructure, good mass transit, and far less poverty” than the United States has. Perhaps worse, the United States ranks last among the world’s twenty wealthiest democracies in life expectancy and infant mortality and also ranks worst in the risk of dying before age 60. In addition, half of American children need food stamps at some time before becoming adults, while this problem is far rarer in Europe.
Compared to Europe, then, the United States has chosen guns over butter, leaving far less money for its social needs. As an economics writer wryly noted, “So remember to take pride in American power, and remember that it comes at a very high price.” In making this classic macroeconomics decision, the United States has much to learn from the wealthy nations of Europe.
Source: Holland, 2011 [48]
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