I don’t usually mind Twitter personality and defenestrated Vox Media founder Matt Yglesias that much. But a couple weeks back he engaged in an argument I’ve been dying to make a video about for years. So with this video I took the opportunity to complain about the irritating data point that Defense Spending has fallen as a percent of GDP, and how meaningless it is in the context of the US federal budget. I feel like I got outside my wheel house a bit, maybe diving a little too deeply into accounting I don’t fully understand, but I think it makes for a fun video.
Budgets are boring right? Not really. They are certainly complex, and passing them is complicated, as Washington, DC’s seemingly perpetual shut-down dance shows. But the question of paying for government is the most important one imaginable. Time and again in history we see great empires brought down by the simple question of “How do we pay for this?”
In the 1500s the Spanish Empire encircled the world, and controlled something like half of Europe, if not more. Their American territories brought a constant stream of precious metals. They were brought down mostly by the fact that they didn’t understand inflation, and defaulted on their debt repeatedly. In the 1920s the British Empire reached it’s largest extent. The “Sun Never Set” on the British Empire. 40 years later it was gone. Because they couldn’t pay for it. The holders of British debt in the United States got to dictate British foreign policy in a few crucial instances.