The cost of the global arms race

A t the end of the cold war America’s president, George H.W. Bush, popularised the idea that cutting defence spending would boost the economy. “We can reap a genuine peace dividend this year and then year after year, in the form of permanently reduced defence budgets,” he declared in 1992. The world took note. America went from shelling out 6% of its gdp on defence in 1989 to roughly 3% in ten years (see chart 1). Then came the 9/11 attacks and conflicts in Afghanistan and Iraq. Now with Russia’s invasion of Ukraine, talk of war between America and China over Taiwan, and tensions concerning Iran’s nuclear ambitions, countries are tooling up as never before in this century.