Getting economics the wrong way around

This is to get the whole point of economics the wrong way around:

Britain must pay its “fair share” into an EU defence fund worth €150 billion if UK arms companies are to benefit from European rearmament, Sir Keir Starmer has been warned.

Miguel Berger, the German ambassador to the UK, told Times Radio that European taxpayers’ money “cannot go simply into British companies”.

Now leave aside that this is a German about defence - remember Basil Fawlty’s advice - and it’s about the EU and all that. Just taste the juiciness of the assertion.

The beneficiaries of defence spending are the workers and capitalists who get paid to make the defence equipment. Therefore only those whose government has paid into the fund can be beneficiaries of such spending. That, in itself, is pretty odd. You and I get taxed, washed through Brussels, so that BAe shareholders get richer? In itself that’s an odd contention.

But really taste that juiciness. The beneficiaries are not the troops who don’t get slaughtered because they’ve got good kit. Nor the generals who get to win. Nor even the citizenry who get defended by that good kit, successful generals and unslaughtered troops. Where the money goes is the definition of good spending, not what the money buys.

Rampant idiocy, of course. The point of buying a loaf of bread is the receipt of a loaf of bread not employment for bakers.

Yes, yes, we’re all well aware that national security does indeed mean that you might want to retain the capacity to do some things directly, not just buying on the open market etc. But even so…..

Defining the benefit of spending as who gets the money rather than what gets bought is economic insanity. We might have a little insight there as to why government control of the economy ends up impoverishing.

Tim Worstall