Shelton International

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⊕ INVESTING IN PEOPLE

Considerations for a change in defense

spending

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THE PROBLEM
The United States is dominant in the international arms market. In 2008, the
United States exported more than 123 billion dollars worth of arms. As seen
in Table 1.1, this is higher than the next top three countries combined (Shah
6). Most people would see this as good business and good for the American
economy. While this was true in the past, being at the top is creating a
problem for the future. The everyday person is not seeing the problem, but
the world is beginning to feel the effects.

Table 1.1
Percent of
Supplier Total Sales in Billions of US Dollars
Total Sales
United States 123.543 39%
Russia 54.316 17%
France 26.915 8%
United Kingdom 17.628 6%
Germany 16.073 5%
China 10.860 3%
Italy 6.506 2%
Other European 40.649 13%
Others 20.274 6%
(Table courtesy of Shah 2)

HOW IT HAPPENED
The United States’ control over the global arms market has grown by three
percent consistently over the past five years with a major spike after
September 11, 2001 (Shah 7). With this growth, the United States has
formed a monopoly on weapons. This is largely due to the fact that the
United States invests more money into its defense budget than any other
country. This provides the private sector with billions of dollars worth of

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grants to create the cutting edge technologies of warfare (Kapstein 2). Table
1.2 shows a table revealing the top companies in the world.

Table 1.2
Rank in 2003 Company Country Profit in Millions of
US Dollars
1 Lockheed Martin US 1,053
2 Boeing US 718
3 Northrop Grumman US 808
4 BAE Systems Britain 10
5 Raytheon US 365
6 General Dynamics US 1,004
7 Thales France 126
8 EADS Britain 172
(Table Courtesy of New Internationalist 19)

THE EFFECT
A monopoly in most markets is something that is feared by economists
(Kapstein 4), but a monopoly in the arms market is something that is feared
by world leaders. The United States has gained enough leverage on the
market to be able to slow down, if not stop, any major arms transaction. In
2006, President Vladimir Putin attempted to sell one billion dollars worth of
arms to President Hugo Chavez, but the United States’ administration did
not approve of this transaction. They used their control of the arms market
to pressure the Russian leader to stop the sale (Russian Life 11).

The effect of this monopoly is also falling down on the civilians of many
countries. The United Kingdom is no longer able to keep up with the United
States’ prices of weaponry and is slowly losing one of their few exports
causing, in part, their economy to fail. Russia, the one-time leader of
weapons production, is being forced to invest billions of extra government
dollars to merely keep their weapons manufacturing industry afloat
(Kapstein 3). Any time a major power has a struggling economy, the world
is affected.

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The United States has been accused of being the policeman of the world, and
the control of the arms market is not helping that title go away. This title has
put pressure on the United States to respond to any and every terrorist
attack, natural disaster or dispute that takes place. This is where the United
States’ citizens feel the weight of this monopoly. They feel heaviness when
they lose loved ones or troops are shipped out to fight another country’s
battle.

THE SOLUTION
The solution to this situation is not easy, but results are possible. The
United States needs to reduce investing and spending in the arms
market. The amount that would need to be cut would only have to be
enough to slowly release the control of the market. This would equal out
to four billion dollars per year (New Internationalist 19). This amount
would cause the United States to lose one percent of the market share
per year if trends continue on the current path. This move would
improve international relations by creating jobs in countries such as the
United Kingdom and Russia and would allow other countries to have a
voice in allowing deals in the arms market.

The extra four billion dollars saved by the United States should be
invested towards furthering international relations. One possible way this
could be done is by creating a federally-sponsored foreign exchange
program for college students. This would allow the next generation to
have a greater worldview and understanding of the needs of the world
in which they live.

THE CONCLUSION
The United States is currently controlling the international arms market,
which is creating a problem. The control puts pressure on countries
and causes citizens to lose jobs. If the United States’ government will

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agree to let go of some of its power, the situation is repairable. There
are benefits to letting go of the power. Both international relations
and future world leaders could benefit. People could benefit from less
spending by the government investing the money saved into the
citizens.

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Works Cited

Kapstein, Ethan B. "America's Arms-Trade Monopoly." Foreign Affairs 73.3 (1994): 13-
19. Academic Search Complete. EBSCO. Web. 11 Mar. 2010.

"Kiss the Hand That Arms You." Russian Life 49.5 (2006): 11. Academic Search
Complete. EBSCO. Web. 12 Mar. 2010.

Shah, A. Global Issues. 23 November 2009. 08 March 2010 <From

http://www.globalissues.org/Geopolitics/ArmsTrade/BigBusiness.asp>.

"VIOLENT REALITIES -- THE FACTS." New Internationalist 381 (2005): 18-19.

Academic Search Complete. EBSCO. Web. 14 Mar. 2010.

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