Lies, damned lies, and defense spending bar graphs

Let me wade back into the debate here a bit. My general argument is that the U.S. needs high-tech gizmos to deter China. Those who pooh-pooh this argument usually post a graph comparing international defense spending (for another example, scroll down slightly). The U.S. column invariably towers over the rest; we spend more than the next umpteen countries combined, etc. etc. The message: Our military dominance over China is absolute.

Although the U.S. unquestionably has the world's highest defense budget, the titanic imbalance shown on these graphs is misleading for several reasons:

1) China hides much of their defense spending. China's self-reported military budget is around $30B. But estimates by the the U.S. Department of Defense, the Rand Corporation, and the Defense Intelligence Agency put the real figure at anywhere from $42B to almost $140B.

2) China's exchange rate is notoriously undervalued against the dollar, which heavily suppresses its dollar figure on those graphs. If China dropped its dollar peg, the "China" column on that graph would most likely shoot up by 30 to 100 percent.

3) Purchasing power parity! Some defense items (missiles, for example) cost about the same in the U.S. as they cost in China. But many items (uniforms, rations, trucks) cost a lot less in dollar terms in China, because China is a poorer country than the U.S. So in terms of what China can actually get for their money, the disparity is a lot less.

4) China's defense spending is rapidly increasing, by double-digit percentages in most recent years.

This is not to say that the U.S. needs to boost our defense spending to the stratosphere; we don't. Remember, my argument isn't that we need an enormous military, it's that we need to focus on super-high-tech stuff specifically geared toward fighting the one unfriendly, potentially aggressive country that could actually take us on. That may not be the most expensive stuff (aircraft carriers, for example, may be worse than useless against China). But it's also not likely to be the kind of stuff we need for counterinsurgencies.

And we shouldn't let misleading graphs lull us into a false sense of security regarding the U.S.-China balance of power.