The Economic Implications of Nuclear Weapons

This project was completed in August 1998 and resulted in the book Atomic Audit: The Costs and Consequences of U.S. Nuclear Weapons Since 1940 edited by Stephen I. Schwartz. These project pages are only occassionally updated and should be considered historical.

The Hidden Costs of Our Nuclear Arsenal

“The Economic Implications of Nuclear Weapons” by William J. Weida—June 30, 1998


William J. Weida is a professor of economics at The Colorado College in Colorado Springs, Colorado, and project director with the New York-based Global Resource Action Center for the Environment. Dr. Weida has taught at The Colorado College since 1985, serving as co-chair of the Economics and Business Department from August 1985 through May 1990, and as chair from June 1990 through June 1993. From March 1982 through July 1985, he worked at the Pentagon in the Economic Policy and Analysis Division under the Assistant Secretary of Defense for International Security Affairs, first as Assistant Director (1982-84) and then as Director (1984-85).

While at the Pentagon, Dr. Weida formulated Department of Defense policy on international economic and energy issues, including security assistance, burdensharing, sanctions and economic warfare trade restrictions, energy and defense trade. During 1983, he also served on a Blue Ribbon Commission on Security and Economic Assistance. Dr. Weida served as an officer and pilot in the U.S. Air Force from June 1965, through January 1971. He taught at the U.S. Air Force Academy from 1970-72 and again from 1975-1982, when he also managed over 40 research projects. From June 1981 through March 1982, he served as Professor and Acting Head of the Academy’s Department of Economics, responsible for curricula, pedagogy, budget and administration of faculty. He also taught courses in macro- and micro economics, statistics and econometrics. His research and articles have appeared in

International Journal of Social Economics and The Journal of Technology Transfer. His books includePaying for Weapons: The Politics and Economics of Offsets and Countertrade (1986); The Political Economy of National Defense (with Dr. Frank L. Gertcher, 1986); Beyond Deterrence: The Political Economy of Nuclear Weapons (with Dr. Frank L. Gertcher, 1990); and Regaining Security: A Guide to the Costs of Disposing of Plutonium and Highly-Enriched Uranium (1997). Dr. Weida holds a B.S. in Engineering from the U.S. Air Force Academy, an M.B.A. in Management Theory from the University of California at Los Angeles and a D.B.A. in Econometrics and Operations Research from the University of Colorado.

Thanks Steve. I have been asked to briefly describe the national economic effects of what occurred in this program, and while Steve is correct, we have not tried to get an overall total gross amount of excessive spending that was devoted to this among programs it is more like the definition of pornography, and that is we can kind of recognize it when we see it. So based on that, let’s take a look at the national context in which this occurred.

The spending that is described in this book occurred during a period when the United States was facing increasing resistance on the part of taxpayers to fund both social and defense type programs and when the U.S. was running a deficit in many years to cover what were regarded as the essential functions of government. The amount of spending was huge by anyone’s measure. Again this is the third most expensive program that this nation undertook during the last 50 years. Now one could say, well so what, we won, so who cares? But that kind of misses the economic point that the excessive spending devoted to nuclear weapons is a sunk cost that is lost forever. That means, that the American people were never given the opportunity to, for example, with the B-2, decide whether they would prefer $100 million of extra spending for schools in 20 additional American cities or one B-2 bomber.

Now there were a number of strategies we could have pursued. Each one carried with it the types of opportunity costs that the B-2 bomber I just cited, illustrate. Unfortunately an open discussion of these costs were precluded by, first of all, the lack of information that accompanied the Cold War environment and the secrecy that was attendant to that; the common misconception that nuclear weapons were cheaper, and, hence, needed no further rationale; the fact that weapons were so complicated in the nuclear arena; and that deterrence was such an esoteric concept that Congress was forced to rely on the advice of the very individuals who stood to profit if the programs were funded. Independent reviews such as this one were inordinately difficult to perform. And, finally, this massive level of spending was very narrowly focused on a few production sites around the United States and this made nuclear weapons spending ideal for pork-barrel projects.

Now, in this town there is no need to remind anyone that the pork-barrel project is an historical anomaly in the United States which is as old as the country itself. It is important to remember, however, that most pork-barrel projects, prior to World War II, were infrastructure-based and when they were built they left behind them the type of materials, the type of infrastructure, the type of facilities, which increase the economic viability of the region.

After World War II, Department of Defense programs, and, specifically, nuclear programs, became the vehicle choice for delivering pork-barrel funds to various regions. Now we couldn’t measure the benefit of deterrence very clearly, but we could sure measure the benefit to each region in terms of local economies and jobs. And because the nuclear funds were so closely focused, the tie between the regional economic benefits and the nuclear weapons created an inertia which made it extremely difficult to curtail nuke weapons programs after their useful life had expired. This has to be added to the fact that the type of spending which occurs for defense projects in general, and in this case nuclear weapons projects, not only provides not the infrastructure and facilities, but also has a lower multiplier and provides less economic activity for the United States in general.

Does this mean that one should not spend for any nuke weapons? No, but it does mean that if you are going to spend for nuclear forces you should not spend more than is absolutely necessary for security reasons because the opportunity costs of a national decision cannot be evaluated within a regional framework.

Now, have we, as a nation, learned anything about this type of spending, having engaged in it for the last 50 years? It is not apparent that we have. As Steve cited, this book can be used as an historical tract, but it can also be viewed as a very real example of what is going on at the current time. For example, in the last presidential election we decided to build another B-2 bomber specifically to enhance employment in the Los Angeles area. The Air Force itself did not request that bomber. There was no other requirement for it other than regional economic stimulation. The current sub-critical nuclear tests are advertised by the Department of Energy to cost from $15 to $20 million a shot. An independent study this month, by the Los Alamos Study Group, shows that these tests are more reasonably priced at $45 to $95 million apiece.

The Science-Based Stockpile Stewardship program, now simply called Stockpile Stewardship, at $4.5 billion a year, is larded with huge amounts of money which appear only to be spent for the purpose of maintaining the employment levels at the national laboratories. A conservative estimate would be, that we could maintain appropriate levels of Stockpile Stewardship with half, or less, of the $4.5 billion that is proposed and, if you take a look at this stockpile stewardship budget for 1999, you find that direct stockpile stewardship, which is what this program has been sold to Congress on, comprises only 13 percent of the stockpile stewardship budget.

Defense economists have long recognized that our true national strength is based, in large part, on the flexibility and diversity of our economy. These attributes depend on levels of accountability in the programs to which national funds are allocated. Unless strict accountability is maintained, the evaluation of regional economic trade-offs is absolutely impossible. For classification and political reasons, spending for nuclear weapons has not had enough public scrutiny and it cannot be fairly compared with other national spending. As a result, the levels of accountability demanded of most government programs have been largely absent from nuclear weapons programs.

The results have been predictable. The allocation of resources to nuclear weapons has often had no discernible relationship to the levels of threat these weapons were supposed to counter and the costs of deterrence have been considerably and unnecessarily increased. It is important for the economic strength of the United States that these types of excessive spending be avoided in the future.

Thank you.

Note: The views expressed in this piece are those of the author and should not be attributed to the staff, officers or trustees of the Brookings Institution.

Copyright © 1998 The Brookings Institution