1. Canada’s Military Policy:
Time to Chart a New Course?
Nick Smith

2. An Era of Unprecedented Spending
-Canada spent approximately $23 billion on its military in the 2010-2011 fiscal
year, higher than the budget has ever been since WWII
-Spending is 18% above its peak during the Cold War (FY 1952-53) and 61%
higher than its post Cold War low of (FY 1998-99)
-Canada now has the 13th largest military budget in the world: of the 12
countries outspending us, 11 have considerably higher populations and 10
have considerably higher GDPs (exceptions are South Korea and Saudi
Arabia)
-Maintaining a military presence in Afghanistan until March 2014 will cost an
additional $1.5-2 billion in the coming years, assuming no further
extensions or unexpected costs

3. -The Harper administration’s Canada
First Defense Strategy plans to increase
the baseline military budget (not
including operational costs such as the
Afghanistan mission) to $31 billion by
2027
-The cost of the controversial F-35
stealth fighter jet procurement is
estimated to be between $14 – $29.5
billion
-Despite this massive spending, our
contributions to UN peacekeeping
missions have dwindled from providing
10% of all peacekeeping troops during Source: “Canadian Military Spending 2010-11”
the Cold War to contributing only 0.07%
of total troops (56 of 88,885)

4. Source: “Canadian Military Spending 2010-11”

5. Should combating terrorism be a
Canadian Military priority?
-Public opinion surveys indicate that most Canadians feel they are at a low
risk of being the victim of a terrorist attack and do not often worry about
terrorism in Canada (Lemyre et al, 2006)
-Since the Air India bombing of 1985, there have been 3 terrorism fatalities in
Canada.
-In contrast, there have been 158 Canadian casualties in the Afghanistan War
since 2002
-Canada is considered one of the western countries at lowest risk for terrorist
attacks

6. Military Intervention vs Foreign Aid
-A study by Jean-Paul Azam and Veronique Thelen (2010) found that Western
democracies may be able to more effectively combat terrorism by
contributing higher levels of foreign aid than by using military intervention
-Despite the fact that terrorists are predominantly from relatively educated
and financially secure families, foreign aid (especially that earmarked for
education) seems to be an effective way of encouraging the recipient
governments to strengthen their own counterterrorism measures
-Terrorism actually tends to increase when US military intervention takes
place in close proximity to oil-exporting countries

7. The Economic Benefits of Lower
Military Spending
-In the short term, military spending boosts aggregate demand and increases
capacity utilization (economic output as a % of output capacity)
-However, long term increases in military spending have a negative effect on
capacity output
-Resources being used to fuel the war effort are drawn from tax dollars and
tend to decrease both public and private investment in productive fixed
capital

8. -higher taxes to finance military spending increases deadweight loss in
domestic production
-borrowing from banks to finance military spending can contribute to inflation
-R&D becomes more concentrated on military innovations rather than
technological advances in economically productive areas or technologies
which improve the health and well-being of Canadians
-policies built around supporting military innitiatives are generally
detrimental to efficient resource allocation (trade restrictions, preferences
for certain firms and industries, etc)
-there is potential for rent-seeking activities to grow around the military
industrial complex due to the often non-competitive allocation of
resources

9. -According to simulations performed
by Knight et al (1996), long term
economic benefits of military
spending decreases will be highly
pronounced for countries which
spend a large portion of their GDP
on defense
-In the middle east and eastern Europe,
a drop in spending from Cold War
levels (10 & 12% of GDP,
respectively) to western levels of
2% will increase total productive
capacity by over 30% over 50 years

10. The Swiss Militia: A Viable Model
for Canada?
-Switzerland’s armed forces consist of only 5% professional soldiers, with the
rest being citizen conscripts
-All 18 year old able-bodied Swiss men must either serve for one year in
active military service (after which time they serve in a reserve capacity
for 10 years), civilian service (social services such as reconstructing
cultural sites, helping the elderly, development assistance abroad, etc), or
pay an additional 3% income tax until age 30
-Switzerland’s military budget is equivalent to $3.6 Billion, less than 1/6th of
Canada’s
-Despite this, Switzerland’s standing army is nearly double the size of
Canada’s (212,000 vs 115,000)

11. Advantages of a Militia
-much lower cost-to-personnel ratio
-imposes natural limits on military spending and interventionism by future
administrations
-a smaller air force and fewer armored divisions would have minimal impact
on peacekeeping operations
-the US-Vietnamese and the Soviet-Afghan wars and new theory on
deterrence strategy provide evidence that guerrilla warfare can often
nullify the advantage of a numerically and technologically superior army

12. National Defense Game
Canada
Professional
Militia
Army
Declares 0 0
War
Hostile 12 8
Power
Maintains 10 12
Peace
10 10

13. Preliminary Recommendations
-Being as fortunate as we are to live in such a safe and secure region of the
world, our military spending is becoming excessive
-Adopting a Militia style armed forces (or at least reducing our spending on
offensive weaponry such as jet fighters, bombers, artillery and tanks)
could save Canadian taxpayers between $5 billion and $20 billion per year
excluding savings on Afghanistan and new equipment
-Reorienting our priorities away from the war on terror and back towards
peacekeeping will save Canadian lives and may even improve our
international reputation
-Militias are a powerful deterrent against military aggression, even when a
conventional war could not be won