Defense budget: still a necessary effort, by Nicolas Bouzou

For three years, our economies have become the adjustment variables of tragedy. After the finally blessed time of liberal globalization, here we are in a war economy: war against a virus first, then war against the Russian threat (threat against France perhaps, against the international order for sure), all this against a background of deleterious global warming. As such, our debate on pensions is anachronistic. The crucial question for the country is not whether we can take full retirement at 62, 63 or 64, but whether we are collectively able to play a role in a world where geopolitical violence is shaking us. in all directions.

A country unable to make a benign pension reform to balance its system and increase the employment of 55-65 year olds while war threatens to spread on our soil is doomed to become insignificant. Because the laws of the economy (which are nothing other than laws of the organization of humans in society) are implacable: to invest more in low-carbon energy, in health, in education, in our security, we have no choice but to produce more wealth: work more and better, be smarter, invest more. This is the roadmap consistent with our hostile environment. If we don’t, out of defeatism, cowardice or pacifism, we are putting our country in danger.

The military programming law (LPM) 2024-2030 fits into this context. The President of the Republic announced that, during this period, France will put 400 billion euros on the table. It’s colossal. The previous LPM had planned to consume 295 billion euros. It is so far perfectly done. Our defense budget will thus have doubled between 2017 and 2030 to bring us to the 2% of GDP requested by NATO from its members. This effort is necessary. Certainly, France will never be in the situation of Ukraine. We have nuclear deterrence, and we are members of the European Union and NATO. Quite simply, the return to high-intensity warfare close to home and the Russian threat oblige us to remain at the forefront in nuclear matters, to strengthen our means of defense under the sea, on land and in the air, to invest more in the intelligence and cyber defense and, overall, to strengthen our intervention capabilities (the issue of ammunition becoming absolutely key in this respect).

The economic impacts of our military downsizing

This resizing of the military question will have at least two economic impacts. The first on the line. The French defense sector is large and efficient. This industry is capable of providing our country with almost everything it needs in the military field. For once, the State plays a positive role of planner and purchaser. Investments are the subject of reliable projections over time (ah if our civil nuclear sector had been piloted in this way!) and the ministry and companies in the sector work well together. This organization allows France to be the world’s third largest exporter of defense equipment. It is not neutral from a macroeconomic point of view. The Israeli and American examples show that military research and development generates positive externalities on innovation throughout the industrial sector. Many of the technologies present in our smartphones come indirectly from military research programs. That military spending has profound impacts on civilian life can be a motivation to bring young people into defence. Indeed, the sector will have to grow, while the labor market is tight. Attracting talent there is a strategic issue for the country.

The second economic impact is financial, and some opponents of the pension reform have clearly underlined an apparent paradox: it would be necessary to find 12 billion euros per year for pensions to avoid a drift in the system, and the President announced at the same time a expenditure of 400 billion over six years; therefore there is money. Yes but no. Already, there is no reason to go into debt to finance a pension deficit, while it is legitimate to go into debt to upgrade our defense. Then, it is because the context forces us to spend a lot in certain areas that we have to save money elsewhere. Public spending everywhere and for everyone is over.