In 1953, President Eisenhower made a speech that included the following about U.
ID: 1141968 • Letter: I
Question
In 1953, President Eisenhower made a speech that included the following about U.S. military spending:
“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.
This world in arms is not spending money alone.
It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.
The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities.
It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals.
It is some fifty miles of concrete pavement.
We pay for a single fighter plane with a half million bushels of wheat.
We pay for a single destroyer with new homes that could have housed more than 8,000 people.”
Please explain the basic economic concept that President Eisenhower invoked here. In your answer provide parts of this quote to support your answer. Also, in your answer, explain what Eisenhower meant by saying that the “world of arms is not spending money alone”.
Explanation / Answer
President Eisenhower is referring to the concept of opportunity cost. Opportunity cost is the value of an alternative action that is foregone.
The cost of one modern heavy bomber is a modern brick school in more than 30 cities, two electric power plants, two fully-equipped hospitals and fifty miles of concrete pavement.
The opportunity cost of a single fighter plane is half million bushels of wheat and new homes that could have housed more than 8,000 people.
“World of arms is not spending money alone” means that one person cannot be made better off without the loss of another person. The concept is Pareto Optimality.