Microeconomic Policy
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Microeconomic Policy

A New Perspective

Clem Tisdell and Keith Hartley

This thoroughly accessible textbook shows students how microeconomic theory can be used and applied to major issues of public policy. In this way, it will improve their understanding of both microeconomic theory and policy and also develop their ability to critically assess them. Clem Tisdell and Keith Hartley have expanded upon their previous successful work on microeconomics. As a result, this new book is considerably updated with substantial chapter revisions, as well as new chapters dealing with business management, ownership, environmental issues, public choice, defence, conflict and terrorism.
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Chapter 17: Defence, Disarmament and Conflict

Clem Tisdell and Keith Hartley

Extract

17. 17.1 Defence, disarmament and conflict INTRODUCTION: THE SCOPE OF DEFENCE ECONOMICS Defence economics is relatively new. One of the first specialist contributions in the field was by Hitch and McKean, The Economics of Defense in the Nuclear Age (1960). This book applied basic economic principles of scarcity and choice to national security. It focused on the resources available for defence and the efficiency with which such resources were used by the military. Like all economic problems, choices cannot be avoided. Scarce resources allocated to defence means that these resources are not available for alternative uses such as social welfare spending (for example, missiles versus education and health trade-offs). But further choices are needed. Within a limited defence budget, resources have to be allocated between equipment and personnel, between nuclear and conventional forces and between air, land and sea forces. Military commanders have to use their limited resources efficiently, combining their inputs of arms, personnel and bases to ‘produce’ security and protection. Within such a military production function, there are opportunities for substitution. For example, capital (weapons) have replaced military personnel, and nuclear forces have replaced large standing armies. Defence economics is about the application of economic theory to defence-related issues. Of course, the standard trade-off analysis and the need for choices assumes that an economy’s resources are fully and efficiently employed. Where there is involuntary unemployment (for example, the Depression years of the 1930s) there may be no or little immediate economic trade-off. Hitler’s...

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