Tuesday, July 20, 2010

As I read the Washington Post "Top Secret America" series...

...I can't help but wonder how much deadweight loss this is all creating. The theatrics one encounters in airports also seems like it creates frictions that must have an impact on the economy--the ability to travel freely matters to economic productivity, and we travel less freely than we did ten years ago.

Fans of Ronald Reagan maintain that he got the Soviets to destroy themselves by making them spend so much on their defense (I think containment might have also had something to do with it). While as a fraction of GDP, our defense, security and intelligence spending is much smaller than the Soviet defense apparatus, the "invisible" impact of this stuff on the economy must be material. I some days wonder if we are doing exactly what Osama bin Laden wants us to do.