The Prospect of German and Japanese Rearmament

Recently considering the "rearmament" of Germany and Japan I argued that the two countries' governments' intentions of elevating their military spending might end up coming to little because of, apart from the limited nature of the announced plans (shooting for 2 percent of GDP, versus, for example, the 4 percent long the average of the far larger U.S.), their limited and declining shares of the world's economic-industrial output and populations (especially its military-age population); the extremely high cost of military capability; the limitations of their existing military establishments, which in Germany's case has numerous claims on additional funding ahead of any expansion of the forces; and the domestic obstacles in the way of additional militarization, extending beyond the outlay of money. The result is that the extra money being talked about might not end up changing things all that much (and that recognition of this may be one of the reasons why so much of the commentariat is so supportive, the anxieties seen in the '90s at such a course so absent).

However, it does seem to me there are two possible objections to all that, namely:

1. Calculations of GDP at market exchange rates between dollars and their currencies understate their economic weight because their currencies are undervalued; and

2. In Germany's case one may not just be talking about a change of course on the part of Germany the nation-state, but a bigger shift on the part of a larger German-led bloc.

In answer to the first objection there is the limited extent to which any undervaluation of their currencies makes a difference. Consider, for instance, the claim made a few years ago that the euro has been undervalued by as much as 20 percent in Germany's case. The result would be that the country's $3.8 trillion economy should be thought, perhaps, a $4.5 trillion economy--and that 2 percent of that difference going to defense would be an extra $15 billion a year. This would not be nothing--but it would not affect things very much at the level of the regional and global balance of power.

Of course, Japan's economy is larger, and so is the degree by which some (by no means the most extreme of the "Japan is doing far better than it lets on" crowd) hold the yen to be overvalued--a $5 trillion economy with a currency recently claimed to have been undervalued by as much as 40 percent. The implication is that one could think of it as really a $7 trillion+ economy--a difference that would be more consequential (with 2 percent of the difference coming to $40 billion+, far more than Japan is expected to spend on defense this coming year, and 2 percent of the total a hefty $140 billion+). Still, it would mean only so much in the increasingly high-cost international security arena of the "Indo-Pacific," especially given Japan's insular position and demographic limits (with the oldest population in the world outside Monaco, almost 1 in 3 of its people a senior citizen these days)--while this is, again, a goal toward which the government would like to work over the next five years rather than a settled matter.

In answer to the second objection it seems worth acknowledging the arguments some have made in regard to Germany's weight extending well beyond its borders. Not long ago Emmanuel Todd offered a picture of a "German economic space" over which Germany is essentially dominant in Central Europe (Austria, the Benelux countries, Czechia, even Switzerland and ex-Yugoslav Slovenia and Croatia) and, to a lesser extent, the Baltic region (Poland, Sweden, the ex-Soviet Baltic republics of Lithuania, Latvia and Estonia)--making the $4 trillion economy more like the economy of an $8 trillion bloc, which with the help of a deferential France was a basis for levering the $16 trillion bloc that is Europe in its desired direction (as the continent's "taskmaster" pursuing a "project . . . of power" in which it "enslave[s] the debt-ridden countries of the South . . . put[s] to work the Eastern Europeans," etc.). Even if one accepts the claim at face value, however, it is far from clear that Germany's economic influence over that larger space can be translated into military power to any meaningful (never mind comparable) degree--even the German-dominated "core" of this space, never mind the larger Union, which remains less than the sum of its considerable parts from the vantage point of military power.

The result is that in the end, important as the shift may be in symbolic terms--and unhappy as it is for what it says about the hopes of movement toward a less war-like world to which those countries' original post-war constitutions spoke, in however imperfect a manner--the judgment about the limits of the development seem to me to still stand.