America, Cynical Arms Dealer? – Part I

[The two posts that follow were initially part of a single reply I made to a reader who made this charge in response to one of last week’s posts.]

A few times in my comments section I’ve seen the sentiment expressed that making money is America’s sole motivation in selling weapons to Taiwan.  It’s kind of a Marxian argument, but never mind.  For in this post, I’ll attempt to disabuse the reader of the notion entirely.

Let me assure you, if America’s sole interest was simply to make money, it wouldn’t bother trying to sell Taiwan weapons at all.  Better instead to sell an equivalent dollar value of products from some American sunset industry, like textiles or tobacco.  That way, America would earn exactly the same thing, profit-wise, while the administration in charge would go on to reap a windfall of votes from older workers, grateful that their jobs had just been spared.*

The kicker to this is that an America that contented itself with only selling textiles or tobacco to Taiwan would need never fear economic retaliation from China.  Because as far as profits from weapons sales go, what the Taiwanese hand giveth, the Chinese hand threatens to taketh away.  Selling weapons to Taiwan is bad business.

Don’t believe me?  If an industry is profitable, what does elementary micro-economics predict?  Market entry.  At which point, I humbly point out that there aren’t a lot of countries clamoring to get a piece of the "profitable" Taiwanese arms market.  Quite the contrary, in fact.  The number of countries willing to sell military equipment to Taiwan has dwindled to a grand total of one.  Which is precisely the sort of response one would expect from suppliers involved in an unprofitable industry.

At some point in this argument, you might object that Taiwan is offered weapons because it just wouldn’t be interested in buying American textiles or tobacco.  Taiwan would find the COST of these things exceeded their VALUE (relative of course, to cheaper foreign alternatives), and would instantly reject them.  But apply that argument to defensive arms, and we suddenly notice a curious thing.

What we notice is that the executive branch of Taiwan’s government DOES believe the value of American arms outweighs its costs.  It behooves us then, to explore the reasons why.

[Part II of the reply can be found here.]

* This oversimplifies the situation somewhat, because it doesn’t take into account the wrath of defense industry workers who’ve lost out by the policy.  The key here is to remember that workers in sunset industries tend to be older (making them less easy to retrain) and more tied to their locale (owning homes in areas where it might be problematic to find a buyer).  Comparatively speaking then, workers in sunset industries are likely to feel a greater sense of relief and gratitude when their jobs are saved than those working in defense industries.