However, beyond extreme data points like Israel, the reality is that the countries that are best at innovating, do not have MIFD complexes, but rather good education systems, progressive incentive structures and state support (rather than control). Indeed, Israel is cited as a case by Mariana Mazzucato in her thesis that states have a key role to play in driving innovation. A great many of its leading technology firms have been developed as follow throughs from its soldiers and some of its battlefield technologies (Iron Dome, and its drone and robotic battlefield programs) have spawned successful commercial applications and reflect a thriving public-private innovation partnership. Israel, somewhat controversially I should say, proves this point. My final thought is on innovation, where despite inefficiencies in the way military procurement is handled, the underappreciated side of military related spending is innovation. Brian Deese, President Biden’s National Economic Council adviser is already pointing towards developing strategic industries such as semiconductors and telecoms, but the risk is that this strategy becomes skewed by the geopolitical side of the debate rather than the necessarily important focus on productivity.

The risk also is that the increasingly fashionable idea of industrial strategy in the US (again another example of America becoming more like France) becomes led by the MIF’D. The risk here, and as with the comparison of military and COVID-health spending, is that there is a great, ultimately value destroying wave of investment spending in cloud computing, cyber and data security and drone technology. In the past, warring states have pushed themselves to the brink of bankruptcy – the Napoleonic Wars, the gigantic expense of the German and British navies in the 1910’s and nuclear weapons spending in the cold War. One is whether the geopolitical contest between the US and China will skew government spending, and the other relates to the combination of military research and innovation. To give the military a break, all this raises two finance related questions. Bush’s economic advisers Larry Lindsay, effectively lost his job for estimating the cost of the Iraq War at between USD 100-200bn (it was multiples of this). In the USA at least, military spending is vast, and often wasteful. They should also alert us to the fact that the military-industrial-financial-data complex (MIFD) will be an expensive affair. His words ring true today, more so in the light of data and cyber security. We must never let the weight of this combination endanger our liberties or democratic process’. The potential for the disastrous rise of misplaced power exists and will persist. This reminds me of the comment of another President Ike Eisenhower, one of only three Presidents to hold a high military rank (after Washington and Grant) who warned ‘ we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military–industrial complex.

As a result, the broad topic of security will be all encompassing – stock markets and cloud computing are just two elements that will be drawn into this vortex.

Western finance on military dr