Local opinion: United States vs China – the great trade (off)

An early economics lesson is Bastiat’s Broken Window Fallacy: What is seen, and what is unseen. What is seen is the visible activity created by spending. What is unseen is what society could have built instead. It’s a basic lesson in opportunity costs. A broken window creates work for the glazier. But society loses the alternative use of that money. The “unseen” cost is the forgone opportunity.

The Brown University Costs of War Project estimates that the total cost of post-9/11 wars for the United States — including Iraq, Afghanistan, Pakistan, Syria, homeland security increases, and veterans’ care obligations — has reached roughly $8 trillion. The wars were largely deficit-financed, meaning future taxpayers continue paying interest costs decades later.

The estimated cumulative U.S. total military spending since 2000 is between $14 trillion and $16 trillion, making the post-2000 era one of the largest sustained military spending periods in world history. China’s estimate is between $4 trillion and $5 trillion. While this is large, it is still dramatically below U.S. military expenditures over the same period.

During this same time period, it is estimated that China has likely invested between $20 trillion and $30 trillion in infrastructure and industrial modernization. The U.S. has continued infrastructure spending, but at a comparatively slower pace and often focused on maintenance rather than transformational expansion. China has created major advancements in transportation, energy, urban development, and digital infrastructure. Its massive metro systems, solar and wind manufacturing, deep-water ports and semiconductor initiatives have been significant.

What is seen in military spending is defense jobs, weapons production, military contracts and short-term GDP activity. What is not seen is what that same money could have funded. Potential equivalents would be nationwide high-speed rail, modernized electrical grids, universal broadband, advanced ports and freight systems, water infrastructure replacement, major scientific R&D, reduced national debt, and education and workforce investment.

What is occurring between the United States and China today is not merely a military rivalry but also a competition between two different models of national investment. Bastiat warned that societies often focus on what spending immediately creates while ignoring what alternative investments might have produced. The defining geopolitical question of the 21st century may be whether America spent too much breaking windows abroad while China spent more time building roads, railways, ports and power systems at home.