S9 Ep29: Guns and Butter

About this episode

The episode discusses the implications of NATO's rearmament on social spending and taxation, drawing on historical data.

Europe's NATO members have pledged 3.5% of GDP to rearmament. The political argument is already about which social programmes will be sacrificed to pay for this, when the government chooses guns instead of butter. What does history tell us about what politicians will do? Christoph Trebesch and Johannes Marzian spent four years assembling the Global Budget Database: 150 years of primary government budget documents from 20 countries, with 116 identified military spending booms in peace and war. They find that governments almost never cut social spending when they rearm; they expand both military and welfare budgets simultaneously. The bill arrives later, as higher taxes. Top income rates typically rise by 10 to 15 percentage points in the decade following a military boom, funded mainly through broad-based income and value-added taxes. With rearmament underway, will history repeat itself? The research behind this episode: Marzian, Johannes, and Christoph Trebesch. 2026. "Guns and Butter: The Fiscal Consequences of Rearmament and War." CEPR Discussion Paper 21193. [Gated] To cite this episode: Phillips, Tim, and Christoph Trebesch. 2026. "Guns and Butter." VoxTalks Economics…

People in this episode

Host: Tim Phillips

Guests: Christoph Trebesch, Johannes Marzian

Topics covered

• military spending
• social programs
• government budgets
• rearmament
• taxation
• historical analysis

Keywords

• NATO
• rearmament
• military spending
• social programs
• government budgets
• tax increases
• historical data

Mentioned in this episode

Organizations: Kiel Institute for the World Economy, Kiel University

Books & works: Guns and Butter: The Fiscal Consequences of Rearmament and War, Guns and Butter

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