Shomron Center for Economic Policy Research

In Search for an efficient Institutions

How Butter Beats the Guns


How citizen, which is fed by Governmental butter loses guns protection: “How Butter Beats the Guns?” (November 12, 2014) by Yanovskiy, Moshe, Syunyaev, Georgiy and Zatcovetsky, Ilia,. Available at SSRN:

The correlation of state spending on pure and mixed public goods reflects the making of fundamental choices about state functions. Are pure public good “defense” normal quality provision compatible in Long Run with heavy spending on social sector (i.e. compatible with mixed public goods provision)?

The main hypotheses tested: elected politicians and bureaucrats’ have strong incentives to choose wrong strategies in foreign and military policies if the state extends its responsibility far from the pure public goods provision limits. The case study (Protocol 1, June 8, 1977, to the Geneva Convention of 1949) shows, how “punishment for military success” strategy undermines incentives of army officers, making the military machine virtually inoperative. Artificially abridged Army capability provides the argument for the notion “war is no solution”. The set of the governments credibly ready to obey ratified Convention, are clearly segmented on two subsets. The 1st one includes the Governments bearing military responsibilities, military umbrella-givers, which abstained to impose all Protocol caused risks on the army officers (non-ratified – USA, Israel; or ratified with strong reservations – UK, France, Germany) and the rest democratic countries – which are military umbrella-takers, ratified the Protocol without significant reservations.

Statistical analysis of Great Powers military spending historical trends used to test the main hypothesis. For the bureaucrats and for Leftists  better to spend more money for butter to buy political support than “to waste” budget money for defense. Preliminary statistical analysis fails to reject it. We believe bureaucratic competition for staff /for budget share  and Universal suffrage (Lefts electoral successes) caused wrong incentives  and provide satisfactory explanation of this phenomena of intentionally wrong strategy choice in Security and Defense.

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