Budget cuts to the Pentagon

After consistently growing since 1998, the US military budget for 2013 will be about one percent smaller--about $525 billion. This is significant in that the military has been receiving large budget increases after the 9/11 attacks. The proposed budget involves cutting the size of the Army and Marines (though they will still be bigger than they were before US involvement in Afganistan and Iraq), reducing the amount of Air Force tactical squadrons, the Navy retiring seven old cruisers earlier than expected and cutting back production on other ships, and spending more on unmanned vehicles and Special Operations forces.

Still, the military budget cuts have been called a "rounding error" compared to total government spending. There will need to be further cuts as the Pentagon is trying to cut projected spending by $487 billion. The cuts can possibly be expanded by $600 billion depending on how things work out between the White House and Congress.

A defense analyst Thomas Donnelly said regarding relations between the President and Congress, "Either it will get worse for the Department of Defense if Obama gets reelected or Newt Gingrich gets elected, or it will get better for the Pentagon if Mitt Romney gets elected."

Defense Secretary Panetta said he will ask Congress to reduce retirement benefits and pay increases. President Obama has asked for less money to fund the military actions in the Middle East this year as the Iraq War closes.

I think that these budget cuts are a step in the right direction. The large budget of the US military is a vestige of the Cold War, and it is no longer necessary to be responsible for 45% of the world's military spending. As the US finally pulls out of Iraq, there are less excuses to keep spending up (unless the government comes up with evidence/"evidence" to get involved in other countries or the South China Sea). What are your ideas on this matter, AP folks?

India's newest class=the spending gurus

What is money if we don't spend it? This question does not seem to pose a problem for India's newest economic class of nouveau riche farmers. Many of these farmers have found themselves suddenly rich by selling their land and reaping the benefits.

It is not these new pockets of wealth that are of interest, however; it's what these newly rich farmers decide to do with their money. For many, the influx of cash translates to "Spend Big, and Spend Now." The attached picture illustrates this: the newly rich Yadav family has decided to marry off their son by flying him in a helicopter to his bride's hometown. Although this impulsive consumption could be blamed on poor education and financial planning, as well as the allure of cold hard cash, sociologists say that much of it is due to the desire of lower casts to "show off their social mobility, partly by emulating the practices of the upper classes."

In India, a country with a strict caste system, social mobility is considered a rarity and a well-earned privilege. Everyone wants to be better than their neighbors, and the more material wealth you show off, the richer you are perceived to be. In fact, many of these farmers are truly rich by Western standards. But we're seeing the same effect here as was demonstrated by the Harvard students economics study - it doesn't matter how much money you have; it just matters how much you have in comparison to everyone else.