A Peace Dividend for the US Economy

As the cold war winds down questions arise: How much should the defense budget be cut, and what should be done with the money freed? What will be the effect of such cuts on an economy in which the share of manufacturing devoted to the military increased significantly in the 1980s?

One view is that of the conservative economist Herbert Stein, of the American Enterprise Institute, who argues against cuts in defense programs “until the size, durability and significance of the change...