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Aboulafia's Index

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Obscure Economic Indicator: The Guns-to-Caviar IndexGood news! It's going down.

By Daniel Gross

Posted Thursday, Dec. 14, 2006, at 2:26 PM ET

Reading the news, it's easy to get the sense that the world is at war: strife in Afghanistan, chaos in Iraq, genocide in Darfur, upheaval in Lebanon, and a variety of insurgencies and border squabbles around the globe. Reading the news, it's also easy to get the sense that the world is in the midst of a golden age of peaceful prosperity. Each year, tens of millions of Indians and Chinese join the middle class. Latin America and South America, previously dominated by authoritarian regimes and civil wars, are now generally democratic and enjoying steady growth.

So, which is it? Is the world more peaceful or more warlike? Since Americans are doing the lion's share of the fighting and military policing, it's difficult for us to answer the question objectively. Fortunately, there is an unbiased global economic indicator that sheds some light on the question: the Guns-to-Caviar Index.

The index is the brainchild of Richard Aboulafia, an analyst at the Teal Group. For the last 17 years, Aboulafia has been charting a relatively simple relationship: how much money the world spends on fighter jets (guns) versus how much money the world spends on private business jets (caviar).

The index measures the ratio between the resources spent by governments arming themselves and the resources spent by really rich private individuals making themselves more comfortable. It measures the relative levels of anxiety among large governments and elation among the global economic elite. When countries are at war, or when they're girding for it, they spend money on the great desideratum of military officials

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