Why the $600B U.S.-Saudi Deal Is Questionable Economics - Econ Lessons

[TexasTowelie]

As an Economist (Mark Biernat), I promote transparency, free markets, and democracy; I do not see the benefits of the just-announced US-Saudi economic deal. The new US–Saudi $600 billion deal might sound impressive, but it contradicts basic economic principles, especially those of Austrian economics. Instead of reflecting free markets and voluntary exchange, this agreement is a top-down, state-engineered package of arms sales, fossil fuel investments, and tech deals with a known autocracy.

An Austrian economist would call this malinvestment: capital is allocated politically, not based on real consumer demand or entrepreneurial insight. The massive arms deal distorts defense markets. The tech transfers—especially involving AI and chip infrastructure—risk leaking to geopolitical adversaries like Moscow, especially given Saudi Arabia’s ties with Russia and China.

This is not a partnership based on liberty or market freedom. It ties the U.S. closer to an authoritarian regime, promotes fossil fuel dependency, and risks American tech supremacy in the name of short-term strategic gain. Economic, ethical, and security-related long—run costs are likely far higher than advertised.

Bottom line is:
*Violates Austrian Economics principles of decentralized market action and spontaneous order.
*Promotes malinvestment by directing billions through political channels.
*Distorts markets in weapons and AI with no consumer accountability.
*Strengthens fossil fuel dependency instead of promoting innovation.
*Strengthens an autocracy rather than fostering free-market allies.
*High risk of advanced technology leaking to Moscow and Beijing.

Let's make the world a better place by promoting the morally high ground in our geopolitical and economic relationships.