The Economics of Warfare

By Ganenthra Raravind

The progression of civilisation is hampered by violent outbreaks of warfare. Before discussing the economics of war, it is pertinent to establish a working definition of the concept. The ancient Roman philosopher Cicero defined war as a contention by force [1]Ideological differences, as well as disputes over territory and resources, are among the potential causes of war. Given current, increasing worldwide tension between nations and groups, it is crucial that we heed the words of President Eisenhower in his farewell address .“Every gun that is made,” Eisenhower told his listeners, “every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.”The focus of this article shall not be on the causes of war, but rather the monetary costs of war, with emphasis on the ongoing and past wars in Afghanistan and Iraq.

The terrorist attacks of 9/11, killing over 3,000 people on American soil, resulted in the American armed intervention in Afghanistan. The armed intervention in Afghanistan was justified as being necessary to capture Osama Bin Laden: the self-confessed perpetrator behind 9/11. Following the war in Afghanistan, the biggest cost of the national defence budget was the Iraq war . The rationale behind “Operation Enduring Freedom,” commonly known as the Iraq war as articulated by Bush and the top brass of Bush’s cabinet, was to prevent the Saddam regime from using weapons of mass destruction. Conforming to the Democratic Peace Theory, another well-known explanation behind the Iraqi war was to usher in democracy in Iraq with hopes that democracy would spill over to other nations in the Middle East, resulting in greater stability within the region. Has stability been achieved in the Middle East? The answer from all sides would be a resounding no; the rise of Non-State actors such as ISIS/ISIL attests to this fact.

Every hour, taxpayers in the United States are paying an astounding $4 million for the war in Afghanistan . Following the Government shutdown of 2013, the Centre for Strategic and Budgetary Assessment estimated that for every U.S. troop serving in Afghanistan, it costs taxpayers a shattering $2.1 million . More than a decade later, the tally of both the wars in Afghanistan and Iraq stands at a conservative estimate of $4 to $6 trillion, including interest[2][3]s accrued from borrowing, and taking into account from the costs involved to look after all the wounded veterans involved in both wars . The biggest ongoing expense would be the medical care and disability benefits accrued for veterans of both conflicts. According to the Watson Institute for International Studies at Brown University, future obligations to Veterans through 2054 would cost an astounding $1 trillion dollars .

Nobel Prize winning economist Joseph Stiglitz, in a 2006 study, concluded that the Iraqi war alone would cost anywhere from a conservative estimate of $1 trillion to a moderate estimate of $2 trillion if all troops had been pulled out of Iraq by 2010 . In actuality, the US military forces completed their withdrawal from Iraq Dec. 18, 2011, ahead of the U.S.[6]–Iraq Status of Forces Agreement, which expired at midnight on Dec. 31 of that same year, thus exceeding Stiglitz’s estimate. It should be pointed out, however, that the figures presented by Stiglitz omit other defence and destruction costs associated with the Iraqi war. The costs associated with the war on terror in Afghanistan continues to mount as a projected 9,800 troops will be stationed in Afghanistan in four locations: Kabul, Bagram, Jalalabad, and Kandahar as a result of a shift in foreign policy.

It is often claimed that the United States is has a war economy and as such wars and military spending are good for the economy; nevertheless, most models show that military spending diverts resources from productive uses like investment in other areas of the economy, such as education and infrastructure repair, thus slowing economic growth and worsening unemployment rates. The Iraq war provided little stimulus to the US economy – as pointed out once again by Stiglitz. This is in stark contrast to the Second World War, which capitalised on the total mobilisation of resources and increased government spending within the United States, resulting in low unemployment. The Iraq war involved heavy government spending. Yet, most of the spending was diverted towards a single commodity, namely oil. The volatility of the oil prices was primarily responsible for the enormous cost of the Iraqi War with very little contribution to the growth of the US economy. When the United States invaded Iraq in 2003, the price of a barrel of crude oil was $25. Due to instabilities created in the Middle East as a result of the war, the price of crude oil shot up to $140 a barrel in 2008[7]

Is America a great nation? To those who have found solitude in this wonderful place we call home, it undoubtedly is. To the many that gaze at its glory from lands far away, America truly is a beacon of hope. It is the duty of my generation to ensure that our future, and that of generations to come, is not one filled with anguish and misery. “A nation that continues year after year to spend more money on military defence than on programs of social uplift is approaching spiritual doom,” said Martin Luther King Jr. The nation we have come to love and admire is slowly moving away from the ideals it was founded upon. Security is of utmost importance; nonetheless, so is education and healthcare – both of which are in dire need of funding. Curtailing our spending on arms and the industrial-military complex, while investing in education and other social programs, could very well make America prosperous once again and that shall be the focus of second my article.