Economics Of War, 2024 Edition

“Well, it seems to me, sir, that God made me a fine instrument of warfare.” – Saving Private Ryan

I guess that there’s no thyme to tell all his stories.

War is one of the natural states of humanity.  Although we don’t have records back before when Grug was living in Switzerland before hot cocoa was invented, we do have Ötzi, a guy who died about 5,300 years ago.

What we can tell about Ötzi is that, first, he’s dead.  Secondly, we can tell that he was almost certainly murdered.  By who?  Don’t know, but it’s a pretty good bet that they guy who inflicted the wound died, too.  Unless he was killed by Keith Richards, who we should probably put on a space ship because only he could live long enough to travel to another star.

Why would I say that the murderer was dead (unless it was Keith Richards)?  The Yanomami people of the jungles of South America are as close as we have to “pre-civilization” people, and they killed themselves in at an astonishing rate.  About half of their men died in combat until fairly recently.

Do your part to keep him immortal.

The economics of the Yanomami violence are pretty simple – a bow, an arrow, a stone knife, and an enemy.  Heck, they don’t even have money, so I have no idea how they can get a rental car.

In one sense, we are the opposite of the Yanomami and Ötzi.  We have been fortunate enough to live in the Good Times, when the horror of nuclear weapons has thus far lowered the percentage of combat deaths since 1945 to what I think could be a historic low.  Why?

War is like football.  Everyone comes out of the huddle, and then lines up.  What the team on the offense is going to do?  Who knows.  It’s the job of the defense to respond and stop them, though using snipers is considered to be unsportsmanlike.  Creating surprise is now pretty difficult, especially surprise on a large scale.

My buddy said he made a voodoo doll of me.  I think he’s pulling my leg.

Let’s look at the Ukraine Conflict.

It started out as a grand, strategic move like a great World War II battle with tanks and bombs and planes.  That did surprise the West (me included) because it seemed so out of place given the safe world we live in – as /pol/ would say:  “nothing ever happens”.  The initial gains of the Russians were large, but by the time the Ukrainians got their feet under them, the Russians had a logistical snarl and found out that rubber tires rot if you just leave them in the garage for thirty or forty years.

Oops.

The war went from swooping strategy to what exists now: a series of mainly small-scale actions where when an infantry squad breaks through, it sometimes makes the news even though a gain of 500 yards is a big deal.  Why?  Because large troop concentrations are visible from space.  And anything visible from space is a target.  Neither side can effectively generate the schwerpunkt or focal point of forces required to break through and create a war of movement.

Are doctors who graduate online called Google® Docs?

Nope.  The latest development is that small squads of Russians are now using small, cheap ($2500 or less) dirt bikes to get to the opposing trenches fast, disposing of them as they storm the trenches.  This helps them avoid the ever-present drone swarms.  It’s like The Road Warrior, but with fewer shoulder pads.

And tank warfare?  For now, at least, it’s gone.  Just like bat is the “chicken of the cave” so is the tank now the “aircraft carrier of the land”.  They’re mainly just expensive targets, and a variety of cope cages, turtle shells, and electronic jamming have been field-innovated to try to protect them.

But when you lose a tank, you lose a pretty big investment.  Russia can only make (depending on your definition of tanks) about 1,500 a year, along with 3,000 other sorts of armored vehicles.  A big chunk of those tanks are modernized and rebuilt Soviet-era tanks.

A Russian T-90 tank costs about $4.5 million.  A drone with bomb costs less than a thousand dollars.  One economist estimated that the Russian tank losses alone was about an $11 billion dollar hit.

You do the math.

Remember when the Biden/Harris administration shot down the Chinese balloon?  At least they tried to stop some inflation.

Likewise, aircraft have had to stay well back because of surface to air missiles, of which the Russians produce a pretty good variety.  The Russians claim (heavy emphasis on the word claim) their radars can easily see the F-35 and F-22.  Claim.  An F-35 costs about $109,000,000 per aircraft.  An F-22 cannot be replaced – we lost the tooling.  Fun fact:  $109,000,000 in quarters would weigh five and a half million pounds, or the equivalent of the weight of pre-printed Biden ballots the Democrats had to dispose of discreetly after Joe dropped out.

As of January, 2024, we have 234 operational F-35s.  We have 187 F-22s.  And, yes, those babies can unleash a lot of havoc in short order, but missiles are cheap, and if it takes dozens to knock one of our fighters down, it’s dollars ahead.  And, let’s be clear:  they’re not always flying.  The US response to the Me-262 wasn’t to try to dogfight a German jet with a Yankee prop, nope, our aces hung around the German air bases and shot them as they had to land.

Is a boomerang their weapon of choice?

Every weapon has a weakness, and rarely can those weaknesses be overcome by papering them over with hundred-dollar bills.  But just as the object of making weapons has gotten bigger and bigger, our ability to fight a World War II style war has gone to zero.  One anecdote is that a captured German fighter pilot was bragging about shooting up a large quantity of American planes on the ground at an airbase.  Being at the airbase, the US officer took him outside and noted, “They’ve already been replaced.”

The German reportedly said, after a heavy sigh, “And that is why we are losing.”  That, and my great-grandfather, Johan von Wilder, who was responsible for downing five German fighters by himself.  Worst mechanic in the Luftwaffe.

The trend, though, is less $100 million fighters, but now seems to be looking towards large numbers of inexpensive, nearly disposable weapons that are cheap, lots of missiles that cost a few million bucks, and fewer “so expensive it’s silly” systems, except for those that give the really important part of the battle:  information – satellites and radar and the like.

But for all of that, the goal in war seems to have changed.  Rather than breaking stuff and killing people, the goal is more based on long-term fights whose goal is to cause the enemy to become unstable to topple their own leadership for someone more favorable.  I’m betting this is really a legacy of the Cold War.

I put my desk in the elevator.  I hope it takes my career to a whole new level.

I don’t think that we’re in any shape to fight an actual war against a determined opponent in a conventional sense for longer than a month or two, and wholly incapable of fighting in an area where we don’t have uncontested air dominance.  From an industrial standpoint, our ability to make more stuff isn’t serious:  outside of small arms and helmet and clothing, I’m not sure that there’s a weapons system that we could make without the help of overseas firms for critical items.

We just don’t make it here anymore, and building the basic industries to allow us to do so will take decades and trillions of dollars in capital invested.  I think we’ve reached the point where our primary weapon is financial.  There’s a precedent that situation can last a long time – the Byzantine Empire lasted in one form or another for over 1,000 years.

The Byzantine Empire had a gold stash that would make Scrooge McDuck® do whatever it is that ducks do when they’re happy, however.  We don’t.  Our wealth is based on paper and mathematics, and can move across borders in milliseconds (megafarads if you want an SI unit).

What would Ötzi’s people think about that?  I don’t really know.  I guess we’ll have to ask Keith Richards.

Author: John

Nobel-Prize Winning, MacArthur Genius Grant Near Recipient writing to you regularly about Fitness, Wealth, and Wisdom - How to be happy and how to be healthy. Oh, and rich.

23 thoughts on “Economics Of War, 2024 Edition”

  1. At present our armed forces seem to still be planning on fighting a Cold War era major European theater war. War now has shifted as dramatically as it always does, like when sinking all of our battleships at Pearl Harbor really had no impact on the war as it had already shifted to carrier warfare. Now all of those aircraft carriers we ship around the world are very expensive targets. I can’t imagine being in an armored vehicle in Ukraine never knowing if you would be blown up by a Russian drone that you don’t see or hear until it hit you.

  2. Yes, the unit costs of jets, tanks and aircraft carriers are crazy expensive. But nowadays the actual wars are very, very cheap to the bean counters. Here’s a DOD accounting for American war costs in Iraq/Syria/Afghanistan in the 21st Century:

    https://comptroller.defense.gov/Portals/45/documents/Section1090Reports/Estimated_Cost_to_Each_U.S._Taxpayer_of_Each_of_the_Wars_in_Afghanistan,_Iraq_and_Syria_dated_June_2022.pdf

    A peak of $767 per taxpayer per year in 2010 down to $184 per year by 2021.

    From https://usafacts.org/ , “Federal revenue in FY 2023 was $13,341 per person and spending was $18,406. The federal government spent 38.0% more than it collected in FY 2023, resulting in a $1.7 trillion deficit.”

    Ignoring inflation and annual bloat (lol), our peak year making war over there was roughly 767/18406 = 4% of the Federal budget.

    Consider Ukraine. Total Congressional appropriations for aid to Ukraine stands at $175 billion over 2.5 years or an average of $70 billion per year so far. Our 2024 Federal Budget was for $6.4 trillion. 70/6400 = 1.1% of the Federal budget.

    The entire 2024 Federal Budget of $6.4 trillion represented “only” 23% of total 2024 GDP. In 1943 and 1944, America spent over 40% of total GDP on World War 2. That would be ALMOST TWICE of the ENTIRE Federal Budget today.

    Sad to say, but GWOT and Ukraine are toy wars compared to World War 2 – and the upcoming World War 3 that we are on a highway to hell trying to provoke.

  3. Technology allows infrared to show where people are hidden, satellites reveal troop gatherings, drones can destroy large sections of a city, missiles can kill from continents away, and all can be orchestrated from a trailer hidden in some obscure area. There are even robots that are programmed to wage war. It all costs a lot of money, and is useless without electricity. In the end, if things continue like they are, there will be no need to fight. Just turn off the essential equipment that allows modern life, and watch anarchy become commonplace. That, and daily skirmishes with sharp weapons a part of survival.

  4. The missles we are firing currently average 5.1 million dollars each. Trying to shoot down a 20k dollar drone is a waiting game. First we cant produce enough and too it will break the printing press. Meanwhile our enemies have serf lapor making 5-50k drones for suicide swarms of 500 or more that yhey can produce 500 a day of. We have not won a war in 50 years, our whole military needs a coup.

  5. Great article. I think you are spot on that the era of blitzkrieg type warfare is over given the level of surveillance technology. I don’t know if it is a good thing or bad thing, but we seem to be reverting back to the attrition warfare of WWI where the battle lines stalemate quickly. Makes for horrible battlefield conditions if you are a soldier, but it does disincentivize power hungry world leaders from invading the neighbors in the future to add territory.

    Just a guess, but I suspect attrition will remain the status quo unless/until someone decides to take it to the next level with anti-satellite and EMP weapons. This would allow one side to erase the surveillance tech so as to allow breakthrough and exploitation again, but it ushers in large scale nukes and Armageddon.

    1. In Ukraine, at least until the front collapses. Which may be closer than many imagine. Then things may happen very quickly.

  6. “…fights whose goal is to cause the enemy to become unstable to topple their own leadership for someone more favorable. I’m betting this is really a legacy of the Cold War.”

    I’d say not so much a legacy, as a requirement when your enemy has nukes. Drain them economically, force them to respond with hyperbolic threats, hope for a coup of some kind such that Russia can then be peacefully integrated into GloboHomo.

    That draining of resources to cause collapse/ coups can work in both directions, however…

    https://coldfury.com/WRSA/WRSA-WP/wp-content/uploads/2024/10/9ae7d09e79d3c2a7.png

      1. “A few hundred transformers, while serious, are nothin’ compared to…”

        You sure about that? It takes a long time to build and emplace transformers.

        https://www.utilitydive.com/news/could-terrorists-really-black-out-the-power-grid/241192/

        “”If you have a physical attack that damages equipment, it can take weeks, months or years to replace that equipment,” says Michael Mabee, a former U.S. Army command sergeant major and an expert in power infrastructure vulnerabilities. “If enough of these transformers were destroyed in a physical attack, we would have a long-term, wide-scale blackout, and the deaths would be in the tens of thousands, hundreds of thousands or millions.””

        https://www.newsweek.com/2023/01/20/domestic-terrorists-could-take-out-us-power-grid-attacks-have-started-1772786.html

        1. You are absolutely correct, I should not be minimizing the importance of our electric grid vulnerabilities. This is actually a topic I have been interested in for some time. The highly localized North Carolina experience will hopefully serve as a wake-up call of how serious a problem this is.

          https://energsustainsoc.biomedcentral.com/articles/10.1186/s13705-019-0199-y

          Another thing I have learned during this NC flooding is about just how important the tiny town of Spruce Pine is, currently under water. This place has a unique geology found nowhere else in the world that allows it to produce ultra-pure quartz that is a vital component in the production of every single computer chip and solar panel made everywhere in the world.

          https://www.axios.com/local/charlotte/2024/10/01/hurricane-helene-tech-chip-shortage-spruce-pine-quartz-supply

  7. Speaking of domestic terrorism, what happened to Western NC & East TN suffices. It took almost 30 years for the Mississippi Gulf Coast to recover from Camille (1969).

    This is much, much worse. Zero $$$ from FEMA, as the area isn’t “diverse” enough.

    Pitiful.

  8. John, about the only thing I recall from my American Military History class is that most generals have the tendency to fight the last war that they won. It is not a promising prospect for any future conflict, especially given 1) The cost of armaments and 2) The fact that we are so dependent for so many things outside of the U.S., including potential enemies. I fear any such conflict will go poorly, and at that rather quickly.

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