Krugman on the Terrifying Reason Nations Keep Waging War

War is a huge money loser. So the motive is not greed.

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One of the more enduring myths about waging war is that it helps the economy. Not so, this cold inhumane calculation, Paul Krugman writes today.

Alarmed by the escalation of rhetoric and events in the Ukraine, Krugman casts his shrewd eye on warfare since the start of World War I a century ago, and concludes that we haven't learned much since. "The war to end all wars" just didn't. Why, given the overwhelming amount of evidence that war is ruinous in every way, including economically, would that be so?

First, the columnist takes a quick detour into history:

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Once upon a time wars were fought for fun and profit; when Rome overran Asia Minor or Spain conquered Peru, it was all about the gold and silver. And that kind of thing still happens. In influential research sponsored by the World Bank, the Oxford economist Paul Collier has shown that the best predictor of civil war, which is all too common in poor countries, is the availability of lootable resources like diamonds. Whatever other reasons rebels cite for their actions seem to be mainly after-the-fact rationalizations. War in the preindustrial world was and still is more like a contest among crime families over who gets to control the rackets than a fight over principles.

But times have changed, Krugman points out. "If you’re a modern, wealthy nation, however, war — even easy, victorious war — doesn’t pay," he writes. "And this has been true for a long time."

A British journalist named Norman Angell proved long ago that "military power is socially and economically futile" in his 1910 book “The Great Illusion,” Krugman points out. War has only gotten more expensive in the meantime. "For example, by any estimate the eventual costs (including things like veterans’ care) of the Iraq war will end up being well over $1 trillion, that is, many times Iraq’s entire G.D.P.," he computes.

So, are leaders just dumb about arithmetic, or is something else at work? Krugman wonders. Putin seems to be under the delusion that he can seize a portion of the Ukraine on the cheap. And the Bush administration drastically underestimated the cost of overthrowing Saddam Hussein and replacing him with a new government. $50 billion or $60 billion? Ha!

So, having dispensed with the economic arguments. Krugman looks elsewhere for the causes of war—and finds politics.

The larger problem, however, is that governments all too often gain politically from war, even if the war in question makes no sense in terms of national interests.

Recently Justin Fox of the Harvard Business Review suggested that the roots of the Ukraine crisis may lie in the faltering performance of the Russian economy. As he noted, Mr. Putin’s hold on power partly reflects a long run of rapid economic growth. But Russian growth has been sputtering — and you could argue that the Putin regime needed a distraction.

Similar arguments have been made about other wars that otherwise seem senseless, like Argentina’s invasion of the Falkland Islands in 1982, which is often attributed to the then-ruling junta’s desire to distract the public from an economic debacle. (To be fair, some scholars are highly critical of this claim.)

Krugman concedes that shoring up Putin's regime may be somewhat of an oversimplification of motivations there, but still finds a kernel of truth in the truly frightening idea. Here's why that's so terrifying:

If authoritarian regimes without deep legitimacy are tempted to rattle sabers when they can no longer deliver good performance, think about the incentives China’s rulers will face if and when that nation’s economic miracle comes to an end — something many economists believe will happen soon.

Starting a war is a very bad idea. But it keeps happening anyway.