The Business of War

Waging war, being aggressive, using force is one of the oldest methods of trying to instil “obedience” or servitude in another. We do it between nations, inside our companies, our institutions, our schools and even within our families.

On a national scale, of course you want to avoid damage to your own civil infrastructure because it’s demoralising for the local population and difficult to justify or manage the truth of the devastation and death that war inevitably brings.

Let’s study the “economic” benefits of war, looking at the USA and the war effort in Afghanistan and Iraq.

For every soldier sent to war outside of the US mainland, what is the increase in Gross Domestic Product (GDP) for the country? How much in dollar terms is made, built, spent, acquired to send that single person away to wage war. What benefit does this bring the nation?

Let’s assume that the figure is USD1,000,000 per soldier per year. So if 20,000 troops are deployed in say, Afghanistan that means the GDP of the US increases by 20 billion dollars per year.

Now what does that mean? At a taxation rate of 30%, the government revenue is increased by USD 6 billion. This is more money to spend on health, infrastructure and other home base facilities. That’s good isn’t it?

Assuming that the average US wage is USD30,000, and assuming that half of the USD20billion per year is labour costs (the other half is materials) then that’s 330,000 people who are employed in this process. Isn’t that good as well?

In the short term yes. Very good.

In the long term, no. It’s terrible. It’s a downward spiral into high personal taxation, lowering world living standards, and police states (how else do you hang on to your income source?)

So, from this perspective, a foreign war, in simplistic terms taking the short term view, is good for the economy. And business will do what ever it has to so that it can continue, indeed thrive in times of war. Remember that Coca-Cola, a US company, invented the drink Fanta and sold it through subsidiary owned companies in German during the Second World War. There was an embargo on doing business with Germany – pretty much what is in place now with North Korea and Iran – so they invented Fanta, using ingredients sourced in Germany, to sell because they weren’t permitted to sell Coke. Before April 1917 the US was a neutral power in the Great War (World War I, or the Great War of Europe: 1914 to 1918), and was supplying materials and equipment to both the British and the Germans, despite the blockade that Britain had placed against Germany. During this same Great War, the German company Krupp sold brass to British companies that was turned into shell casings that was used by the British in Europe against German soldiers!

Jeremiah Josey