MILOEK
Militärökonomische Forschung und Lehre
Research and Courses in Economics of Defense
E
Online: * August 2012
An Economic Model of Military Conflict XIII
Even if this draft is still in a very rough shape, it is already capable to offer some insights: For example, it makes clear, why comparing the manufacturing costs of two weapon systems must not be a decisive criterion: “Though the interceptors cost $45,000 each (some 50 times the price of most of the missiles they destroy), Hamas will struggle to restock with rockets and, after its backing for the uprising in Syria, will get less help from Iran.“ →Economist (24.11.2012, p. 40). Instead a weapon’s manufacturing cost must primarily be oriented towards its performance potential, i.e., the damage it creates to the enemy war effort or the damage its deployment is able to avoid in regard to the own effort.
Consequently, without a reference to the respective “Point Zero” of both sides, the cost information remains incomplete. Take, for example, the following statement seeking to assess the US war effort in Vietnam: “Estimates by 1967 suggested that it cost the US $9.60 to inflict $1.00 worth of damage.” ─ Wiest (2002, p. 27). At first glance, this seems to show impressively how inefficient the US effort had been. But without additional information, the statement has only a limited value: For example, was this damage critical to the war effort of Communist Vietnam? Or was it able to replace a $1 damage with assets even worth more than $1? How long was the US able to endure this unfavorable ratio? And how much damage and investments were finally required to bring the Communist regime to a peace agreement that would credibly respect a free South Vietnam allowing the latter to overcome its own instabilities like corruption and transform to a democratic regime similar to modern South Korea?
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First Version: June 2012
This Version: November 2013
This Version: November 2013
