...and expensive as hell

An addendum to my previous post. (thomasbeck.substack.com/p/war-is-bad-mkay)

One thing few people spend much time thinking about is just how much war costs. Not only its physical and emotional costs, but the sheer enormity of the monetary demands. War is probably the biggest waste of money possible among humans. Paying for wars (and reconstruction) takes far longer than fighting the wars themselves.

The effects are as long lasting. The South still has not recovered from the Civil War, despite decades of time and trillions of dollars funneled by Southern Congressmen and Senators from northern tax payments. After World War Two, Great Britain tried to pay off its monstrous war debt by squeezing its remaining colonies (rather than raise taxes on its war-weary public). And, of course, the onerous financial burdens of the first world war were material influences on the inter-war period.

Another US example: LBJ’s determination to pay for the Vietnam War without raising taxes, coupled with his reluctance to cut domestic spending, led to the stagflation of the 1970s (along with the oil shocks) that set the conditions for the disastrous “Reagan Revolution” of the 1980s. (Which had other interrelated preconditions.)

In my previous essay, I mentioned how Vladimir Putin is spending so much on his criminal war in Ukraine that he is having to neglect most other domestic Russian needs. He is trying to maintain pensions and salaries for the urban elite he needs, but the country’s already subpar infrastructure is falling apart. Fires, floods, terror attacks—if it can’t be turned to fight his war (or fuel his apparatchiks’ corruption) it will have to wait.

And wait. And wait. And wait…

Russia is perhaps the poorest rich country in the world. It generates enormous capital, but spends it terribly. American politicians always talk about cutting “waste, fraud, and corruption,” but they have no idea what they’re talking about. When it comes to WFC, Russia has America way in its rearview mirror. They have a few surprisingly competent finance officials (especially the head of Russia’s Central Bank), but, as in any cronocracy, any kleptocracy, there’s as much interest in stealing money as there is in spending it on what it was meant to be spent on.

When it comes to financing his war, Putin is caught in a bind. As I wrote previously, his entire regime has been based on the idea of trading energy for money. And western Europe was happy to trade money for energy—and peace. It was a great idea, until…

Since 2014, though, Russia’s energy earnings have been interrupted, sanctioned, and diminished. Despite his efforts to find new markets and to subvert and evade sanctions, despite the world’s unceasing thirst for oil and gas regardless of source, Putin is having to put his war on his country’s credit card. Russia is short of investment capital and much of its reserves have been frozen in western banks. I mentioned his capable central banker, but there’s only so much she can do to cope with rising costs, falling receipts, and no end in sight to either.

So Putin is basically paying for everything by printing money. At the moment, that isn’t causing too much inflation. But that’s not going to last. At some point, he or his eventual successor will have to turn off the spigot.

At which point, the bill will come due. And a Russia materially bereft of resources will struggle for years if not decades to pay it. At least a generation of Russians too young to vote now will face a future of diminished opportunities, dilapidated cities, international shunning, domestic strife (tensions are building among native Russians and ethnic minorities, and nationalistic thugs and Russian Orthodox zealots are being turned loose to enforce Putin’s mania to stamp out criticism), and lack of investment in technologies and cultural activities.

And for what? It is frequently pointed out that if the monarchs and generals who started the first world war had known how disastrous it would turn out, they might not have been as avid to go to war. In Putin’s case, you have to wonder if he would have been deterred. “Great men” often think they are above history, that they control their own destiny. Given the delusional nature of his obsessions with restoring as much of Imperial Russia as he can, he probably would not have believed any cautionary warnings before he invaded Ukraine in 2022.

In any case, what’s done is done. We’ll all be paying for Putin’s irrational determination to exterminate Ukraine as a country and an idea. No man should have the power to unilaterally cause such a catastrophe. But that’s an idea for another essay.

For now, let’s just remember that war costs more than you think. No, more than that.