The economics of war will eventually weigh on the US.
The following is an excerpt from a must read article by investing guru Doug Casey (bold emphasis mine)
An AK-47 costs less than $500 most places in the world; the bullets cost about 20 cents apiece, and the teenager to employ them costs nothing at all. In fact, teenagers in the Muslim world are in such oversupply that they can be said to have a negative cost.
A US soldier, by contrast, is immensely expensive. Even though most of them come from lower socio-economic levels, a substantial investment has been made in taking them even through Grade 12. Then comes the cost of recruiting, training, equipping, paying, insuring, housing and transporting them in the military. I’m not sure the cost of a US soldier in the field has ever been accurately computed, but it has to be well over a million dollars for a simple grunt and much more for a specialist. That’s not counting the lifetime of pension benefits and medical care for the maimed. And with battlefield medical as good as it now is, the ratio of seriously wounded to dead is much higher than ever before. You may sympathize with the US soldier, but he’s definitely on the wrong side of the equation.
An M-1 tank costs about $5 million a copy. It, or any other vehicle, can be destroyed by an IED fabricated from fertilizer or unexploded ordnance. Even if it’s not destroyed, or not even severely damaged, the brains of its occupants are likely to be scrambled by the blast wave. This is, incidentally, something that is underappreciated. A blast wave bounces a brain around in a skull like an egg inside a tin can. Considering that IEDs are both devastating and extremely hard to detect, it’s no wonder they’re so popular.
Have you ever wondered why there’s no reporting on the numbers of tanks, APCs, Humvees, helicopters and other (immensely expensive) hardware being destroyed in the current US wars? It’s classified, because the numbers would be so embarrassing. Unlike in Vietnam, there’s no longer any body count of the enemy because that would be politically incorrect. But it doesn’t matter how large it is; every dead jihadi is a dragon’s tooth that will grow back as ten replacements. That’s why there’s really no way to win a guerrilla war before you go bankrupt – no way short of genocide or at least serious mass murder.
A $1,000 RPG will easily destroy a million-dollar armored personnel carrier and its occupants. A $10,000 shoulder-launched missile can take out a $10 million helicopter or a $40 million F-16. It may be practically impossible to shoot down a $1 billion B-2 bomber, but that’s academic; they were built to fight a nuclear war against the USSR. They’re useless except to deliver atomic weapons, but the new enemy lives in refugee camps and scattered within teeming cities. The B-2’s codename should be changed from Spirit to Albatross, because it’s not only totally uneconomic, it’s almost totally useless.
So the economics of guerrillas attacking an invading superpower are excellent. In response, the economics of a superpower attacking guerrillas or terrorists are disastrous. In its current wars, the US winds up using cruise missiles, at around $1.5 million each, to blow up wedding parties. The direct expense is bad enough; the vastly greater indirect expense is the creation of a clan of new enemies. The best result is for the missile to just pulverize some sand. Even if it hits a few mujahidin, that’s placing an implied value of several hundred thousand dollars apiece on their heads.
In other words, whether we’re looking at offense or defense, the economics of destruction are tilted not just 10 to1, not just 100 to 1, but probably closer to 1,000 to 1 in the favor of insurgents.
Perhaps you’re thinking further advances in technology will tilt the equation back toward the US. But as I explained above, the effect of each innovation will be just the opposite after only a short period of technological monopoly. People have a lot of misplaced confidence in the so-called "defense" establishment to come up with marvelous devices to confound groups designated as the enemy. Of course advances will be made, at least for as long as the US government has scores of billions to spend on R&D annually – which it soon may not, for financial reasons. But even if it diverts funds from its myriad other projects, the procurement process is stultifyingly bureaucratic, slow and costly. It’s not at all entrepreneurial, which it still was to a degree even during WWII, when the P-51, the best fighter of the war, was taken from concept to production in nine months and turned out for $50,000 a copy.
The US will even lose the war for new weapons as time goes on, simply because the Defense Department bureaucracy is so counterproductive. It’s like the company Dilbert works for in the cartoon pitted against millions of independent entrepreneurs in the Open Source world. Dilbert’s company moves like a dinosaur, while the Open Source world watches, imitates, innovates and improves at warp speed.
Today a ponderous state supposedly represents our side (I italicize that because, although I truly dislike many of the people it’s fighting against, I consider it to be an even greater danger). At best, it resembles a dim, tired old Tyrannosaurus up against hundreds of smart young Velociraptors intent on eating it. The outcome is obvious: a bunch of the attackers will get killed, but the T-Rex is dead meat.
Remember that there are more scientists and engineers alive today than in all of human history before them, the vast majority from non-OECD countries. The ones who are any good don’t want to work in a constrained, bureaucratic environment with no financial upside. Entirely apart from that, if the minions of the perversely named Defense Department come up with a real super-weapon, in today’s world it’s easy to replicate and improve on, and for a fraction of the original cost. That’s why there are scores of thousands of apps developed for most any electronic device that hits the market today – in addition to the device itself being "knocked off" illegally by small factories that could be anywhere.
Terrorism icon Osama bin Laden’s goal was reportedly to bankrupt the US. And the US has been fighting a 20th century modeled war, when times (or warfare’s evolving dynamics) has been dramatically changing.
In line with the way incumbent political institutions have been structured, the US political establishment has been failing to keep with the new realities (or with the emergent forces of decentralization). And at worst, they seem to be falling right into bin Laden’s ‘war of attrition’ trap.
Yet you can profit from terror (or political folly) as Doug Casey points out, read the rest here
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