Stories of conflict fill today’s headlines: Whether it is Syria’s civil war, street battles in Ukraine, terrorism in Nigeria, or police crackdowns in Brazil, the gruesome immediacy of violence is all too apparent. However, while commentators debate geostrategic considerations, deterrence, ethnic strife and the plight of ordinary people caught in the middle, dispassionate discussion of another, vital aspect of conflict — its economic cost — is rare.
Violence comes with a hefty price tag. The global cost of containing violence or dealing with its consequences reached a staggering US$9.5 trillion (11 percent of global GDP) in 2012.
This is more than twice the size of the global agriculture sector and dwarfs total spending on foreign aid.
Given these colossal sums, it is essential that policymakers properly analyze where and how this money is spent, and consider ways to reduce the total.
Unfortunately, these questions are seldom given serious consideration. To a large extent, this is because military campaigns are usually motivated by geostrategic concerns, not financial logic.
Although opponents of the Iraq war might accuse the US of coveting the country’s oil fields, the campaign was uneconomical, to say the least.
The Vietnam War and other conflicts were also financial catastrophes.
Similar doubts accompany arms spending during peacetime.
One might, for example, question the financial logic of Australia’s recent decision to spend US$24 billion on the purchase of problem-plagued Joint Strike Fighters while simultaneously preparing for the most stringent budget cuts in decades.
Wasteful, violence-related spending is not just a matter of war or deterrence. For example, tough and expensive law-and-order campaigns — though appealing to voters — generally have little effect on underlying crime rates.
Whether it is a world war or local policing, conflicts typically involve big increases in government spending; the question is whether they are worth the cost.
Of course, money spent to contain violence is not always a bad thing. The military, police or personal security details are often a welcome and necessary presence, and, if properly deployed, can be expected to save taxpayers’ money in the long run.
The pertinent issue is whether the amount spent in each instance is appropriate.
Certainly, a few countries have struck a fair balance, addressing violence for a relatively small outlay; so there are ways to reduce unnecessary expenditure.
Effective budgeting for potential or ongoing conflict is best achieved by emphasizing prevention.
We know what underpins peaceful societies: an equitable distribution of income, respect for minority rights, high education standards, low levels of corruption and an attractive business environment.
Moreover, when governments overspend to contain violence, they waste money that could otherwise be invested in more productive areas, such as infrastructure, business development or education.
The higher productivity that would result, say, from building a school rather than a jail, would improve citizens’ wellbeing, thereby reducing the need to invest in violence prevention. Consider this the “virtuous cycle of peace.”
Compare, for example, the almost US$10 trillion spent worldwide in 2012 on violence containment to the global costs of the recent global financial crisis.