Cost of the War on Terror- Redraft

 

All the money spent in Iraq and Afghanistan represents resources destroyed. As of September, 2021, a study from Brown University estimates the US has spent $8 Trillion on the 'War on terror.

https://www.brown.edu/news/2021-09-01/costsofwar

But, that's just money. How much, in terms of real resources, does $8  Trillion US, $8000 Billion US, represent?  

Let's do residential. Median value of a house in the United States is (these days) $275K Say $300K US per house,  on average.

 That's about 24 million houses. The equivalent value of 24 million houses which is not being invested, rather is being destroyed in warfare. 24 million houses which are not being built. With 24 million houses figure 3 persons per house, housing for 72 million people. So the residential equivalent of a several very large cities has being leveled. This kind of calculation has been done, more accurately and in greater detail, both nationally and for the share of one's locality, and can be found by searching in say: 'cost of the war in Afghanistan'. 

Nobody is being hurt though. But: Let's look at it in terms of man lives. Average GDP per worker is roughly, $23T/160M in the labor force, these days gives almost $150K per worker per year. So the cost is about 50M man years. Figure 40 years productive life: So,at current dollar value about $6M per life. So: $8000B/$6M = 1.25 Million lives. So the war on Terror has destroyed the lifetime production of 1 and a quarter million American men and women. Economically speaking, these are the casualties the US has sustained. 

Let's check the nuclear option. When you nuke a city, you destroy only half the lifetime productive capacity of the population (half has already been contributed) so DOUBLE the number of people killed. So we get  2.5 Million. Note we are now considering everyone in our city as labor or potential labor. 

Now the total capital of the US is about $70T. Divide by total people (330M) and you get about $210K per person, of physical capital, that is houses, factories, offices, roads, utilities, etc. these people occupy and use. An interesting number in its own right. But we'll use $200K. So that's $ 500B worth of capital our 2.5 Million people occupy and use. (200K x 2.5 M.) Figure $500B to be the equivalent of 125K man lives. ($500B/$6M = 83K man lives.) We subtract 83K man lives because we're blowing up their productive lives equivalent in material destruction, giving 2.4 million man lives. We're subtracting it because we don't want to count it twice. But we see that counting the actual material that is blown up is just a small correction. We can just as well ignore it, given the approximate nature of all our numbers

 So, roughly, the War on Terror has, so far, cost the economic equivalent of the total destruction of a city of 2.5 million people. Give or take. 

That's everyone and everything in it.  So that's somewhere between  Chicago  (Pop 2.7 million,) and Houston (Pop 2.3 million) So:  Take the city of Houston, kill all the people, level it. replace it with waste: The cost to the United States of its 'War on Terror.'

That's a lot of economic terror the United States has inflicted on its own people to prosecute the "War on Terror. " Of course ‘economic equivalent’ does not include pain and suffering. Or cleanup. 

Most of the numbers we've used understate the answer. One can argue that we understate the earnings per man life, but don't forget capital is spent on the individual at both the beginning and end of his life, so the net contribution of a person to society is probably considerably less than 40 years of labor. By our calculations 9/11 resulted in the destruction of something under 5 thousand man lives of production. The War on Terror is, it seems, a rather disproportionate response. The City of Houston for a couple of tall office towers.

But then, one can always claim the US actions in WWII were  a disproportionate response to Pearl Harbor.

The Nuclear Equivalent to the War on Terror

All the money spent in Iraq and Afghanistan represents resources destroyed. As of September, 2021, a study from Brown University estimates the US has spent $8 Trillion.

https://www.brown.edu/news/2021-09-01/costsofwar

But, that's just money. How much, in terms of real resources, does $8  Trillion US, $8000 Billion US, represent?  Let's do residential. Medial value of a house in the United States is $140K. (2010)

 That's about 7 million houses. The equivalent value of 7 million houses which is not being invested, rather is being destroyed in warfare. 7 million houses which are not being built. 7 million houses figure 4 persons per house, 28 million people. So the residential equivalent of a several very large cities has being leveled. This kind of calculation has been done, more accurately and in greater detail, both nationally and for the share of one's locality, and can be found by searching in say: 'cost of the war in Afghanistan'. Nobody is being hurt though. But: Let's look at it in terms of man lives. Average GDP per worker is roughly, $14T/140M in the labor force, these days gives $100K per worker. So the cost is 10M man years. Figure 40 years productive life: $4M per life. So: $1000B/$4M = 250K lives. So the war on Terror has destroyed the lifetime production of 250 thousand men. Economically speaking, these are the casualties the US has sustained. Let's check the nuclear option. When you nuke a city, you destroy only half the lifetime productive capacity of the population (half has already been contributed) so DOUBLE the number of people killed. Figure 500K. Note we are now considering everyone in our city as labor or potential labor. Now the total capital of the US is about $50T. Divide by total people (300M) and you get about $170K per person, of physical capital, that is houses, factories, offices, roads, utilities, etc. they occupy and use. An interesting number in its own right. But we'll use $200K. So that's $100B worth of capital our 500K people occupy and use. (200K x 500K.) Figure $100B to be the equivalent of 25K man lives. ($100B/$4M = 25K man lives.) We subtract 25K man lives because we're blowing up their productive lives equivalent in material destruction, giving 475K. We're subtracting it because we don't want to count it twice. But we see that counting the actual material that is blown up is just a small correction. We can just as well ignore it, given the approximate nature of all our numbers So, roughly, the War on Terror has, so far, cost the economic equivalent of the total destruction of a city of 500 thousand people. Give or take. That's everyone and everything in it. That's a lot of terrorism. Of course ‘economic equivalent’ does not include pain and suffering. Or cleanup. Most of the numbers we've used understate the answer. One can argue that we understate the earnings per man life, but don't forget capital is spent on the individual at both the beginning and end of his life, so the net contribution of a person to society is probably considerably less than 40 years of labor. By our calculations 9/11 resulted in the destruction of something under 5 thousand man lives of production. The War on Terror is, it seems, a rather disproportionate response. But then, one can always claim WWII was a disproportionate response to Pearl Harbor.

Variable VAT Tax to Regulate Resource and Product Flow in an Economy

Variable VAT Tax to Regulate Resource and Product Flows in an Economy

So the title pretty much says it all. Let's get to a few details.

If the government imposes a sales tax on an item, not only do we expect an increase in tax revenue, but we also expect an increase in the price of the item.*  For almost all goods, (and here we will ignore any possible exceptions,) the quantity demanded will also decline. Because of this, a sales tax may be used to regulate the demand for, and therefore, although perhaps after some delay, the production of, a given product. By increasing the sales tax, both demand and production will be reduced. By reducing the tax, demand for and production of, a product will be increased, over the current quantity demanded.

Now, there is no particular reason why we should restrict ourselves to a positive tax, if for some reason,we wish to stimulate demand for a product beyond the present demand. We can impose a negative.sales tax on a particular product sold. The price to the buyer will go down, the quantity demanded will increase, and production will eventually rise to meet this subsidized demand.

And of course, there is no reason to restrict such a variable tax to finished goods or services. It can be imposed at any point in any market in any supply chain. Indeed, in countries with a VAT, the mechanism for such regulation and control of production is already in place.

With such a tax in place, resources can be directed to any place in an economy. In particular, resources can be directed to where they are most needed, say in response to some disaster, and not just to where the demand is greatest. Indeed, society's current practice of meeting any particular demand, that is, responding to some local surplus of money, may not always be in the best interests of the society, or its economy.

If, for instance, more infrastructure is needed, demand in that sector can be increased, while at the same time reducing the demand in other, more discretionary sectors,where resources may be being inefficiently used, or even wasted.

In the case of imports and exports, the same mechanism of variable taxation may be used. A goal, here, of course, might be to establish a balance between the value of imports and exports. Another might be to encourage an export of finished goods, and encourage an import of factors of production.

And of course, this system of allocation could be made completely transparent.

Naturally, there are many technical details which would have to be dealt with, most particularly how to deal with the relative differences in the elasticities of supply and demand for any given product or factor of production. However, I am confident that such difficulties can be worked out.

The main obstacles I see to the establishment of this, or indeed, any rational system of allocation of resources in an economy, to be political.
                                                         ________________
*Almost always.  The only possible exceptions would seem to involve a completely elastic supply base, with a high margin of profit above cost capable of completely absorbing the tax. The price may not change, as the profit would decline by the amount of the tax.

With totally elastic supply, however, the price is generally driven down to cost by competition, and the margin of profit is at or near zero.

Links to Quora

Back, and it's been two whole days!  So  I'm going to post links to (some of ) my answers in economics on Quora, here, just so they're all in one place.  In no particular order.  For your convenience.

https://www.quora.com/Would-the-world-economy-benefit-or-suffer-from-a-sudden-revival-of-the-Gold-Standard/answer/Charles-St-Pierre  Mostly suffer


https://www.quora.com/Do-you-think-that-a-Robot-tax-should-be-used-to-curb-automation-taking-too-many-jobs/answer/Charles-St-Pierre

 https://www.quora.com/Is-there-a-fundamental-flaw-in-the-free-market-theory-that-leads-to-the-deprivation-of-property-and-concentration-of-economic-power-through-debt/answer/Charles-St-Pierre  And see my comment at the bottom.

https://www.quora.com/What-is-wrong-with-America-2/answer/Charles-St-Pierre


https://www.quora.com/Should-the-economy-of-a-country-always-be-growing-If-it-is-not-possible-could-it-mean-that-the-thesis-of-the-capitalism-is-wrong/answer/Charles-St-Pierre



https://www.quora.com/Why-should-I-hate-free-markets/answer/Charles-St-Pierre Why you should fear free markets


PBOC injects record $83 billion into the financial system - Asia Times  So this was reposted to Quora,  I posted a comment there suggesting that the financial system was the wrong place to put the money.  They should instead have a negative sales tax.  This would pretty immediately stimulate demand, and make everybody happier at the same time.




However, further thoughts occurred to me, which I (will) discuss above.

https://www.quora.com/Would-the-economy-run-better-if-we-got-rid-of-all-government-control-and-destroyed-monopolies-it-creates/answer/Charles-St-Pierre
Government and the role of violence.

Moving My Activity

Due to the underwhelming response to my posts on this web site, I have moved my activity here to Quora.

A few parting thoughts:

        It is important to determine what is important.

                                          

                                                                 *

        People who are paid to think, think what they are paid to think.

                                                      _______________


And:

           "It ain't what you don’t know that gets you into trouble. 

            It's what you know for sure that just ain’t so."

                                   Mark Twain  (1835 - 1910) American Author*

                                                         _____________

Finally, this little dose of concentrated wisdom from Terry Pratchett (1948-2015) British Author  

           From Carpe Jugulum, (with thanks to Elspeth Cowrie and her answer at Quora) 

"And that's what your holy men discuss, is it?" [asked Granny Weatherwax.]

"Not usually. There is a very interesting debate raging at the moment on the nature of sin. for example." [answered Mightily Oats.]

"And what do they think? Against it, are they?"

"It's not as simple as that. It's not a black and white issue. There are so many shades of grey."

"Nope."

"Pardon?"

"There's no greys, only white that's got grubby. I'm surprised you don't know that. And sin, young man, is when you treat people like things. Including yourself. That's what sin is."

"It's a lot more complicated than that--"

"No. It ain't. When people say things are a lot more complicated than that, they means they're getting worried that they won't like the truth. People as things, that's where it starts."

"Oh, I'm sure there are worse crimes--"

"But they starts with thinking about people as things."

                                                         ____________________

Thank you for your time and attention.
                           
                              Another Amateur Economist
                                                      _____________________
*I have since learned that this attribution is unlikely.

Link to: "Researchers chart rising inequality across millennia"

This link is too good to pass up, especially as our Republican Congress debates lowering taxes for the wealthy.

"Researchers chart rising inequality across millennia

Findings have profound implications for contemporary society"

https://www.eurekalert.org/pub_releases/2017-11/wsu-rcr110917.php


One paragraph: "Their findings, published this week in the journal Nature, have profound implications for contemporary society, as inequality repeatedly leads to social disruption, even collapse, said Tim Kohler, lead author and Regents professor of archaeology and evolutionary anthropology at Washington State University. The United States, he noted, currently has one of the highest levels of inequality in the history of the world."

The Purposes to Taxation

There are four purposes to taxation.

1: Destroy money. The government doesn’t need to tax to spend money. It just has to write the check. However, money it spends adds to the money supply, and this would cause inflation if an equal amount of money wasn’t taken out of circulation or destroyed. If money is taken out of circulation but not destroyed, as when the government borrows to spend, (which it rarely has any need to,) and this money is accumulated by the financial sector, the potential for inflation remains, and increases as the amount of money in the financial sector increases.

2: Discourage certain behaviors, or, through negative taxes, ie subsidy, (a word for particular forms of spending,) encourage certain (other) behaviors. All spending, of course, encourages the production of what it is being spent on. (Allowing for profits, of course.)

3: Redistribute demand, and therefore wealth. More or less egalitarian societies, such as democracies, cannot survive an excess of economic inequality. Money represents economic rights. That is, economic rights are proportional to wealth and income. Economic rights cannot be completely separated from political rights. An unequal distribution of economic rights results in an unequal distribution of political rights. This phraseology, however, is sort of a contradiction, since political rights may implicitly be regarded as those rights held, and that wealth shared, equally by all citizens in a society. Precisely: The only difference between economic rights and political rights is the method of allocation, and their resulting distribution. A more proper phrasing, then, would be that increasing economic inequality results in an increasing conversion of political rights to economic rights. A sufficiently progressive tax system can prevent this from arising, and so help to maintain a system of political rights. An egalitarian government, therefore, will tax economic rights, so limiting the scope and degree of inequality, and subsidize political rights, so enlarging the scope and degree of equality. The dynamics and stability of this process is itself interesting, but beyond the scope of this question. However, the first goal of every proto- oligarchy is the reduction of the progressivity of taxation to a level insufficient to prevent the increasing of economic inequality.

4: Validate its currency. By requiring that taxes be paid in its unit of money, the use of that money is (very strongly) encouraged in that economy. Since using a single unit of money increases economic efficiency, this increases the quantity of free resources in that economy. This increases both the rate of sustainable consumption, and the rate of wealth accumulation in that economy.