Paul Krugman on Why We Fight
By David Henderson
I often criticize Paul Krugman’s writing on economics. But I also give him credit where credit is due. And credit is due for his excellent recent column on war. Read the whole thing.
Some excerpts and my comments:
If you’re a modern, wealthy nation, however, war — even easy, victorious war — doesn’t pay. And this has been true for a long time. In his famous 1910 book “The Great Illusion,” the British journalist Norman Angell argued that “military power is socially and economically futile.” As he pointed out, in an interdependent world (which already existed in the age of steamships, railroads, and the telegraph), war would necessarily inflict severe economic harm even on the victor. Furthermore, it’s very hard to extract golden eggs from sophisticated economies without killing the goose in the process.
Angell, by the way, often gets a bum rap from people who think that he was predicting an end to war. Actually, the purpose of his book was to debunk atavistic notions of wealth through conquest, which were still widespread in his time.
Krugman even does some basic public choice, discussing briefly the incentives of governments to wage war. He writes:
The larger problem, however, is that governments all too often gain politically from war, even if the war in question makes no sense in terms of national interests.
I’ve written more extensively about the public choice of war here and here. In “The Economics of War and Foreign Policy: What’s Missing?” I wrote:
Among those who bear large costs of one government’s foreign policies are people who live in other countries. So, for example, if country A’s government kills people in country B, the potentially biggest losers from this policy are people in country B. But because people in country B cannot typically vote in country A’s elections, and can’t typically give campaign contributions to politicians in country A, some of the biggest losers from government A’s policy cannot directly influence political outcomes in country A. Thus some of the opposition to the government’s foreign policies, though potentially strong, cannot legally be brought to bear on the politicians making the decisions. A clear implication is that the politicians will not care as much as otherwise about damage done to foreigners and that, therefore, the equilibrium could involve a lot of damage. Couple that with the fact that citizens in country A will be even less well informed about many of these actions than they are about the government’s actions in their own country, and the implication is even more destruction of country B than otherwise. This is just one implication of the public-choice way of thinking. More insights likely await those who apply the public-choice framework to foreign policy.
In economics, by the way, we call the effect of country A’s government on people in country B an externality.
And in “War and Presidential Greatness,” Zachary Gochenour and I explored the relationship between the percent of his own people a U.S. president gets killed in war and the “greatness” rating that historians apply. We write:
Our data analysis shows that wars in which a large percentage of the U.S. population is killed, all other things equal, have led historians to judge as great the president on whose watch those wars occurred. Presidents Theodore Roosevelt and John F. Kennedy certainly perceived the situation in this way. Other presidents probably did so as well.
This conclusion is troubling. Most presidents, after all, probably want to be thought of as great. When they spend resources on war, they are spending almost entirely other people’s money–and lives. They get little credit for avoiding war. Martin Van Buren, for example, effectively avoided a war on the northern border of the United States. He also forestalled potential war with Mexico by refusing to annex Texas (see Hummel 1999). How many people know about these actions today? Indeed, how many people have even heard anything about Martin Van Buren, aside from perhaps his name?
Woodrow Wilson, in contrast, inserted the United States into WorldWar I, a war in which the United States might easily have avoided participation. Moreover, had the U.S. government avoided World War I, the treaty that ended the war probably would not have been so lopsided. The Versailles Treaty’s punitive terms for Germany, as John Maynard Keynes predicted in 1919, helped set the stage for World War II. So it is reasonable to think that had the United States not entered World War I, World War II might not have occurred. Yet, despite his major blunder and more likely because of it, which caused more than one hundred thousand Americans to die in World War I, Wilson is often thought of as a great president.
Of course, an important policy question is whether the wars in which so many Americans were killed were necessary. Our view is that they were not, although making that case lies beyond the scope of this article.
This analysis has a disturbing public-choice implication: if modern presidents understand these incentives, and they almost certainly do, they will modify their behavior in light of them. Therefore, we have identified another potential source of deviation from median-voter preferences, which springs from the executive’s attempt to cement a legacy of greatness in the eyes of historians. Those who want peace should take historians’ ratings of presidents seriously. Moreover, we need to stop celebrating and try to persuade historians to stop celebrating presidents who involved the country in unnecessary wars. One way to do so is to remember the unseen: the war that did not happen, the war that was avoided, and the peace and prosperity that resulted. If we applied this standard, then Presidents Martin van Buren, John Tyler, Warren G. Harding, and Calvin Coolidge, to name four, would receive a substantially higher rating than the historians usually give them.
With his column, Paul Krugman has entered an area that has not been thoroughly studied by economists but that is waiting to be so studied. I hope he does more.
HT to John Goodman.