Arms Dealer: “Why should I help you?”

Hunt: “If you don’t help me, we will be facing war.”

Arms Dealer: “But war is good for business.”

Hunt: “Nuclear war?”

Arms Dealer: “…let’s talk.”

I certainly did not expect to be writing about economics in response to seeing Mission: Impossible – Ghost Protocol last night (a great movie, by the way). But as you can see, the above lines create too perfect a scenario for discussing the beneficence of war fallacy to pass up.

While this exchange does not present a perfect example of the beneficence of war fallacy, it certainly gives rise to an interesting question: Why is it that the arms dealer finds nuclear war undesirable but traditional war to be “good for business”?

Though I do believe–in accordance with proper economic theory–that war is bad for the economy, I will not argue that it is bad for this individual arms dealer. Indeed, a war would almost certainly increase demand for weapons, meaning higher prices for his products and increased profits for his firm. So for him, a traditional war would most likely be “good for business” (as long as his stockpiles are not the ones getting attacked), at least in the short term.

But nuclear war, as he knows, is bad for everyone. It even appears that the writers of the film assumed their viewers would also hold such sentiments, as Hunt’s argument against the economic beneficence of nuclear war seems to go without saying (requiring nothing more than a simple two-word question: “Nuclear war?”).

But why is nuclear war considered economically detrimental if non-nuclear war is beneficial? I think what many would say is that nuclear war is too large–too destructive–to possibly be economically beneficial, but that smaller “traditional” wars can be beneficial because they induce demand through increased spending. This does not follow, however, unless one can identify the point of inflection at which war becomes too large to be beneficial. Is it when $1 billion of damage is done? $10 billion? $100 billion? If such a point cannot be identified, the assertion that any war can be beneficial for the economy is baseless.

War also diverts investment from other lines of production. As our common economic fallacies page states, “Because of scarcity, the resources which are funneled into war production are no longer available to produce the things which people demand according to their subjective preferences.” This has the net result of reducing overall productivity and hindering economic progress.

So while war may be good for the arms dealer’s business, the existence of active militaries waging wars with one another is never beneficial for the economy as a whole. Lew Rockwell makes the point well in this excerpt:

“Let us never forget that the military is the largest single government bureaucracy. It produces nothing. It only consumes resources which it takes from taxpayers by force of law. Making matters worse, all these resources are directed toward the building and maintenance of weapons of mass destruction and those who will operate them. The military machine is the boy with the rock writ large. It does not create wealth. It diverts it from more productive uses.”