SINGAPORE—Some people may think that economists have little contribution to make in analyzing military conflicts. Such an idea is misleading and wrong!
The management of conflict, once just the domain of political scientists, has now attracted the interest of economists. Since conflict involves strategic interactions between adversaries, there are opportunities for applying game theory with conflicts analyzed in terms of games of bluff, chicken-and-egg theory and tit-for-tat (e.g., deterrence; brinkmanship; and mutually assured psychological destruction).
There are extensive literatures on arms control and whether such control results in war or peace. Overall, economists usually analyze conflict in terms of its likely benefits and costs for the participants.
Economists as management experts have made further contributions to the analysis of conflict. They have examined the belief that democracies do not go to war with each other and they have been used to advice on target selection in military conflicts (e.g., allied bombing of oil fields, ball bearing and fighter aircraft plants in World War II).
Furthermore, their analysis of collective action and military alliances applies also to peace as a public good with nations having incentives to free ride on the actions of the alliance leaders.
However, despite the large number of military conflicts, there is a relative absence of empirical studies of conflict by economists. Often, empirical work, including case studies of conflicts (e.g., World War II and now, terrorism), has been undertaken by scholars from other disciplines.
In the Philippines economists must seriously assess insurgency and separatism in terms of their likely costs and benefits to the adversaries. On this basis and from the Philippine perspective, there will be direct military costs, as well as costs imposed on the civilian economy. Such costs might be short and long term.
“Much depends on the scenarios assumed, all of which will be characterized by uncertainty,” said a book, Management of Violence: A Strategy for National Security and Public Safety, soon to be published here and in the Philippines, and written by this writer.
For instance, armed conflict with leftist insurgents, Moro rebels, as well as the Abu Sayyaf terrorists, will incur military costs over its duration followed in the longer run by possible extra costs to the defense budget, as the government continues its incremental adjustments in relation to its existing policies, and faces a possible budgetary increase thereat to curb terrorism and insurgency using conventional forces under a unified command structure.
For example, the proposed 2017 P240- billion budget combined for police and military represented a huge increase by 30 times, compared to Marcos’s last budget of P8 billion in 1985-1986, adjusted to inflation and other causes such as graft and corruption.
Budget Secretary Benjamin E. Diokno said the budget of the Philippine National Police (PNP) and the Armed Forces of the Philippines (AFP) was substantially increased to support President Duterte’s war on drugs, criminality and terrorism.
“The proposed budget for the PNP alone amounted to P110.4 billion, or 24.6 percent higher than its 2016 budget, for the National Police force to hire more personnel, and purchase more guns and patrol vehicles to intensify its suppression of criminality,” Diokno said.
He told Congress the proposed budget for the AFP is P130.6 billion, 15 percent higher than the 2016 budget, to complement the AFP’s modernization program, including P25 billion to better equip soldiers for counterterrorism.
The Duterte administration has also sought an increase in the salaries of military and police officers through the passage of a new law for a new tranche of salary standardization to increase the base pay of uniformed personnel and the pension of retirees.
The insurgency war also involved short-run costs for the civilian economy, such as higher oil prices, impacts on such sectors as the airline industry, tourism and share prices of consumer products, a loss of investor confidence, as well as the recession in the world economy.
Some sectors benefited, such as defense industries (e.g., orders for ammunition, communication equipment and combat boots). In the longer run, there might be implications for the level of public spending on social- welfare programs.
For a country whose poverty level is 70 percent of its more than 100 million population, spending too much for the armed services, inordinately very large for its kind of threat, is, indeed, a strong manifestation of poor political and economic judgment.
From the view point of strategic management, it doesn’t make sense fighting 30,000 Moro, Abu Sayyaf and communist terrorists with 10 army divisions, 30 brigades and 90 battalions, 10 separate marine battalions, five engineering brigades and one armored brigade, each with its own headquarters complete with line services (personnel, intelligence, operations and logistics).
In essence, our policy-makers must think of the enormous sums of money that went to overhead expenses alone maintaining multilayered headquarters, with overlapping functions and responsibilities, and the requirements in terms of infrastructure, armaments, ammunition, transportation and communications that runs into billions of pesos, money that could have been saved and diverted to provide the men in uniform decent salaries and allowances and, thus, avoid corruption, favoritism and patronage, the very problems that fed on the military rebellion in the past few years.
To reach the writer, e-mail cecilio.arillo@gmail.com