The Economics of Nuclear Weapons

The recent India Pakistan skirmishes have brought the issue of a nuclear Armageddon to the forefront of international politics. The news channels in both countries, as well as the international media, have been discussing the possibility of the situation escalating into an all-out nuclear war. The question of the futility of such a war has also been raised since it would bring nothing but destruction to both sides.

During these debates, the question of the futility of nuclear weapons was raised many times. Many people believe that the amount of money being spent on nuclear weapons is simply going down the drain. Under normal circumstances, these weapons are never really going to be used. Hence, both India and Pakistan, as well as other countries of the world, would be better off if they simply stopped spending money on nuclear weapons.

In this article, we will have a closer look at the economics of nuclear weapons in order to determine whether the money which is spent on acquiring nuclear weapons can actually be considered to be wasted.

Deterrence: The Real Benefit of Having Nuclear Weapons

The real fact is that nuclear weapons are a relatively cheaper way for smaller states to defend themselves against much larger aggressor states. Conventional warfare is symmetrical. This means that to counter a certain number of troops on the ground or fighter jets in the air, an army has to retaliate with almost equal strength. The problem with smaller countries is that sometimes it is not economically feasible for them to compete with much larger nations. This is where nuclear weapons come to the rescue. They act as a deterrent to the aggressor power. Some examples of such deterrence have been listed:

  • Firstly, during the period after World War 2, the Russian army was much bigger than the American army. However, America did not spend money and resources to create an equally bigger conventional army. Instead, it kept on developing nuclear weapons. The amount spent on nuclear weapons was less, and it still acted as a more powerful deterrent for the Russians.
  • The French were the next to follow suit. After World War 2, the French were being completely dominated by NATO since NATO provided it with security. France developed a nuclear arsenal which helped it get rid of NATO dominance while simultaneously deterring any possible external aggression.
  • In the modern world as well, American politicians and senators routinely talk about committing acts of aggression against Iran. Many Americans believe that America should go to war with Iran since it is a rogue state. On the other hand, there is absolutely no consensus in the United States on conducting acts of aggression against North Korea even though North Korea is also an equally bad rogue state. America has much more nuclear weapons that North Korea does, but the mere existence of nuclear weapons is acting as deterrence against American aggression.
  • There are some negative examples also where the absence of nuclear weapons has encouraged a foreign invasion. For instance, the United States invaded Saddam Hussein’s Iraq on the pretext that there are weapons of mass destruction in Iraq. These weapons have not been found until today even though the entire country has been wrecked. The same can also be said about Muammar Gaddafi’s Libya where the American invasion happened because of a lack of nuclear weapons.
  • Ukraine is another compelling example of how lack of nuclear power creates national security problems. When the USSR disintegrated, Ukraine had a large arsenal of 130 nuclear weapons. Other countries such as America and the United Kingdom convinced Ukraine to give up these weapons. Now, the Crimea region of Ukraine has been invaded by Russia. If Ukraine had nuclear power, the Russian would not have been so blatant about the use of force.

The Trillions of Dollars That Nuclear Weapons Have Saved!

The bottom line is that nuclear weapons act as a very credible deterrence against foreign invasion. Up until now, there has been no invasion of a nuclear-armed state. The aggressor powers will always be concerned that if the smaller power is backed into a corner, it could unleash a nuclear Armageddon.

Hence, if one comes to think of it, the money spent on nuclear weapons makes complete sense. It is true that billions of dollars are being spent on weapons that will never be used. However, these weapons act as an insurance policy. They are preventive measures against foreign aggression. If these billions of dollars were not spent on the creation of nuclear weapons, the world would have fought many more wars, and trillions of dollars would have been spent. Also, enormous loss of life and human suffering would have been inflicted on the planet. Smaller states are therefore better off, spending money and buying a nuclear insurance policy which all but eliminates the chances of a conventional war.

The bottom line is that nuclear proliferation may not be a bad thing. Ironically, it may act as a deterrent and bring peace and stability to the world. The current status quo wherein only some states are nuclear-armed works in favour of those states as it enables them to dominate others. Once again ironically, the absence of nuclear arms leads to warfare causing wastage of precious economic resources and human life.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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