A potential military conflict in Ukraine will come with costs for all those, directly and indirectly, affected by a war situation. To examine the costs involved in a war, it is interesting to examine the US military action in Afghanistan.  The US invaded Afghanistan in October 2001 in response to the September 11 terrorist attacks which the US believed were the responsibility of Osama Bin Laden who was being protected by the Taliban who controlled Afghanistan at the time. The American’s stayed in Afghanistan until 2021.

According to most analysts, the war in Afghanistan cost America around $1 trillion. This figure can be broken down into $900 billion spending on military operations which includes personnel, equipment, ammunition, and $130 billion spending on building up and training the Afghan army and police force. The $1 trillion figure does, however, ignore the medical costs of veterans injured in the conflict and the interest costs of borrowing to fund the war.

The $1 trillion costs of the US war in Afghanistan can be looked at in opportunity cost terms to the US economy. The highest value alternative the $1 trillion could have been spent on. If the aim of the war from an American perspective was to improve the security of the US population against terrorism, then the $1 trillion could have been spent on intelligence and counter-terrorism security (a possible opportunity cost).

It is also worth considering the cost of military and counter-terrorism spending in terms of the economic output they produce and how this benefits the US population. Defence goods produced will be included as part of the US GDP and it will generate income and employment, but the benefits of military spending on producing, for example, tanks, ammunition and fighter jets may not be immediately tangible to the US population.

The $1 trillion spent on the war in Afghanistan could make US citizens feel safer because of the power of the US military and its perceived ability to stop terrorism emanating from Afghanistan. The benefits of spending on healthcare or education are, however, perhaps more likely to directly improve the welfare of the US population. The $1 trillion spent on the war in Afghanistan could have paid for 10,000 new hospitals in the US or 25,000 new schools.

The opportunity cost of resources allocated to defence can be looked at in terms of resources not allocated (foregone) to healthcare or education. This can be illustrated by a production possibility curve which is shown in the diagram opposite. As the US economy moves from F to G on the PPC curve the opportunity cost of producing Y to Y1 more military goods is X to X1 fewer healthcare goods.

Because military spending is in the hands of governments, the allocation of resources between military goods and healthcare/education goods is a political decision. The invasion of Afghanistan in 2001 was taken by the Republican President, George Bush who had focused on a war on terrorism and may well have wanted to look strong in response to the events of September 11.

Military conflict in Afghanistan has also affected the production possibilities of the Afghan economy because the destruction of capital in a war reduces its potential output and this could have shifted its production possibility curve inwards.

The immense human cost of war in terms of the lost lives of soldiers and civilians must also be considered. Since the US invasion of Afghanistan in 2001, there were 3,500 coalition force deaths, and 20,500 military personnel were injured in action many with life-changing consequences. 64,000 Afghan security services were killed along with 111,000 Afghan civilians. This is a death toll of 199,000 people and if you add to this to the unimaginable impact on the families of those who died or were injured by the Afghan war you have a huge human cost. You also have to think about the traumatic human cost of the war to the wider Afghan population who had to endure the constant stress and anxiety of living in a war zone.

Possible questions to discuss with a class

1. To what extent is it possible to put a monetary value on the cost of a war?

2. Discuss the possible benefits of spending on defence.

3. If wars come with such significant economic costs why do countries engage in them?