There Are Three Ways To Pay For War in Ukraine
A public service announcement
With the situation in Ukraine as fluid as it is, Congress seems poised to back up President Biden in his confrontation with Putin’s Russia any minute now by legislating actual funds. It is therefore vital for our public conversation about war, and the expenses of war, let alone contemplating rumors of war, to keep a simple truth in mind about how we pay for wars.
By “we,” I mean humans, and by wars, I mean all of them, ever. Human beings have only ever invented three ways of paying for war since the invention of money, and every innovation so far has been a variation on one of these three. Thus all public policy choices regarding war finance must obey the dismal law of war economy, which can be understood as a choice of political poisons:
Taxes. Sounds simple enough, until you realize that a military draft is taxation — the government is taxing the life, or some period of the life, of that person. Then there is the perennial problem of Who Pays the money taxes, and that is a hard question when gasoline and groceries are suddenly more expensive. Which brings me to…
Inflation. It’s when you devalue your currency. Ask the principalities of the Thirty Years’ War how that worked out. Also the Romans. Also Jimmy Carter but not Ronald Reagan. Which brings me to…
Debt. We have to credit Lyndon B. Johnson with converting the United States to a debt-financed military power in Vietnam and Reagan with sealing the deal. Debt is always a problem, and the US already has enough debt as it is because we do keep charging wars to a credit card and we just charged the whole Covid pandemic the same way.
Again, those are the three choices. You have no other choices because no other choice exists. All three possible choices are contentious. In the event of actual, real, not-imaginary war, they are the contested lines on which Americans will fight about the resulting cost in blood and treasure.