Containing global violence costs nearly $10 trillion a year

A U.S. Army Soldier from Alpha Company, 13th Psychological Operations Battalion pulls security from a humvee at a vehicle control point in the village of Kapisa, Afghanistan
A U.S. Army Soldier from Alpha Company, 13th Psychological Operations Battalion pulls security from a humvee at a vehicle control point in the village of Kapisa, Afghanistan.
Staff Sgt. Michael L. Casteel

The price of insecurity is quite high. The Institute for Economics and Peace estimates that the world spent $9.46 trillion to contain violence, in 2012. That accounted for some 11% of the global economy.

“Were the world to reduce its expenditure on violence by fifteen percent it would be enough to provide the necessary money for the European Stability Fund, repay Greece’s debt and cover the increase in funding required to achieve the United Nation’s Millennium Development Goals,” says the Institute for Economics and Peace.

The estimate is a part of a new report from the group that calls attention to the economic impact of violence. While the human cost is well documented, this is one of the first reports that accounts for the money spent on containing violence and the money lost due to it happening. A marginal decrease in violence could have a major impact.

Military spending eats up half of the cost, followed by the impact of homicides and then internal security (ie. police officers). The countries that spend a large portion of their GDP on violence containment come as little surprise: North Korea, Libya, Syria and the US. One slightly surprising entry is development darling Liberia. The country is still emerging from the damage caused by a pair of nearly successive civil wars spanning from 1989 to 2003.

I spoke with Michelle Breslauer, the Americas Program Manager for the Institute for Economics and Peace, about why Liberia is so high on the list and what can be learned from the study.

I found it surprising that Liberia was so high on the list. Why is violence still such a problem in a country that is lauded for its post-civil war advances, including a Nobel Peace Prize?

Despite Liberia’s notable advances, it is a country that still feels the effect of conflict. The methodology of this analysis attempts to measure the full space devoted to violence containment in a country. The majority of Liberia’s violence containment spending is a result of the UN Peacekeeping mission presence, which is operating partially to compensate for weak peace-supporting institutions. In the 2013 Global Peace Index, IEP compared levels of peacefulness with a country’s peace-supporting institutions. Liberia has a ‘peace deficit’ which suggests that the level of peace the country experience is not matched by the strength of its institutions.

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This report is almost like a $10 trillion bill on the ground. Why are countries and international organizations not doing more?

This is one of the first comprehensive and systematic attempts to aggregate the global costs of violence. While there are established studies that look at the economic impact of one type of conflict, for instance a civil war, IEP is working to communicate a more holistic understanding of the tremendous social and economic impact of violence. We take into account everything from military spending to the fear of crime, addressing violence as an industry, much like health or education, which has never been done before.

We hope to give countries and international organizations the tools they need to better understand the relationship between violence and poverty, and peace and prosperity. Looking at the vast discrepancy between violence containment spending and ODA disbursements [violence containment spending is 75 times the size of ODAs]encourages policy-makers to examine priorities for aid allocations. Many of the countries with the highest expenditure on violence are also some of the poorest, demonstrating the need to invest in peace in international development frameworks.

One could argue that more military spending is necessary to ensure security. Does such a policy prescription make sense? Are non-militarized solutions adequately employed to increase security?

Military spending is a reflection of either actual violence or the fear of violence. What the violence containment spending model provides is greater clarity of the cost and benefits of pre-emptive policy interventions. For instance, there is a powerful economic case for negotiated settlements to disputes such as those that occurred in Indonesia with the ‘Free Aceh Movement’ or in Northern Ireland with the Irish Republican Army.

In a peaceful world, what is roughly the target GDP expenditure on violence containment?

There is no universal target as expenditure will vary by country. While there is always a need for some level of policing and jails, the key is to find the optimum balance. Expenditure on violence containment is economically efficient when it effectively prevents violence for the least amount of outlay. Understanding the cost and benefits of both violence reduction and violence prevention programs is key.

Econ Impact of Global Violence Containment

What are ways that foreign aid can reduce violence itself and expenditures on violence?

It is important to look at the virtuous cycle of peace to understand how investing in peace can result in clear economic dividends. Building peace fosters resilience and human development, through the development of the attitudes, institutions, and structures that reduce violence and sustain peace. If foreign aid was invested in programs that reduce violence, it would lead to increased productivity and social cohesion. This then reduces the need for violence containment expenditure, such as incarceration. Investing those savings back into peacebuilding structures would lead to increased opportunity, productivity and prosperity. Developing the attitudes, institutions, and structures that sustain peace requires investing in education, youth, anti-corruption measures, free media, and access to basic services, among others.

With the US making is draw-down in Afghanistan, is the country prepared?

Afghanistan currently ranks at the very bottom of IEP’s Global Peace Index, with high levels of internal conflict and political instability. As the US is making its draw-down in the country, Afghanistan is increasing its levels of military expenditure, and the percentage of GDP spent on violence containment is the fourth highest in the world. However, it is critical to not only look at levels of negative peace but also to understand the institutional and societal capacity for peace. Empirical analysis by IEP identified an eight part framework to describe the attitudes, institutions, and structures associated with peaceful societies. These are areas that help move society away from conflict in a non-violent way and include well-functioning government, sound business environment, equitable distribution of resources, acceptance of the rights of others, good relations with neighbors, free flow of information, high levels of human capital, and low levels of corruption. In order to stabilize Afghanistan, focus must be placed on strengthening and building these structures.

It seems like the data shows that throwing money at violence containment is not necessarily the best solution. What lessons can the US take from the report on regards to its domestic and international policies?

IEP previously looked at the macro-economic effect of wars on the US economy, finding that public debt, levels of taxation, and inflation increased, while consumption decreased. So the common refrain that war is good for the economy is being dispelled. What the US can do is to fully understand the long-term economic effects of military action compared to investing in more preventative measures.

 

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About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.