Keeping sea lanes open: a benefit cost analysis — Crooked Timber

8 Apr

Would a crisis in the South China Sea, presumably caused by a Chinese attempt to claim control, have such a huge adverse effect? It is routinely pointed out that the volume of trade passing through the South China Sea ($5.3 trillion on this estimate ) is very large. But the great majority of this trade (around $4 trillion) is going to or from China.[^1] Obviously, the Chinese government can control this trade in any way it chooses through domestic policies and has no interest in blocking it. The remaining $1 trillion or so of trade (about 1.5 per cent of global GDP) might, in the event of a crisis, be forced to take more circuitous routes, as happened when the Suez canal was blocked. But using the same method as was applied to Suez, it’s easy to see that the total impact would be modest.

On past experience, it seems highly unlikely that an economic analysis of this kind will have any effect on military policy discussions. Vague claims about economic interests loom large in such discussions, and attempts to pin them down to concrete realities are routinely evaded. The century beginning with World War I, and running through to the trillion-dollar quagmires in Iraq and Afghanistan has seen countless demonstrations that, under modern conditions, war is almost invariably an economic disaster for all concerned. That hasn’t stopped war, and preparation for war, being considered as an essential part of a national economic strategy, and it seems unlikely to do so.

Source: Keeping sea lanes open: a benefit cost analysis — Crooked Timber

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