Posted by: graemebird | October 28, 2006

War Financing For Middle-Power Survival In The 21st Century.

The template here is the idea of Codevillas (speaking of Livy) of the early Romans being successful by making their wars BIG and SHORT.

How do we arrange our finances for such a contingency.

Well in the first place we have to have the most minimalist non-defense, non-security sector imagineable.

Then what we need is a series of taxes at very low rates. But rates that can be upped for a short time to handle the explosive intervention and for the hurried prepartions after that.

So for example you can’t have GST at 15%. Or the top rate for income tax at 15%…..

Because if you raise these taxes higher then that they become horribly inefficient.

So if you had the GST it would have to be at (lets say) 5%. So that during the action and its super-build-up following the action you could raise it to 15% temporarily.

And thats the same with the income tax if its retained. You might want it at 5% so that it can temporarily be raised to 15%.

The next thing, and this ought to go without saying is that your currency ought to be 100% backed commodity-money. There is just no way you can afford to have the international community losing faith in your bullshit, fractional-reserve-paper money when everyone is sneering that you are going to wind up a satrap of some Crackers or the Chi-Coms.

Another consideration is that there cannot be a single dollar of debt in any government institution….. Federal/State or Local.

If we are looking at a 3 month explosive action and then a massive military build-up AFTER THAT to deter a reprisal the borrowing doesn’t start until after the action.

So for 3 months of action you might have 9 months of heavier taxation. Wherein you fight, borrow, build-up and pay off what you’ve borrowed.

Hopefully this can be avoided of course. Like hopefully you spring into action and do the build-up and mobilisation only. And don’t have to fight at all. And so you don’t have to borrow and keep that financial powder dry.

Potential enemies will know therefore that you have:

1. Fiscal blue-sky above you when it comes to rapidly raising taxes.

2. The strongest and best backed currency on the planet that isn’t going to let you down even if the barbarians take over a chunk of territory.

3. Not a dollar of public debt

There is precedent for superior financial power leading to the ability to kick ass against what otherwise would have been an overwhelming opponent.

During the heyday of the Amsterdam bank the Dutch and British navies were clashing all the time.

They had three wars between 1652 and 1674.

The British.. according to Niall Fergusan had a bigger economy. They had two and one half times the population. And they went through a massive build-up in their navy. They were not without determination to win this thing.

Yet the Dutch whipped their ass and Fergusan credits this ability to their superior financial system.



  1. A sensible financial strategy is about as likely as a sensible military strategy; and how likely is it that the public will support the ruthlessness that short wars often require?

  2. An interesting point the second one.

    But we are not here taking bets on WHAT IS GOING TO HAPPEN.

    This seems to be a common mistake. To confuse what we ought to do and in the end must do to survive and some sort of passive crystal-ball-gazing.

    You think you’ve made a point but you’ve really changed the subject.

    I wasn’t getting involved in crystal-ball-gazing. I was saying what will give us an advantage and allow us to survive without being a leige to people that we are frightened of.

    As to the second point. Its long wars that the public lose heart in. An explosive effort inspires the public (hateful characteristic of the human race that this shows up) and the hardest part of it might be withdrawing while you are ahead.

    As to ruthlessnes. Well I don’t quite know what you mean by that. I see no point in targeting civilians. Materiel, combatants and regime leadership are the only viable targets.

    But given that yes you need to be ruthless if you are a middle power alone in the world. You’ve got to wipe the oppositions forces out so fast and convincingly and get back home to springload with such speed and committment that all potential enemies are completely dumfounded.

    This is actually a pretty good way to make friends internationally. Another perverse characteristic of the human race.

  3. Graeme. can you turn on the RSS feed for this blog please?

  4. I’m a bit of a techno-phobe Rob. I don’t know how to set that up.

    Hell. I haven’t yet sorted how to take advantage of it. Don’t know what the feed does at all.

    So you might be able to give me some instructions.

  5. Graeme, I think your WP package is the same as mine, so if you go to Dashboard -> Presentation -> Sidebar widgets and add the Meta or RSS panels to your sidebar, it should be there. It allows your readers to get live feeds of new posts or comments at your blog.

  6. hey graeme how often do you check your email? just about to send you something now

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