Lessons of the Ukraine War

The first lesson was that Ukraine was stronger than Russian or American authorities expected. Most commenters expected Russia to win rapidly, not unreasonable given the relative size of the two countries’ population and economies. They didn’t.

It took longer to learn but the second lesson was that so was Russia. Their military performance was not impressive but neither sanctions nor the cost of three and a half years of a very bloody war seems to have had much effect on the economy, the conditions for Russian civilians, or Putin’s hold on power.

The third lesson was that the crucial weapons were not tanks but drones and that the technological superiority of the NATO powers was less important than expected. As best I can tell, the important improvements in drone technology were made not by the US and the advanced European economies but by Russians and Ukrainians.

War as schoolmaster and laboratory.

The fourth lesson was that the European NATO powers were weaker than expected. Their GNP is about four times Russia’s and nobody is blowing up their factories, but three and a half years after Russia invaded Ukraine and they committed to supply Ukraine, their production of artillery shells is still much less than Russia’s.

Rich but…

One possible explanation of the weakness of rich European states is that so much of their revenue is committed to welfare state expenditures, politically difficult to reduce, that they cannot afford a large increase in military expenditure. The EU has been increasing, not decreasing, welfare expenditure even as it talks about the need to rearm, perhaps because parties that want to rearm need to bribe coalition partners to support increased defense budgets. Germany, whose government spends almost two thirds of its income on social expenditure, decided to pay for increased defense expenditure not by spending less on other things but by loosening restrictions on borrowing.

The table shows 2024 statistics for Russia and the major NATO countries: government expenditure, public social welfare expenditure and military expenditure, all as a percent of GDP.¹

The NATO countries (with the exception of Turkey²), spend three to five times as large a fraction of GDP on social welfare as Russia and, with the exception of the US and Turkey, collect a larger fraction of GDP as government revenue. That suggests the possibility that the reason they are less able than Russia to spend money on their military is that they are more socialist, at least in the sense in which “socialist” is used in the European social democracies.

Another and related explanation of the slow pace of rearmament in the NATO states might be the level of government regulation, socialism in another sense. Part of rearming is producing military equipment, including artillery shells. Artillery shells (and missiles and mines) require explosives. Regulation in the US and Europe is in part aimed at preventing risk.

An industry where anything risky requires multiple layers of approval by government bureaucracies is likely to move slowly. Consider the nuclear reactor industry which, in the US, moves so slowly that reactors that in the early years could be built in a year or two now mostly cannot be built at all. Or consider the contrast between how long it took to build a bridge or a subway at the beginning of the 20^th century and how long it takes at the beginning of the 21^st.

According to an online ranking of countries by how strong their regulation is, it is much weaker in Russia and Ukraine than in the NATO countries. Whether or not that is the case, in a near-dictatorship engaged in a war that its ruler very much wants to win regulatory obstacles to the production of war material, if they exist, are likely to get ignored and similarly in a country fighting for its life.

The Future of the Welfare State

The experience of the past century or so suggests that, in a rich modern democracy, government spending in general and welfare transfers in particular tend to increase over time. The same seems to be true of regulation. If the explanations I have offered for the weak response of the NATO states to the Ukraine war and the increased threat from Russia is correct, one consequence of that growth is to make countries less able to defend themselves.

We might see a future where the growth of both redistribution and regulation in rich democracies is occasionally interrupted by actual or threatened military conflict with poorer, less democratic countries that see a neighbor both rich and weak as an opportunity for conquest or extortion. The result could be a punctuated equilibrium, welfare growth balanced by an occasional conflict or threat of conflict leading potential victims either to cut back on welfare and regulation — it will be interesting to see what happens in Poland, the one major NATO power that is, for obvious geographical and historical reasons, taking rearmament seriously — or be conquered.

I am reminded of Kipling’s account of the problem:

It is always a temptation to an armed and agile nation
To call upon a neighbor and to say:–
“We invaded you last night–we are quite prepared to fight,
Unless you pay us cash to go away.”

And that is called asking for Dane-geld,
And the people who ask it explain
That you’ve only to pay ‘em the Dane-geld
And then you’ll  get rid of the Dane!

It is always a temptation for a rich and lazy nation,
To puff and look important and to say:–
“Though we know we should defeat you,
we have not the time to meet you.
We will therefore pay you cash to go away.”
...

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1. Russia no longer publishes a breakdown of expenditure; I got my figure for its social welfare expenditure by combining an estimate of its ratio to total expenditure from one source with an estimate of the ratio of total expenditure to GDP from Wikipedia. Figures on 2021 expenditures provided by a Russian correspondent implied a ratio of about 11%, higher than my 2024 estimate but, like it, strikingly lower than the figure for the NATO countries. My figure for Ukraine is from another source.

2. Turkey has remained neutral in the war while taking advantage of the opportunity it provides to reduce Russian influence over territories near it.