War….Innovations, Surprises & the New Winners

                        War….Innovations, Surprises & the New Winners

 

 

War is destructive….this is a universal truth. However, as north pole cannot exist without south pole, evil does not exist without God, every destruction too co-exists with creation. 

 

This co-existence was witnessed during the three big wars of the previous century. 

 

World war I : The need for treatment to soldiers led to huge investments in research for plastic surgery which led to development of trauma treatments for road accidents.

 

World War II : Air attacks necessitated increased investment in Radar technology which ultimately triggered development of Air Traffic Control and Weather Forecasting for consumers

 

Cold War : In order to ensure communications and survive a nuclear attack, US made huge investments in ARPANET which led to the development of internet.

 

The list of war-driven innovations is endless – canned food, drones, nuclear power etc. 

 

 

An immediate questions arises - Is there something unique that happens during war times that triggers innovation ?

 

To answer this, one needs to dive one level further and discover what is that special thing that becomes the core reason for any war. Common sense says that the core reasons are greed, hatred, ego etc. that trigger war. However, for practitioners and academicians of strategy, there is an even more fundamental condition that is primary to any war  - existence of an irrational mind. 

 

Rational minds assess the damages caused by war and see value in alternative ways of resolving the differences and thus work towards achieving the alternative solution.

 

However, when one side drifts towards irrationality, the risk-reward curve gets skewed for the other party, who then starts seeing no value in the rational path. Prisoner’s Dilemma is a classic example. With risk-reward curve getting skewed, the significance of economic logic and rational market theories in investment decisions also comes down. And this skewed risk-reward scenario is an adversity but is also an opportunity.

 

In normal markets,  there are certain innovations/investments that are unable to attract funding since the risk reward ratio does not justify the investments, but when risk-reward curve itself gets skewed, such innovations/investments seem feasible and thus get funded. 

 

During WW-II, the need for uniforms for soldiers in large quantities justified huge investments in machines and processes for large scale production of readymade garments. Post-war, this newly created eco-system could be used to manufactured readymade garments at very affordable prices, thus creating a new large scale consumer market which did not exist pre-war.

 

 

 

 

 

The Suprises 

 

Besides innovation, war can also bring up surprises that were unthinkable before the war. 

 

International political events have always caused huge polarization on Indian social media. But the US-Iran war has seen very limited polarization – a pleasant surprise for those on social media. 

 

And this is despite presence of strong anti-Trump sentiments, strong anti-Isarel sentiments and strong anti-Muslim sentiments in India.

 

Wars do bring unthinkable surprises.

 

 

 

The New Winners

 

With a new risk-reward system, a logical fallout is “new winners”.

 

In 9 x 11 twin tower attack, the biggest winner was neither Afghanistan nor Pakistan, as most people would have thought in 2001. It was actually China.

 

The attack accelerated US’s willingness to integrate China into the World Trade Organization and thus China became part of WTO. Also, post 9x11, in order to avoid any recession, US pushed for quantitative easing and started printing dollars. A large share of easy dollar money found an easy way into cheap imports from China (who was now part of WTO). This triggered huge surplus for China and huge deficits for US. After 25 years, the global power equation is easily palpable.

 

 

Any guesses on which nations will be the new winners in the post US-Iran war of 2026 ?

 

India is the first and obvious answer. With US losing its sheen in being a trustworthy partner and China never known for trustworthiness, India can become a preferred choice as ‘the big brother’ for many small Asian, African and South American countries.

 

Any other surprise winners ?

 

I would like to take a wild bet on Pakistan. Post-war, gulf countries - looking for larger security needs - would find Pakistan as an attractive source of military men. With a Sunni Muslim dominated army, powered by nuclear  power and available at a low cost, Pakistan could be a huge gainer.

 

Readers of this blog would think that is it logical for an Indian to even think about Pakistan as a winner. But when irrational behavior drives decision making, can authors remain indifferent  ? 

 

-  DEEPESH SALGIA