(Instruments of Power: 4 of 4)
Welcome to Post 24 of 72 Airman’s Writings.
This marks the end of my second year of monthly blog posts on various topics.
This marks the completion of a full third of my intended work on this blog project.
This also marks the end of my series on the national instruments of power.
So, this month’s post is on the fourth national instrument of power, the E of DIME: Economy.
This post, unlike its three siblings, is more of a ramble. I think you’ll enjoy it as much as the other posts despite that. Maybe you’ll even enjoy it more…
If you somehow arrived here without reading any prior posts, I decided to write this four-post series on the Instruments of Power for a few reasons.
For one, I needed topics to write about for my monthly writing exercise project, 72 Airman’s Writings – this blog.
Second, I attended Squadron Officer School Class 22A. Among the many topics we discussed over the course of those five weeks was the National Instruments of Power.
Third, I figured that this would be a valuable opportunity to slightly increase my knowledge as a military officer. Even as a military member myself, I do not absorb knowledge of every facet of the military’s purpose, resources, methods or processes from mere membership, so it benefits me to remain curious, ask questions, and seek greater understanding.
Finally, I’m sharing the E of the DIME acronym with you in this post because we sometimes do things in order, and we’ve already written on the D for Diplomacy, the I for Information, and the M for Military.
So! Economics…
I’d bet that if you have taken an economics course, you have likely heard the relatively simple concept of the law of supply and demand as the basis of economics.
Maybe you haven’t, so here’s a quick simplification:
Basically, our world involves a system in which people Want and/or Have Things.
If a Person has a Thing and a Singular Other Person wants that Thing, they can trade some Resource or Skill for that Thing.
Example:
You have an apple and are willing to trade your apple for my dollar.
You are trading your Thing/ Resource for my Resource.
Example:
You have an apple and are willing to trade your apple for my decently written 250-500 word essay or article.
You are trading your Thing/ Resource for my Skills.
Economics is a system involving all people, though…
If a Person has a Thing and multiple other People want that Thing, then the Person with the Thing may only be able to trade with a singular other Person.
Now, instead of You saying “I will trade my apple for one dollar,” You can now trade the apple for the highest bid from the other People.
Someone’s “I’ll pay one dollar for your apple” can be raised by Someone Else’s “I’ll pay two dollars for your apple” and so on.
Assuming Your apple is the only available apple in the situation, the resources You could trade the apple for are higher: low supply and many in demand translates to higher costs.
Similarly, if You have many dollars and want one apple, and you approach Many People whom each have an apple, You can likely trade at a lower price.
Someone’s “You can have my apple for two dollars” can be cut by Someone Else’s “You can have my apple for just one dollar!”
Again, assuming Your dollars are the only dollars available in the situation, and Everyone wants Your dollars, You could trade fewer dollars for an apple. This can be viewed in multiple ways, but to keep it simple, the ubiquitous supply of apples matches your low demand in your favor, reducing the cost of the apple.
In the same vein:
Low demand and high supply? Low prices.
High demand and low supply? Higher prices.
Low demand and low supply? Or high demand and high supply? Prices depend.
That’s keeping economics extremely simple.
Unfortunately for those of us wishing to keep things simple, there’s entire hierarchies of needs, multiple suppliers, varieties of demand even for singular types of Thing, and financially ambiguous factors that muddy up the idea.
Then to take that complicated concept and encapsulate it in part of a description of instruments of power?
…well, we’re here, so let’s keep trying.
Economics also hinges on the fact that resources are limited. Once an apple is eaten, it’s gone.
Once a Person (or a Family) occupies a space – say, in a house – that space is unavailable for others until the space is vacated.
So, two primary elements are clear: supply and demand.
Supply is relatively straightforward. Supply is stuff.
Low quantities of stuff with no change in the desire for stuff results in higher prices.
High quantities of stuff with no change in desire for stuff results in lower prices.
Demand is less straightforward.
Humans desire safety, sustenance, stability, and as a summary term, shazam – that less tangible something that presumably increases our esteem or desire of us in others.
While demand for ‘housing’ makes sense, the desire of levels of luxury of that housing varies from person to person.
While demand for food makes sense, the desire for specific foods varies from person to person.
Et cetera – but there’s generally a minimum level of desire within the context of specific supply.
Greater desire for something with no change in its quantity results in higher prices.
Less desire for something with no change in its quantity results in lower prices.
I think we get that, now.
But…
What if there is Stuff that is greatly desired but Really Far Away?
Say there’s even lots of that stuff.
Today, we can just put literal tons of stuff on boats, planes, and trains and move it to us – we just exchange a bit more money into the situation to compensate for transportation.
But years ago, maybe we only had boats, so we had to move less stuff, slower, and at greater risk.
…or even years before that, when boats were inadequate for huge hauls over drastic distances, so instead we had to manually carry even less stuff even slower, and at even greater risk.
For the moment, let’s consider an older (younger?) world of earlier seafaring technology and earlier fascination with spices – specifically, Constantinople/ Istanbul.
Istanbul was located along one of the major land routes where spices could be transported easily. As such, it was able to control space and, essentially, impose taxes on spices.
Spices are the supply.
Demand is MASSIVE across Europe.
The plentiful spices are generally Really Far Away in southeast Asia, requiring significant over-land travel or extremely dangerous, technologically-not-so-feasible sea travel.
The further away from the source of the spices a nation was, the greater cost incurred to acquire those spices because Transportation is also Stuff, as was the food to sustain the Transporters and their Security.
And boats sucked.
So, Istanbul got filthy rich because demand was MASSIVE and supply was limited by passage through its lands.
Places like the Netherlands and the Iberian peninsula (Spain and Portugal) had significant costs because their demand was MASSIVE and they had no other good options to get the supply they wanted.
Then, if we skip and simplify it, boats got good and traveled around Africa or through the Red Sea to get spices cheaper.
Technology caused a lot of changes:
The Netherlands, Portugal, and Spain got cheaper spices because they adjusted their incoming supply, even enabling them to sell spices to become wealthier.
Istanbul slowly bled its wealth as supply shifted.
The rest of the world reacted to these changes:
Every nation along the Silk Road and spice routes was impacted.
(I recommend reading Peter Zeihan’s The Accidental Superpower for more about geopolitics).
Basically, boat technology dramatically altered economics.
Now, how might a nation execute their economic instrument of power in today’s world?
You’ve got the simpler, diplomatic stuff:
“If your country continues/fails to behave a certain way, then we deny you stuff.”
“If you do/don’t X, then we’ll buy the stuff we usually buy from you from someone else.”
You’ve got informational stuff:
“We want you to behave a certain way, so we’re going to reduce supply or increase prices of stuff.”
“We’re going to improve our technology to make some economic change on purpose.”
And you’ve got military stuff:
“If you attack a place, then we deny you stuff.”
“If you deny us stuff, we’ll attack you/ your friends.”
“If you sell stuff to/ buy stuff from an enemy or otherwise hostile nation, we’ll attack you.”
These are fairly shallow examples, but the impacts of economic activities can be surprisingly and ridiculously deep.
Why might you care?
Originally, I was going to go with my usual outline:
What is economics?
How does America do it in the context of instruments of power?
Why should you care?
But once I got started, the seemingly coherent ramble emerged.
For what it’s worth, America executes economics deliberately via the Department of Commerce.[1] There are also a lot of independent market forces, but that’s a bit besides the point.
The Department of Commerce employs a lot of different skills that can be easily imagined from various examples above:
Political Science
History
Communication
Planning/ Program Management
Resource/ Time Management
Risk Management
General Science, Technology, Engineering, Mathematics
Statistics
Technical Interaction Capabilities
Even if you’re not interested in considering a job within the DoC, you can likely scale down the concepts or skills from the economic instrument of power to personal skills for self-improvement!
References
[1] U.S. Department of Commerce
72 Airman's Writings 