Top Gun economics

December 8, 2008

It’s not often that economists turn their attention to military hardware, but Deutsche Bank has done just that in its latest world outlook. The subject is aircraft carriers and what it sees as the strange desire among a number of countries to build them.

Russia has suggested it may build up to six carriers, DB notes, while China plans one and Britain and France three between them. Like the true economists they are, DB first questions the need, saying such boats are vulnerable, make no sense for coastal defence and are for projecting offensive power over long distances. Then comes the cost:
  

To build a serious aircraft carrier costs well above $5 billion. But then you need to build half a dozen escort vessels and the aircraft to produce a battle unit that will require upwards of 10,000 sailors. Since it is for distant power projection, to keep a single aircraft carrier group on constant deployment requires at least two and more likely three groups.”

It reckons China can afford this because it only plans to build one. But Russia, even with a recent surge in wealth, is unlikely to launch a programme soon, it concludes.

4 comments

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Aircraft carriers have probably already become obsolete
due to modern missile development. This has not yet
been acknowledged by those superpowers capable of building
and operating these monster targets as we have not yet
had a war between nations with carriers and nations with
sufficient modern missile capacity.

Posted by Gene Strong | Report as abusive

Gene,

I agree w/ you 100%. The 11 US acc battle groups are obsolete & vulnerable. They also reflect huge legacy & operating costs. If analysed using the objective metrics of business, they would fail analysis.

These are the 21st century floating naval maginot lines. There’s just too many egos wrapped around these slow boats & their support groups.

Posted by Sage | Report as abusive

The main menace in these days are terrorists. Therefore, why would you need to invest in a carrier?? It won’t save you from promt terrorist attack!!

Posted by Raul | Report as abusive

5 billion for a corrupt corporation in need of bail out, or 5 billion for a new aircraft carrier? I’ll take the shiny new boat!

Posted by Patrick | Report as abusive