The Deadly Arms Game – Part 2

Around the time of the Kargil war in July 1999, this is what Atanu Dey wrote in an article entitled “Dollar Auctions and Deadly Games“:

One enlightening model of human behavior is the so-called “Dollar Auction” which illustrates the sort of trap that conflicts can lead to with costly consequences. This auction proceeds much as a normal auction except that while the highest bidder gets to keep the $1 bill bid upon, the second highest bidder has to pay the auctioneer the amount of the second highest bid.


The only way to win at a dollar auction therefore is either to not participate or if one does begin, then to either reach a compromise with one’s opponent or to exit as early in the game as possible.

Wars too have the peculiar characteristic that both parties, winner as well as the loser, pay. The dollar auction game illustrates the trap that nations fall into in a process of conflict escalation given the structure of strategic games.

The dollar auction is a perfect model of the conflict that India faces against Pakistan, with Kashmir being the dollar being auctioned. The bids in this auction are the military expenditure of each nation and the auctioneer is the one who collects the spoils of the military expenditures of the two nations. Since advanced industrialized countries are the major suppliers of arms, they play the role of the auctioneer quite well.

If the long drawn-out India-Pakistan conflict is seen as a dollar auction game with the US as the auctioneer, it is easy to understand why it is in America’s interest to keep India engaged in a perpetual conflict with Pakistan that is costly for India but very profitable for the US. Read in that context, the Headley story starts to make sense as well. The plan has been executed to perfection. As they say, it’s all about Money, Honey!

Continued tomorrow.

8 thoughts on “The Deadly Arms Game – Part 2

  1. It’s would best to have no arms & military, but what will we do? Arms & military is a permanent matter of history. You can say it is the most terrible. But I often think the great great majority of us know very little about war.

    We say so much about it, but few are so fully involved, thankfully, to be certain of their views. Maybe that’s the best thing every military can say: Civilians were not there.

    We may have many poor leaders. Smart leaders would not have led us into a messy world. We see leaders that are so incapable that they make poor decisions. Then why can they be so very shrewd and smart to “keep India engaged in a perpetual conflict with Pakistan”?

    You could not. I could not. A 1,000 professors could not. It’s too ingenious and complex and persistent to be true. You’re asserting that arms dealers are very smart, smart for profits, and smart for bloody profits, plus you’re asserting Obama and his policy is happy to get arms profit from long war. I think that’s a silly assertion. The whole entourage may be very poor leaders and managers, history can judge that, but I doubt one of them is tricky as you say.

    America is big and clumsy, and stupid, the world would have no war if we were smart, but it is not wishing to harm in the way you claim. Blood is more important than offhanded political statements.

    The wickedness of war is not a dollar auction. Feels that way. But it is not.

  2. Brian,

    You the error you are making is simple. You label the decisions made by the leaders as stupid. The question is, stupid from which point of view? What may be stupid from the point of view of general welfare may be very brilliant from the point of view of specific narrow interests.

    The dollar auction is a model which says that it is in the interests of the arms manufacturers and arms dealers (who gain from the continuation of conflict and lose if conflict stops). Are you claiming that this is not true? Are you claiming that it is NOT in the interests of the US — the largest manufacturer and exporter of arms in the world — to see continued conflict around the globe?

    Are you saying that selling $10 billion worth of arms to India is not in the US’s interest? Are you saying that the US is giving away $7 billion worth of arms to Pakistan to see peace break out in the Indian subcontinent?

    If your answers are “yes”, then we obviously inhabit different realities and any discussion would be futile.


  3. Like any other business, arms dealers and manufacterers are a business as well. If their “customers” were to disappear (i.e. no conflict) how will they survive. Hence it is correct to surmise that there are business interests behind this.

    What I often wonder is that after arms, sports & entertainment is the 2nd largest business worldwide. Coincidentally, India and US are both big on sports & entertainment as well.

    Is there an opportunity to move the $$ away from arms to these industries that have less strife and blood to shed?


  4. Dear Atanu,
    In all the managers of weaponry fab & sales, these people are not the cause of so much worldwide terror and war. Oh, indeed they are fuel to a longtime and crude war culture, a disease in humanity in my opinion. But I find it incredulous that there’s dealers instigating wars to boost sales. It’s an easy claim.

    I make a second point. To carry on a criminal sophistication that prolongs conflict, to do so undetected while under relentless suspicion and scrutiny, would stretch human intellect. Were they that bright and smart, certainly they would not have chosen such a stupid, yes stupid, approach to wealth. I’m saying the caliber of brain power to execute a hidden global conspiracy to spark and sustain war, especially across foreign scope and years, is just too astounding.

    Were crowds of hidden arms’ conspiracists a true claim, it would illustrate grand smarts. Were they so genius, we would all be much more so. None in humanity carry such execution and skill, even if we would imagine such intricate larceny.

    Some conspiracies are too far-fetched. That’s my hope to say. Plus, my last assertion, I don’t see America as so ill motivated and treacherous. Dumb maybe, but not so malicious and mean to operate such harm.

  5. Brian,

    Have you seen the movie blood diamond? Please watch it. This theory seems far fetched. But it is definitely possible.

    People motivated by profits do really cruel and sad things. This sadly happens often.


  6. Brian,

    You wrote, ” But I find it incredulous that there’s dealers instigating wars to boost sales. ”

    Yes, I too would find it incredible. No one can credibly make that claim.

    My claim is that it is in the interests of the arms manufacturers that conflict continues. It is in their interest, and it is in the interests of those who make the decisions on whom to sell arms to and whom to gift arms to.

    Perhaps you have not read my piece on “Dollar Auctions” — or perhaps you read it and did not understand the thesis. The argument is simple. It is in the US’s interest to keep the conflict between India and Pakistan alive. If the US wanted, it could have stopped the gift of arms — fighter planes, for example — any day of the week. But the US does not!

    Ask yourself why not. Why does the US give Pakistan tens of billions in arms for free? And don’t tell me it is because of Afghanistan. Since 1950, the US has been arming Pakistan for free. Care to explain why?

    Do you realize that arms manufacturers in the US “own” the politicians? Do you realize that the US exports arms to BOTH sides of all conflicts?

    Try to explain away what Eisenhower termed the ‘military-industrial’ complex. Go read this for more.

    Go watch “The Confessions of an Economic Hitman”.

    In a comment above, I have given a link to another post of mine: The care and feeding of the permanent arms industry.

    I am giving all these pointers since it is rather tedious to go over things that are already available on the web for anyone to watch, listen and read.

    If after all this, you are still not convinced, I wish you well and resign from this conversation.

  7. Well, I do not defend war markets. War is acid. Ending war will require our acerbic will. I like your vinegar and resolve! And I agree we are enduring a culture of arms sales. I suppose dealers are witty enough for their profits but too blockheaded to step away. Or, as they should, too shortsighted to install your ingenious Dollar Auctions. We shall try to repair ourselves, for the good of all humanity.