Peace Pays (March, 2007)

An economy based on violence prevention could realize an annual “peace dividend” of $1.1 trillion (conservative estimate).

If the combined cost of direct and indirect consequences of interpersonal violence in the USA is $425 billion, and the direct cost of US military involvement in violent conflict is currently $666 billion, not counting the indirect military costs, we are spending at least $1.1 trillion per year on crises of violence. How long would it take to bring that expense down to zero?

It makes “cents” to establish a cabinet-level Department of Peace. The first year’s investment might be $10 billion, could save $70 billion. Reinvested in prevention, an upward spiral of economic benefits would quickly result in healthy growth and development for children, security and prosperity for adults. An annual investment for 10 years of $59 billion would provide shelter, health care, AIDS control, eliminate starvation and malnutrition for EVERYONE on the planet. The need for a huge military machine would decline rapidly as world desperation, the root cause of violent conflict, is regarded seriously.

DISCLAIMER: I do not have expertise in the area of economics. I acquired a Master’s degree in systematic design-planning as taught to me by an associate of R. Buckminster Fuller. I have a personal bias towards non-coercive conflict resolution, and am the Oregon State Coordinator for the campaign to establish a U.S. Department of Peace. — David Hazen

Prevention Math: Benefit to Cost Ratio

The direct and indirect costs of inter-personal violence in the USA has been estimated at $425 billion per year by the Illinois Center for Violence Prevention.

Evaluation of programs for the prevention of interpersonal violence does not produce a single, generic benefit-to-cost ratio. However, research is indicating that the economic benefits of well-designed programs are in several orders of magnitude greater than the costs, and that early interventions on youth have the greatest benefits. There is also a growing acknowledgment that synergistic results occur in the presence of multiple initiatives and community involvement, as well as a growing awareness that violence is not only a systemic problem (Transforming Communities), it is a learned behavior and therefore can be “unlearned.” (Lt. Col. David Grossman)

The Washington State Institute for Public Policy, in its endeavor to find the best-practice models in the field, has produced perhaps the most widely cited body of evidence for the efficacy of specific programs. In a September 2004 report, “The Benefits and Costs of Prevention and Early Intervention Programs for Youth,” the WSIPP listed juvenile offender programs that range in benefit for each dollar spent from $38 for Dialectical Behavior Therapy to $7 to $13 for Functional Family Therapy. Aggression Replacement Training benefit ranged between $12 to $20. The Child Development Project saved $28 for each dollar spent, Good Behavior Game saved $25. Other programs for youth did not fare as well.

The benefits of adult programs are not as great, yet still significant. US Dept of Justice Federal Bureau of Prisons report State of the Bureau 2005 says, “Regarding programs that the Bureau has found to have a positive effect on recidivism, the benefit-to-cost ratio of residential drug abuse treatment is as much as $2.69 for each dollar invested in the program; for adult basic education, the benefit is as much as $5.65; for correctional industries, the benefit is as much as $6.23; and for vocational training, the benefit is as much as $7.13.” In another study, “Transcendental Meditation in Criminal Rehabilitation and Crime Prevention” published in September 2003 in the Journal of Offender Rehabilitation, estimated savings were $10 for each dollar spent. Total savings over 5 years for every 1,000 inmates and 100 correctional officers instructed in TM is estimated at $31.6 million.

Without a doubt, supportive interventions on aggressive thought processes by means of education and training are far more cost-effective at promoting human security than punitive, after-the-fact crisis management strategies.

There is no comparable research data on the benefit-to-cost ratio of prevention of violent conflict between global actors, the nation-states. Although there have been periods of relative calm, there has been no deep experience of world peace for over a century, which makes the benefit not only difficult to measure but also difficult to imagine. However, we could suppose that in an era of world peace the spending on armed forces would be much less than it is now, and that in itself could be a direct benefit of world peace, although there would be many indirect benefits as well.

The direct cost of US military involvement in violent conflict is currently $666 billion (Friends Committee on National Legislation), which includes not only the DOD but also defense-related spending in other departments, such as the nuclear weapons programs in the Dept. of Energy. There are indirect costs, the interest on the national debt attributable to military spending and the costs of veteran benefits, currently $300 billion per year (FCNL).

Other indirect costs are largely invisible to the public. “The Economic Costs of the Iraq War” by Bilmes and Stiglitz (National Bureau of Economic Research, 2006), states that the value of the stock market is estimated to be $4 trillion less in 2006 than would have been predicted on the basis of past performance, and the increase in the price of oil reduces our national income by about $150 billion a year. In the past, spikes in the price of oil were sufficient to trigger a recession. (Hirsch, R.L., Bezdek, R.H, Wendling, R.M. “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” United States Department of Energy, National Energy Technology Laboratory. February 2005.)

Is it possible to reduce the financial burden of maintaining a military presence around the globe? (The 2005 Human Security Report: War and Peace in the 21st Century,) funded by five governments, published by Oxford University Press, and three years in the making, tracks and analyzes trends in political violence around the world. Its findings are sharply at odds with conventional wisdom. It shows that most forms of political violence have declined significantly since the end of the Cold War––and finds that the best explanation for this decline is the huge upsurge of conflict prevention, resolution and peace-building activities that were spearheaded by the United Nations in the aftermath of the Cold War.

Traditional security policy emphasizes military means for reducing the risks of war and for prevailing if deterrence fails. Human security’s proponents, while not eschewing the use of force, have focused to a much greater degree on non-coercive approaches. These range from preventive diplomacy, conflict management and post–conflict peace-building, to addressing the root causes of conflict by building state capacity and promoting equitable economic development.

Notice the similarity of supportive strategies for promoting peace on the international scene to the strategies for prevention of interpersonal violence. Both are heavily dependent on communication and education, as well as on inclusion into economic markets. It should not be too surprising that there is legislation currently in Congress, HR 808, that would frame the pathway to reducing both interpersonal and international violence as the responsibility of a single department, the Department of Peace and Nonviolence.

Investing in peace

The major investment in peace-building activities that would be necessary to make a measurable difference in world security would more than likely be motivated by witnessing the success of an initial year of operation of a Department of Peace. We cannot expect that simply increasing the current U.S. State Department funding for diplomacy and development, $35 billion (proposed FY08), would create the desired result, although it could add to it. The State Department does not deal with unrecognized, non-state actors, and so it does not address violence within the USA or terrorism.

What could we expect from an initial investment of a mere $10 billion in the first year of a Department of Peace? The Department of Peace is intended to be primarily a “coordinating” body. It is not intended that the Department provide all the mediation and conflict resolution services to address all the forms of violence specified in the Bill. Rather, because proven, effective non-governmental programs exist, the Department will coordinate and communicate what programs are available, as well as fund them so they can be expanded. So we might expect a relatively low portion of that $10 billion being spent on administration, and the rest of it providing leverage to successful programs. Approximately two-thirds of the focus on the Department of Peace is on reducing violence in American homes, schools, streets, and prisons. The other third of the focus is preventing international violence. It includes prevention of conflict through sustainable technology and investments.

Let’s assume a reasonable rate of return, a middle figure of $7 saved for every dollar spent, as a starting point for a hypothetical investment in combined international and domestic peace-building. $7 to 1 is the low benefit-to-cost ratio for interventions on violent behavior of youth, and one of the high ratios for interventions on adults. Let’s further assume that the $70 billion saved as a result of the first $10 billion spent is able to be measured and recaptured as tax revenue or shifting funds from the defense budget. These are large assumptions, hypotheses to be tested against the real world, yet food for thought, because a reinvestment of that $70 billion could return a savings of $490 billion of expenses on violent conflict that never happened, and that is a substantial sum of money.

In the real world, it could take a little longer to realize such economy, it could take less time. We don’t know until we try.

If the combined cost of direct and indirect consequences of interpersonal violence in the USA is $425 billion, and the direct cost of US military involvement in violent conflict is currently $666 billion, not counting the indirect military costs, we are spending at least $1.1 trillion per year on crises of violence. How long would it take to bring that expense down to zero? We need to stretch our imaginations to admit that this is even a possibility, and let us continue regardless. The longer we continue to reinvest our savings, the more exponentially greater the savings become.

Investing 1/8 of $1.1 trillion, or $136 billion, in proven, cost-effective violence prevention programs, we could perhaps increase the income of the USA by 7 times that amount, or $952 billion. Even if we shift that $136 investment from the current $666 billion military budget, we would still have $530 billion for the military, over three times the combined military spending of Russia, China, and the six “rogue” states. We would have a net return after expenses for both peace and war of $286 billion ($952 billion benefit minus $666 billion cost). As the projected need for a military in a peace-building culture gradually declines over many years, the interest on the national debt attributable to military spending and the costs of veteran benefits, currently $300 billion per year (FCNL), can be added to the peace dividend.

An annual investment of only $59 billion for 10 years would provide shelter, health care, AIDS control, adequate nutrition for EVERYONE on the planet. (UNESCO World Game, and linked pages). The upward spiral of economic benefits would quickly result in healthy growth and development for children, security and prosperity for adults, worldwide. This kind of investment produces an empowerment of people and nations, a relaxation of tensions and conflicts as real needs are met, and increased long-lasting security, which is the ultimate goal, after all.

If spending levels remain the same over time, imagine perhaps 20 years from now a military budget of $136 billion including indirect costs, $200 billion still being spent on violence prevention, creating a net savings of $1.4 trillion (benefit = 7 x investment). Subtracting expenses from the benefit, the peace dividend equals $1.1 trillion, the cost of our violence crises today.

It makes “cents” to establish a cabinet-level Department of Peace.

Peace is economic power.

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