The Economics of Air Defense
A lot has happened in the last week of the Ukraine war. In this post we will look at an incident that may shed some light on the economics of the conflict. Then a note on avoiding head forgeries in war and markets by keeping the big picture in mind.
After the Ukrainian attack on the Kerch Strait Bridge last weekend, Russia responded with massive rocket and drone attacks on Ukrainian targets starting Monday. The drones were mainly Iranian Shahed-136 kamikazes (renamed Geran-2 by Russia).
The cost estimates I’ve seen for these drones vary from around $20,000 to $25,000 each. They’re literally propelled by lawnmower engines (presumably because Iran has limited access to engines due to US sanctions), although in the video above it looks like they’re getting an initial rocket boost from their launchers.
Apparently, despite being noisy and slow, they were quite effective, so the Ukrainian Air Force sent a MiG-29 fighter to shoot one down. You can see the MiG firing at it in the short video below.
Incidentally, a MiG-29 apparently costs between 5 and 12 million dollars.
In this case, the MiG successfully shot down the drone, but fragments from the drone’s explosion hit the MiG’s cockpit, forcing the pilot to eject. You can see the MiG wreck below.
So the Ukrainians sacrificed a $5 million+ plane to shoot down a $25,000 drone. If this sounds like an unrepresentative example, consider that we have already given Ukrainians the equivalent of the entire 2021 Russian military budget.
Keep the big picture in mind
Last month, during the surprisingly successful counteroffensive by Ukrainian forces, one of my shrewd correspondents on Twitter, Roko Mijic (whose famous thought experiment Elon…
