You know, war is one of the most
profitable industries in the world. In
2024 alone, global military spending
surpassed $2.4 trillion, the highest in
history. Which means the business of war
isn't just doing well. I mean, for lack
of a better word.
Welcome to Alux, the place where future
billionaires come to get inspired.
Today, we're exploring just how massive
the war economy really is, how it
actually works behind the scenes, and
why it may never stop growing. Now,
unfortunately, war has always been
profitable for someone. So much so that
way back in the day, kings and emperors
thought of it as kind of like an
investment. They'd send soldiers to some
foreign place, and when it was all said
and done, the kingdom had a whole new
set of people to tax, which meant the
more they fought, the richer they
became. Then came the industrial
revolution, and war started becoming
more about business. For the first time,
companies were mass- prodducing rifles,
cannons, uniforms, and ships. And by
World War II, entire economies were
built around war. For example, the US
government spent billions of dollars
funding private companies to build
planes and tanks and weapons. And when
the war ended, those companies didn't
just close their doors. They kept
growing. And that's what led President
Dwight D. Eisenhower, a former general
himself, to warn the American people of
what he called the militaryindustrial
complex. Now, he feared that if war ever
became too profitable, it could start
shaping our politics, our economy, even
our priorities as a society. And he was,
well, he was spot on. Now, let's go back
to that number. 2.4 trillion. That's how
much money governments around the world
spent on defense in 2024. And it's the
most they've ever spent in history. Now,
to give you an idea of how massive that
is, if the world's defense budgets were
a single country, it would have the 10th
largest economy on Earth, just above
Canada. And and nobody spends more than
the United States. Every year, the US
pours more than $800 billion into its
military, which is more than the next 10
countries combined. Now, all of that
money sounds huge on paper, right? But
it gets even crazier when you zoom in.
Take the F-35 fighter jet program for
example. Over its lifetime, it's
expected to cost more than $1.7
trillion, making it the most expensive
weapons program ever built. That's
roughly the entire GDP of Australia for
one plane that still has mechanical
problems two decades after its first
design. Or look at the Iraq war. That
single conflict cost US taxpayers an
estimated $2 trillion. And that doesn't
include the interest on the debt or the
long-term medical care for the people
who fought there. Even the cost of one
soldier is jaw-dropping. Every person
the military recruits, trains, and
deploys on the battlefield represents
hundreds of thousands of dollars in
spending. Their rifle, armor, night
vision goggles, satellite comms, food,
fuel, transport, even the packaged meals
they eat. All of it is bought from
private companies that make billions
supplying the military. So yeah, you can
kind of see how the US gets to spend
$800 billion. The crazy thing is that
number never really goes down because
being peaceful doesn't necessarily mean
being unarmed. It's actually one of the
few things that politicians from both
sides actually agree with. Usually they
call it deterrence. And the idea is that
the only way to prevent a war is to
always be prepared for one. Like with
atomic weapons, if Russia and the US
know that nuking each other would send
humanity back to the Stone Age, then
they're probably not going to do it. So
they both built enough nukes to cover
the world like seven times over. And
that logic is basically what the machine
keeps running whether there's fighting
or not. And it's not just in the US.
Even countries that pride themselves on
being peaceful, like Japan, Sweden, or
Switzerland, spend billions of dollars
every year to stay ready just in case.
Because in the event that they or one of
their allies gets attacked, countries
need to be able to defend themselves.
So, they always keep spending. And for a
handful of companies, that simply means
great business. For example, when Russia
invaded Ukraine in 2022, the stock
prices of the biggest defense companies
in the world jumped 20 to 30% within
weeks. That's because investors know
that every conflict means these
companies get new contracts and a whole
lot of profit. And that's the strange
thing about this industry. For most
people, war means loss. Cities get
destroyed and people get killed. But for
these companies, war, or even just the
possibility of war, means dollars,
billions of dollars. You see, there's a
few things about the business of war
that, whether you like it or not, make
it one of the most profitable businesses
on the planet. So, let's see how that
really works from the inside. But before
we do that, if you're watching this
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the end of the day, the best investment
you will ever make will always be in
yourself. All right, let's get back to
business, shall we? So, if you look at
the biggest players in the defense
industry, the same five names always
come up. Loheed Martin, Rathon,
Northrup, Broomman, Boeing, and General
Dynamics. Together, they're worth
hundreds of billions of dollars. And
that value comes from how the business
of war actually works. because it's a
cycle that keeps feeding itself year
after year. It starts with governments.
So, every country sets aside part of its
budget for defense, usually justified by
the need for security, deterrence, or
national stability. And that money flows
straight into the hands of these
companies who are paid to build whatever
the government orders. fighter jets,
tanks, missiles, drones, satellites,
cyber security systems, transport
vehicles, anything that can be used to
maintain or project power. If a war
breaks out, the demand for these things
increases almost instantly. And every
piece of equipment that's used or
destroyed has to be replaced, repaired,
and upgraded. And that means the
government contracts these companies get
are multiplied along with their profits,
of course. Then when the war ends, the
spending doesn't stop. It just changes.
Because after the fighting comes the
rebuilding and the same corporations
often win contracts for that, too. For
example, companies like Hallebertton and
KBR earned billions during the
reconstruction of Iraq. And let's face
it, they were getting paid to rebuild
the same infrastructure that their
industry destroyed in the first place.
But either way, once that phase is over,
governments return to the same argument
as always. They need to be ready for the
next threat. So they renew their
budgets, approve new funding rounds, and
the cycle begins all over again.
Governments fund, companies build, wars
start, the money circulates, and then
everything resets under the banner of
deterrence. That is how it works. And
the thing is, this doesn't only revolve
around weapons. Every single part of the
war is a business opportunity. There are
companies that supply food and fuel,
that manufacture uniforms and body armor
that provide data systems, communication
networks, even the cleanup operations
that come after. Everything from feeding
troops to repairing bases has a price
tag attached to it. Even soldiers don't
stop making money after a war ends.
Private military companies like
Blackwater and Russia's Wagner Group
hire them for private security,
training, aviation support, and
intelligence services for uh whoever
needs them. But at the end of the day,
what makes companies in the business of
war so profitable isn't just that the
cycle never stops. It's that the costs
are far higher than you could possibly
imagine. There's a well-known example of
the Pentagon paying hundreds of dollars
for simple items like hammers, coffee
makers, or just regular screws. These
are the kinds of things anyone can find
at a regular hardware store for a few
bucks. But when the client is the
government and the budgets are measured
in billions, those details get lost. And
when you look at the reason this keeps
happening, it's exactly what President
Eisenhower warned about. You see, all of
these defense companies, especially the
big five, spend millions of dollars a
year donating to campaigns, funding
think tanks, and hiring entire teams of
lobbyists whose entire job is to
influence defense policy. Plus, their
boards are filled with retired generals
and former high-ranking people from the
Pentagon. And their company executives
also move into government roles where
they decide how the budget gets spent.
Seems like a huge conflict of interest,
right? Well, exactly. This is what is
known as a revolving door. When there's
a constant exchange of people between
private companies and the government,
which is supposed to regulate those
private companies over time, this
creates what economists call regulatory
capture, where the line between
governments and corporations basically
disappears. And even if a politician
wanted to reduce defense spending, let's
not forget that millions of jobs are
tied to the military-industrial chain.
Cutting the defense budget would mean
layoffs, economic instability, and
political backlash. So most politicians
choose not to touch it. Again, this is
exactly what Eisenhower warned about,
that if war ever became too profitable,
it would become so deeply embedded in
the economy that it can't afford to
stop. And he was right.
War at this point has become too
economically important, too profitable
to end entirely.
So what does all of this mean for you
and me? Well, war is terrible, right? I
think everybody can agree on that. But
the system we've built around it isn't
completely black and white. There's a
lot of nuance here. For example, the
internet started as a military
experiment. GPS was made to guide
missiles. Drones were military tools
before they became cameras. Even AI
comes from defense research. In other
words, a lot of what we now use in
peaceful everyday life comes from this
same system. There's also the argument
about deterrence. Now, the stronger and
more capable a country's military
becomes, the higher the cost of actually
going to war. like nuclear weapons, for
example, are horrific. But they've also
prevented major world powers from
fighting each other directly for nearly
80 years. So in a strange and
uncomfortable way, deterrence works.
Granted, we do have a few wars going on
at the moment, but statistically, the
world is still a lot more peaceful now
than it ever has been in any other point
in history. And that's the good part.
But obviously, there's another side to
this argument. When we think about war
as a business, and it is a business,
things get pretty weird. You see, our
current global economic system rewards
whatever makes the most money. And it
doesn't really care if that thing is
good or bad for humanity. As we've seen,
war has always and probably always will
be profitable. And where there's profit
to be made, there's going to be
companies ready to serve that demand.
When wars end, the stock prices of
defense companies like Boeing, Loheed
Martin, and Rathon tend to drop, which
is a strange reminder that ultimately
war is just more profitable than peace.
So maybe the real question isn't whether
the business of war is right or wrong.
It's whether we're okay living in a
world that needs war to function. Just a
lot of food for thought there. All
right, Luxer. That is how the insanely
profitable business of war works.
Remember, if you're serious about
building wealth and becoming the
sharpest version of yourself, come join
us inside the Alux app. We've got all
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here next time.