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The military equipment cost problem - why (some) nations struggle to build affordable weapons

Perun cuts through the meme of Western "gold-plated" weaponry with a nuanced reality check: the cost gap isn't a bug, it's often a feature of how NATO chooses to fight. While the author admits that some Western procurement is undeniably bloated, the most striking claim is that for high-end platforms like the F-35, the US is actually getting a bargain compared to what allies pay for older, inferior jets. This piece matters now because the war in Ukraine has forced a global reckoning on whether "quality" can survive without "quantity," and Perun provides the economic autopsy of why Western militaries struggle to mass-produce cheap munitions.

The Reality of the Cost Gap

Perun immediately dismantles the idea that Western militaries simply buy $15,000 hammers, arguing instead that the price disparity is driven by specific design choices and strategic needs. "There can be enormous differences with two giant asterisks," Perun writes, noting that physics applies to Russian and American engineers alike, and that performance often dictates price. The author points out that when comparing cruise missiles like the Russian Kh-101 and the American Tomahawk, the costs are surprisingly similar, hovering around $2 million per unit. This evidence is crucial because it shifts the blame from incompetence to capability; if you want a stealthy, long-range missile that can hunt ships, you pay for the physics required to make it happen.

"A weapon system manufactured in Russia is not magically cheaper than one built in Europe or the United States. If there is a cost gap between the two, it's going to be driven by something. Be that economic factors, the design, creative accounting, or some combination of all the above."

However, the author concedes that the disparity becomes glaring in the realm of drones and artillery. Perun notes that a small drone a NATO military might buy for $6,000 has a $600 Ukrainian equivalent, a tenfold difference that highlights a fundamental divergence in procurement philosophy. The core of the argument is that NATO militaries have embraced a "pay-to-win" model, preferring expensive precision-guided munitions over the "weaponized arts and crafts" of the Eastern front. This framing is effective because it reframes the issue from one of industrial failure to one of strategic preference, though critics might note that this preference has left Western stockpiles dangerously thin for a prolonged conflict.

The military equipment cost problem - why (some) nations struggle to build affordable weapons

The Four Ingredients of Affordability

To understand why Western systems remain expensive, Perun breaks the problem down into four factors: Scale, Specifications, Setting, and Certainty. The author argues that "good stuff and cheap stuff seldom being the same thing," explaining that tighter tolerances and advanced materials impose a heavy "engineering tax" on designers. For instance, building aircraft that fly at hypersonic speeds requires heat-resistant materials that simply do not exist at a low price point. This section is the piece's analytical engine, moving beyond anecdotes to explain the mechanical reasons behind the sticker shock.

"Generally, the more you want a system to be able to do or the better you want it to be able to perform, the more you're going to have to pay for that performance."

Perun also highlights the role of "Scale," noting that mass production is the only reliable way to crush costs through economies of scale. The author suggests that without the massive production runs seen in World War II or currently in Ukraine, Western defense contractors cannot lower unit costs, regardless of how efficient their factories are. This is a sobering admission for a defense industrial base that has operated on low-volume, high-margin contracts for decades. The argument holds up well against the backdrop of current supply chain bottlenecks, where the lack of a guaranteed large order prevents factories from ramping up to efficient levels.

"Under the right circumstances, economies of scale and learning curves over time can absolutely crush your cost curve."

The Strategic Dilemma

The commentary concludes by examining the "Setting" and "Certainty" factors, suggesting that Western militaries often design for the wrong kind of war. Perun writes that NATO forces "instinctively reach for a more expensive weapon system like a PGM [precision-guided munition], where other nations might reach towards more affordable solutions." This preference for high-tech solutions over simple, mass-producible tools has left the alliance vulnerable to attrition warfare. The author's observation that "quantity and magazine depth can matter just as much and sometimes more than sheer quality" serves as a stark warning to policymakers who have prioritized technological supremacy over logistical resilience.

"For many militaries, affordable systems munitions are now suddenly higher up the priority list with new projects calling for everything from the mass adaptation of small and affordable drones to newer, cheaper torpedoes and missiles."

While Perun acknowledges that some Western nations are finally pivoting toward affordability, the article hints that old habits are dying hard. The transition from a "blingy" procurement culture to one that values simple, cheap, and effective tools will require a fundamental shift in how governments and industry interact. A counterargument worth considering is that the "cheap" Eastern models may not be sustainable in a high-intensity conflict against a peer adversary with advanced air defenses, suggesting that the Western preference for quality might still be the correct long-term bet, even if it is painful in the short term.

"It's hard to estimate exactly how much Russia or the People's Republic of China spends on their ICBMs, but you might struggle to fit a Sentinel program size money furnace into some estimates of their budgets."

Bottom Line

Perun's strongest contribution is the refusal to accept the simplistic narrative that Western defense spending is merely wasteful; instead, he reveals a complex trade-off between capability and volume that has left NATO ill-prepared for a war of attrition. The argument's biggest vulnerability is its reliance on the assumption that "cheap" Eastern systems can survive against Western air superiority, a variable that remains untested in a full-scale peer conflict. Readers should watch closely to see if the current pivot toward mass production can actually overcome the entrenched incentives of the defense industrial base before the next crisis hits.

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The military equipment cost problem - why (some) nations struggle to build affordable weapons

by Perun · Perun · Watch video

For decades, the defense industrial base in NATO and allied countries has been pretty good at turning out high-tech defense products, incredibly advanced submarines, the first fifth generation fighters, systems so precise that they can afford to bring swords to a missile fight, and ambitions that stretch as far as building satellite networks capable of detecting aircraft or even hypersonic munitions. Often, it can seem like in a lot of these countries, developing advanced and capable weapon systems isn't really the challenge. But where things can often fall down compared to some competitors is developing cheaper systems. There are, of course, exceptions.

With JDAM, the US helped usher in the a of the affordable precision munition, and we've subsequently seen the concept of these bolt-on guidance kits copied by other countries, including Russia. But in some other cases, Western defense products sometimes seem to specialize in causing sticker shock and all. And in the aftermath of Russia's 2022 invasion, which has reemphasized the world that to fight a large-scale conventional war, quantity and magazine depth can matter just as much and sometimes more than sheer quality. For many militaries, affordable systems munitions are now suddenly higher up the priority list with new projects calling for everything from the mass adaptation of small and affordable drones to newer, cheaper torpedoes and missiles or the rebuilding of the atrophied parts of the defense industrial base that specialized in more simple affordable munitions like unguided artillery shells.

By patron vote, then the question I want to start unpacking today is basically why? Why does it sometimes seem like NATO states, including the US, can struggle to build weapon systems that don't have price points so high that it counts as a form of friendly fire? Why might have it seemingly required a conventional war and a very obvious and public shell crisis in order to prompt change? And then finally, based on some of the programs we're seeing so far, are things actually changing?

We'll start with some background on the problem. What are some of the factors that tend to make military equipment more or less expensive? and just how expensive does Western or NATO standard military equipment tend to be compared to international competitors? Then we'll start to get into the question of why looking at how the military, civilian governments, and industry might interact when it comes to designing and ...