WATIMA: Economic insights from ‘Game of Thrones’

This week’s article may be foreign to readers who haven’t watched the Game of Thrones series. The first episode of the eighth and final season was aired on Sunday.

The main theme is power and the danger that comes with it. Who exactly will take the Iron Throne and rule over the seven kingdoms to dominate, pre-empt and eliminate threats.

The fantasy series is based on the five-volume book series A Song of Ice and Fire by American novelist and screenwriter George RR Martin.

While many fans can relate to the classic quotes and sayings used in the show, it also offers good insights on political economy, more so the economics of war.

To start with, political economy is the issue of public finance and how it can be traced back to the medieval days.

When the crown (kingdom) finds itself heavily in debt and its position threatened because of its deteriorating financial woes, the option the king’s advisors opt for apart from debt just like in modern day economies is to be creative on taxation.

Hence they introduce a sin tax on prostitution at the capital Kings Landing, arguing that it’s a way of improving morals just like how modern-day tax bureaucrats disguise new taxes when they mismanage economies.

The other tax imposed is on those who wish to enter the city seeking safety from their home areas that experience ravaging wars. They must pay a tax levy – applying the tax principle of raising cost through a levy so as to alter or tame the behaviour of taxpayers

Coming to the economics of war, the myth is that economic strength determines the outcome. The force that has the strongest economic base has a powerful military advantage and what matters is how one can mobilise resources and actually deploy them.

In the Game of Thrones, one of the reigning armies is the House of Lannister. Because of their extraordinary wealth they can afford to deploy the largest number of soldiers and arms. They have attracted reliable allies to their side because of their economic might.

Their wealth is evident when King Robert leaves the crown and it’s established that the crown (kingdom) owes the House of Lannister three million dragons (currency) a similar amount to what the crown owes the Iron Bank of Braavos, a powerful lending institution.

The other economics of war trend is that calculations of economic advantage drive rulers towards war therefore the maintenance of power is always more important to rulers than the overall economic interest. In short, this means that leaders will always pursue war to the point of near economic ruin.

In the Game of Thrones, we can analyse this trend by looking at the business model that the Iron Bank of Braavos uses.

First, the bank’s clients are noble families who seek loans to fund wars and expand territory or fend off threats.

So the bank’s intrinsic demand is the race for military advantage by noble families and therefore runs a model where in the event any of the noble families fails to repay its loan, the bank will loan the rivals thus motivating these families to continuously pursue maintenance of power.

This also points to the fact that the bank also profiles risk as those who fail to pay loans are also not well economically organised to win wars and therefore it’s better to deploy their resources to the rival who presumably uses it efficiently.

Since the bank’s intrinsic demand is funding wars, it essentially exists to perpetually drive demand for wars, which is the gist of the whole fantasy series.