Economist on Star Wars: Destroying Death Stars Would Collapse Galactic Economy

"Too big to fail" just took on a whole new meaning.

How are you occupying your time until Friday, when you can finally see the new Star Wars movie? Watching the old ones over and over again? Talking about how much you hated the three prequels? Arguing with friends about how George Lucas was right to sell the franchise to Disney?

One professor decided to spend his time totally geeking out. His name is Zachary Feinstein and he’s a financial engineering professor at Washington University in St. Louis. He recently published a paper titled “It’s a Trap: Emperor Palpatine’s Poison Pill,” that calculates the cost of destroying two Death Stars and measures the impact on the galactic economy. (Read it here, it’s kind of amazing.)

People have already calculated that building the Death Star had to be crazy expensive because it would need 1.08×1015 metric tons of steel plus other raw materials. But Feinstein argues that two destroyed Death Stars would create financial ruin. Popular Science explains: “If the first Death Star cost the Empire $193 Quintillion (in 2012 U.S. dollars), then the gross domestic product of the galactic economy was roughly $4.6 Sextillion a year.” Feinstein arrived at a total cost of $419 quintillion dollars for both Death Stars.

“Following logic stitched together from prequels and Wookiepedia, we get a galactic banking sector with assets that are 60 percent of the gross galactic domestic product,” Popular Science said. “Since these banks are likely heavily invested in the Empire itself and the Death Star specifically, the destruction of one Death Star by intergalactic terrorists and the collapse of the Empire following the destruction of the second, would devastate the galactic markets, and create a financial crisis on a truly massive scale.”

The paper concludes that such financial devastation would lead to a bank bailout. (Sound familiar?)

“Finding the economic resources the Rebel Alliance would need to have in reserve in order to prevent a financial crisis from gripping the galaxy through an optimally allocated banking bailout.”

Here’s more:

We modeled the state of the economy of the Galactic Empire prior to the destruction of the two moon-sized battle stations and the fall of the Imperial government. This allowed us to calibrate a financial network of the systemically important institutions, thus providing a picture of the economic repercussions from the Battle of Endor. In this case study we found that the Rebel Alliance would need to prepare a bailout of at least 15%, and likely at least 20%, of GGP in order to mitigate the systemic risks and the sudden and catastrophic economic collapse. Without such funds at the ready, it likely the Galactic economy would enter an economic depression of astronomical proportions.

But perhaps nobody geeked out on the business of Star Wars like Kevin Smith, who wrote this epic scene from Clerks arguing that independent contractors must have been used to build the second Death Star — and hence became casualties of a war they had nothing to do with.

Randal breaks it down in terms anybody can understand: “Think the average storm trooper knows how to install a toilet mane? All the know is killing in white uniforms.”

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