The Indicator from Planet Money - How Iran is wasting American resources

Episode Date: March 19, 2026

Iran is using an affordable strategy to even the playing field in the war with the U.S. It’s using drones that cost in the thousands of dollars to combat American missiles that cost several million. Military analysts have already signaled concern about the U.S. producing enough munitions, and this isn’t helping. Today on the show, why the U.S. spends so much on munitions and what it’s learning from Iran. Come see Planet Money live on stage in April! 12 cities. Details and tix here: https://tix.to/pm-book-tour. Related episodes: Are we overpaying for military equipment?Can Just-In-Time handle a new era of war? A trucker, a farmer, and an entrepreneur walk into a global supply shock Are we overpaying for military equipment?For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org. Fact-checking by Sierra Juarez. Music by Drop Electric. Find us: TikTok, Instagram, Facebook, Newsletter.  See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

We have a book coming out. Planet Money, a guide to the economic forces that shape your life. It's packed with stories and graphics that illustrate economic principles that can help you make smarter decisions. That's why we have special incentives for people to pre-order the book. I'll explain at the end of the show or go to planetmoneybook.com for details. NPR. The U.S. and Israel war with Iran has exposed a fascinating economic imbalance. The U.S. has been launching big, multi-million dollar missiles at Iranian targets.

Iran has fired back with wave upon wave of inexpensive drones, costing only thousands of dollars. And these drones don't look anything like your hobby drone that you might use to take photos on a hike. In the language of the military, the word drone basically means an unmanned aircraft. Iran Shah had 1-36s are typical of these low-cost drones. Picture a short missile with wide wings and a propeller at the end. It's about the size of a go-cart and buzzes like a moped scooter. It uses GPS to find a target and fly into it, blowing it up. Jerry McGinn is an expert on military supply,

and he says this wave of drones is a deliberate strategy by Iran. They launch a lot of drones to try to have the U.S. kind of use their more exquisite weapons to knock them down and deplete our stores. Last year, U.S. Defense Secretary Pete Hegeseth was already concerned about the pace of the U.S. producing new munitions. This asymmetry in battlefield spending risks worsening the weapon supply further. This is the indicator from Planet Money. I'm Waylon Wong. And I'm Darym Woods. Today on the show, drone warfare economics. We learn about why the U.S. spends so much on munitions and how it's starting to learn from Iran.

There is a mismatch between the U.S. and Iran in how they're fighting. It involves drones. The U.S. has a lot more firepower, yes. But Iran has figured out how to make the war expensive for the U.S. Now, the estimates vary, but it appears Iran has fired more than 2,000 traditional missiles in the current war. Most have been intercepted, according to Israel and Gulf countries. But what sets Iran apart is its intensive drone-making industry. Iran makes these drones in local.

factories, each with two backup sites in case they get bombed, according to Iranian authorities. Iran has exported the drones to countries like Russia and Sudan. Estimates of how much they cost to make vary, it's anything between $4,000 and $50,000. That is a wide range, but the basic point remains that these drones are incredibly cheap compared to U.S. guided missiles. Take the Tomahawk missile or the Patriot, which is used to defend against missile or drone attacks. They are very exquisite weapons. They can cost a couple million dollars or more, depending on the weapon to produce. Jerry McGinn is director of the Center for the Industrial Base at the

Center for Strategic and International Studies. And that's a military term he's using. Exquisite weapons means top of the range. The term really took off in the late 2000s, when then-defense secretary Robert Gates critiques the Pentagon for buying too many high-end ships and jets. Jerry says the inventory of exquisite weapons takes years to build up. They take some time because they are very, very kind of almost handmade in some ways. So produced in them at scale is kind of hard to do. Go to a tomahawk factory and you'll see workers in white lab coats drilling screws manually. Jerry says the U.S. has a sort of bias towards these types of weapons.

The challenges is that presidents like to use them. This is not just President Trump, but, you know, they're very very, very precise, so they limit collateral damage. They're very effective and they really destroyed targets, and they don't create a lot of threats to our military forces. Of course, the missiles only limit collateral damage if the correct target is entered. Videos of the strike on the Iranian Girls School indicate that a U.S. Tomahawk missile was used. According to an NPR interview with a U.S. official who was not authorized to speak publicly, this killed at least 165 civilians. most of them children.

In this war, the U.S. has fired a lot of tomahawks and patriot missiles, billions of dollars worth. In the first three days of the war, the U.S. drained and estimated 10% of its tomahawk inventory. This gutted supplies so much that, according to the Washington Post, the Pentagon is moving parts of his missile defense system from South Korea and its patriots from the Indo-Pacific to the Middle East. This is the weapon supply shortage defense analysts like Jerry McGinn, have been raising the alarm about for years. Wistening the situation for the U.S. is the changing nature of warfare.

Since the war in Ukraine, drones have become more prevalent. The Pentagon has taken notice. It's now deploying anti-dron systems that don't require launching those exquisite missiles. These are basically cannons that can shoot down those Iranian drones. They've been quite effective in the sense that very few of the Iranian drones have gotten through. And the U.S. is trying to fight drones with drones. Last summer, the Pentagon announced what it called the Lucas drone. It's a $35,000 drone built by copying the Iranian drone we talked about at the start of the show.

The Shah had 1-36. The Lucas drones are being used by the U.S. military for the first time in the current war in Iran. Last year, the Pentagon also announced what it calls its drone dominance initiative. It wants to buy 200,000 drones by 2027. That's firepower that's not prioritizing the stealthy, highly precise, exquisite weapons. So the U.S. is revving up its drone capability. But Jerry says the U.S. is starting a little on the back foot. Our level maturity in the use of particularly the smaller Shahed-type drones is less mature than the Iranians.

Jerry's advice for the military is to focus more on quantity and less on the highest, most exquisite quality. Get multiple companies making the... low-cost munitions, and allow Congress to pay for them over multiple years, which currently it can only do for the higher-value munitions. Mass munitions, I think, is a really good way to help build kind of significant mass and civic imprudisability capabilities. This would cost more in a typical year, but Jerry views it a bit like insurance, paying for extra capacity now so that the country can scale up as needed in future conflicts.

Doing that would enable the Department of Defense or War to do longer-range, longer-term contracts with companies, so then companies can invest more and you have an ability to produce faster and at larger scale. So the more of those kind of things that we can do, I think, would help us overall. Regardless of the approach the U.S. takes, the military is financially bleeding right now. And to staunch the blood, it will need to figure out how. to deal with thousands of wearing drones. This episode was produced by Cooper Katz McKin, with engineering by Robert Rodriguez. It was fact-checked by Sierra Juarez. Kaykin Cannon edits the show and The Indicator is a production of NPR.

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