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The Battleships classic role is to control the seas and engage other Battleships in order to gain that control. Seeing as there are no other BB's that classic role is negated in addition to greater weapons being designed to take down ships.
Iowa can stand up to surface missle attack but if she gets one decent hit from a modern torpedo her back is broken. Like most ships they can soldier on in new roles when they can no longer achieve their designed role. Battleships have always been the cheapest way to put steel on a target.
One salvo of 16" guns is more effective than an airstrike or a cruise missle. Cruise missles are expensive and aircraft run the risk of missing a target or getting shot down.
If you miss with Iowa's guns (not likely) you can just crank out another salvo quicker than another airstrike can be deverted or another cruise missle can be programed. Battleship guns also have an incredible pcyhcological effect on those recieving the incoming fire, just ask the Germans at Normandy.
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