How wars hurt the economy

Sam Smith,2011

The fantasy parading as serious negotiations over the nation’s debt collapses on the recognition of one fact: our absurdly expensive wars are not even on the table.

A Brown University study finds that the figure just for our post 9/11 misbegotten escapades approaches $4 trillion. That’s about 25% of our whole national debt accrued in just one decade of badly distorted policies. Add in the Bush tax cuts and you have an explanation for one-third of our total fiscal deficiency.

Given the hawkish inclinations of our media, with even MSNBC owned by GE, this is not something you’re about to hear much about, so instead it’ll have to be paid for out of things like food stamps and Social Security.

Further, enabling the denial is a myth that wars are good for the economy. This is only true, however, if you engage in one or two factor analysis.

David Henderson looked at World War II from an economic – not moral – perspective and made some important points:

There’s another cost that hardly ever gets discussed: war typically has little or no spin off benefit. A good economy creates new economies. For example, if you build a rail line to a town that hasn’t had one, you not only have the benefit of the public works project but all the good that line does for the town’s economy and the economic opportunities it opens up for its residents.

But if the same amount of money is spent in Afghanistan on roads, tanks and Humvees the spin off benefit will be essentially non-existent. War creates economies with a greatly reduced lifespan and greatly reduced benefits.

Another way to look at this is to consider what happens after wars are over.

Roughly two thirds of all deficit reduction in the past century occurred following World War I and World War II.  Jermie D. Cullip described what happened after World War II:

“From 1950 to 1959, the total number of females employed increased by 18%. The standard of living during the fifties also steadily rose. Most people expected to own a car and a house, and believed that life for their children would be even better. . . The number of college students doubled. Getting a college education was no longer for the rich or elite
Over the decade the housing supply increased 27 percent . . . Growth in the economy also led to increasing popularity of other financial intermediaries. . .

“Oer the decade, GNP per capita almost doubled and the public welfare reacted accordingly as the cost of living index rose by just 1 percent and unemployment dropped to 4.1 percent.”

Much as World War II may have aided Roosevelt close out the Depression, it was the end of the war that created the boom.

The other one third of the past century’s deficit reduction occurred during the Clinton administration, but as Dean Baker perceptively noted in 2003:

“The Clinton boom was built on three unsustainable bubbles. One of them, the stock bubble, has already burst. The other two bubbles-the dollar bubble and the housing bubble-are still with us.”

In part, and in no small part, we are paying for Clinton’s boom today.

There are lots of moral grounds on which to oppose war, especially those as mindless and futile as those Iraq and Afghanistan. But we shouldn’t lose sight of another fact: wars are a gigantic waste of money, they damage the economy, and they undermine its growth. The failure of our leaders of both parties to give this more than passing notice is a sign of total incompetence or of total indenture to the military machine. In either case, they are wrecking the country about which they pretentiously claim such patriotism.

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