February 22, 2016

Why wars are bad for the economy

From our overstocked archives

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. 

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:

Imagine that somehow the United States had avoided entering World War II. . . Millions of cars would have been produced; people would have been able to travel much more widely; and there would have been no rationing of meat, tires, nylons, eggs, butter, and sugar. In short, by the standard measures of prosperity, Americans would have been much more prosperous. . .
Much of the capital and labor would have been producing cars and trucks for the domestic economy. In fact, the assembly lines in Detroit, which had churned out 3.6 million cars in 1941, were retooled to produce the vehicles of war. By 1942, auto production was down to under 1 million. For the years 1943 to 1945, auto production was so low that Wikipedia does not even report it. During the period from late 1942 to the 1945, in other words, almost the whole of U.S. participation in the war, production of civilian cars was essentially shut down.. .

Consider fuel. Because the government wanted to buy fuel at an artificially low price, it imposed price controls on gasoline and put itself first in line. Then it issued ration cards to Americans, dramatically reducing the amount that normal Americans could buy at the controlled prices. . . Even railroad seats were rationed, writes Brinkley, with priority given to military personnel.

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.  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 eliteOver the decade the housing supply increased 27 percent . . . Growth in the economy also led to increasing popularity of other financial intermediaries. . .

Over 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 big piece 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.


Anonymous said...

Iraq was our corrupt leaders defending the Saudis.

Afghanistan was retaliation for an attack on us.
Our mistakes were to take prisoners and not to
leave. Not invading Afghanistan would have been
a bigger mistake than invading it. After winning,
it was bonehead stupid not to leave forthwith.

Thanks to drones, we no longer take prisoners
at terrorist training sites.

Anonymous said...

Perhaps 2:43, you ought to seek out and read The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, written by Zbigniew Brzezinski.
ZBig knows of what he writes, for he has been a principle architect and adviser of US international policy for nearly all of the past five decades.
Clearly, initial involvement in Afghanistan had nothing to do with to do with retaliation, rather, it had everything to do with hubristic imperial expansion.
If mistakes were made, it was acting on Zbigniew Brzezinski's council.
We offer the following excerpts:

"How America 'manages' Eurasia is critical. A power that dominates Eurasia would control two of the world's three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa's subordination, rendering the Western Hemisphere and Oceania geopolitically peripheral to the world's central continent. About 75 per cent of the world's people live in Eurasia, and most of the world's physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for about three-fourths of the world's known energy resources."

"Never before has a populist democracy attained international supremacy. But the pursuit of power is not a goal that commands popular passion, except in conditions of a sudden threat or challenge to the public's sense of domestic well-being. The economic self-denial (that is, defense spending) and the human sacrifice (casualties, even among professional soldiers) required in the effort are uncongenial to democratic instincts. Democracy is inimical to imperial mobilization."