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War and the Economy

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CShirk Posted: Fri, Jan 11 2008 10:12 AM

Okay, I'm a staunch believer in the idea that warfare is always destructive to the economy, and should thusly only be undertaken with extremely careful scrutiny and even then only as an act of self-defense. I was in a debate about the recent (supposed) threats that five Iranian PT boats were placing to three US Naval vessels - considering the Iranian government releast contradictory footage on YouTube, I'm having my serious doubts. Regardless, though, somebody made a comment about the Second World War bolstering the US economy, and I couldn't help but disagree. My line of thinking is that the number of jobs may have increased, et cetera, but a lot of capital was diverted from the civilian economy and dumped into the machine of war. Thusly, whilst the government war machine thrived, it was actually at the expense of the rest of the economy. My entire post on that forum was as follows:

[quote="Alastar (Gaming Forum Name)"]
World War 2, contary to popular belief, did not really bolster the United States economy. It increased production, true, but only for military goods. The the things that make an economy, the things that make a peaceful society - food, production of clothing, shipping of civilian goods, et cetera, et cetera - all suffered. Food became such a major problem - keep in mind that the effects of the Dust Bowl on the economy all the way back in the 1920s had not yet fully recovered - that the average person on the street was rationed. To pay for the war machine, people were forced (in the sense of propoganda making it "unpatriotic" not to contribute) to turn in steel and aluminum food cans. Were these placed back into circulation for food? No, they were smelted down and used as raw materials for military supplies - as opposed to the military purchasing raw materials from mines et cetera. Furthermore, the draw on society AFTER the wary - with veterans coming home who could not handle a return to civilian life, who suffered from PTSD, or who had lost limbs - was also serious. Many of these people would never again be able to return to normal lives, essentially furthering continuation of the "war time" economy well after the end of the war.
No, war is NEVER good for an economy. When justly applied - that is, in self defense - war is only a necessary evil. It is nothing more. It has never bolstered any economy, except through conquest (expanded territory means expanded resources means expanded capital means expanded means of and ergo production means more purchasing power to the average Joe means better short). War, however, does not have a history of causing that. Europe's economy - including Great Britain - was devestated until well into the '50s and Japan's into the '60s. A lot of the US economy went back into helping the European and Japanese economies rebuild.
The fact is, this war is just like any other, even the so-called "Cold War". The means of production are being distracted from producing for the capitalist economy (and therefore the whole of society) and turned to the service of the State in the production of the tools and weapons of war (which are very expensive and seem to get more expensive every day). Now, if a nation's money supply (in this case dollars) is the representation of that nation's accumulation of capital, then consider this as a point: each Stryker costs a whopping $2.8 million dollars. That is 2.8 million units of capital that is being pulled away from the general economy to wage a (frankly unpopular) war. Now consider this, the Bugatti Veyron is the most expensive car on the planet right now, with a price tag that tops $1.7 million dollars. Military vehicles are produced solely for the military, and are received essentially at cost of production. Let us assume that Bugatti hand-makes each vehichle to the specifications of the customer. In theory, then, twice the amount of capital goes into producing a common APC, than goes into producing the most expensive car on the road. Now, consider some of the military's more expensive projects in that light. What drain is that putting on the economy, and what is the actual ECONOMY getting back? Answer: a lot of drain, nothing back. Even in World War 2, virtually NOTHING that left the economy to go fight in the war returned to the economy within ten years after the war. Some of what was pulled out of the economy has not and will never re-enter the economy. Some of the few exceptions to this are the M1 Garaand rifle and the Jeep.
[/quote="Alastar (Gaming Forum Name)"]

I know I make some wild assumptions throughout this post, but I'm pretty new to economics, and I'd really like some opinions. Is my argument valid? Or are my assumptions so off base as to invalidate my argument?


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 I'm in agreement with most of your arguments.  The idea of war being good for the economy is a species of the Broken Window Fallacy.  One segment of the economy (in this case, production of weapons and war materiel) benefits tremendously, at the cost of diverting resources from things people value much more highly (food, clothing, shelter, entertainment, art, and so on.)  Compounding things immensely is the fact that war destroys many resources outright, preventing them from being used for anything at all.  This includes the people killed and maimed, who might otherwise have led very long and productive lives.  The diversion and destruction of resources, both material and human, leaves a society much, much poorer.

 The only point I disagree on is that war can bolster an economy through conquest of new territory.  In fact, the costs of raising, equipping, maintaining, and deploying a military force, plus the costs of keeping conquered territories under the thumb of the conqueror, make conquest almost always a losing proposition for the economy as a whole.  Certain firms or individuals may gain from the plunder, but only because through the "magic" of the state, the burden of cost is shifted to the taxpayers.

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