DiscussEconomics

Fallacy: Wars Do Not Stimulte the Economy

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Great article on how America has single handedly caused the spike of world oil prices in the past and indirectly Yankees line the pockets of Middle East dictators, and how Wars DO NOT stimulate the economy.

You mean to tell me a billion dollars a day is better spent in IRAQ then in America on consumption or job creation or, etc.?

My favorite quote:

Moreover, money spent on the Iraq war does not stimulate the economy today as much as money spent at home on roads, hospitals, or schools, and it doesn’t contribute as much to long-term growth. Economists talk about “bang for the buck” – how much economic stimulus is provided by each dollar of spending. It’s hard to imagine less bang than from bucks spent on a Nepalese contractor working in Iraq.

4 responses to “Fallacy: Wars Do Not Stimulte the Economy”

  1. Allan Avatar
    Allan

    Seems WWII improved the economy for America because it sped up the development of manufacture capital during a time when that sector was at its prime (increase in supply). Next, we sold stuff to countries that were rebuilding their demolished cities (increase in demand). IraqAfghanistan are a different beast.

    Reply
  2. Tory Avatar
    Tory

    There was increase in demand post-WW2 that had special circumstances (all of Europe needed rebuilding).

    The wars after? You’re telling me 1billion a day (or more) is better spent in Iraq and towards arms manufacturers than consumption at home? Heck no.

    Reply
  3. Shane Curran Avatar
    Shane Curran

    Keynes believed that fiscal spending has the ability to stimulate the economy even if you are paying someone to dig a hole and then fill it back in again. I think he was correct, but the money could obvously be more beneficial to the economy or at least to standard of living if it is spent on infrastructure. The United States was able to prosper after WWII for many reasons. One reason the US prospered more than Europe is because with the exception of Hawaii, the war did not take place on US soil. Another reason the US prospered after WWII is because many of the technologies that were discovered/perfected during the war could be used to produce maritime goods. For example the use of a production line to build tanks could be applied to the automotive industry.

    Does spending on the Iraq war stimulate the economy? Yes. Would the money spent on the war stimulate the economy more if it were spent on infrastructure in the US? Yes. The spending does stimulate the economy but it would be better if it were spent on items that did not blow up.

    Reply
  4. don wonnell Avatar
    don wonnell

    There are many costs that remove wealth from the economy that could be put to much better use. One such cost involves the Hypercomplex US Tax Laws of Mass Confusion, which unneccarily remove much needed money from millions of taxpayers and enrich the usual suspects who lobbied for US tax laws. Another cost is the kind of website about immediate cash settlements where someone has to wait for their money, like “it’s your money, but I want to make it my money – I’ll use it when I want to”. These kinds of costs could go toward uses that are productive that would help the US economy.

    Reply

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