I don’t know if this is debatable or not. I was all set to put this in GQ but then I figured that somebody will come up with some debatable points, so here it is.
I was watching Deputy Secretary Wolfowitz’s news briefing on CNN yesterday <transcript>. He mentioned how expensive a protracted war would be, saying several times that $20B is realistically just a downpayment on that effort. Every time he said that, or words to that effect, I got the feeling he was trying to prepare us for some sort of economic crisis, what with all the money we’d be channeling into making new exploding devices.
On the other hand, I keep hearing about how good war is for the economy. Steel mills & defense contractors go into overdrive & need all kinds of new employees to drive the war machine.
So which is it? Instead of saying that war is expensive, wouldn’t it be more accurate to say that war is an investment in the economy? Is there any productive reason to keep going on about how much this is going to cost us?
It depends on a lot of things. Not many people know that the U.S. didn’t even enter a recession during the entire course of World War II. On the other hand, it was the only combatant to manage that, so it would appear that the war did economic damage to everyone else.
The reason the U.S. didn’t go into recession? Well, because first of all it didn’t have to commit nearly as much of its GDP to the war effort as other countries did. But in my opinion, a much bigger factor was women. Before the war, women were an insignificant part of the work force. But during the war, they poured out into factories in droves, creating a big boost in production and industrial output.
In the long run, any time you divert resources from where they ‘want’ to be into a war effort, it has to do damage to the economy. But there are lots of factors that can offset that.
Also, remember that the funding approved so far is only about 40 billion. That’s a huge amount of money in real terms, but as a percentage of the U.S. budget it’s not. That’s about twice as much as the budget for the Department of Education. Remember, the government just passed a 1.35 TRILLION dollar tax cut - 40 billion dollars won’t be noticed, and might even provide a short-term keynesian boost to the economy depending on how it is spent.