War

3 Pages 706 Words

MANY PEOPLE think that war is good for an economy. Princeton economist Paul Krugman, for example, wrote that the terrorist attack of September 11 "could even do some economic good" because it would lead to increased spending to replace buildings. This is false.
This war may be justified, but the spending on war, the physical resources devoted to war, are not themselves a benefit; they are a clear, and often large, cost. The reason is simple: These resources would have been used in other ways and now we must give up those uses.
Even for the United States, which generally manages to fight on other people's territory, war has a high cost. The most obvious cost is death. Gen. Douglas MacArthur once said, "Old soldiers never die; they just fade away." But the line should really be old soldiers never die; young ones do. World War II, for example, cost the United States more than 400,000 lives, almost all of them people under 40.
Another obvious drain of war on the economy is the diversion of resources from productive, peaceful activities to military ones. We are often told that World War II was a boom time for the U.S. economy. If measured by the unemployment rate, that was true. In 1944, for example, at the peak of World War II-related production in the United States, the unemployment rate hit a low of 1.2 percent. But that doesn't mean Americans were better off. In fact, in 1944, the average American was worse off than they were during the worst part of the Great Depression a decade earlier. How so?
In 1944, the government spent 42 percent of the U.S. Gross National Product on war. Money spent on airplanes, guns, jeeps, tanks, bullets, bombs and manpower, and the resources that the money bought, are a drain on the economy. The resources are used for war material, almost all of which gets destroyed, instead of being used for the other uses that people value. So the 42 percent of GNP spent on the war was a cost to the economy. By cont...