IG’s Peace Blog

Peace and its many aspects

Is war good for the economy? It depends…

Some people think that war, meaning really the arms industry is good for the economy, and they usually have figures to prove it. This is probably, seen from a long run perspective, a mistaken idea. There is no doubt that if your economy has a lot of military oriented production and you reduce that production, jobs will be lost, with all the knock on effects that entails. However, it is not entirely reasonable to justify arms spending in economic terms. Why? simple. If you invest in arms, you get some economic growth, sure; but eventually you end up with a product that doesn’t produce anything else (a tank, a plane, etc…) and becomes obsolete. However, if you take the same amount of capital and invest in almost anything else, you produce something that contributes to the production of other things–like cars that help people go to work, etc…

Now, this is not an argument against military spending. Rather it is an argument against justifying military spending in economic terms. Military spending should be justified (only) in regard to security needs.

Hold on there, a hypothetical critic might say…isn’t it true that great innovations have come from military spending? The answer is yes, but you could have gotten the same (and probably even better) if you had adequately funded “civilian” research. Now here is the crux…in the U.S. (and some other countries), we don’t like the idea of the government funding a lot of research, except in regard to the military. So, naturally, much is discovered where much is invested. This seems to confirm the idea that we “need” military spending for economic and technological reasons…heck, the internet grew out of a Department of Defense project, didn’t it? So, military spending is sometimes a substitute for a more coherent and balanced government industrial policy.

There are many, many sites on the internet that deal with this and related issues (just google something like “military spending economy” and see for yourself), and many are–no surprise–quite partisan. So, I’m just going to point you to one, and again affirm that I do not necessarily subscribe to the views expressed there (but I do think they are interesting and thought provoking).

This leads to another subject, which I hope to discuss later: war is rarely (if every) economically beneficial (when you take everything into account).

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September 18, 2008 - Posted by | Uncategorized | , ,

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