War and the Economy…

Continuing with the theme of Economic stimulation (or lack thereof) I hope to combat another well established fallacy:

That war stimulates the economy.

If this is true, then every time our economy is in a slump, let us declare war on somebody, launching the world into conflict and confusion until the second coming…!

But fortunately for us, it isn’t true.

During times of war, we see the employment of thousands of troops, who are paid a salary which will be, spent somewhere else. Not to mention the billions that must be spent equipping them with the necessary items, this brings money to several distinct industries. It’s easy to see this and say, “By George, we can fix our economy!”

However, we must consider that the money must come from somewhere – the taxpayer.

If one hundred billion is spent on soldiers and equipping them, that one hundred billion must be removed – via coercion – from the private market.

The Wars in Iraq and Afghanistan (according to a CBO report) could cost taxpayers a total of 2.4 TRILLION by 2017 – and this works out to about $6,000 per citizen. Think of what you could do with $6,000 additional dollars in your pocket!

Yes, that 2.4 trillion has gone to stimulate several distinct industries (and I am ignoring the politics of the Iraq/Afghanistan war for the sake of this exercise) but a question is raised: what could it have done had it been left where it was supposed to be, the pocket of the private citizen, who knows best when it comes to his own property?

I contend the money would have gone to very legitimate, peaceful industries in harmony with the natural economic order, instead of the government arbitrarily deciding how it is spent – generally on wasteful purposes.

So maybe War can stimulate a particular industry as compared to others – but looking at the economy as a whole, it just moves money from where it should be, to somewhere else.

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