Tuesday, February 9, 2010

Depressing

One of the biggest fallacies of economics is that war is good for an economy. The oft cited example is that of World War II and how it lifted this country from the Great Depression. Well, you can't have it both ways as this New York Times reader suggests:
To the Editor:

A big reason for the huge deficit is the $1 trillion we have spent on the Iraq and Afghanistan wars. Stopping the wars now would take a large bite out of our deficit. Our children and grandchildren would be grateful.

Jordan Langner
Delmar, N.Y., Feb. 8, 2010
Either spending reduces the output gap or it doesn't. If World War II lifted this country from a depression, surely the wars in Afghanistan and Iraq ought to be doing wonders for a little old recession? Obviously there's a flaw somewhere, draw your own conclusions.

2 comments:

p.a.whelan.nd said...

People often forget that we sold enormous amounts to the Allies - Cash & Carry ftw - and that the developed economy was pretty much demolished whereas ours emerged running at full steam. Few people talk about the Victory Gardens and that the government rations where the norm during the war. The connection is flimsy at best as historically wars can go either way. Also, no one talks about the Depression starting, then WWII. We started our wars and then hit a recession. WWII in no way applies.

Adam Freund said...

Phil, good to hear from you again! Hope all is well.

As far as this article, the only point I want to make is that war is NEVER good for an economy. There is a strain of thought out there which believes that WWII lifted us out of the great depression. It cannot be true, you don't build wealth through destructive activities.

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