Posted by SleepingHare on 4/3/2003, 2:32 am, in reply to "Re: Threat of Iraq (part 2)" The US position was unusually fortunate because the war wasn't being fought on its shores. War was not good for the economies of Europe and Japan. They were shattered by WWII devastation and took years to fully recover, even with massive US aid. There are also many hidden costs to war. Despite its civilians and civilian infrastructure being spared, the US had to deal with the economic and social costs of physical and mental war damage to its soldiers. That involves disability payments, additional medical costs, and lost productivity. Widows and orphans were also created that had to be supported by the public purse for years to come. The government deficit spending that boosts the economy in the present leads to debt that must be repaid with interest in the future. That means the boost in the present will be counterbalanced by a proportionally larger drag in the future. However, the additional drag might be worth it if human misery can be reduced by smoothing out the economic cycle. There are almost no circumstances under which a modern nation can economically benefit from a war when all costs are included. The only good economic thing about WWII is that it encouraged governments to open their purse strings and run the massive deficits that ended the Depression. They probably would not have agreed to do it for any other reason.
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The statement "war is good for the economy" is highly deceptive and needs to be carefully explained, lest someone actually advocates war because they believe it. It is a misunderstanding that stems from the US experience of WWII. US military spending brought the country out of the Depression. However, any type of government deficit spending of an equivalent amount would have had a similar effect. Such spending was actually advocated for non-military purposes prior to the war to stimulate the economy, most notably by J. M. Keynes. His suggestions, which included things like building and improving civilian infrastructure, would have had far more lasting benefits to the economy.
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