Posted by Phoebus Apollo on 4/8/2003, 10:09 pm, in reply to "Re: War is not good for the economy" This money to wage a war does not come from nowhere, and while industry spikes to make war goods, typically only the spoils of war can compensate the literal throwing away of money that occurs during it. This can be created by investors who seek to take advantage of war certainties by making investments in businesses that benefit from the war, but most of these investments are incredibly risky and economically unreliable, hence how the stock market acts erratically as the war progresses. An erratic stock market, even if it has large jumps, is typically not a stable or secure one. Second, investors make false business decisions based on the jumpy market, stock prices are up for an industry that may or may not experience real gains from the war, making investors poor when prices come back down. I could go on forever detailing instances where the war is not breeding a stable economy. The simple fact is that while economies can benefit by war in a short term scale, the economy typically is not compensated by the inequity a war causes - war in an economic sense is literally throwing away money. Sure, sometimes that money comes back to the citizens, but int he end, throwing away money is not a economically viable investment. Hundreds of troops will need to be stationed post-war, costing in upwards of $40 billion a year, for what will likely be a few years. That money is not money well spent to help the economy. Taxes will need to go up at some point to fund projects that were set aside for the war. That is a double-draining effect on the economy. Whether Iraqi oil liberation will in reality cover these expenses is something I can't entirely be certain of until real estimates are made as to what the effect of this war is in comparison to what was the expectations had we not gone to war. Even if the literal figures show a net gain, recurring war expenses may put so much of a strain on federal coffers that overall damages the economy, political policy may be created that damages private business, and wartime regulation and contracts may force businesses into profit lossing deals. Subsidies will be required to compensate them. Where do these subsidies come from? In fact, where do all the costs come from? The American taxpayer, and that net loss always has a reciprocated effect on the real economy. So while the stock market might spike, I don't expect that war is somehow a "good idea" to help it out.
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You seem to forget that much of the rebuilding effort will be directly funded by American tax dollars. So either 1) the budget will be compensated by refinancing other government districts, hurting the American economy by damaging public interest sectors or 2) more taxes will be created burdening the economy by literally taking money out of it.
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