Saturday, February 25, 2017

Is War Is Good For The Economy? Well Not Always!

This Could Have Negative Implications!
Some investors have stated that war is good for the economy but it could be argued not always. While disputing the statement I also rail at the arrogance of such people who often have little regard for the lives that war destroys. I contend they are basing their opinion or observation on a rather limited view of warfare. If in some future war things escalate rapidly or someone makes a mistake and unleashes one or more nukes killing millions and turning the ground into an unlivable wasteland the cost of war may be proven far too heavy to bare. The fact that war can and has often rewarded investors in the past is no guarantee it will perform as well in the future.

Bubbling up through the forces that bring us to war is the stupid and shameful myth that it is good for the economy. While war does line the pockets of a few industrialist and businessmen the cost is great and outweigh the benefits. War brings about the wrong kind of economic growth and such spending quickly creates a wall of debt. While those who benefit from the production of weapons busy themselves with promoting war as a solution to our woes as an answer warfare often fails to be either easy, swift, or true. For proof, we need only look upon the millions of people displaced and forced to flee war-torn areas, these refugees often pay the price for the billions of dollars of military hardware produced at a profit and pumped into countries across the world.

China Boost Its Economy By Building Machines For War
When a country gorges at the trough of deficit spending to construct weapons it can easily manipulate a big temporary boost in its GDP. One of the best examples of building an economy on a foundation of military might or a massive move to militarization was demonstrated by how Germany was turned into a war machine during the 1930s. Hitler is often seen as the force guiding Germany's economy, how much he contributed is a matter of debate. Hitler's views on the economy were mixed and of secondary importance to his more overriding goals. Remember Hitler rose to power following the hardships of World War I and Germany's historic bout of hyperinflation in the mid-1920s.

The crash in 1929 and the Great Depression that spread across the world created an environment where Hitler was able to become Chancellor of Germany in 1933. Under his leadership the Minister of Economics introduced the Mefo bills (Government IOUs) that existed alongside the Reichmark, industries were allowed to trade these bills among themselves. This was a scheme that allowed Germany to rearm by creating a huge off the book deficit and massive national debt.  As a result, employment soared and wages rose. The part of this story many people forget is the prosperity was false and temporary. The fast growth only masked real problems within the economy and resulted in rationing and shortages in things like poultry, fruit, and even clothing for many of the people.

War Is Ugly And Has Hidden Cost
A major problem of a war based economy is the issue of sustainability. It is expensive to maintain an army and war is a destructive force. Long gone are the days of conquering your enemy then raping and plundering your way to glory and riches. At least so it seems and we can only pray that part of mankind's history is fading into the rear-view mirror. In many ways, this lessens the appeal and lowers the risk reward ratio of war. When after winning a war if you have to pay and invest money in rebuilding the enemy you defeated, war becomes rapidly unappealing. The only real winners are those manufacturing the weapons and signing massive contracts to rebuild what has been damaged. Another problem is if society takes the position the lives of their soldiers have value, the cost of lives lost and the money spent to care for the wounded and other programs for those who have served quickly adds up.

The sad reality we face is that plans have been made that move us solidly in the direction of "automating war." The development of drones and killer robots is well under way and will massively change warfare and take mankind'' savagery to a new level. Seriously, are we to be impressed and inspired at the profits made from rebuilding cities and countries destroyed and devastated by war? This is akin to the broken window economic model where we celebrate and break windows thrilled because we are creating jobs employing those making glass as well as those that install it. Let us not forget America was broke and bankrupt at the end of World War II. If memory serves me correctly Vietnam and our outing in the Mideast have also come at great cost. This leaves me unenthusiastic whenever I hear warmongers and greedy investors urging war as a cure-all. 

Footnote; The two articles below were referenced for this piece. 

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