Cost of War

I've just been reading a post titled, "Escalation and Accidental Military Keynesianism." In it, there are some very interesting predictions and burn models for the Iraq war in 2007 under the Bush escalation. The main point is that expeditures in 2007 in Iraq will top $110 billion dollars, which represents nearly 1% of U.S. GDP. This figure is so large it is hard to even comprehend. It is more that the GDP of all but 45 countries. The country I live in has a GDP of $125 billion, for example. 1% of GDP is the same percentage as the farming industry represents, for example. Quite simply, $110 billion is a lot of money.

A great deal of this money will come back to the United States in the form of salaries and expeditures on American made goods. The effect this has on the overall economy cannot be overlooked. In fact, try to imagine how much the economy would suffer if this money suddenly were not being spent. It is a well accepted battle cry of the left that war is good for the economy and that is what these war-mongers are thinking when they call to arms. The former is undeniable, but the latter is a little too cynical for my taste. Having said that, one must always remember that it is money that makes this world go around. Anyone who tries to seperate politics from economics can expect to be half-informed at best, a marionette at worst.

WWII is generally credited for bringing the United States out of the depression and putting America firmly in charge of the world's economy. There has been a surge in economic activity during every major war the the U.S. has been involved in since. During Vietnam, for example, GNP increased by over 75%.

So if the United States continues to outpace the world in economic growth in 2007, you can be sure that one major reason for that is the war in Iraq. Even if it is just "acccidental Keynesian effects."