The Effect of War on the U.S. Economy
Over the past two centuries, America has seen her share of wars. Wars that have affected every aspect of her citizens’ lives, perhaps most profoundly of all have been the effects that our economy encounters in times of turmoil. From employment to credit and financial markets to the price of much needed commodities, no aspect of our economy can be said to remain unchanged during any given conflict. With the war in the Middle East entering its seventh year and past debt from World Wars I & II still remaining on the national deficits’ books, what does this mean for our economy? Economists have drawn different conclusions on topics such as: 1.
The economic cost of War on the economy
The economic impacts on oil markets, energy prices, financial and credit markets 3.
The economic stimulus produced through wars
This research of the economists’ views of the effects of war on the U.S. economy attempts to address these three topics. Estimating the Cost of War
According to www.Firstworldwar.com it is estimated that the cost of the World War I to the Allied countries was over 125 billion while it cost the Central Powers around 60 billion. In comparison, www.digitalhistory.edu estimates that World War II cost the Allied countries approximately 1 trillion dollars. A recent article in the San Francisco Times cites studies by the Center for Strategic and Budgetary Assessments, as having estimated that “the Korean War cost about $430 billion and the Vietnam War cost about $600 billion, in current dollars”. Sadly these numbers only account for the outward monetary costs. There can be no true measure of the human loss associated with these past wars, or the human misery, deprivation and suffering they caused. Statistics provided by www.wikepedia.com place the death toll for World War I between 20 million and 60 million. World War II estimates human losses at roughly 72 million people, including 47 million civilians with the deaths of 20 million resulting from war related famine and disease. With advances in technology and battle strategy, casualties sustained during the Vietnam War were less in numbers but no less in sacrifice. The number of U.S. casualties was 58,217 with 1,947 missing in action. North Vietnamese losses accounted for an additional 1 million with civilian casualties estimated at 400,000 – 900,000.
Gimble (1976), outlines the Marshall Plan, officially the European Recovery Program (ERP). This was the U.S. plan for rebuilding European countries post World War II. The plan was in operation for four years beginning in July 1947. During that period some $13 billion USD in economic and technical assistance were given to help the recovery of the European countries that had joined in the Organization for European Economic Co-operation. The $13 billion compares to the U.S. gross domestic product of $41 billion in 1949. This would place present worth of post war reconstruction money at $108,767,646,324.11. According to Haass (2000) p.140, by the time the Vietnam War ended in 1975 President Nixon had established an agreement with North Vietnamese Prime Minister Pham Van Dong putting financial post-war reconstruction in the range of $3.25 billion of grant aid over five years.
The current Iraq war has positioned itself to possibly be the longest in U.S. history. At a current length of 4 years and 8 months, with no end in sight it has already surpassed the length of World War II, the Civil War, World War I and the Spanish American War. The length of this conflict means an increase in the number of military service members wounded or killed. With more than 1 million U.S. troops now having served in Iraq, the cost of long-term medical care and disability benefits will continue contributing to the cost of this war for years to come. Striglitz (2006) estimates that accrued liabilities for veterans now total an astounding, $4.5 trillion. Even at such a high number, it does not account for...
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