Economy.

This is coolbert:

War and the Economy.

I think the consensus opinion among most Americans is that war is GOOD for the economy.

This thought is more than likely a legacy of the period from just after the end of the Second World War [WW2].

To the average American citizen, the years just after the end of WW2 seemed to be prosperous beyond measure. Prices and inflation were low, and the citizenry that had been engaged in "war work" had a lot of disposable income on their hands. Prosperity for the general populace was achieved in a manner that had never been [or even seemed to be] possible prior to the war.
\
In 1939, only ¼ of the American adult male population owned an automobile. By 1947, almost ALL American adult males owned an automobile. This is just a staggering statistic!! Given such a statistic [among many such statistics] it is not difficult to see why the American populace arrived at the conclusion that war was GOOD for the economy.

Generally speaking, however, WAR IS NOT GOOD FOR THE ECONOMY, IT IS BAD FOR THE ECONOMY!!

Even in times of peace, for a state to possess a large standing military can have a deleterious effect upon the economy.

This deleterious effect has as it's sources:

EXCESSIVE TAXATION

A SIGNIFICANT PORTION OF THE MOST ABLE-BODIED, WEALTH PRODUCING MEMBERS OF A SOCIETY [YOUNG MEN OF MILITARY AGE], ARE ENGAGED NOT IN WEALTH PRODUCTION, BUT ARE RATHER ENGAGED IN WEALTH CONSUMING ACTIVITY. WEALTH CONSUMING ACTIVITY THAT SOMETIMES BECOMES FRENETIC.

A variety of authorities and observers have comment on the phenomenon OF WAR BEING BAD FOR THE ECONOMY over the millenniums:

According to Sun Tzu: [speaking here about the cost of war and the effect it can have on the overall economy.]

"In the operations of war . . . the expenditure at home and at the front, including entertainment of guests, will reach the total of a thousand ounces of silver per day. Such is the cost of raising an army of a hundred thousand men."

"Poverty of the state exchequer causes an army to be maintained by contributions from a distance. Contributing to maintain an army at a distance causes the people to be impoverished."

"On the other hand, the proximity of an army causes prices to go up; and high prices cause people's substance to be drained away. When their substance is drained away, they will be afflicted by heavy exactions. With this loss of substance and exhaustion of strength, the homes of the people will be stripped bare, and their incomes dissipated."

Joseph Campbell, quoting Breasted on the effect that taxation had on the peasantry and middle-class of ancient Rome to support the far-flung legions [legions for centuries both at peace and war] of the Empire, states that:

"Staggering under his crushing burden of taxes, in a State which was practically bankrupt, the citizen of every class had now become a mere cog in the vast machinery of the government . . . as it likewise crushed all progress in business and affairs"

IT IS WELL UNDERSTOOD EVEN IN THE MODERN ERA THAT WAR IS COSTLY AND IS GENERALLY SPEAKING BAD FOR THE ECONOMY.

The Soviet defector Bajanov [personal secretary to Stalin himself] in 1928 outlined to western authorities as to WHY the Soviet Union would NOT go to war with the western powers in Europe. Bajanov was able to tell his western interrogators that:

"highly secret discussions in the Kremlin had led to the conclusion that, for the time being, a war against England and France was out of the question for the paradoxically capitalist reason that Stalin's Russia simply could not finance it by the old-fashioned methods still under consideration . . . . The weakness was not manpower . . . but the lack of capital resources to feed the enormous industrial output which would be need to equip and supply such an army [1-1.2 million men] . . . . Before the Great War [World War One], there were 2 billion rubles' worth of small savings in the savings banks alone. By the summer of 1927, these had shrunk to deposits amounting to not more than 100 million rubles. As for other alternatives . . . the sale of gold and foreign currency reserves in the State Bank to purchase supplies would serve no purpose in the military emergency . . . Increased customs duties would have "a negative political effect"; manipulation of the budget would only lead to a collapse of exchange rates; and increased direct taxation would yield little . . . Paper issues of war loans, which would cause a further concealed reduction in general living standards, offered the best fundraising option; but even so, "the financial catastrophe would begin after the third month of war.""

[It was not that the Soviets did not desire war with the western powers, rather they did desire war. But they could not engage in war because they had no funds to sustain a conflict that would be successful!!]

[It should well be appreciated that the demise of the old Soviet Union is certainly due to the fact that the Soviets spent themselves into oblivion through excessive expenditures on arms and the military. The CIA was pretty much on the mark with it's estimates of Soviet military spending. The CIA, however, was far off the mark when estimating the total value of the Soviet economy. A value that could NOT withstand the enormous expenditures for armaments the Soviets were so fond of.]

Even in an extremely wealthy nation-state such as the United States, WAR CAN BE A SEVERE DRAIN UPON THE ECONOMY.

During the Vietnam War, President Johnson, wanting a GUNS & BUTTER society both at the same time, and not desiring to raise taxes to finance the war, took two steps that financially strapped and burdened the U.S. economy for decades later, yea, even to this day!! These steps were:

Float a bond issue with a thirty year life span. IT WAS NOT UNTIL 1998 THAT THE FINAL PRINCIPAL WAS PAID OFF ON THESE BONDS [ALL THE WHILE PAYING INTEREST ON THE ISSUE OF COURSE!!]!! EVEN DECADES AFTER THE WAR ENDED, THE U.S. PUBLIC WAS STILL PAYING FOR THE WAR!!

AND.

Began "raiding" the social security "trust fund". Monies that were NOT SUPPOSED TO BE TOUCHED FOR ANY PURPOSE OTHER THAN PAYING OUT SOCIAL SECURITY BENEFITS WERE PUT INTO THE GENERAL REVENUES AND USED TO FINANCE THE VIETNAM WAR EFFORT!! THIS "RAIDING" OF THE "LOCK BOX" CONTINUES UNABATED TO THIS DAY!!

[In my estimation these facts are generally NOT even known to the U.S. public as a whole. Monies used to service such debts restrain a government's discretionary spending. Monies that previously could be used for projects and programs that would benefit the society as a whole are now being used just to service the debt incurred by financing a war in the fashion such as was employed by President Johnson.]

The current war being fought in Iraq by the U.S. military is of course a prime example of how war can stress a governments finances and place a huge burden on the society as a whole.

What was supposed to be a quickly won war of short duration and limited appropriated spending, has become an anti-insurgency campaign of indefinite length. A war that needs continuous legislative approval for more and more expenditures. Unanticipated and costly expenditures that drive the U.S. government further and further into debt. Debt that most be financed in some manner. Debt that must be paid off in some manner even far down the road!! Debt that severely hampers and restricts the discretionary spending of the government far into the future. Debt that CAN lead to future increased taxation and inflation.

[An increased need of government to finance the military and wars by borrowing removes capital from financial markets. Capital needed by "capitalist" businesses that survive, thrive, and grow by also borrowing from those same financial markets. A limited amount of capital as a result of excessive government borrowing means higher interest rates for business, with stagnation quite often being a result.]

It may very well be that the American experience in the aftermath of WW2 was an anomaly of the first order. NOT to be seen ever again!

coolbert.