War and Profit

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Blood Money : How the State Profits from War

One of the most enduring misconceptions in economics is that war is beneficial to the economy (Moffatt , n . pag . This myth was further perpetuated by the economist and New York Times columnist Paul Krugman who wrote : Ghastly as it may seem (the destruction of the World Trade Center ) could even do some economic good .the driving force behind the economic slowdown has been a plunge in business investment . Now , all of a sudden , we need some

new office buildings (Tracinski , n . pag Indeed , bad economics reign in moments of crisis and or panic , when people are desperate for solutions

To refute the alleged benefits of the War Economy ' critiques use the fallacy of the broken window (Tracinski , n . pag . When a vandal throws a brick through a shop 's window and the shop 's owner has to spend , say 200 for the window 's repair , the people will think that the defacer has given a positive contribution to society . After all , the repair of the broken window meant an instant boost in employment and economic activity (Tracinski , n . pag . But what these short-sighted citizens didn 't know was that the 200 that was spent on fixing the window could have been used in ventures that might have advanced the shop owner 's enterprise

Unfortunately , proponents of the War Economy ' assumed that (since a broken window can stimulate the economy (it must be better ) when literally thousands of them are broken (Tracinski , n . pag . For them wars are crucial for the survival of modern economies (Cline , n . pag War Economy ' advocates believed that almost every industry is involved with providing goods and services to the armed forces (uniforms , food , medicines , weapons manufacturing , etc . Hence , should war be eliminated , these businesses , particularly technology and manufacturing , will fold up

Another argument of the backers of the War Economy ' is that it is the fastest solution to an economic slump (Moffatt , n . pag . When the economy is undergoing recession , production is low and people are spending less than usual . But when the government goes into war , it will need weapons and equipment for its soldiers . Economic activity is therefore expected to increase due to the rise both in government spending and the private sector 's business transactions with the miliatry

Corporations will scramble for contracts that will allow them to supply uniforms , vehicles and bombs to the army . These companies will have to hire more workers to keep up with the increase in demand , lowering the unemployment rate in the process . There are even some workers who will be employed to replace those who volunteered as reservists abroad . Since the unemployment rate is decreased , consumers will spend more again Increased consumption , in turn , will boost the retail sector . At the end of the day , there will be overall economic growth , thanks to the government preparing for war However , critics contended that the above-mentioned projected economic advancement is at the expense...