On the recieving end, war causes businesses to lose inventory, employees, capital goods and simply put, valuable property. Additionally, funding the construction of missiles, tanks, carriers and other such warring goods requires the diversion of productive capital into inefficient and unproductive industries (the utility of a tank on a farm is roughly the same as a tractor on a battlefield). Iraq war’s costs spiral beyond 1991 Gulf War:
The military spending also had a positive impact on the US economy, however, said Wachovia global economist Jay Bryson. “In terms of budgetary numbers, I think it has probably been somewhat stimulative to the US economy. You are pumping more money into the army, and some of that money gets spent here at home,” he said. “But overall when you have parsed out the oil price and you have parsed out any sort of knock-on consumer sentiment, ... it is very difficult to say one way or the other.”
The bottom line was that the fallout of the war had failed to interrupt the global recovery. “World economic output is really starting to pick up,” Bryson said. It was impossible to say for sure that the Iraq war had a detrimental effect on the world economy, he added. “I don’t think you can actually say that. Maybe it has slowed growth a little bit, but I think it is more of a secondary-effect order of magnitude.”
First off, it’s impossible to begin estimating the copious number of opportunity costs that the reallocated billions of dollars would have been used for in the hands of private enterprise. I can dare say however that bullets, bombs and body-caskets are hardly goods that create productive long-term economic growth domestically. In addition to Bastiat’s Broken Window Fallacy, this smacks of a classic Keynesianistic dogma that Frank Shostak dispenses of:
The GDP framework cannot tell us whether final goods and services that were produced during a particular period of time are a reflection of real wealth expansion, or a reflection of capital consumption. For instance, if a government embarks on the building of a pyramid, which adds absolutely nothing to the well-being of individuals, the GDP framework will regard this as economic growth. In reality, however, the building of the pyramid will divert real funding from wealth-generating activities, thereby stifling the production of wealth.
The CPA might as well start selling bumper stickers stating:
Khufu Was A Penny Pincher