One of the more enduring myths in Western society is that wars are somehow good for the economy.
It is vital for policy-makers, economists and the public to have access to a definitive analysis to determine once and for all whether war is good or bad for the economy.
That analysis is below.
Top Economists Say War Is Bad for the Economy
Nobel prize winning economist Paul Krugman notes:
If you’re a modern, wealthy nation, however, war — even easy, victorious war — doesn’t pay. And this has been true for a long time. In his famous 1910 book “The Great Illusion,” the British journalist Norman Angell argued that “military power is socially and economically futile.” As he pointed out, in an interdependent world (which already existed in the age of steamships, railroads, and the telegraph), war would necessarily inflict severe economic harm even on the victor. Furthermore, it’s very hard to extract golden eggs from sophisticated economies without killing the goose in the process.
We might add that modern war is very, very expensive. For example, by any estimate the eventual costs (including things like veterans’ care) of the Iraq war will end up being well over $1 trillion, that is, many times Iraq’s entire G.D.P.
So the thesis of “The Great Illusion” was right: Modern nations can’t enrich themselves by waging war.
Nobel-prize winning economist Joseph Stiglitz agrees that war is bad for the economy:
Stiglitz wrote in 2003:
War is widely thought to be linked…