The Cost of War: Examining the Economic Impact of Modern Conflicts

[nismaratwork]

So we invaded Iraq and when we did we lost Afghanistan.

We were never going to win either scenario. The point however, is that there is a measurable dilution of terrorist capacity to plan and execute mass casualty events. I believe that could have been achieved with means that fall short of invasion, and of course Iraq was simply insane and tangential.

 

[nismaratwork]

Afghanistan is "lost"? Since 2003 and the Iraq invasion? Apparently that kind of insight is qualification for the US Senate.
http://www.foxnews.com/story/0,2933,267181,00.html"

Iraq was and could have continued to be an effective foil to Iran, and insulation between Iran and Israel, which is why we armed and supported them in the first place. Bush Sr. realized the strategic importance of this, and far from lacking conviction in leaving short of Bagdhad, he made a wise choice for the future. Bush W. and his advisers obviously lacked that vision, and were deluded in the believe that they could improve this situation. Time has shown they were wrong.

 

[Office_Shredder]

I guess I missed the part where after the WTC towers fell the American government folded like a cheap suit and the Taliban moved into take over.

Was it a horrible tragedy? Yes. Should we work to stop it from ever occurring again? Yes. Are the stakes involved anything remotely resembling "controlling the world"? No. That's simply not true, and to suggest otherwise is nonsense.

Please give a demonstration on Islamic terrorists ability to dominate economic, political and military spheres of influence across the globe. Not influence via attacks, but to actually control. Otherwise, cut the nonsense out and let's move on to something productive

 

[nismaratwork]

I guess I missed the part where after the WTC towers fell the American government folded like a cheap suit and the Taliban moved into take over.

Was it a horrible tragedy? Yes. Should we work to stop it from ever occurring again? Yes. Are the stakes involved anything remotely resembling "controlling the world"? No. That's simply not true, and to suggest otherwise is nonsense.

Please give a demonstration on Islamic terrorists ability to dominate economic, political and military spheres of influence across the globe. Not influence via attacks, but to actually control. Otherwise, cut the nonsense out and let's move on to something productive

Indonesia, The Philippines, Iran, problems emerging in Iraq, Israel's issues with the "right of return", The House of Saud's control through (among other mechanisms) Wahhabi Islam, Northern Africa such as the Sudan, and to some extent Egypt. There is a competing culture, and one that seeks a world of Muslims, connected in fellowship. Given the sheer numbers, that implies a measure of control, much as Catholicism enjoys in Italy and elsewhere.

 

[nismaratwork]

That's counter-factual and incoherent.

That is a meaningless statement without support, reflecting only your personal opinion.

 

[CAC1001]

Interesting Cyrus, you dropped a word from Desiree's post that makes all the difference: long. The major reason debt/GDP bares watching is because lenders use it as a risk metric in deciding what interest rate they will demand, or whether they will lend at all in the future. The Greek crisis recently emphasized this point. That is, the key is whether or not lenders believe they will continue to be paid back in the long term. Thus war debt, especially for major powers, presents very little risk when it is run up, because wars inevitably come to an end, public sentiment for democracies is overwhelming in agreement to end them as soon as possible. As economists say, war spending, being temporary, is not structural.

Entitlement programs on the other hand such as Greece's early retirement benefits and the US's Medicare tend to have no end, have wide public sentiment to continue them (via robbing Peter to pay Paul as Disiree points out), tend to continually expand, forever as far as I can see, until they either collapse upon themselves or until they cause the state to default on its debt. Entitlement programs are structural. The point of all this is that comparing the US current debt and its trajectory to WWII debt is misleading from the stand point of the lender, the bond holder, the banker. From where they stand, the US has never had this kind of structural debt load in its entire history, not anything close to it.

BTW, updating the chart to this year has the US debt to GDP ratio at 87.5% as of May 2010.

http://zfacts.com/metaPage/lib/National-Debt-GDP.gif

One thing on this, I agree with you on most of it, however, cannot war debts still present a major risk to a nation? I had been reading how while it can be "obvious" from a historical standpoint that a major war is likely to occur, often at the time right prior to the war, the people are unaware.

One way to test this I had read is to look at the prices of bonds of nations right before the war. Bond prices will plummet if the general population knows a war is coming because they know that the countries will have to run up massive debts and deficits to finance the war, and will thus dump the bonds.

So wouldn't war debts still be risky? Yes wars are temporary, but they can still last a long time...?

 

[mheslep]

One thing on this, I agree with you on most of it, however, cannot war debts still present a major risk to a nation? I had been reading how while it can be "obvious" from a historical standpoint that a major war is likely to occur, often at the time right prior to the war, the people are unaware.

One way to test this I had read is to look at the prices of bonds of nations right before the war. Bond prices will plummet if the general population knows a war is coming because they know that the countries will have to run up massive debts and deficits to finance the war, and will thus dump the bonds.

So wouldn't war debts still be risky? Yes wars are temporary, but they can still last a long time...?

It sounds like the risk you refer to above would be inflation risk, in that lenders may expect the government to inflate the money supply (print money) which makes it easier for the government to pay off the war debt but devalues the bonds. However, I don't see much risk of default caused by war debt, causing a wide spread collapse. The Afghanistan war is the longest (hot) war in US history and it has nothing the like the lifespan of US federal entitlement programs, nor the growth potential, nor the public support to continue out over the horizon.

 

[CAC1001]

The Afghanistan war is the longest (hot) war in US history and it has nothing the like the lifespan of US federal entitlement programs, nor the growth potential, nor the public support to continue out over the horizon.

Well, some wars have been longer: Vietnam was 1962-73, the Philippine Insurrection was 1899-1913, and the Indian Wars 1790-1891.

 

[russ_watters]

One thing on this, I agree with you on most of it, however, cannot war debts still present a major risk to a nation?
...
So wouldn't war debts still be risky? Yes wars are temporary, but they can still last a long time...?

Certainly, but you have to weigh risks against each other. In WWII, the risk of debt is weighed against the risk (fallout) of Nazi Germany taking over all of Western Europe.

 

[nismaratwork]

Certainly, but you have to weigh risks against each other. In WWII, the risk of debt is weighed against the risk (fallout) of Nazi Germany taking over all of Western Europe.

There was also the patriotic sale and purchase of War Bonds, and then Victory Bonds, which I think reflects your calculation of relative risk.

 

[russ_watters]

There was also the patriotic sale and purchase of War Bonds, and then Victory Bonds, which I think reflects your calculation of relative risk.

I'm not quite following. Those were the debt.

 

[mheslep]

Well, some wars have been longer: Vietnam was 1962-73, the Philippine Insurrection was 1899-1913, and the Indian Wars 1790-1891.

In terms of war debt, the topic of the moment, the US didn't have any ground troop levels of consequence in Vietnam until '65. Likewise the scale of those other conflicts would have no need for the issuance of any debt to pay for them.

 

[nismaratwork]

I'm not quite following. Those were the debt.

The argument was made earlier that people would dump bonds and avoid their purchase in times of war. I am making the point that while that can be the case, it is not always the case. Maybe it would be better to say that WWI, WWII, the most active phase of the Korean War, conform to the notion that war-debt is fleeting. We are yet to see how modern wars will play out, when there is great waste for little gain, including an imperative for self-defense.

There is the fallout from war; Vietnam vets with broken families and minds, and the TBIs being racked up in these current conflicts. We did little for the veterans of Vietnam, so maybe that cost was minimal, but there is impetus to care for those injured, and a wider view of what constitutes injury, in modern wars. What happens when wars spawn their own entitlement programs, out of the necessity of treating PTSD, TBI's, amputation and burns, and the public is unwilling to ignore this? Wars, and the weapons of war are evolving, and as both do, how they impact our economy may not be as easy as a chart of past GDP %'s.