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> War is very expensive. Unless you're referring to the obvious horrific cost to human lives, war isn't "expensive" in any real sense in terms of national fina
by lucideer 4y ago
> War is very expensive.
Unless you're referring to the obvious horrific cost to human lives, war isn't "expensive" in any real sense in terms of national finance. War is profitable: any money "spent" goes somewhere. Many wars have lifted countries from recession.
The only slight argument one could make for the expense of war is military consumption of fossil fuels (but we're already talking about control of that resource, so that's self-fulfilling).
- imtringued 4y agoWar is profitable because you are taking what someone else has built or what was already there and claiming it as your own. The costs are borne by the losers of the war. Either through loss of life or the loss of the seized capital.
- FeepingCreature 4y agoCouldn't you just give people money and avoid the part where you set part of the economic output on fire? I think the fact that wars can be economically beneficial is a blazing indictment of our economic competency.
- cuteboy19 4y agoThis paradox was resolved by economist Bastiat in 1850 https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window
- FeepingCreature 4y agoWell, it's not really a fallacy if you account for political impediments to just giving people money. In other words, war can compensate for a "demand shortage," notwithstanding that in a sensibly run economy, such a thing should never be expected to exist.
- eru 4y agoIt's pretty easy to print money.. (Yet, sometimes like around 2008 countries still fail.)
- marcosdumay 4y agoWhat is not easy is getting that money on the hands of the people, instead of a few rich folks.
- eru 4y agoIf the rich folks spend it, it gets into the hands of other people. If the rich folks keep it, then it doesn't contribute to anything (eg not to inflation), and you can just print more. In fact, the latter is much better: you can have your central bank gradually buy up the rest of the world without any inflation nor devaluation of your currency.
- FeepingCreature 4y agoIf the rich folk spend it, it gets in the hands of other people exactly insomuch as the other people are required to make something that the rich people want. That is increasingly not a given. And of course, it also burns some portion of those people's economic output on Rich People Interests. If the rich people "X" it and it gets in the hands of other people without burning those people's economic output on RPIs, then X is called "donating", not "spending". And in that case, we might as well cut out the middleman, cough UBI cough.
- lucideer 4y agoI was very careful in my comment not to directly use the term "economically beneficial", as wars are provably detrimental to the economy holistically. It's only beneficial to the abstracted idea of "economy" many modern economists and GDP-discourse folk subscribe to. Bastiat's parable alone is not particularly convincing in itself as it chooses to deal exclusively with currency (something that's provably debunkable by looking at economic systems even slightly more complex than the oversimplified whims of one shopkeeper), and not with the allocation of resources to society in general, which is much more negatively impacted by war / broken windows.
- FeepingCreature 4y agoI think wars can be straightforwardly economically beneficial, but only if spending is politically constrained.
- lucideer 4y agoHow???
- FeepingCreature 4y agoThe idea is if you can spend money on a bomb, you have some money that flows through a production chain, giving people employment, and at the end you get an item (the bomb) and you destroy it. It would be strictly better if you did anything else with the money, that resulted in the same employment spending but you'd have less value left at the end to destroy. But say that you live in a militarized society where it's easy to agree to fund bombs but very hard to agree to fund social services. Then the bomb may be your only option, and it's still better for your economy to build the bomb than not. It's the broken-window effect, if your political system is captured by a glassmakers' lobby.
- lucideer 4y agoYou're ignoring what the bomb does. > it's still better for your economy No. It's not. It's always worse in every way other than pure monetary terms.
- marcosdumay 4y ago20th century economics has a thing or two to add over those simple ideas.
- rhn_mk1 4y agoWhat things?
- marcosdumay 4y agoThere is a huge amount of complexity created by price-stickness and other non-rational behavior. There exist (with quite a lot of empirical validation) some situations where moving the money around improves the society, even if the reason the money is moving is a slight loss.
- cuteboy19 4y agoAre you saying that going around breaking random windows is actually good for society?
- marcosdumay 4y agoIt may be, it may not be, depends on some factors. It's not as simple as "spending money on wasteful things doesn't benefit anyone", but it is always the case that if you would gain even from breaking windows, you would gain even more from spending on something useful.
- rhn_mk1 4y agoWith spending money being a proxy for labour, I'm disappointed that the article mentions labour only once.
- mellavora 4y agoYou are half-right, in that any money spent goes somewhere, thus the government deficit spending to finance the war becomes business or household income. However, war is expensive in strictly economic term due to the physical destruction of resources. A bombed factory cannot produce cars. If the skilled engineers needed to rebuild or operate the factor are not available (dead, otherwise occupied, etc), this will also result in economic loss. The investment to convert a factory from car-making to military-vehicle making only generates long-term value if the military continues to order from that factory. Otherwise, that investment does not generate a return, likewise it takes additional investment to convert it back to car manufacture. Ukraine is not selling much wheat this year, due to the war. Since this wheat is perishable, its economic value is lost.
- lucideer 4y agoThis is a good point, but is mostly asymmetrical and favours the aggressor (there are many exceptions but they're in the minority).
- orwin 4y agoWar destroy capital. If you think of production in non-monetary terms, war is always a net negative.
- everybodyknows 4y ago> War destroy capital. It does. It also destroys cartels, rentiers, economic caste systems, captured government regulators and regressive tax regimes. This is one reason the US, Japan and Germany recovered so strongly after WW2.
- imtringued 4y agoDestruction of capital is good for capitalists. Scarcity of capital leads to higher yields and positive yields are necessary for the accumulation of capital. Of if the return on physical capital were to fall below the interest rate offered for money, capitalists destroy capital as it is too abundant. I have a hunch that this is what ultimately drives countries to war but it can't explain all wars. Primarily those following economic depressions. Yes, capitalists are insane.
- hgomersall 4y agoIt's not the war per se that lifts countries out of recession, but the ignoring of economic dogma in order to do whatever it takes to wage war. I would posit the same resources could be directed to more productive things than blowing stuff up (btw, this is largely the argument of MMT).