The North American Economy needs wars?

Question

I was speaking recently to a lecturer from the London School of Economics, who say's that he believes North America needs wars to sustain its economy. Is this true?

Answer 1

Let's see what a war does.

War:
Allows you to used up old stocks of weapons and have a justiification to build new ones. This definitely caused a pick up in the activities of your armament industries amd peripherals; furthermore as the weapons are used, the demand keeps increasing.

Allows you to test your new weapons and showcase to potential buyers. War is therefore a double boon for the armaments industry; not only does it sell more immediately, but also establishes a non-disputable advertisement that ensures a steady stream of orders.

Allows you to send find jobs for some of the poorer/less eductaed people in your society (since well-off/well-educated people are less likely to join the military).

Allows you to make any threats you make credible. An actual war is not necessary but military might alone not enough. There must be demonstrated willingness to use the military might for any threat to be credible.

Affects the mood of your people. This can cut many ways. Either people are afraid and lose hope, eventually destroying your economy. Or people feel galvanised and become stronger.

On the other hand, war:

Causes you to switch resources into the armament industry, but this is an issue only if you have full employment. If you have idle resoruces, then it is less of a problem.

Causes widespread devastation if the war is fought on your own territory.


Therefore I would say:
1 If you have idle resources
2 If you have a good armaments industry
3 If you have and depend on military might for advantages
4 If you can keep the war far from your own territory
then war can even have a positive effect on your own economy.

Now, if to that you add reconstruction that allows you to provide long term projects for companies of your country so that they are assured of a steady stream of income over time therefore boosting your GNP...

Then yes, I would say war can be beneficial to your economy.

Now thinking specifically of the US; given the position of the US$ as reserve currency, and the fact that the US government has been running huge deficits financed by bonds, then it makes sense to ensure buyers of the bonds will keep them and keep buying them, for their benefit as well as that of the US. This assurance can be obtained by being a credible threat for example.

On the other hand, I am not sure Canada would benefit so much though.

Answer 2

Not war but military power to enforce its foreign policy. America can then demand favourable economic conditions from other countries.

Answer 3

War can never be profitable. See: "Parable of the Broken Window" by Bastiat.

Answer 4

no, that's one man' s opinion