There is a myth that the money spent on the military is good for the economy. Its supporters point to the spin-off benefits of military research, such as GPS and microwave ovens, and argue that government spending on the military spurs on economic growth. Numerous researchers have pointed out the obvious fallacies in these arguments. Money spent on civilian research programs will produce larger economic gains because that is what they are designed to do, whereas with military research it can only be a by-product.
Most wars are financed using a combination of debt and higher taxes, which can in the short term mimic an economic stimulus but in the longer term economic growth almost always slows as civilian investment and consumption are squeezed out to fund the war effort. For most wars, including World War II, the Vietnam and Korean wars, GDP growth increased. This has given rise to the argument that war is good for the economy. However, both investment and consumption stalled or declined and were accompanied by higher taxes or higher debt. The benefits were illusionary because using GDP as the single yardstick of success misses many other important points. It counts that which is destructive for society in the same way as what is good. Polluting industries, sickness, gambling, tobacco, dealing with the consequences of crime: all add to GDP. However, even with its shortfalls, it’s the standard way of measuring the size of a country’s economy and for convenience we use it in the work of the IEP.
For countries in conflict, the economic costs are devastating and long lasting. We estimate that the economic impact of violence in 2016 was equivalent to 67 per cent of Syria’s GDP, 58 per cent of Iraq’s GDP and 52 per cent in Afghanistan. The effect lingers: the civil war in Sierra Leone formally ended in 2001, but we estimate that nine years later, annual GDP was 31 per cent lower than if there hadn’t been a war.
Enumerating the costs of conflict can be a powerful tool to educate people about the positive benefits of peace, making them more receptive to the policy shifts that will be necessary to create a more peaceful world.
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