War is Bad for the Economy

National security spending …“Elevates inefficiency to a national purpose” Seymour Melman

Divorced one like Bush sent the link:


“For the report, The Economic Impact of the Iraq War and Higher Military Spending, by economist Dean Baker, Center for Economic Policy Research (CEPR) commissioned Global Insight to run a simulation with its macroeconomic model.”

“The model runs show for a 1% of GDP increase in military spending, similar to what has been since 11 Sep 2001:”

“After 10 years of higher defense spending, there would be 464,000 fewer jobs than in the baseline scenario with lower defense spending.”

“After 5 years, annual car and truck sales are projected to go down by 192,200 in the high military spending scenario. After 10 years, the drop is projected to be 323,300 and after 20 years annual sales are projected to be down 731,400.”

“Construction and manufacturing are the sectors that are projected to experience the largest shares of the job loss.”

“It is often believed that wars and military spending increases are good for the economy,” said Baker. “In fact, most economic models show that military spending diverts resources from productive uses, such as consumption and investment, and ultimately slows economic growth and reduces employment.”

This is in line with a paper by Thomas E. Woods at; http://www.mises.org/journals/scholar/woods2.pdf “Neglected Costs of the Warfare State”

The paper quotes Seymour Melman (1917-2004) and the idea that when resources are devoted to military spending they are taken from other urgent needs. Melman of Columbia University extended the work of Frederic Bastiat, (1801 to 1850) who stated similar findings to Baker’s.
“the costs not only of modern American wars but also of the defense establishment itself.

“Industrial productivity,” he [Melman] wrote, “the foundation of every nation’s economic growth, is eroded by the relentlessly predatory effects of the military economy…. Traditional economic competence of every sort is being eroded by the state capitalist directorate that elevates inefficiency into a national purpose, that disables the market system, that destroys the value of the currency, and that diminishes the decision power of all institutions……..”

Here is why I write about waste in national security projects.