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Kimberly Amadeo

The True Cost of War

By August 27, 2013

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The U.S. announced it could launch air strikes against Syria as early as Thursday. That's because the U.S. believes the Syrian government used chemical weapons on its rebels, killing 1,000 men, women and children.

Defense Secretary Chuck Hagel said any strike would be limited, such as cruise missiles that would strike specific Syrian military targets. These missiles would be launched from U.S. warships that have already been moved to the Mediterranean. It would not be massive bombing on Syrian President Bashar al-Assad. The action would be in partnership with allies in NATO and the Arab League. (Source: New York Times, Momentum Builds for Military Strike in Syria, August 27, 2013

How It Affects You

The Dow dropped 100 points, adding to its decline since August 2. (For more, see Dow Closing History.) Investors flocked to the traditional safe haven investments, gold and Treasuries. As a result, gold prices rose while Treasury yields dropped to 2.76%. Oil prices rose above $108 a barrel, as investors grew worried the conflict could escalate and create shortages. (Source: CNBC, Dow Drops 100 Points, August 27, 2013)

This potential conflict affects you in two ways, one short-term and one long-term. The short-term impact will be felt over the next few months, depending on how involved the U.S. becomes. This, of course, depends on the reaction of Syria and its allies, Iran, Hezbollah and Russia. The current unrest in Egypt could also be worsened, which has investors worried. Therefore, expect volatility in the next few weeks, which will drive stock prices lower and gold, Treasuries and oil prices higher.

The long-term impact may surprise you. Most analysts say that war is good for the economy. The theory is that defense spending creates jobs. This theory is based on the boost in U.S. economic growth from World War II, which many say ended the Great Depression.

However, times have changed. First, military spending is not the way to create jobs. A Brown University study estimated the cost of the Afghanistan, Iraq and Pakistan wars at $3.7 trillion, or $31,000 for every family in America. This counts benefits to disabled vets -- nearly half of the 1.25 million who served have made health or disability claims.  It also counts the interest on the debt incurred to finance the wars -- $185 billion.

A U Mass/Amherst study showed that $1 billion of military spending created 8,555 jobs and added $565 million to the economy. That sounds great until you compare it to other ways the money could have been spent. That same $1 billion given back to your family as a tax cut would have created 10,779 jobs and put $505 million into the economy as retail spending.

The best way to create jobs? Spend $1 billion on building mass transit. That creates 19,795 construction jobs and puts $880 billion into the economy. If you want to leverage that $1 billion in government spending into the best bang for the buck, try spending it on education. It puts $1.3 billion into the economy, while creating 17,687 jobs.

Even more important than the money are the lives disrupted. A quarter of a million people were killed, half of them Iraqi civilians.  The wounded total 365,000, while 7.8  million have been displaced.

As put so well by Reuters reporter Daniel Trotta:

In one sense, the report measures the cost of 9/11, the American shorthand for the events of September 11, 2001. Nineteen hijackers plus other al Qaeda plotters spent an estimated $400,000 to $500,000 on the plane attacks that killed 2,995 people and caused $50 billion to $100 billion in economic damages.What followed were three wars in which $50 billion amounts to a rounding error. For every person killed on September 11, another 73 have been killed since.

Perhaps it's time to admit we can no longer afford the true cost of war. Tell us in How Much Should the U.S. Spend on National Security?

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Photo: An American airforce jet returning to base in Saudi Arabia after a raid on Iraqi ground forces during the first Gulf War. Photo by MPI/Getty Images

Comments

July 9, 2011 at 2:38 pm
(1) Bob Lilley says:

I remember chatting with a middle-aged man from Ethiopia one evening.

He told me that his culture was obver 5000 years old, yyet his country contines to live in poverty.

“Do you know why?” he asked me.

“Because of war!” he replied to his own question.

“We have been spending all of our time and resources on conflict – and for what? Our young men are dying, our young women are raped, and our children are hungry!”

That is the true cost of war!

Thank you for putting a dollar perspective on these recent conflicts, however. The entire 2012 budget? Is it any wonder we are in the shabby shape we are in now??

September 3, 2013 at 2:33 pm
(2) chan says:

hi kim
Did any body come across the proverb from John F kennedy ( former
American president) saying that: “Man kind should end the war or War will end the man kind”.

What a contradict statement.

September 3, 2013 at 4:45 pm
(3) useconomy says:

Then again, do you just stand by while someone gasses 1,400 people including women and children? Especially since the global community has outlawed chemical weapons, based on the awful experience of WWI. The U.S. stood by when small European countries were being attacked during WWII, and eventually we were attacked as well. This military strike isn’t just about Syria, it’s also a warning to Iran and its development of nuclear capabilities.

September 3, 2013 at 11:56 pm
(4) Chan says:

Certainly not!!!!!! At the time John F Kennedy said that statement the circumstances and situation were entirely different and today’s environment is entirely different scenario. It is like that because the general people mentality and morality deteriorated worldwide.This happend like this because resources and needs of people are different from country to country. we could give some more execues for ourselves but at the end the togetherness and the value of human kind have been lost.Most people in the world have to learn to live mutually understandable. Off course there are some differences between a human being thinking but certainly does not mean that we all human being cannot live in peace. killing of human being is just not acceptable Kim.

September 4, 2013 at 8:24 am
(5) useconomy says:

Well, and to your point, even the Generals are saying that a military strike will not solve the underlying problems in the Middle East. For example, sanctions against Iran are working, and led to a change in leadership (in a way.)

However, even Russia would support a military strike if it’s proven that chemical weapons were used. Although, I doubt Putin would stop selling arms to Assad.

September 5, 2013 at 2:56 pm
(6) Chan says:

Putin accepts whatever is going on in Syria, and he is in totally other view than Obama. May be on reason is Russia is under Communist where as US follows Democratic.

September 5, 2013 at 3:05 pm
(7) Kimberly says:

Hi Chan,

I thought Putin said he would support intervention if it was proven that Syria used chemical weapons. We’ll see what happens if Obama meets with him (informally) at the G-20 meeting this weekend.

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