While expenditure on the two wars has been rising steadily over the years, $171 billion in 2007 and $193 billion in 2008, expert opinions differ on whether war spending hurts or improves the economy. History has shown that war expenditure somewhat improves the economic conditions following the years of conflict, such as that experienced in Japan and the United States itself. After the World War II and following the Great Depression, the U.S economy revived itself with the war efforts and spending being labeled as the cause. The National Bureau of Economic Research confirmed the same, suggesting that countries that more actively engaged in war activities had better economic revival rates than others. War spending alone did not affect per-capita figures.
However, it can be observed that increased military spending is not only deemed bad for short term economic activity affecting the lives of normal citizens, given how the same expenditure can be attributed to public health care and education, but it also affects the country’s economy as a whole. The post Gulf War recession is a good example of this. The recent recession of 2008 that plagued the banking regimes of the United States, Britain and other countries can also be termed a result of the increasing expenditure on the ISAF forces by the relevant countries.
Some may argue differently, however, suggesting that a moderate increase in budget of the Pentagon may not negatively affect the economy (Feldstein). There are other reports from the Congressional Budget Office suggesting that through 2017, the cost of the war would come out to be $2.4 trillion, which according to the given population levels equal to $570 per citizen per year. The Joint Economic Committee on the democratic side submitted its own report suggesting that figure was closer to $830 per year. That is a high price to pay, considering the impact of the war on oil prices which have risen steadily since 2001. That coupled with the falling dollar and consequently inflation would impact not only the government but also the common citizen in the long run.
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