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September 19, 2014

A Key to Economic Growth? War

Tyler Cowen: “The continuing slowness of economic growth in high-income economies has prompted soul-searching among economists.”

One explanation: “It is the persistence and expectation of peace.”

“Rather, the very possibility of war focuses the attention of governments on getting some basic decisions right — whether investing in science or simply liberalizing the economy. Such focus ends up improving a nation’s longer-run prospects.”

In short:; “War brings an urgency that governments otherwise fail to summon.”

“But here is the catch: Whatever the economic benefits of potential conflict might have been, the calculus is different today. Technologies have become much more destructive, and so a large-scale war would be a bigger disaster than before. That makes many wars less likely, which is a good thing, but it also makes economic stagnation easier to countenance.”

“There is a more optimistic read to all this than may first appear. Arguably the contemporary world is trading some growth in material living standards for peace — a relative paucity of war deaths and injuries, even with a kind of associated laziness.”

  • marktrail

    Ferengi Rule of Acquisition 34: War is good for business.

    • tel00

      Ferengi Rule of Acquisition 35: Peace is good for business

      • marktrail

        Also true.

      • Suralin

        Ferengi Rule of Acquisition 76: Every once in a while, declare peace. It confuses the hell out of your enemies.

  • Micheal Planck

    Why? Because war leads to government spending. We could have the same economic growth without the destruction if conservatives were motivated to spend money by something ofter than fear.

  • moderatesunite

    seems like growth inherently slowing once economies reach a certain scale is also a likely explanation of slower growing developed economies. Also though pressure to make correct decisions and do whatever works could be a factor, simple government spending is likely a significant component as well as Michael points out.

    • Suralin

      I don’t think the scale is the limiting factor, in and of itself. I think it’s more that most (if not all) of the economic niches have already been filled in the developed world. This means there’s less room for entrepreneurs to make their mark.

      Ok, maybe I’ve been reading Zubrin a bit too much, but I do think that coming up with a new frontier (wherever that might be) would help the economy immensely.

      • moderatesunite

        the idea that many of the possible resources and economic niches are already in use in the developed world is certainly part of that assessment (although we could still do many times more by increasing efficiency and operating more sustainably). But sure if we had a bigger planet, easier access to space, or some other new frontier it would definitely lift some of the constraints.

  • YONATAN C

    ARE OUR SONS AND DAUGHTERS LIVES JUST BUSINESS OPPORTUNITY FOR THE RICH? THERE ARE STILL THREE MILLION UNEMPLOYED AMERICANS WHO HAVE BEEN WITHOUT AN UNEMPLOYMENT EXTENSION SINCE LAST DECEMBER. THIS WAS DIRECTLY CAUSED BY THE REPUBLICAN SENATE’S REFUSAL TO PASS THE EMERGENCY UNEMPLOYMENT BENEFIT BILL. THE REPUBLICANS HAVE UTTERLY FAILED THESE UNEMPLOYED FAMILIES, AND DESTINED THEM TO FINANCIAL RUIN AND POVERTY. MANY OF WHOM MAY NEVER RECOVER FROM. THE REPUBLICANS HAVE SHOWN A TOTAL LACK OF COMPASSION AND COMMON DECENCY TOWARDS OUR OWN PEOPLE IN THIS COUNTRY. THEY ARE SHAMEFUL, AND NEED TO BE VOTED FROM OFFICE.

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