A persistent myth in economics is that war is good for national economies. The argument goes like this: millions are given jobs serving in the armed forces. Industries that make planes, tanks, missiles, and other war materials are ramped up. This leads to more profit and employment. All the new income is then spent into the economy, creating a cascade effect of economic growth. Some economists will preversely even take this a step further to say the economy of war victims can be improved. After all, if all the homes and factories have been destroyed, jobs and business activity will have to be ramped up to rebuild.

There are many economic fallacies built into these arguments. For starters, all the resources expended for war must be taken from something else. The soldiers in the military aren’t available to be farmers, factory workers, programmers, construction workers, etc.; the same goes for the business manufacturers. If you’ve set aside facilities to build tanks and missiles, they’re not available to make cars, computers, tractors, phones, and so on. Also, the military, unlike most of the economy, is a net consumer of resources, rather than producer. In other words, they consume scarce resources like fuel and food, leaving the rest of the economy to pick up the slack. In a resource-abundant nation like the U.S., we don’t often think about this, but populations throughout history have starved and suffered while scarce necessities were seized for use by the military. The most obvious cost of the military is the taxes we pay to fund it, which again is money taken from other areas of production. As for the victims of war, yes, they may ramp up to full employment to rebuild, but instead of building hospitals, schools, theaters, and other items of an advanced economy, they must go back to square one and focus their resources on developing basic food & shelter.

A good way to visualize the fallacies is to picture an island economy, with no government or financial system to muddy the waters. Imagine 20 people are stranded on a desert island. Starting from nothing, they must develop a makeshift economy, producing for survival. They hunt, fish, gather fruit, build huts, and dig wells. Once the essentials are taken care of, they work on perfecting their tools, shelter, medical treatment, and sharing of knowledge. They develop better storage and preservation of food. They even progress to the point they build some entertainment options. Their economy may get good enough that all of them don’t even have to work full-time (“oh no, the economy is slowing!”).

Now imagine war enters the picture, perhaps from a nearby island. Seeing a threat, half of the residents start preparing full-time for battle. But now, the other half of the people have to do all the fishing, food gathering, and construction. Wood that could have been used in fishing rods and buildings is now used to make spears, war boats, and fortifications. Assume next the war with the other island takes place. People on both sides are killed. Food stores, huts, and wells are destroyed. Everything must be rebuilt from scratch with fewer people and resources. “Yay! They’re back at full employment!” Of course, even after peace is made, a segment of the population that once worked in production activities must be set aside for military operations in case the threat re-emerges in the future.

Do you see all the fallacies in the “war is good economics” argument? Apart from the moral and personal horror, at any point in the island development did it seem the economic situation improved because of war? It’s unfortunate that in modern society, a healthy economy is measured by GDP and income in the most recent period. In other words, how much production did we generate last quarter? How much wealth did we add this quarter? These measures don’t reflect how much wealth was consumed, or in the case of war, destroyed.

To put it simply, the wealth of a nation is the accumulated production to date, minus what has been consumed, destroyed, or given away to other nations. War is the greatest net consumer and destroyer of wealth in all of history. Yes, with all the evil people around the world, we’ll likely always need a standing military to defend us, but never again let a politician or media pundit convince you that funding a military or launching a war is good for the economy.

Blog Link: https://educationdojo.com/articles/2025/07/is-war-good-for-the-economy/

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