English 112
Professor Friesen
11/04/2014
Economic Change in Times of War
The interconnectedness of specific events in a nation and the resulting state of the country’s economy has been analyzed for centuries. Specifically, there is an on-going investigation into the economic change and fluctuation in commerce a country experiences during a period of conflict. Three key questions emerge while researching for information and data on wartime economies: Does war stimulate long-term economic growth, do countries not physically located in the battle zone profit economically from supporting a war effort, and the steps a nation must take to focus wartime efforts, and its resulting economy, into rebuilding sustainable peace. In …show more content…
The broken window fallacy is a scenario created by French Economist Frederic Bastiat to explain that destruction, included in warfare, doesn’t benefit the economy (Andreano, 1962). The fallacy states that by breaking a store owner’s glass pane, the store owner must pay for a new piece of glass which stimulates the local economy. Yet, Bastiat’s explains that destruction reduces a nation’s disposable income (in this case, the store owner), meaning that the country will have fewer dollars to spend on the development of the national economy as a whole. Goldstein (2003) explains that military spending acts in such a way that slows economic growth by diverting capital gains and labor forces from more general national investments such as the improvement of schools, roads, and the investigation into new technologies to war related …show more content…
Additionally, long term bonds, that hold stake in the war-ridden nation, are often handed down, in order to give back to the supporting nation when the economy and state of the conflicted nation begin to recover (Andreano, 1962). Despite the initial amount of free capital the supporting nation gives away, the long term benefit of wartime monetary and material supplements far outweighs the perceived negative short term impact. As Weaver (2011) states, one of the few downsides to supporting a war effort is the representation of the nation’s politically standing, which can possibly lead to future conflict within the associate