War is never a solution to anything. We come in peace, and may other words, we are in the tweets of many leaders. However, they still somehow end up weaponizing the most cruel states like the Occupied Israel in the world.
We lost a lot even when they invaded Iraq and attacked Afghanistan.
A report published by the Watson Institute for International and Public Affairs states that between 2001 and 2021, during the war in Afghanistan, the U.S. Pentagon spent more than $14 trillion.
About half of that money went to companies that make weapons and provide military services.
This is much more than the average GDP of many countries, but is it worth it for the U.S economy? Wars hit hard on budgets, businesses, and the daily lives of people.
Does war boost the economy through defense jobs, or does it drain resources?
Let’s dig into the article to find out!
How War Can Reshape Economies?
War doesn’t just change societies, it also plays a big role in shaping:
- Global politics
- Trades
- Science
Throughout history, war has helped spread economic and political influence around the world. The rise of modern nation-states has often gone hand-in-hand with war, which has both limited and expanded global connections.
Today’s wars are different. They often involve cross-border trade and hidden economic activities like smuggling or black markets. These “new wars” can increase non-transparent and unfair economic practices, beyond just regional rivalries.
Real Cost of Wars for the U.S.
Economist Joseph Stiglitz said that war has directly hurt the U.S. economy. For example, the Iraq invasion caused oil prices to skyrocket from $25 to over $100 per barrel.
Just like in the modern times of the Israel-Iran war when the Strait of Hormuz is about to be closed, Americans can quickly see a big jump in gas and energy prices. That’s because this narrow waterway, linking the Persian Gulf to the Gulf of Oman, is one of the most important routes for oil shipments in the world.
According to the U.S. Energy Information Administration (EIA), about 20 million barrels of oil pass through the strait every day.
That’s around 20% of the world’s total oil use. There are not many backup routes to move oil if the strait is blocked. And Iran has often threatened to shut it down during conflicts.
Even though the U.S. produces a lot of its energy, gas prices would still rise sharply if oil flow through the Strait of Hormuz were disrupted.
Losses the U.S. Economy Had to Bear after the Iraq & Afghanistan Conflict
The U.S. entered wars in Iraq and Afghanistan during already weak economic times. In 2008, military spending for the Iraq war peaked at 4.3% of the country’s GDP. For the Afghanistan war, the peak came in 2010, costing around $297 billion, about 2% of GDP.
These numbers only include the direct military costs; they don’t count other big expenses like:
- Healthcare
- Benefits for veterans
- Interest on the money borrowed for the wars
- Aid to allies
- Rebuilding the war-torn countries
When all these extra costs are added in, the total is much higher.
In the Cold War, extra military spending was balanced by raising taxes, but in the case of the Iraq and Afghanistan wars, it was paid for by borrowing money. It was also the first time in U.S. history that the government lowered taxes during wartime.
The Israel-Iran War Impact on the U.S. Economy
The Iran-Israel conflict is happening far from the U.S., but it can still affect the American economy.
Jerome Powell, who is the Federal Reserve Chair, said that officials are keeping an eye on the situation. He explained that when there is trouble in the Middle East, energy prices often go up for a short time but usually come back down.
He also pointed out that these kinds of events don’t normally cause long-term inflation. However, in the 1970s, things were different. Back then, major events like the Iranian Revolution and the Arab oil embargo caused a big drop in oil production and pushed gas prices even higher.
This time, Powell believes that kind of extreme situation is unlikely. He said the U.S. economy now relies much less on foreign oil than it did in the 1970s.
Can the U.S. Economy Afford Another War?
Right now, the U.S. already has $36 trillion in national debt. At the current time, a war like the Iraq War can not be afforded.
There are global risks too. Many European allies prefer peaceful solutions and diplomacy with Iran and may not support another U.S.-led war. The fact that some people offer weapons to Israel is another debate.
Countries like China and Russia, which have close ties to Iran, can use the situation to gain more influence in the region. This can weaken America’s role on the global stage. And the power game they play might just fire back.
Conclusion
War always comes with a heavy price. From rising oil prices to massive government spending, the U.S economy has gone far beyond the battlefield.
Now, the U.S., already facing record debt, can not afford another full-scale conflict. So, when the question arises, can America afford to repeat the same costly mistakes? What do you think about this? Tell us in the comments below, let’s connect there, and don’t forget to subscribe to BlogDunes!
FAQs
Q1: How did World War I impact the US economy?
The war effort stimulated economic activity. Employment opportunities were expanded, which saw a migration of workers, including many African Americans from the rural South seeking jobs.
Q2: Why did the US economy boom after WWII?
Most historians conclude that the most important American long-term influences were removing trade tariffs, the “Americanization” of business structures, and the new wave of private investment.
