There used to be a time when war invariably meant economic growth and security, even if physical security was at risk. As Dr. Rachel Maddow exclaims in her book “Drift: The Unmooring of American Military Power”, society no longer has any skin in the game when it comes to war. First of all, is this true? Does this translate to, and is it the cause for lack of economic boom in wartime conditions that has historically been the mainstay in American Economics? I don’t know, but it’s a heck of a research question.
First, let’s take a look at some of the historical wartime numbers: GDP and unemployment (U3). For GDP, because the dollar is different today than in 1948, I use percent change over time. What we’re looking for are peaks in GDP and dips in unemployment during times of war. This is what it looks like:
Up until around 1978 GDP growth was highest during wartime. The Korean War and the Vietnam War saw GDP growth. Right after these wars is when we see shaded areas of recession. This trend stopped cold by 1978.
Unemployment was also at significantly low levels during the Korean and Vietnam Wars. This trend also came to an abrupt end by 1978.
There were several conflicts from 1978 forward, and while it could be argued that those conflicts were nothing like the Korean or Vietnam Wars, you would think that you would see some trend in peaks and valleys during conflicts. But you don’t.
“Why” is a mystery. Maybe society has a whole doesn’t have any more skin in the game because of technology. Maybe the Military Industrial Complex of C. Wright Mills is finally dead as a factor of society, even if it’s still the largest government expenditure.
One thing is for sure: war isn’t costing all that much in human capital.
It is a heck of a research question, though; be it for Sociologists, Economics, Political Scientists, or Historians.