Well, based on previous American military conflictsnegatively… in every single category studied. An Institute for Economics and Peace report, published in early 2012, indicatedthat the majority of American military conflicts lead to an increase in publicdebt and levels of taxation, a decrease in consumption and investments as apercentage of GDP, and an increase in inflation, either during or afterwards,as a direct result. Why do I bring upthe effects of war on American consumption? Because the recent actions of North Korea could POTENTIALLY cause theKorean War to go ‘hot’ again, and in the process drag the United States intoanother drawn out war. In the past monthalone North Korea has threatened to level Washington D.C. with a pre-emptiveNUCLEAR strike, canceled the 1953 armistice that ended the Korean War, and justyesterday they cut the last military hotline with South Korea. North Korea has threatened the United Statesand our allies in the past, but this time it may be different, and regardlessof what one may think; whether it be posturing or actually gearing up for war,North Korea’s 9,000,000 man, nuclear weapon equipped military is not somethingto simply ignore. IF North Korea’s toughtalk actually leads to action and war does break out, American consumption, andtherefore the American economy as a whole could suffer a serious blow. I say this because America’s economy is just beginningto actually recover from the effects of the 2008 recession, and is stillconsidered fragile due to higher than average unemployment, rising inflation,and government debt being at an all-time high. The Institute for Economics and Peace report I mentioned earlier (EconomicConsequences of War on the US Economy) stated that the United States has paidfor military conflicts in three different ways since World War II; increasing thedebt, raising taxes, or printing more money to pay for it (increasing inflation).
Any one of these methods would cause greatharm to the American economy’s recovery, and because a military conflict inKorea would be much larger than our recent conflicts in the Middle East, andkeep in mind we’ve spent $3.1 trillion in the Middle East since 2001, it wouldalso be much, much more expensive, and therefore far more dangerous to ourcountry’s financial stability. So whatdo you think? Think the Korean War willheat up again? And if so, what effects do you think it will have on the US economy?- Zach Briscoe
http://www.huffingtonpost.com/michael-shank/economic-consequences-of-_b_1294430.html
I personally think that North Korea is all talk because any war provoked against us would have greater consequences to them than the United States. However, If for some reason they do attack I think that consumerism will have a slight increase and then plateu off back to normal. I say this because with the threat of war on the horizon there will be those people who will probably stock up on goods, and bunker down in their homes in preperation for this war. If you have ever seen some of those discovery channel shows where you see people preparing for doomsday events like 2012, people went insane buying underground bunkers, an insane amount of food, and all kinds of pharmacy goods too. You will always have a portion of the population that will over consume in these crisis, but for the most part I think consumption will stay the same and maybe have a slight increase for a short while.
ReplyDeleteIgnoring a war reigniting with North Korea could have an even greater effect on the US economy than an actual all out conflict. It is commonly known that North Korea has three old blood enemies, the “puppet” South Korea, its WWII invader Japan and the “Imperialists” United States. In a recent statement by North Korea, after its few weeks of saber rattling, it stated that it would target Japan for nuclear war. Japan represents a major portion of the world economy ranking 3rd in total global wealth. Japan being a major trade partner with the US, having a nuclear warhead drop on the world’s technology capital vaporizing millions of innocent civilians, would devastate Japan’s economy and would splash waves onto the US’s economy. With the bitter taste of the war on terror in the US’s mouth, it is nothing compared to the wake we would feel from idling standing by. It doesn’t help that war use to be profitable like in WWII when the US had to build everything from scratch, stimulating the economy in unprecedented ways. In the post Cold War era for the US every war should be a relative setback to the economy because there is no industry to be had. Most of the United States’ modern weapons have already been produced and stockpiled. What should be an example to North Korea is in 2003 a similar dictator waged war with the United States who collapsed in under a month. While we don’t want to be pulled into a war the public doesn’t care to fight, we cannot abandon such large trade partners. If North Korea were to actually act and the US did nothing to help, the US and its army of consumers would feel the nuclear shockwave of the world’s 3rd largest economy being put on hold.
ReplyDeleteIf North Korea were to actually attack either Japan/South Korea/Us, it would probably be one of the last actions it would make as a semi-cohesive state. Even NK's longtime ally and supporter, China, has distanced itself from the childish antics that have been issuing from the "Democratic People's Republic". One of the major problems would actually be what happens when North Korea collapses. Considering what happened when East and West Germany reunited, and the economic turmoil that went along with it, North and South Korea reuniting would be an economic nightmare for the South. North Korea is essentially mired in the past with no industry to speak of, sans the war industry. If the two countries were to reunite, the South would bear the brunt of the costs concerning the feeding of the millions of malnourished Northern citizens. That alone would have severe consequences in the Pacific rim economy.
ReplyDeleteThere are some very valid points in this post, as well as in Max's above statement.First and foremost, war is no longer profitable, at least the way Americans prosecute it nowadays. In the golden days war made money because things were manufactured here, sold to partner nations(or loaned at great debt vis a vis World War One) and we simply earned the profit. Its how we got to where we are economically, though very few want to admit it. Today, however, we make guns for our own use and the debt is passed on to the American taxpayer. Max's counterpoint is also a valid statement. Remembering the level of inter-connectedness that we share with the world now days, and the effect of the current recession, any major economic powerhouse falling, means a great threat for all economic powerhouses. So if we are damned if we do and damned if we don't, what is the answer? Well, North Korea has to undergo periods of rapid and aggressive saber-rattling in order for it's officials to remain in power. They have to have the three great enemies in order to survive, and every few years one of the Jong's has to remind his people that we are still here, threatening their lives. As Andrew states, war could potentially devastate North Korea before the first shot is fired, and I'm sure even they understand that. So with no war, and no credible threat of war, they can continue to be the squeaky wheel on the international stage that gets ignored when they take their threats right up to the limit and then go quiet.
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