WAR is BAD for the ECONOMY

War is BAD for the Economy.

Consider this model from the war of 1812.
• The WAR started and the economy heated up;
o New factories were built,
o New jobs were created,
o Wages increased.
o The gross domestic product increased by an average 15% for the 4 year period including the 2 ½ year war period.

• The war ended and the economy cooled down.
o Historians called it the Panic of 1819.
o The depression lasted 31 years with an average decrease in productivity of 21% for the period.
o Some factories were closed,
o Some jobs were lost,
o Some wages decreased, and
o There were many bankruptcies.

The 31 year depression with the average 21% loss in productivity significantly out weighs the average 15% gain over the 4 year period including the war time.

Clearly this model shows that war is bad for the economy.