Answer "C" is close to the classical "broken windows" argument. In a small town a mischievous boy breaks the window of a baker. The townspeople are all upset over the broken window and mad at the little fellow, when someone points out that this is actually good, because now the baker will hire the services of the glass man to repair the window. The glass man in turn will have money to spend on bread, enriching the baker.
Problem here is this logic does not account for the opportunity costs associated with the money the baker spent repairing the window. He might have decided to buy a suit, thus enriching the tailor. Or a pair of shoes, thus helping the cobbler. He may have invested in his own business, hired another employee, or simply saved the money in a bank earning interest, that was used, in turn, to provide a loan to another businessman to create jobs. The destruction of the window may benefit the glass maker – just as war often helps military contractors and suppliers – but that means the money can not be spent on other things. In the simple case above, the tailor or cobbler go without.
The only way war can create value is for the victor to forcibly take from the vanquished. This is why war has been so popular throughout all human history – because the victor taking from the vanquished is the norm. However, Americans don’t practice this, nor do we charge other countries who we save, thus war is always a net cost to society.
That being said, it is still needed, as the cost of not having a strong military and not being willing to fight proactive wars is much higher!
If war enriched a society, creating jobs and wealth, every time a country went into a recession or depression it would simply launch a war on a weaker neighbor. This is one of many fatal flaws with Keynesian economic theory!
Brain hurts now - too much thinking just after midnight!
), you might want to find out what YOU believe. How is the economy put together, how does it work? Find out what school of economics you subscribe to, by taking this test:
