is a longstanding myth that war benefits the economy.
The argument goes that when a country is at war, jobs
are created and the economy grows. This is a myth. Many argue that World
War II ended the Great Depression, which is another myth. Unemployment
went down because many men were drafted, but national economic output
went down during the war.
Economic growth and a true end to the Depression did
not occur until after World War II. So it is wrong to think there is
an economic benefit arising from war.
There are many economic shortcomings during a war. During
wartime it is much more common to experience inflation because the money
presses are running to fund military expenses. Also, during wartime
there is a bigger challenge to the currency of the warring nation, and
already we see that the dollar has dropped 20 percent in the past year.
Although there are many other reasons for a weak dollar, the war certainly
is contributing to the weakness in the dollar.
during wartime the country can expect that taxes will go up. I know
we are talking about cutting taxes, and I am all for cutting taxes;
but in real terms taxes will go up during wartime. And it is inevitable
that deficits increase. And right now our deficits are exploding. Our
national debt is going up nearly $500 billion per year.
The other shortcoming economically of wartime is that
funds, once they are borrowed, inflated, or taxed, once the government
spends these, so much of this expenditure is overseas, and it takes
away from domestic spending. So this is a strong negative for the domestic
economy. Another thing that arises during wartime so often is the sentiment
for protectionism- and a weak economy in wartime will really build an
incentive for protectionist measures, and we are starting to see that,
which I think is a danger.
During wartime, trade is much more difficult; and so
if a war comes, we can expect that even our trade balances might get
much worse. There are a lot of subjective problems during wartime too.
The first thing that goes is confidence. Right now there is less confidence
in the stock market and literally hundreds of billions of dollars lost
in the stock market in the last year or two, again, due to other reasons;
but the possibility of war contributes to this negative sentiment toward
the stock market.
It is hard to judge the future. Nobody can know the
future because of the unintended consequences of war. We do not know
how long the war will last. How much it will spread? So there are a
lot of uncertainties about this. There is fear. Fear comes from the
potential for war and a lot of confusion. And unfortunately, when wars
are not fought for national security reasons, the popularity of the
war is questioned- and this may alienate our allies. And I believe we
are seeing some of that already.
is no doubt that during wartime government expands in size and scope.
And this of course is a great danger. And after war, the government
rarely shrinks to its original size. It
grows. It may shrink a little, but inevitably the size of the government
grows because of war.
This is a danger because when government gets bigger, the individual
has to get smaller; therefore, it diminishes personal individual liberty.
are the costs that we cannot ignore. We have the cost of potential loss
of life, but there are also tremendous economic costs that even the
best economists cannot calculate closely.
always be fought as the very, very last resort. It should never be done
casually, but only when absolutely necessary. And when it is, I believe
it should be fought to be won. It should be declared. It should not
be fought under U.N. resolutions or for U.N. resolutions, but for the
sovereignty and the safety and the security of this country. It is explicit
in our Constitution that necessary wars be declared by the Congress.
And that is something that concerns me a great deal because we have
not declared war outright since 1945, and if you look carefully, we
have not won very many since then.
We are lingering in Korea. What a mess! We have
been there for 58 years, have spent hundreds of billions of dollars,
and we still have achieved nothing- because we went there under U.N.
resolutions and we did not fight to victory. The same was true with
the first Persian Gulf War. We went into Iraq without a declaration
of war. We went there under the U.N., we are still there, and nobody
knows how long we will be there. So there are many costs, some hidden
and some overt. But the greatest threat, the greatest cost of war is
the threat to individual liberty. So I caution my colleagues that we
should move much more cautiously and hope and pray for peace.