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The Economics of War

All is not new. It is hardly an original thought to say the war on terrorism is a new type of war. A war not against nations, but against men. Men who move from nation to nation pledging allegiance to none while gathering support from all. And therein lies the part that is old about this war.

Money. Wars run on money. Without money there are no weapons of mass destruction just as there are no bullets, or tanks, or ships. From our own history, George Washington to George "Gulf War I" Bush, we had to deal with this. You have to have the money.

But what about the costs to our economy? Let me say right here the cost will be willing paid by our nation, state, and counties. But we must remember that there is a cost. In a zero-sum game, any dollar spent on the war means a dollar less is spent on education, or health, or welfare.

The immediate secondary economic effect locally is the 30 to 40 percent drop in revenue from visitors afraid to travel. I bear no ill will against anyone who decides the place to be during a war is at home, not gallivanting somewhere in the Pacific. But this revenue shortfall will mean many business, already weakened from the September 11th attacks, will go bankrupt. Hardest hit will be the airlines, followed by the thousands of small businesses that support the visitor industry here.

From there it will ripple out to the services that touch these businesses. Even if this is a short war, thousands will be laid off because the damage is already done. People are already canceling travel plans. It will be months, after fighting stops, before a recovery can begin.

As I've noted before, it took our state 10 years to recover from Gulf War I. And while I have no way of knowing if it will take that long this time, I reckon the time frame will be measured in years, not months.

Aloha!

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This page contains a single entry from the blog posted on March 19, 2003 7:45 AM.

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