13-09-2017, 01:15 PM
In June 1967, Les Fishman wrote an article entitled The Economics of Vietnam. He calculated the costs to the federal government of supporting the French in Indochina from 1955-1965 and after pursuing the war from 1965 until the time of writing. He analyzed the economy and the impact of spending on war: the short-term effects "Cost-benefit"; the multiplier effects (or lack thereof) of military spending; the effect on the balance of payments; the changes in cross-border investments to and from the United States, and the impact on US reserves, and thus their ability to continue to act as world bankers. It is a broad document that relates the war to the role of the United States in the world economy, as well as the domestic economy. He concludes that investment in the containment of communism through the Marshall Plan and postwar military deployments, maintaining a "peaceful coexistence" with the Soviet Union, had a high return, keeping the Soviet Union at bay for relatively small expenditures. The return on investment in Vietnam, which confronts China militarily across South-East Asia, is likely to be low. As for short-term profitability, he underlined that the total economic investment of US citizens in Southeast Asia was at that time at 600 million dollars, equivalent to the cost of 6 days of the Vietnam War. At the same time, the distortion of the federal budget to the war effort reduced spending on social programs and, therefore, contributed to reducing social stability in the country. This paper tries to apply part of the analysis of Les to the present wars. While Iraq ("Operation Iraqi Freedom") is the main war being waged by the United States, it must be seen alongside the war in Afghanistan ("Operation Enduring Freedom"), the Global War on Terror, and the budget expansion of Homeland Security : all as a consequence of the attack on the Twin Towers in 2001. The contexts of the two periods were different: from 1964 the American government tried a Keynesian approach of the macroeconomy, using tax cuts to stimulate the but trying to balance the federal budget with the business cycle. Since 2001, US administrations have not pursued such a policy, as they have increased spending on warfare at the same time as reducing taxes, not for Keynesian reasons to stimulate economic growth at the end of the cycle, for encourage the very rich through tax cuts. The public deficit increased since 1965, according to Les, due to the overestimation of the positive economic effects of war spending. The deficit widened after 2001 due to a policy of tax cuts and increased spending. The position of the United States in the world was also different: China was still a poor country largely agricultural, the Soviet bloc was the main political competitor and the United States. in oil.