What Are the Negative Effects of War on Economy?

Reports have shown that the negative effects of war on economy include increased public debt, increased levels of taxation and inflation. The negative effects of war on economy are due to the macroeconomic effects of the United States government spending which has occurred since World War II.

It has also been shown that through excessive spending on the military for things such as weapons and military pursuits, other areas that could use investments are ignored when it comes to spending such as education, infrastructure and high-tech industries. The problem is that the effects of military spending (such as money spent on surplus machinery) are not productive when compared to the economic needs of these other areas.

Many people have argued that government spending during war brings about positive economic benefits that cannot be ignored in a discussion about the negative economic problems of war. However, these positive economic benefits are short-lived and can only be seen in the short-term. There will be economic growth that happens when conflict spending increases, but this ends quickly leading to the residual negative effects that hurt the economy in the long term. The United States has thus far paid for all of its wars through debt, inflation or taxation.