Politics, The Economy

Does the war in Iraq help to stimulate the U.S. economy? In this City Paper interview, Doug Henwood why it doesn’t.

CP: One question I’ve heard a lot of people pose is why there’s been so little talk of a war dividend” stimulus to the economy.

Henwood: Well, a lot of the money’s being spent on what they call “support services.” In the GDP accounts for the second quarter, for example, the military component was growing at a 45 percent annual rate, and that was the highest since 1951. But it was heavily concentrated in these support services–carrying troops over, setting up bases. The kinds of contracts that Halliburton is getting. It’s not like the old days when they were making lots of trucks and uniforms and things like that. The old industrial economy got a lot of stimulus out of war procurement. Now it’s these services, and high-tech weaponry, which is highly specialized, highly automated, and doesn’t really generate that much job growth.

I was talking to a union organizer a couple of weeks ago who was trying to organize a plant where they make the bulletproof vests. These are really low-wage jobs, just classic garment industry jobs where the workers only make a few bucks an hour. So it’s not like these people are getting high wages out of war procurement. It’s basically sweatshop conditions.

Also, see Calpundit on the cost of oil in Iraq. Can’t find a link, but there is a great Doonesbury comic about this!