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Give Me 10 Minutes, I’ll Tell You What War Does To The Economy

War – It not only kills soldiers of countries who participate in it but also affects the lives of common people all around the world. Let us see what war does to the economy? In world war 2 along with soldiers, millions of common people lost lives. The Soviet Union itself lost 7 million civilians.

The country with less army usually has a high standard in its people quality of living. Such countries have high chance to spend more on public sectors.  You can check the standard of living rank by clicking on this –https://www.usnews.com/news/best-countries/articles/2018-08-02/does-a-countrys-military-spending-improve-quality-of-life

How War affects the World Economy?

During the war period, the government needs more money to meet its military needs. In order to achieve that, it starts imposing more taxes on the people of its country. It depreciates the quality standards of the people. In 1931 the amount of tax paid by the American people was $4 million but by the end of World War II i.e; 1945, it reached $43 million. These taxes covered most of the spendings required for the war. The remaining amount was collected in the form of debt and “WAR BONDS”.

You can read more about war bonds by clicking this link https://en.wikipedia.org/wiki/War_bond

Debt and HyperInflation

During World War II, the debt of the USA was more than 120% its GDP. Not only America many countries got stuck in debt. To meet its spending Germany started printing more money which led to HyperInflation. This made the life of common people very hard.

Affect of War on Employment, Consumption, and Investments

Due to more spending on building war equipment, the demand for labour was increased. Another important fact is that most of the population were in the army. This reduced the unemployment rate. Many companies shifted their production from consumer to military equipment, this reduced the consumer products in the market. This increased the price of consumer products. When coming to investments, I think no need to say. Stockmarkets react to every news whether it is good or bad. So as usual during the war period, it went into the diving mode.

Modern-day War

After World War II no big war has taken place between countries directly. But now the war has changed its shape. If suppose a war situation arise between any countries then it would be in any form like Biological or Cyber or Trade war. In fact, the best example of trade war you can see is between U.S and China. Due to imposing more tariffs on each other products, it is affecting the economy of many other countries along with U.S and China.

Conclusion

  • The war in any form not only kills but also disrupts the world economy.
  • Increases Inflation.
  • Decreases the people standard of living.
  • Increases Tax burden on people.
  • Pushes the country into Debt.
  • Decrease foreign investments into the country.
  • Affect the people health if it is a Nuclear War
  • Many People become Homeless.
  • Increase in job opportunities to build war equipment.
  • Advancement in Technology to build more sophisticated warfare.

Thanks for Reading. If you want to know how debt can affect you – Read here https://www.mintpaisa.com/debt-cycle/

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