BUSINESS MAGAZINE.
War is always a tragedy, it destroys lives, changes people, places, leaves deep scars in history and open wounds in societies. But it can reorient an economy in positive ways, writes The Wall Street Journal. With fuel and electricity prices skyrocketing, shipping bottlenecks creating short-term shortages, and inflation rearing its head all over the world, it’s safe to say that war isn’t good for the economy in the short term. But the long-term perspective looks somewhat more positive: military spending can create jobs, encourage the creation of new technologies and stimulate investment. Around the world, more and more countries are stepping up their arms production and investments in national security, if only to deter their rivals. These expenditures promise to alter governments’ spending priorities and affect budget balances and credit ratings. The change began four years ago, when Russian President Vladimir Putin recovered from the humiliating failure to conquer Ukraine in four days by building his country’s economy on a military base. Today, Russia spends more than 7% of its official gross domestic product on the military, avoiding the economic freefall under the pressure of sanctions and war costs that the West hopes for. Russia is now a war economy. The war feeds it and gives power to Putin. Russia’s reorientation is extreme, but Moscow is not alone. From Washington and Ottawa to Europe and Japan, money is flowing into the war and security apparatus at levels not seen in decades. With conflict also in the Middle East, the consequences of war – shortages and inflation – loom on the horizon for businesses and consumers globally. To paraphrase Milton Friedman, we are now all war economies. You may also be interested in: Is this inherently bad? For Ukraine, Lebanon, Gaza and large parts of Russia, the result of the conflict is a horrific number of deaths, injuries and immense material losses. Iran will face a painful recovery – regardless of what comes next -, being a country that was struggling even before the war with violent repression and economic collapse. However, further from the battlefield, the picture is less lopsided, especially in Europe.Read the full article on Business MAGAZIN.
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