[Congressional Record Volume 149, Number 34 (Tuesday, March 4, 2003)]
[House]
[Pages H1494-H1495]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          ECONOMIC MYTH OF WAR

  The SPEAKER pro tempore (Mr. Bishop of Utah). Under a previous order 
of the House, the gentleman from Texas (Mr. Paul) is recognized for 5 
minutes.
  Mr. PAUL. Mr. Speaker, I want to talk tonight about an economic myth. 
There is a myth that has been around a long time and that is that war 
benefits an economy.
  The argument goes that when a country is at war it will create jobs 
and creat economic growth. This is a myth. During the time of World War 
II and following, they claim that the Depression ended, finally ended 
with the start of the second world war. And this is not true either 
because a lot of men were drafted and put into the military. 
Unemployment rates obviously went down, but there was no improvement in 
the economy.
  Economic growth and really the ending of the Depression did not end 
until after World War II. So it is wrong to think there is an economic 
benefit coming from any kind of a war.
  There are a lot of shortcomings from a war. During wartime it is much 
more common to have inflation, and the money presses are running so we 
can expect inflation from the military build up and the possible war 
that we are facing. Also, during wartime there is a bigger challenge to 
the currency of that nation that is at war, and already we see that the 
dollar in the past year has been down 20 percent. Although there are 
many other reasons for a weak dollar, the war is contributing to the 
weakness in the dollar.
  Also, during wartime the country can expect that taxes will go up. I 
know we are talking about cutting taxes, and I am all for cutting 
taxes; but in real terms taxes will go up during wartime. And it is 
inevitable that deficits increase. And right now our deficits are 
exploding. Our national debt is going up nearly $500 billion per year 
at an analyzed rate.
  The other shortcoming economically of wartime is that funds, once 
they are either borrowed, inflated or taxed, once the government spends 
these, so much of this expenditure is overseas, and it takes away from 
domestic spending. So this is a strong negative for the domestic 
economy. Another thing that arises during wartime so often is the 
sentiment for protectionism and a weak economy, difficulties with 
currencies in wartime will really build an incentive for protectionists 
measures, and we are starting to see that, which I think is a danger.
  During wartime, trade is much more difficult; and so if a war comes, 
we can expect that even our trade balances might get much worse. There 
are a lot of subjective problems during wartime too. The first thing 
that goes is confidence. Confidence in general. Right now there is less 
confidence in the stock market and literally hundreds of billions of 
dollars lost in the stock market in the last year or two, again, due to 
other reasons; but the possibility of war contributes to this negative 
sentiment toward the stock market.
  It is hard to judge the future. Nobody can know the future because of 
the unintended consequences of war. We do not know how long the war 
will last. How much it will spread? So there are a lot of uncertainties 
about this. There is fear. Fear comes from the potential of war or 
during wartime and a lot of confusion. And unfortunately, also when 
wars are not fought for national security reasons, the popularity of 
the war is questioned, that this may alienate our allies. And I believe 
we are seeing some of that already.

[[Page H1495]]

  There is no doubt that during wartime the government expands in size 
and scope. And this of course is a great danger. And after war, the 
government rarely shrinks to its original size. It grows. It may shrink 
a little, but inevitably the size of the government grows and there is 
a tremendous incentive to increase the size and scope of government 
during wartime. This is a danger because when government gets bigger, 
the individual has to get smaller; therefore, it diminishes personal 
individual liberty.
  So these are the costs that we cannot ignore. We have the costs of 
the war. We have the cost of potential loss of life, but there is a 
tremendous economic cost that even the best economists could not 
calculate what this war may cost us.
  War should always be fought as the very, very last resort. It should 
never be done casually, and it should be done only when absolutely 
necessary. And when it is, I believe it should be fought to be won. It 
should be a declared war. It should be a war not fought under U.N. 
resolutions or for U.N. resolutions, but for the sovereignty and the 
safety and the security of this country. Under those conditions, it is 
explicit in our Constitution that only those wars that are fought in 
that manner should be declared by the Congress. And that is something 
that concerns me a whole lot because we have not declared a war 
outright since 1945; and if you look carefully, we have not won very 
many since then and wars tend to linger.
  We are lingering in Korea. That is a mess over there. We have been 
there for 58 years, have spent hundreds of billions of dollars, and we 
are still messed up because we went in there under U.N. resolutions and 
we did not fight to victory. The same with Persian Gulf War I. We went 
in there without a declaration of war. We went in there under the U.N., 
and we are still there and who knows how long we will be there. So 
there are a lot of costs, hidden costs and some are overt. But the 
greatest threat, the greatest cost to war is the threat to individual 
liberty. So I just caution my colleagues that we should move much more 
cautiously and hope and pray for peace.

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