The cost of war

January 13, 1991

Just how long the current recession will last depends in vast measure on how long the crisis in the Persian Gulf endures. A long war or a long standoff would mean continuing uncertainty for American business and industry, and uncertainty means expansiownturn shake out.

Such is the prevailing sentiment among economists. It is a formula so neat and pat that its uniqueness might be overlooked. For most of this century, prosperity has accompanied long wars in the American experience. World War I, World War II and Vietnam were periods of robust industrial expansion and rising living standards. And not just for munitions makers, but for the citizenry.

Not this time. The conflict is taking place where the world's largest oil reserves are located. The price of oil is determined not only by supply and demand, but by fear and speculation. Until uncertainty subsides, energy costs will be inflated and economic activity depressed almost everywhere.

Another difference prevailing today is the sheer size of the U.S. military arsenal. Eight years of the Reagan-Weinberger spending binge at the Pentagon followed by an abrupt decline in the Soviet threat have lefts the armed services with sufficient weaponry to fight a short M-{ or medium-term war without seeking replenishment. Only a protracted struggle or a very long stay in the sands of Araby would force a burst of new military orders.

Still another difference has to do with the state of the economy. With government, corporate and private debt at record levels, the nation is illpoised to finance a long war or a long standoff. Even the 5 1/2 month buildup in the Persian Gulf has been such a strain on U.S. resources that Bush administration officials have had to go, hat in hand, asking various "allies" for contributions. This is rousing tempers on all sides.

Already, the cost of Operation Desert Shield has been officially pegged at $30 billion (probably an underestimate.) If fighting breaks out, military analysts figure the price tag will rise to $1 billion a day - a devastating figure that militates for a devastating quick-kill war. This deadly arithmetic must surely motivate President Bush to seek an early military or diplomatic solution.

Patience, the course advocated by critics of administration policy, carries a price tag tugging down the economies of most nations in the antiM-!Iraq coalition, especially those nearest the sphere of confrontation. And, at the end, there is no assurance war would not have to be fought in less favorable circumstances than is the case today. Given that situation we find President BushM-Fs course persuasive.

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