WAR OF AFGHANISTAN

War of Afghanistan

War of Afghanistan

Introduction

The economic cost of the conflict is unquestionably momentous. The fact does not surprise any one: A

war costing $2.4-trillion WILL affect most economies. The US economy has been under pressure by the impact of the war. There is widespread apprehension resulting from the monthly spending to fund the war. The Afghanistan war has started a debate on how war expenditure impacts economic

conditions of the nation. Does it assist economy like the spending during World War II unarguably ended the Great Depression? Or does it harm the economy through inefficient spending, as many observers have remarked about the first Gulf War? The report states that funding the war in Afghanistan has actually damaged the American economy. This can be seen by observing some numbers. The total expenses for the war in Afghanistan is about 104.9 billion in the year 2010. This is a major chunk of eth total US GDP. (Kaufman, 2009). To make the matter worse, this number will go up to about 120 billion by the end of 2011.



Literature Review

While historians have studied and commented on the many miscalculations committed during the war, very little has been written on flawed economic forecasts. A few examples will be sufficient. Lincoln's Secretary of the Treasury anticipated that the direct cost of the war North would be $240 million. This was alost 7pc of GDP of the period. The actual cost turned out to be $3,200 million. This is calculated to be about 13 times the estimated cost. The productivity of a worker remained low for almost a century. The most historic economic analysis of all time, Economic Consequences of the Peace, could not predict the inflation in germany that was about to happen, nor did it had any clues of the Great Depression in Britain that happened in the 1920s. Similarly, the book failed to mention the Great Depression of 1930s that destroyed the financial infrastructure worldwide (Bansal, 2003).

In more recent history, the cost of the Vietnam War was understated when the hostilities started. The initial estimate in 1966 understated the cost for the 1967 by about $10 billion. This was almost 1 pc of GDP. The war

lasted till 1973. The resultant cost was estimated to be

between $110 to $150 billion. The indirect cost was more problematic to estimate. Many experts do not include civil unrest that was caused by inflation and economic instability. Discussion One of the main reasons of why the war in Afghanistan has negatively affected the U.S. economy

is the major affect on federal US budget. When the war started, the Bush administration failed to realize the huge sums of money that would be used in waging the conflict. White House economic advisors estimated that attacking Afghanistan could be between $500 billion and $800 billion. It is now proved that the experts undereported the cost

by a large margin. In 2002, many government bureaucrats, including Mitch Daniels (who was the head of White ...