they could send platoons of Marines up the Mississippi River to Ohio, to stay in motels & eat at the local restaurants.

they could send Army Rangers in HumVees across the desert to Las Vegas, to stimulate the local economy there.

they could deploy photons or Navy Sailors to San Diego to train at the local beaches and stay at the local hotels and stay at the local restaurants.

The notion that wars stimulate the economy, etc. is the broken window fallacy. That story goes like this - a child throws a ball, breaking the window of some guy. The town then gets excited, because some guy has to replace the window now, which will stimulate the economy of the town. Of course, in order to replace the window he has to forego buying shoes.

A more important factor will be whether the troops in Iraq are able to find jobs. While unimportant from a GDP perspective, in a real sense, reducing the need for soldiers, and moving skilled labour into other areas of the economy would probably be beneficial (of course many will stay within the military). Unlike previous wars, I am fairly optimistic about the prospects of Iraq veterans, which are quite highly skilled (relative to previous soldiers).

The more important implications of the war in Iraq involve oil prices.
"If America retracted their forces to the United States and went back to the other old-fashioned method of getting your oil, paying for it, just think ..."

Well, I hate to break it to you but Americans are already paying for Iraqi oil. Iraq is a member of OPEC, a cartel that fixes the price of oil somewhat (some members cheat and sell more than they are supposed to).

Will oil prices be lower or higher following American withdrawal? Well, it depends. A civil war in Iraq would almost certainly increase uncertainty about the supply of oil, driving up prices. If say, the Shiite south formed its own country, with strong Iranian influence, as well, the price of oil would probably go up. It is a lot easier to manage a cartel when you have a few large actors with a considerable stake in keeping oil prices high (on top of that, Iran would be a in a good position to threaten the oil-rich gulf states).

With a strong Canadian dollar, management in this country is in a position to do this.

Rumor has it that we actually manufacture such machinery in Canada.

Generally a soldier makes less than a worker would in the private sector, so even if it were practical for the soldier to accumulate things the economy produces, they would not be able to accumulate as much.

Because there is central planning of what soldiers may consume, market forces cannot determine supply and demand. Econometric theory would tend to indicate there would be less money circulating as a result of that, and hence less economic activity in general. In addition, all military paycheques come from the government, which has to get the money from somewhere else.

Thus having soldiers at war deprives the economy of their abilities as producers, and most of their capacity as consumers. This does not count the value of the stuff destroyed in the commission of war (crimes). There is some good material about producing military stuff for its own sake in "The Theory and Practice of Oligarchical Collectivism", the book-within-a-book in 1984.

The proof is in the pudding. Under Bill Clinton (when there was no major war), the stock market rose by over 130%. Under Bush 43 (in the same period of time) it has only risen by 4%, dividends and inflation notwithstanding.

Most business people I talk to credit "The War" for screwing up the U.S. economy.

I think it is pretty clear. Getting out of Iraq would be a great stimulus to the US economy, and by extension ours.

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Originally posted by Parkdale High Park:
That is an incredibly short-term view of the economy. In the long run, productivity growth, or people working longer hours, is the only thing that can make us all better off. Consumer spending is sort of the short-term version of that.

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This is one area where the U.S. economy has outpaced Canada since FTA-NAFTA. U.S. public and private investment in research and developement is consistently higher than any of the other English-speaking countries in total as well as percentage of GDP.

After the end of laissez-faire capitalism post-WWII, the U.S. began massive public investment in R&D by way of military, Pentagon and federal agencies and directed to computer technology, lasers, satellites, aerospace, nuclear power, metalurgy, oil well drilling technologies, and medical research. And most of that publicly-owned research was handed off to the market or "private enterprise." Today, a lot more spending on R&D is due to private funding, but taxpayer funded research in the U.S. is still significant.

Major tech advances like those are coming harder and tend to be more expensive and research-intensive before bearing any fruit, which is why I think federal agencies and academic research is doing the bulk of high risk research into genetics, stem cells and nanotechnology. Private enterprisers are waiting to pick the lowest hanging fruit of the public R&D trees around the world. I gather that US-style intellectual property debate is an important issue for academics around the world. Because if its enforced, researchers who once collaborated with colleagues at universities and agencies around the world on important same research would no longer enjoy that same freedom to share ideas and research findings while under business contract.

I think the U.S. is relying on something like $3 billion dollars pouring into the country everyday to finance the wars and military spending. A lower dollar, I think, will work against U.S. spending on innovation which leads to productivity gains. Americans do need better health care, better roads, schools, and the very things which capitalism has depended on as much or more than everyone else. In Canada, we have a $130 billion dollar infrastructure deficit, and so far, capitalists haven't volunteered to build us any new highways, hospitals(without taxpayers footing the bills), nuclear power plants or money for research into alternative energy sources.

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Will oil prices be lower or higher following American withdrawal? Well, it depends. A civil war in Iraq would almost certainly increase uncertainty about the supply of oil, driving up prices.

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