How War Powers the US Economy Amidst Global Uncertainty

In the face of a looming economic recession, the United States has once again turned to a strategy that has historically shaped its economic landscape – leveraging controlled war economies. Arturo Ortiz Wadgymar, an academic at UNAM's Institute of Economic Research, sheds light on the government's approach during the XVIII International Seminar on World Economy 2023: Radical changes in the world: the fragmentation of the economy in crisis.

Ortiz Wadgymar contends that, to stave off recession, the U.S. government has historically supported regional conflicts, allowing it to boost public spending, increase internal demand, and bolster spending for military operations. This strategy includes the development of public spending on war materials, products, and technology, effectively steering the economic cycle towards expansion rather than recession.

During his master conference, “The US Recession, the wars, and the economic effects for Mexico 2024,” Ortiz Wadgymar points out a compelling correlation between U.S. economic growth and its involvement in conflicts. In the first three quarters of 2023, the GDP growth was modest, but a significant rebound to 4.9 percent by year-end can be attributed to the support provided to Israel during the attacks on Gaza.

The driving force behind this economic surge lies in the arms and military equipment industry, with companies like Lockheed Martin, Raytheon Technologies, Boeing, and Northrop Grumman leading global sales. Ortiz Wadgymar draws parallels with the extraordinary growth the U.S. experienced during World War II, showcasing the potential economic benefits of a war-driven economy.

However, the academic expert warns that while the short-term economic issues may be resolved, the long-term consequences for humanity and the environment are severe. The excessive focus on military technology and spending comes at the expense of addressing critical global issues such as mass migration and poverty.

Joaquín Flores Paredes, a professor at the Facultad de Estudios Superiores Cuautitlán, adds perspective by highlighting the colossal annual U.S. military expenditure exceeding $800 billion. This spending trend, he argues, serves as a crucial tool to reactivate the U.S. economy amidst crises or recessions.

The comparison with European Union countries, allocating only 1.6 percent of their GDP to military spending on average, underscores the priority the U.S. places on the military sector as a business.

Flores Paredes also notes that the U.S. has historically sought to maintain its hegemony in Latin America by intervening in conflicts and supporting military coups that align with its economic interests.

In the face of these realities, it becomes crucial to scrutinize the consequences of a war-driven economy not just for the involved nations but for the global community. As the world grapples with permanent changes, ideological shifts, and political rearrangements. The analysis presented at the seminar serves as a call to action for nations to adopt a more balanced, humane approach to global issues rather than prioritizing short-term economic gains at the expense of long-term consequences.