The economics of fear

Terrorism has not crippled economic growth, nor has it frustrated the spread of globalisation. Not yet, anyway, says columnist Robert J. Samuelson.

Since 2001 the world economy has expanded more than 20 per cent.

For the United States, the gain is almost 15 per cent; for developing countries, more than 30 per cent.

World trade exports and imports has risen by more than 30 per cent.

Outstanding international debt securities have jumped almost 90 per cent, to $13.6 trillion (through the third quarter of 2005).

Even when huge, terrorism's costs can get lost in a $13 trillion economy, says Samuelson:

At last count, the U.S. had committed $432 billion to the wars in Iraq and Afghanistan a far cry from informal estimates of $50 billion to $200 billion before the Iraq war.

The Congressional Budget Office now projects that those costs could easily exceed $800 billion by 2016.

A study by Linda Bilmes of Harvard and Joseph Stiglitz of Columbia puts the war's ultimate budget costs even higher, at a minimum of $1.1 trillion in present value.

Still, this spending is a tiny share of all U.S. federal spending, estimated at $47 trillion from 2001 to 2016.

Source: Robert J. Samuelson, The Economics of Fear, Washington Post, August 16, 2006.

For text (subscription required): http://www.washingtonpost.com/wp-dyn/content/article/2006/08/15/AR2006081501123.html

For more on Economic Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=17

FMF Policy Bulletin/ 22 August 2006

Publish date: 31 August 2006
Views: 308

Economics, News

The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation. This article may be republished without prior consent but with acknowledgement to the author.

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