Economic Issues: Is the war in Iraq good for the economy Essay

As most of the issues concerning nowadays deals more on the economic impacts of the actions of the government, there have been a lot of debates arguing if whether it would be beneficial to the US the ongoing war in Iraq. In an economic view point, it is clear that funding war really requires a lot of money to spend in order to sustain it which in turn involves high opportunity costs on the part of the American people. Last year, around $1 trillion was the expected spending of our government to fund the said war in Iraq (Wolk 1) while there are sectors in the government that lacks enough budgets to continue its functions to serve the American people. Like for instance, the Congress decided to cut the fund allotted for education to around $12. 7 billion. Due to the war in Iraq, the government have incurred tremendous amount of budget deficit, and in order to solve the said problem on the finances of the government they sacrificed the welfare and pass the burden to the students. Moreover, taxes rate were increased by the government due to the need of more funds. It was found out that most of the tax collection of the government entirely goes to transfer payments like the war in Iraq. Moreover, the funds being used for schools came from property taxes; funds for roads and bridges came from gas taxes while user fees funds airports, sewer and water systems (â€Å"Where Do Your Taxes Go? † 2). The government also uses the funds generated from IMF to perform its designated functions. In short, the government charges us taxes in order to fund the war in Iraq and not to give us infrastructures and services that are in the first place role of the government to its citizen. Although at some point in time prices of stocks rise by the start of the war, but it does not guarantee that it would remain at that level. Moreover, it was the result of the expectations of the investors and not because of the direct cause of the war (Glassman 1). It is still up to the investors how they will view the war in Iraq- beneficial or detrimental to stock market. If they see that the war would boost the economy in the future, then, they would improved the stock market. But if the investors think that it would be risky to invest by the time the war began, then, war is detrimental to the financial institutions of the economy. Moreover, the US Central Bank said last November 6 that â€Å"geopolitical uncertainty† is the reason behind the economic turmoil like the cutting of the interest rate to 1. 5%. this only tell us that war in Iraq puts no good in the economy. Deaths might weaken the labor force of the economy and this result to lower productivity and growth of the market (Schifferes 1). Wage rate pressured to go up and could negatively affect the profitability of the companies in the market. Moreover, there are rumors in the market that Iraq will cut their supply of the oil in the international market as a result of the war (Miller 1). With this, there is a possibility that prices of oil products to rise which plays a vital role in the production of final goods in the market. It was said that the price of oil increased from $35 to $40 at the start of the war and this greatly affects the level of the productivity of the economy. Actually, there is really no problem on the military intervention of US to Iraq economic-political situation if it only involved a short period of time (Stiglitz 1). But the current situation seems to be not the case since until now the war continuous to occur in the desserts of Iraq which as we have said imposed uncertainties to the stock market, undervalued the welfare of its citizens and the reputation of the government to the foreign investors. Short run impacts of the war can still be handled by the market system itself; but in the long run, there is already a need for the collaboration of all the sectors of the economy to put back again the economy into its equilibrium condition.