NCPA - National Center for Policy Analysis

THE ECONOMICS OF FEAR

August 16, 2006

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

  • Since 2001 the world economy has expanded more than 20 percent.
  • For the United States, the gain is almost 15 percent; for developing countries, more than 30 percent.
  • World trade -- exports and imports -- has risen by more than 30 percent.
  • Outstanding international debt securities have jumped almost 90 percent, 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, Congress 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 federal spending, estimated at $47 trillion from 2001 to 2016.

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

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http://www.washingtonpost.com/wp-dyn/content/article/2006/08/15/AR2006081501123.html

 

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