Terrorism is good for the economy

The 30-Share Bombay Stock Exchange Sensitive Index (BSE Sensex) fell by 252.85 points to 8839.87. This in stark contrast Friday's rise of 80 points, what many believe, confirms hypothesis that the War on Terror is bad for the Economy. Many experts are already calling for a restraint in our efforts to combat terror and some are even suggesting abandoning of such endeavors altogether.

The hypothesis that wars lead to economic growth is nothing new. Ever since the Science of Economy has taken over the burden of explaining economic phenomenon, we have seen book after book smeared with words, sentences, paragraphs and pages dedicated to explaining the relationships between wars and economy. One particular example is the global economic crisis of 1929, which was followed by WW2. Post WW2 we have seen sustained and unprecedented economic growth, which indeed has been fueled by other wars that have taken place over the second half of the last century as well. This apparent close nexus between wars and economic growth has been, as some economists claim it, the cornerstone of modern capitalism.

Now some experts argue that Global War on Terror is just another War, and failure of Global War on Terror to give impetus to global economy is an indication that the two, viz. War and Economy, are not interlinked. But still some other experts argue that, War on Terror apart from a few friendly fires here and there and a few rogue missiles treating children's nurseries as terrorist camps, is essentially about eliminating violence and restoring peace. This apparently ulterior motive of War on Terror forestalls any advantages that might have been yielded to the economy. So these other experts continue to argue that War on Terror is not the same as any other war and two are very different both in character and final impact on the economy.

A further impetus to the hypothesis is the Global Recession that some experts claim has been a direct result of Global War on Terror initiated by US and in which India is an active partner along with a host of other countries. Experts further claim that the Greater the War on Terror the greater is the damage to the economy. Similarly, greater the extent of War on Terror, greater is still the extent to which impact can be felt adversaly on the economy. If these experts are to be believed monday's fall at the BSE is nothing but just another attestation of this hypothesis.

Professor D. Rangarajan from War and Economic Studies Department, of IIIIIWET, says, and we quote, “On Friday, while terrorist attack was on, we saw a rise on stocks at the BSE, and on Monday when this so-called “battle” against terrorism was won the trends were reversed. Now it is well established fact that Stock-markets are the barometer of success of any economy. So the facts speak for themselves. It is high time that the relevant authorities, and now that the same person holds both Finance ministry and Home ministry this should be relatively easy, take notice and the so-called War on Terror if not put on halt, at least curbed to the extent that it does not in any way hinder the growth of economy.”

From our side, we can only add that, if the words of these eminent and renowned economists are to be believed, authorities should pay heed to these voices and take the steps necessary (or rather not take unnecessary steps in this case :) to ensure proper growth of the economy.