Terrorism Is Such a Real

¶ … Terrorism is such a real and pervasive physical fear in contemporary American society that it is easy to forget its economic impact. While estimates vary, the official figure for spending stands at around $120 billion since the within America's borders and the war in Iraq began, in rapid succession. (Bernasek, 2004) but as Anna Bernasek notes in her New York Times Business Section article, "Counting the Hidden Costs of War," on terror calculating the net effect of a continuing war without a real, projected end date, is almost impossible in a simple and precise fashion. Economists must calculate what is lost as well as what is spent to fight terrorism. Although open to debate, two economists, suggested the war on terror may have already cost the United States $150 billion in lost gross domestic product. "That is close to one percentage point of growth lost over the past year and a half. If that figure is correct, the nation's annual economic growth rate, which has been 3.7% during this period, could have been nearly 4.7% without the war." The study took into account factors like higher oil prices, increased budget deficits and greater consumer uncertainty. "When analyzing the effects of uncertainty, the authors estimated the impact of the war on financial markets, business investment and consumer spending." (Bernasek, 2004)

The article underlines how terrorism's costs cannot be measured simply in expenditures, but in lost opportunities for growth and development of domestic industries. The war in Iraq only exacerbates the costs of terrorism, as it increases the fears of consumers and provokes the potential for terrorist attacks. Thus, even though the model is open to debate, and economists quibble about whether it is too low or too high, all agree that hidden costs have been incurred due to terrorism's negative effects on consumer confidence and driving up oil prices. "It isn't a coincidence that we have oil prices breaching the key $50-a-barrel threshold," notes one analyst, which would have been unheard of before 2001. But there is hope as "any analysis of the war's economic impact over time, and the war on terrorism's impact over time "is not complete without considering the potential future benefits to the United States and the rest of the world. Increased political stability in the Middle East, stable energy markets and diminished global terrorism could pay major dividends. In fact, many people in Washington hope that the benefits will ultimately outweigh the costs, however large." (Bernasek, 2004)