tional federal aid to recover. The long-term impact of the attacks depends on how quickly the nation’s economy recover and the decisions on where to locate by the companies. The city initially paid for clearing the area and the most visible portion of the cleanup, which was nearly a half a million tons of steel, concrete and debris.The World Trade Center attacks were said to be hurting the civilian economy in ways that merely a military engagement like the Persian Gulf War didn’t. MSNBC news reported that because of its global scale and long-term nature, the war on terrorism will cost more than the Persian Gulf War, which totaled about $80 billion in constant fiscal-year 2002 dollars. The Vietnam War, by contrast, cost $572 billion in 2002 dollars. US government spending as a percentage of gross domestic product peaked at 43.7% in 1944 during World War II and was only 20.5% at the height of the Vietnam War in 1968. It is currently about 18% (see table 1). This is all said to be because in relation to the size of the overall economy, the increase in government spending this time will not be sufficient to compensate for the dampening effect of the threat itself. MSNBC news also reported that the money expected to be spent as a result of the attacks overstates the great impact of fresh government spending, since much of it will simply go to replace lost incomes.The economics of war show that in wartime, the production of standard consumer goods has to be curtailed in favor of weapons, army supply, medications and other products that are in high demand. The best way to do this is to let the private sector respond to incentives, even though government spending now plays a big part in determining what should and should not be produced since it becomes the biggest client for these products. That is not the way things have been done in the wars of the 20th century though. On the contrary, governments have used each such opp...
