Op-Ed: War's Economic Pain May Be Worse Than Expected

A historian who has spent years dissecting World War I's economic wreckage thinks today's Iran conflict could leave a longer shadow than many assume. In a New York Times essay, Harvard's Jamie Martin argues that in a tightly linked global economy, even brief wars can trigger shocks that outlast the shooting. "Of course, the Iran war has been nowhere near the scale or duration of World War I," he writes. "Yet even if this shaky cease-fire holds, there are reasons to believe that its shocks will be felt long after." The closure of the Strait of Hormuz has not only jolted oil, he notes, but also blocked the shipment of fertilizer for crops, helium for chips, and chemicals used in everyday plastics.

"Snarled supply chains will take months to untangle, and damaged production facilities in the Persian Gulf will take even longer to repair." Energy prices are unlikely to fall back to pre-war levels anytime soon, and food scarcities are likely to surface later, with poorer nations hit hardest. "As the experience of the Covid pandemic made clear, supply chain disruptions like these can produce inflationary surges with long tails, which, before they abate, can have damaging secondary effects, from higher mortgage rates to fiscal crises to political unrest." All this after only a month of war, he writes. Just "imagine the effects of a larger and more protracted conflict—one whose likelihood, some believe, is greater now than at any other moment in recent history." Read the full essay.