Terrorism and its financial impact
The attacks on September 11th had a strong effect on the American people both physically and emotionally. The World Trade Center that once stood tall as a symbol of strength and resilience crumbled to the ground in a matter of minutes as thousands of innocent people lost their lives. Additionally, the long-term economic impact of the attacks are still felt to this day and are a direct result of the War on Terror. The terrorist hijackers goal to devastate the U.S. economy by destroying its centers of power: Wall Street, the Pentagon and the White House (Amadeo, 2016) was in many ways successful, and this ultimately caused the 2001 recession to deepen. The total death toll of all three targets was nearly 3,000 people and while emotions were still high, our nation’s leaders were already kick-starting the biggest government-spending program in U.S. history.
In 2009 the Wilson Quarterly featured a column about the economic cost of 9/11. Professor Adam Rose, who headed the team of research economists, found that “losses from business interruptions totaled only slightly over $100 billion dollars” as opposed to in 2006 when researchers pegged the cost to the national economy to be as high as $500 billion, “about 0.5 percent to 1 percent of GDP” (Rose, 2009). The initial attack had people on edge and several reports made regarding the economic damage were exceedingly overestimated. Rose and his team were able to figure these numbers by individually analyzing “affected business sectors for three years after the attacks occurred” (Rose, 2009). His group also found that of the 114,216 workers in 1,134 firms housed in the World Trade Center only 4,5111 workers were unemployed as a result of the attacks (Rose, 2010). Eventually 88 percent of the displaced workers were relocated to nearby cities (Rose, 2010). Rose is a Research Professor at the University of Southern California’s Sol Price School of Public Policy. His primary research deals with the economics of natural and man-made hazards, and he has also coordinated 8 studies to arrive at a definitive estimate of the economic consequences of 9/11.
In Rose and Blomberg’s Total Economic Consequences of Terrorist Attacks: Insights from 9/11, they evaluate policy options that are most likely to lead to “cost-effective reductions in future economic losses from terrorist attacks” (Rose & Blomberg, 2010). Behavioral responses to disasters can also be linked to economic consequences. Rose notes the “social amplification of risk” that often occurs as a result of media distortion (Rose & Blomberg, 2010). The attacks on 9/11 inevitably manifested a fear factor by reducing air travel and tourism for nearly two years after the event. Researchers found that there was approximately $22.7 billion in damage in and around the World Trade Center complex and that the New York City Comptrollers Office estimated a $22 billion budget in order to replace what was destroyed in the attack (Wray, 2002). Rose and Blomberg conclude that the decisive factor does not lie with the perpetrator, but within the individual being threatened. Ultimately, that individual controls how they shape their emotional response, even in the face of a traumatic disaster.
In Zhu Rongji’s The Impact of 9/11 on our Economy, and Our Countermeasures, he points out the inability to predict international altercations and offers early planning strategies as a way to prepare for war once it begins. He also notes that in the aftermath of 9/11, the most direct impacts on the economy will have to do with foreign-exchange reserves, exports, and Chinese stock markets (Rongji, 2001). The New York Times also reported on a study confirming the 9/11 impact on the New York City economy. The deep recession affected men and women in every working sector, but those in high paying job industries that primarily drove New York’s economy felt the deepest impact. The data showed that nearly 70 percent of jobs lost and 86 percent of wages lost were in fields such as finance, insurance and banking (Polgreen, 2004). With the stock market closed for four trading days, the Dow fell 7.13% losing 617.78 points and stopping at 8,920.70 (Amadeo, 2016). Over the past few decades the city had been predominantly driven by a single industry, and the sudden shock of the attack in the World Trade Center proved the need for a more diversified economy. However, New York City wasn’t the only U.S. city that was forced to undergo economic changes.
When President Bush called for the War on Terror he said, “Americans should not expect one battle but a lengthy campaign, unlike any other we have ever seen” (Bush, 2001). The initial $20 billion budget helped President Bush to launch the war in Afghanistan in order to “bring to justice Osama bin Laden, the head of the al Qaida organization that master-minded the 9/11 attacks” and $13 billion was needed to launch Homeland Security (Amadeo, 2016). However, when President Bush sent troops into Iraq the cost of the war doubled compared to the one in Afghanistan. In addition to increased spending on the Department of Defense and Homeland Security, the War on Terror cost the government a whopping $864.82 billion by the end of Bush’s term in office (Amadeo, 2016). This spending also continued into President Obama’s term. It is no surprise that the life of American’s all across the country have been drastically affected and the damage done to our economy continues to affect us today. The economic damage extended much further than Ground Zero and New York City. We live in such an interrelated country that the economic implications affected several other sectors while continuing to worsen our national debt.
References
Amadeo, K. (2016, September 8). How the 9/11 Attacks Still Damage the Economy Today. Retrieved from https://www.thebalance.com/how-the-9-11-attacks-still-affect-the-economy-today-3305536
Parrott, J. A., & Cooke, O. D. (2005). The Economic Impact of 9/11 on New York City’s Low-Wage Workers and Households. JSTOR, Resilient City. Retrieved from http://www.jstor.org.ezproxy.lib.utexas.edu/stable/pdf/10.7758/9781610441216.12.pdf
Polgreen, L. (2004). Study Confirms 9/11 Impact On New York City Economy: Economic Effect of Sept. 11 Attack. ProQuest, New York Times. Retrieved from
Rongji, Z. (2015). The Impact of 9/11 on Our Economy, and Our Countermeasures, September 27, 2001. Brookings Institution Press. Retrieved from http://www.jstor.org.ezproxy.lib.utexas.edu/stable/pdf/10.7864/j.ctt7zsw1m.50.pdf
Rose, A. Z. (2009). The Cost of 9/11. Wilson Quarterly. Retrieved from http://archive.wilsonquarterly.com/sites/default/files/articles/WQ_VOL33_A_2009_PERIODICAL_04.pdf
Rose, A. Z., & Blomberg, S. B. (2010). Total Economic Consequences of Terrorist Attacks: Insights from 9/11. Peace Economics, Peace Science and Public Policy, 16(1). CREATE Research Archive, Retrieved from http://create.usc.edu/sites/default/files/publications/totaleconomicconsequencesofterroristattacks-insightsfrom9_0.pdf
Wray, R. (2002), “New York Counts Cost of 9/11 Comptrollers Estimates City’s Overall Bill at up to $95bn,” The Guardian, September 2002.
