Wars are generally a good thing. I betchya all those people with their sons and daughters and loved ones in Iraq right now hate me as much as Bush. But as seen in history, something good always comes from it. Like you said, high economic activity. But also territorial gains, and a 'goal' of a peace limit.

Wars, measured on the large scale and holistically, are extremely costly.

This is the broken window fallacy. While it does appear that destruction can stimulate economies, it actually represents a net loss for the society. War does involve creation, increased industrial output, and what have you, but the act of destruction only harms. There is no benefit from destruction. The resources which are directed to increasing production could just as easily have been directed towards other projects, building infrastructure for example. War is unique because it convinces the people to allow the government to spend much more money that it can in times of peace, but there is nothing inherently about war that is good for economies. The broken window fallacy goes something like this: Billy throws a rock and breaks a window. The window maker is hired to replace the glass, and is paid. He can then spend that money, which will help create more jobs. Billy has stimulated the economy by breaking a window. Zorg describes a version of this fallacy as his master plan in "The 5th Element". What this scenario misses is that the money which was used to hire the window maker didn't just appear. If it had not been spent to replace the window, it could have been used to fill some other need. Sure there is money changing hands, but as a net gain, society has the same amount of money and one window less than it did before. War is like this. There seems to be increased production, but it is in fact production that isn't contingent on war, only on available resources. War kills people in whom society has invested a certain amount of money for training, and who represent a certain amount of individual earning potential, and it consumes massive amounts of foods, fuels, medical supplies, manpower, ammunition, and all sorts of military equipment and ammunition. These resources which are expended, or the money used to produce them could have been spent in any number of other productive, rather than destructive manners. What is better for the economy? Spending $10 billion of taxpayer money to pay GM to produce tanks to crush a foreign enemy, or spending $10 billion to pay GM to make fuel efficient cars for each and every family in the country?