Joseph Stiglitz claims that our Iraq adventure will cost the U.S. three trillion dollars and the rest of the world an equivalent amount, for a grand total of $6 trillion (source). Can this be true? Let’s look at some numbers.
The first number is population. Stiglitz talks about Iraqis being killed, emigrating, or being displaced. He cites the current population at 28 million, in agreement with the CIA Factbook, but fails to note that it was 24 million before the war. Iraq has a much lower death rate per 1,000 population than the U.S. and a much more rapidly growing population. The guy’s Nobel Prize was in economics, not in demographics. If we were worried about weapons of mass destruction and we’re sure which of the Iraqis were developing them, with $6 trillion we could have offered each of the 24 million pre-war Iraqis $250,000 to get them set up in a new country with no major weapons or Jihad industry (the typical Iraqi family has 4-5 kids, so that would be at least $1.5 million per family).
Let’s look at the economy. The CIA Factbook says that Iraq’s current GDP is $55 billion. The $6 trillion cost to the world would therefore be equivalent to 100 years of Iraqi GDP. Definitely not a very good bargain, especially since the world probably derives no more than 5 percent benefit from Iraqi GDP (i.e., it would take 2000 years to get a return on our $6 trillion).
Oil exports from Iraq are 1.67 million barrels per day, about $61 billion per year and, again, roughly 100 years to equal $6 trillion.
How about oil reserves? The CIA says 115 billion barrels. At $100 per barrel, this is worth $11.5 trillion, almost an entire year of U.S. GDP. Again, however, there does not seem to be a plan to confiscate Iraq’s oil and distribute it among the investors in this $6 trillion effort.
One thinks of government and the military as wasteful, but it is tough to believe that we are being this wasteful. When I first heard about the Iraq war and someone said “We’re spending $1 billion per day”, I thought “Who cares? The U.S. military spends about $1 billion every day in peacetime.” But $3 trillion or $6 trillion is real money.
In his essay, referenced above, Stiglitz cites a $2 trillion growth in U.S. debt as evidence for the cost of the war. This doesn’t make sense to me. As a nation, we’ve borrowed money for a lot of things besides Iraq. We’ve borrowed to pay for Medicare, Medicaid, and other entitlement programs. We’ve borrowed so that we could subsidize the melting down of corn into SUV fuel. We’ve borrowed so that we could give billions of dollars to America’s wealthiest farmers and agribusiness. We’ll soon be borrowing to bail out real estate and mortgage speculators.
Who has read this book? Is Stiglitz convincing? By winning the Nobel he has proven that he is smart. Could it be that the rest of us are actually dumb enough to spend $6 trillion on Iraq?
I like your passion. I’m with you. With due respect, all of your logic and arithmatic is not going to convince anyone in DC or anywhere else. Remember, it is funny fiat money and they/we know it. The phony balance sheet does not really matter. Bigger issues are competitiveness, brains, & brawn. Perhaps this is what you are really driving at.
Generally speaking, we are weak, dumb and lazy and our future looks like more of the same hence our currency is rightly in the crap pile. Isn’t the experiment of “one person, one vote” just playing out? Sorry for the doom/gloom, I am just a slave and the next quarterly tax payment is already on my mind…
“By winning the Nobel he has proven that he is smart.”
Ummm haven’t you heard of the Nobelist Econonomists behind Long Term Capital? Note the Econ prize wasn’t established by Nobel and was added long after…considered largely second rate compared to the physical science Nobel prizes.
Anyway, it doesn’t work out mathematically. He and his co-author [Bilmes who’s a lowly lecturer at Kennedy school, not even a real professor] claim current costs are $25B per month including financing costs [and including afghanistan a figure seemingly pulled out of the air for convenience. http://www.democracynow.org/2008/2/29/exclusive_the_three_trillion_dollar_war }. The current cost without interest is half of this according to them or $12.5B/month. This implies outageously high interest rates or extremely long timescales for payoff. Neither is justified. Why has no one pointed this out? Also they write essentially as if the US would spend $0 on the military without this war. Also as I say, this “$3T” war includes Afghanistan’s war [1/3 of Iraq cost or $1T], which even the most ardent Bush hating, Probama liberal concedes is “a just war”.
Joseph Stiglitz won The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (2001) which is *NOT* one of the (five) prizes established by Alfred Nobel .
I don’t know whether it’s 1 trillion or 3 trillion, but it’s too much. The previous platinum standard for geopolitical re-engineering, the Marshall Plan, cost $125 billion in inflation-adjusted dollars. Saving 16 European countries from communism was quite cheap compared to saving one middle-east backwater from radical Islam, if we even manage to accomplish that.
Well,
IIRC, the argument for this amount of dollars was largely based upon future projection(s) of related expenditures such as: increased military pension obligations, VA benefits, VA ‘benefits’ for wounded vets, replacing equipment that underwent accelerated depreciation due to desert use, debt interest, and probably some other stuff that I’m not remembering ATM.
Most of these costs, obviously, are not likely to be immediately realized and I’m not sure what timeframe they were imagined to be likely to be realized – I’d guess maybe 50 years for the aforementioned, and maybe 100 years for the debt portion.
A lot of these costs aren’t really set in stone, and according to an interview with the author on NPR they had supposedly taken a conservative approach to calculating the likely final costs. However, one obvious flaw to these calculations are the difficulties of projecting such things such as medical/scientific advances in the case of wounded vets; understated real inflation statistics used to calculate pensions, or the fact that replacing (ie updating) military hardware happens regardless of whether old hardware is used up – in which case those costs are already realized.
When you think of $6t, it is roughly half of our current national debt, much (most?) of which is war debt. Perhaps an interesting way to compare final costs would be to compare the length of the current Iraq/Afgan war against the length of previous wars waged, along with perhaps adjusting for some sort of combat/resource intensity measures. I would suspect that even though the current conflict is a “small” war, it is by no means less resource intensive than the past bigger wars we’ve waged, and at the current juncture is longer in duration than WWII. In fact I would argue that wars in general have become more intensive as they’ve become more complex and require resources from more and more segments of the economy (manufacturing, pharmaceuticals/medical, myriad technologies, etc), veterans alike will require more resources – not only due to the commonly talked about ‘lots of wounded, few dead thanks to body armor’ – rather life expectancies are longer and normal social function is growing increasingly complex and requiring more skills that are easily traumatized by combat experiences. I’ve heard that the average combat serviceman in WWII experienced an average of 40 hours/year of combat, in Vietnam this number had increased to 210 days, no idea if this is true or not – but it would certainly have a bearing upon what people are able to do when they come back.
-tid242