Counting The Cost Thereof

There was an interview on Democracy Now! yesterday with Joseph Stiglitz and Linda Bilmes on the cost of the war in Iraq, which they conservatively estimate at $3 trillion: the second most costly war in US history after World War II. Three times spent per Iraqi than what was spent per European during the Marshall Plan. This excerpt deals with the impact of the war for the American economy.

JOSEPH STIGLITZ: You know, in the election campaign, people said there are two big issues: the economy and the war. I think there’s one big issue, and that’s the war, because the war has been directly and indirectly having a very negative effect on the economy.
JUAN GONZALEZ: Well, could you talk about that somewhat, because you obviously go into that in your book, the impact of the enormous borrowing that occurred to finance the war at the same time that the President put through tax cuts—unheard of that we go into war and we cut taxes, rather than raise them—and also just the impact then that spread throughout the entire economy in terms of the housing crisis that we’re into now?
JOSEPH STIGLITZ: Well, this was one of the big points that came up in the joint committee hearing that we were in yesterday.
AMY GOODMAN: You testified yesterday before Congress.
JOSEPH STIGLITZ: That’s right. And this was one of the big points, that in every other war there has been what you might call shared sacrifice. Some people obviously sacrifice more, putting their lives at risk, but everybody was asked to sacrifice. This is the first time that, at the time we went into war, we actually cut taxes, rather than raised taxes. And even as we were cutting taxes, we already had a very large deficit. So that means this war has been totally financed by deficit. And that’s really been the trick that the Bush administration—it wanted people to think that there were no economic trade-offs. We could have a war for free.
JUAN GONZALEZ: And those deficits, the financing came increasingly from abroad, right?
JOSEPH STIGLITZ: Very much so, at least 40 percent from abroad. So that means that Americans will be paying those abroad interest and—the other aspect of that that’s really important to realize is that while we were saving zero, or household saving went down to zero, the government had negative saving and we were borrowing, the pools of wealth that were being created were in the Middle East, China. So when we have an economic problem, like the fact that Citibank and Merrill Lynch had to be bailed out, they had to turn to these others, to the sovereign wealth funds that were held by other countries, and that makes us more dependent on abroad.
AMY GOODMAN: Who is profiting from this war?
JOSEPH STIGLITZ: Well, actually, there are two big gainers in this war and only two: the oil companies and the defense contractors. And you see that where the pools of wealth are being created. One of the big pools of wealth are in the Middle East, the countries that are the oil exporters. We are transferring hundreds of billions of dollars from American consumers, businesses, to the oil exporters. You can look at it as simple as that.

The rest of the interview is well worth reading, or listening to. What struck me, however, while listening to Stiglitz and Bilmes outline how they estimated the cost of the war, is that they make their analysis solely from the standpoint of the cost to the American public of the war in Iraq. This is important, as far as it goes, and what they reveal is an absolute scandal by any democratic standard. Stiglitz refers to the opportunity cost of how the $3 trillion was spent, and points out that security could have been achieved by other means, by winning ‘hearts and minds’ and so on.

But the application of opportunity cost here, and in fairness, in most instances, only really takes into account the next best alternative as perceived by the entity allocating the resources, with little, if any, regard for those who must deal with the consequences of the decision. If we want to extend its application to the people that the US said it was liberating, and it seems reasonable to do so since a fair amount of US public support rested on the perception that the war was an instance of altruism, if not full-blown humanitarian intervention, then the opportunity cost of unleashing the war would have to include having one million people still alive and getting on with their lives, two four million people still living in their homes, countless millions of people not traumatized by pervasive violence and suffering. All that seems incalculable.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

I on Twitter

March 2008
« Feb   Apr »

%d bloggers like this: