http://www.guardian.co.uk/world/2008/feb/28/iraq.afghanistanThe true cost of war in 2005, a Nobel prize-winning economist began the painstaking process of calculating the true cost of the Iraq war. In his new book, he reveals how short-sighted budget decisions, cover-ups and a war fought in bad faith will affect us all for decades to come. Aida Edemariam meets Joseph StiglitzThursday February 28 2008 14.30 GMT
Fitful spring sunshine is warming the neo-gothic limestone of the Houses of Parliament, and the knots of tourists wandering round them, but in a basement cafe on Millbank it is dark, and quiet, and Joseph Stiglitz is looking as though he hasn't had quite enough sleep. For two days non-stop he has been talking - at the LSE, at Chatham House, to television crews - and then he is flying to Washington to testify before Congress on the subject of his new book. Whatever their reservations - and there will be a few - representatives will have to listen, because not many authors with the authority of Stiglitz, a Nobel prize-winner in economics, an academic tempered by four years on Bill Clinton's Council of Economic Advisers and another three as chief economist at the World Bank (during which time he developed an influential critique of globalisation), will have written a book that so urgently redefines the terms in which to view an ongoing conflict. The Three Trillion Dollar War reveals the extent to which its effects have been, and will be, felt by everyone, from Wall Street to the British high street, from Iraqi civilians to African small traders, for years to come.
Some time in 2005, Stiglitz and Linda Bilmes, who also served as an economic adviser under Clinton, noted that the official Congressional Budget Office estimate for the cost of the war so far was of the order of $500bn. The figure was so low, they didn't believe it, and decided to investigate. The paper they wrote together, and published in January 2006, revised the figure sharply upwards, to between $1 and $2 trillion. Even that, Stiglitz says now, was deliberately conservative: "We didn't want to sound outlandish."
So what did the Republicans say? "They had two reactions," Stiglitz says wearily. "One was Bush saying, 'We don't go to war on the calculations of green eye-shaded accountants or economists.' And our response was, 'No, you don't decide to fight a response to Pearl Harbour on the basis of that, but when there's a war of choice, you at least use it to make sure your timing is right, that you've done the preparation. And you really ought to do the calculations to see if there are alternative ways that are more effective at getting your objectives. The second criticism - which we admit - was that we only look at the costs, not the benefits. Now, we couldn't see any benefits. From our point of view we weren't sure what those were." snip
Thus, any idea that war is good for the economy, Stiglitz and Bilmes argue, is a myth. A persuasive myth, of course, and in specific cases, such as world war two, one that has seemed to be true - but in 1939, America and Europe were in a depression; there was all sorts of possible supply in the market, but people didn't have the cash to buy anything. Making armaments meant jobs, more people with more disposable income, and so on - but peacetime western economies these days operate near full employment. As Stiglitz and Bilmes put it, "Money spent on armaments is money poured down the drain"; far better to invest in education, infrastructure, research, health, and reap the rewards in the long term. But any idea that war can be divorced from the economy is also naive. "A lot of people didn't expect the economy to take over the war as the major issue
," says Stiglitz, "because people did not expect the economy to be as weak as it is. I sort of did. So one of the points of this book is that we don't have two issues in this campaign - we have one issue. Or at least, the two are very, very closely linked together."
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/07/AR2008030702846.html
The Iraq War Will Cost Us $3 Trillion, and Much More
By Linda J. Bilmes and Joseph E. Stiglitz
Sunday, March 9, 2008; Page B01
There is no such thing as a free lunch, and there is no such thing as a free war. The Iraq adventure has seriously weakened the U.S. economy, whose woes now go far beyond loose mortgage lending. You can't spend $3 trillion -- yes, $3 trillion -- on a failed war abroad and not feel the pain at home.
Some people will scoff at that number, but we've done the math. Senior Bush administration aides certainly pooh-poohed worrisome estimates in the run-up to the war. Former White House economic adviser Lawrence Lindsey reckoned that the conflict would cost $100 billion to $200 billion; Defense Secretary Donald H. Rumsfeld later called his estimate "baloney." Administration officials insisted that the costs would be more like $50 billion to $60 billion. In April 2003, Andrew S. Natsios, the thoughtful head of the U.S. Agency for International Development, said on "Nightline" that reconstructing Iraq would cost the American taxpayer just $1.7 billion. Ted Koppel, in disbelief, pressed Natsios on the question, but Natsios stuck to his guns. Others in the administration, such as Deputy Defense Secretary Paul D. Wolfowitz, hoped that U.S. partners would chip in, as they had in the 1991 Persian Gulf War, or that Iraq's oil would pay for the damages.
The end result of all this wishful thinking? As we approach the fifth anniversary of the invasion, Iraq is not only the second longest war in U.S. history (after Vietnam), it is also the second most costly -- surpassed only by World War II. snip
Why doesn't the public understand the staggering scale of our expenditures? In part because the administration talks only about the upfront costs, which are mostly handled by emergency appropriations. (Iraq funding is apparently still an emergency five years after the war began.) These costs, by our calculations, are now running at $12 billion a month -- $16 billion if you include Afghanistan. By the time you add in the costs hidden in the defense budget, the money we'll have to spend to help future veterans, and money to refurbish a military whose equipment and materiel have been greatly depleted, the total tab to the federal government will almost surely exceed $1.5 trillion.
But beyond this is the cost to the already sputtering U.S. economy. All told, the bill for the Iraq war is likely to top $3 trillion. And that's a conservative estimate.
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