Which Opportunity Costs?

by Harry on July 20, 2005

This is a quibble with something in John’s long discourse on the war. It’s more of a question, than a quibble, really. John rightly points out that, in assessing the true consequences of some policy or action, we have to take into account the opportunity costs:

A second common feature of pro-war analysis is a failure to take account of the opportunity cost of the resources used in war. The $300 billion used in the Iraq war would have been enough to finance several years of the Millennium Development project aimed at ending extreme poverty in the world, and could have saved millions of lives. But even assuming this is politically unrealistic, the money could surely have been spent on improved health care, road safety and so on in the US itself. At a typical marginal cost of $5 million per live saved, 60 000 American lives could have been saved. This is morally relevant, but is commonly ignored.

Please don’t think about the war, or John’s more general argument about it, for the moment. Assume that all we are doing is trying to figure out the consequences for the purpose of moral evaluation (whatever weight you think the consequences should have—for me, its less than for John, but more than for some). What are the real opportunity costs that we should figure in?

John admits that it is highly unlikely that the costs of the war would have been used to end extreme poverty and thus save millions of lives. And certainly the money could have been spent on improved health care and road safety for Americans. But pro-war leftists might believe that in fact the money would have been used to exacerbate inequality—to support the addictions of the wealthy rather than to benefit anyone. Or to up the funding for Star Wars. Or something equally wasteful. If they are right then John’s alternative purposes are not, in fact, morally relevant, at least to our (the left’s) evaluation of the war.

It seems to me that on a strict accounting of consequences (for the purposes of evaluating a policy or action) we should only ask this “what would the money, actually, have otherwise been used for?” Of course, there is always uncertainty about this. But I have something close to certainty that it would not be used for purposes as good as John (rightly) says it could have been used for.

Assume that I am right about this, or at least assume that the pro-war left believes it—if it is true that Bush and Congress would otherwise have done no good with the money, the pro-war left is entitled to treat the monetary costs as irrelevant. And, indeed, the anti-war left is obliged to do the same.

My suggestion might seem paradoxical. While it might be fair for the pro-war left to defend an accounting which assumes there are no opportunity costs, it would be very odd to allow Bush et al, themselves to do the same: they cannot, surely, say in their own defense “Look, Quiggin, you are assuming we’d have otherwise done something valuable with the money, but we wouldn’t have done”. Why? Because they have control over what they do, so there is nothing inevitable from their perspective about the waste of the resources. They could have used it for some better purpose (than, say, tax relief), and they would have deliberately refrained from so doing (because they are, under these assumptions, basically bad guys).

If there’s a resolution of the paradox it is this. As outsiders to the action we (the left), in evaluating the war, are entitled to treat as fixed the motivations, intentions, and actions of Bush and co. in so far as those are peripheral to the war. Bush et. al., being agents and having power over both the war and other aspects of policy, are not entitled to treat their own motivations, intentions and actions in that way, because they have the power to change them. Of course, in our all-things-considered moral evaluation of Bush et. al. we should consider all their motivations, intentions and actions; but the pro-war left is restricting their positive evaluation to the war itself.

(Note: hold your breath, and John’s reply will follow soon!)

{ 12 comments }

1

alkali 07.20.05 at 4:55 pm

On the same reasoning, why can’t we also assume that the soldiers who were killed in Iraq, had they not been sent to Iraq, would have died in some other misguided Bush administration military venture?

2

Kevin Donoghue 07.20.05 at 5:33 pm

This highlights a point which always strikes me when I read one of John Quiggin’s posts on this, or for that matter the posts of Norman Geras. The whole debate between the pro- and anti-war left (not forgetting the not-this-war-now left, i.e. d-squared) is a sham fight. It’s an argument about what the various factions would do if they had any real say in the matter. In reality, they don’t. Their alternatives are: march to Trafalger Square and vote against Blair, or stay at home and vote for Blair.

Still, the principles are worth discussing.

3

engels 07.20.05 at 6:07 pm

if it is true that Bush and Congress would otherwise have done no good with the money, the pro-war left is entitled to treat the monetary costs as irrelevant

I think this is too strong. The argument from opportunity costs shows that Bush is not telling the truth when he claims the aim of the war is a humanitarian one. Unless the “pro-war left” has already swallowed the idea that Bush is acting in bad faith then I’d say this point is worth emphasising to them, for obvious reasons.

4

Ragout 07.20.05 at 11:24 pm

I consider myself on the “pro-war left,” and of course I think Bush was acting in bad faith, like going to war to build up his “political capital.” But I’m happy if he does good for bad reasons.

Personally, I think the first commentator has a good point. If Bush hadn’t invaded Iraq, the army would have been left free to invade North Korea, and we’d have started a nuclear war on the Korean Peninsula.

5

anno-nymous 07.20.05 at 11:47 pm

This seems to ignore the realities of the budget process. If the money hadn’t been spent in Iraq, almost all of it simply wouldn’t have been spent at all. America would have $300 billion less debt. And whatever other macroeconomic effects that would entail.

6

Adrian 07.21.05 at 12:41 am

Bush’s motivations and character can’t be a completely fixed point in anyone’s analysis, since the scenario being considered is that he did something other than what he, in fact, did. To ignore the option of poverty relief, one has to vary his mental events a little bit but not too much, and I’m not sure that’s a coherent constraint on the counterfactual space.

I suppose in consequentialist terms opportunity cost is the difference between considering whether going to war was good (excess of benefits over pains) or the right thing to do (best course available).

7

JR 07.21.05 at 3:16 am

We are allowed to posit no war, but we are not allowed to posit any alternative to war. I don’t understand this. If we can imagine a world in which Bush was not permitted to invade Iraq, why can’t we imagine a world in which he was forced to do something – anything – with the money other than pour it down a convenient sewer.

My own vote for an alternative use would have been to plow huge sums into reconstruction of Afghanistan, using local contractors for everything – roads, railroads, airports, schools and universities, museums, police stations, courthouses, libraries, hospitals and clinics, and cheap micro-credit for anyone who wanted it. There could have been a well-paid job for every Afghan who wanted one and a thriving small business for anyone with an ounce of initiative. Afghanistan could have become the most developed Muslim country outside the oil patch. By now every Muslim in the world would know what a good friend the US can be and what a marvelous place the modern world is to live in.

8

Ray 07.21.05 at 3:24 am

“I consider myself on the “pro-war left,” and of course I think Bush was acting in bad faith, like going to war to build up his “political capital.” But I’m happy if he does good for bad reasons.”

This is a reasonable response to the opportunity cost question. Sure, if Bush was interested in saving lives, he could have spent the money better, but even if he’s in it for the oil, we’re justified in supporting him if his action saves lives.

The problem is, the choice is not simply between ‘war’ and ‘no war’, its between ‘no war’, ‘war type1′, ‘war type2′,…. ‘war typeN’, where each type of war involves different military tactics, a different kind of occupation plan, a different set of conditions for withdrawal, and so on. Bush’s motivations decide which type of war we get, and if his goal is not saving lives it becomes more likely that we get a type of war with a net cost in lives.

9

goesh 07.21.05 at 6:24 am

-another classic gem here, that the war money could have been used to end extreme poverty in the world. How many blank checks have you guys had and failed? Going from poverty to extreme poverty, boy, that could employ alot of people with tax dollars just defining what that means – imagine the reams of definition coming from that

10

Philarete 07.21.05 at 8:36 am

. They could have used it for some better purpose (than, say, tax relief)

Framing, Harry, framing! Don’t fall into the Republican language trap. It’s “Tax cuts for the wealthiest 1%.”

BTW, as a member of the anti-war left, I think that even tax cuts for the wealthiest 1% would have been a better use of $300 billion than bombing Baghdad.

11

PersonFromPorlock 07.21.05 at 8:09 pm

Interesting that only one poster so far has suggested that the $300B might have been left in the taxpayers’ pockets. Oh, well, some thoughts just can’t be thought by the best people.

12

decon 07.22.05 at 3:18 pm

Imagine that upon the occassion of the Japenese bombing of Pearl Harbor FDR had declared war on Korea.

Would the relevant opportunity cost be the $$$ that FDR could have spent on rural electrification? No. The relevant opportunity cost here is the next best alternative use of our military resources. We could have:

1. Deployed the military resources used in Iraq elsewhere (say Afghanistan and/or Pakistan).
2. Held our military resources in reserve so that they would be ready to respond when called upon.

As it is our military is bogged down in an expensive snipe hunt.

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