A trillion dollar war

“Given a budget of a trillion dollars and almost unlimited military power, does anyone really want to suggest that competent managers couldn’t have achieved a great deal more liberation from oppression than this. I have plenty of ideas, and I’m sure others do too.”

Clearly. Taking out The Berlaymont would have cost less and set a great deal more people free.

Although it’s a toss-up between dusting Brussels with asbestos and dusting Iraq with DU…

By the way Tim, you’ve just voiced support for terrorism – expect a knock on the door from Judge Ian Dredd any minute now.

Q: “How many people work at the Berlaymont?”
A: “About forty percent of them.”

Nordhaus’ estimate only included the costs to the United States; fair at the time, as his paper was on of the few evidence-based contributions to the US discussion on whether to go to war, but today John should not leave out the cost to (a) Iraq and (b) the rest of the world.

Pre-war Iraq’s GDP was deeply depressed by sanctions, so current output may not have dropped much; but the damage to the capital stock (still continuing) is plainly severe. This includes human capital through the disruption of education as well as damage to hospitals, power grids, housing and pipelines. Any advance on $50 billion? The destruction of the institutions of government and the loss of life are hardet to quantify and polemically should be left out, but not forgotten.

For the rest of the world, the main impact has been via oil prices. Surely this has depressed world growth by a few fractions of a percent? Life and death if you live in Mozambique.

John omits the medical and supplemental pension costs to US veterans – a few $ billions a year. Not a big deal in the total, but politically important as the Bush Administration apparently doesn’t propose to fund these costs but to shift them on to the returning Tommy Atkinses. (http://whitewolf.newcastle.edu.au/words/authors/K/KiplingRudyard/verse/volumeXI/tommy.html)

Good one by Tom Tomorrow: link

I think the important question, really, is could we all ‘ve had a pony for this such milliard of the FDR’s once-proud “dollars”? (I assume there’s a bulk discount.)

Actually, isn’t the ‘conservative’ estimate that running high deficits makes money grow on trees?

I wonder what proportion of that $2 trillion is the direct result not of war per se, but of deep corruption and a criminal failure to place any effective controls on the spending of taxpayers’ dollars.

Whenever I try to imagine a historical figure as inadequate as our own Dear Leader, the last of the Romanovs always appears:

The period of peaceful economic development lasted until July 1914, when Russia entered World War I. Military expenses were enormous and immediately caused budget deficit. In 1915 budget deficit stood at 8,561 million rubles; the same year military spending equalled 8,620 million. In 1916 these figures were 13,767 million and 14,573 million, respectively. The government frequently issued bonds to finance the deficit. War Loans (War Bonds) were issued in 1914, 1915, and 1916….

Overall, 29% of war expenses incurred from the beginning of the war until the February Revolution of 1917, were financed by issuing paper currency. Printing money caused inflation. Prices were rising once again. As inflation increased, gold, silver, and even copper coins began disappearing from circulation, becoming a way for the population to store value. It is estimated that in February of 1917, before the February Revolution, the purchasing power of one paper ruble equalled that of 0.26 – 0.27 rubles before the war began.

The problem with moving away from direct costs is you get into all sorts of estimates based on comparisons with what the situation would have been otherwise. For example, with respect to Iraqi oil production — what would it have been if Saddam had remained in power? Would Saddam have invested in oil infrastructure and increased production? Or would he have used the tight oil market to play the kind of games with oil prices that Enron did during the California energy crisis?

Or, look at it another way — imagine a world with the sanctions regime removed and Saddam raking in the money from $65 oil. What kind of mischeif would his regime have caused going forward? How much would it have cost to defend against? There’s no possible way to estimate that – perhaps nothing, perhaps huge sums.

Sglover: It’s not entirely fair to blame Nicholas II for what happened to Russia. That said, I can see where you’re coming from as far as ineptitude goes.

A better example might be Nero, who was, by all accounts, a disconnected self absorbed jerk, and who flagrently abused trajegy to further his own personal ambitions – in his case owning the biggest house in Rome.

The Katrina disaster has exposed the raw underbelly of Bush’s weak dollar foreign policy. There is a human cost to the corporate republic in which we live. The more we see of it the more likely the people are to reject it.

As to Iraq and Bush’s outright lies, both about why we went to war and what it would cost, I’ve little more to add. It does tie back to the weak dollar policy however. I’ve got a blog post here that explains it in some detail.

Ah yeah, I get it. If we use the imaginary costs from a parallel universe, it turns out that Bush’s war saved us money! Surely Saddam would’ve finished his planetary destructor beam with all that $65/bbl oil revenue. Not even the Medium Lobster could put it so well….

No, you don’t get it – the original post is based taking the difference between current costs and imaginary costs. How much is oil now? How much will it be in 2008? Ok, how much do you imagine it would it be now if Saddam were still in power? How much in 2008? The difference is to be added into (or subtracted from) your ‘total war cost’. But if you can’t answer the latter two questions, you have no point of comparison. Same problem applies to long-term interest rates–what assumptions are you making about what the world would be like had the invasion of Iraq not taken place? And how do you know those assumptions are correct?

We can certainly know, with at least some accuracy, what was directly spent. But we cannot know with ANY accuracy how much more oil is now than it would have been in a counterfactual 2005 in which Saddam & sons remained in power.

You’re underestimating the healthcare costs. I say this partially because it’s always true (everyone always underestimate teh healthcare costs), but also because this war has a higher proportion of wounded: dead in its casualties, and better survivorship of severe wounds than any war before.

Taking care of the roughly 14,000-15,000 to date will be quite a task.

mq, If Saddam was no threat then why did Clinton spend 8 years and billions of $$ and hundreds + lives (Kobhar Towers etc ) “containing” him? If it is all a scam then it is a Democratic AND Republican scam. The world is a dangerous place, Democrats should stop pretending that mass murdering dictators want peace, they don’t. The only thing they understand is who is stronger. And it is better for dictators to know that we are stronger and they need to act accordingly.

Slocum, your comparison should include, of course, the fact that the last four years, Bush is president. So your supposition seems to be that if Bush had not invaded Iraq, he would have said, screw it, trashed the sanctions, and welcomed Saddam into the global system?

I don’t know. Bush is so incompetent that might have been his strategy. But another possible scenario is that he would have used the opportunity to really get rid of the terrorists who attacked us — you know, Al Qaeda — strengthened our police intelligence with Europe and North Africa, so that Madrid, Casablanca, and London could have been prevented, and in general not presided over four years of rising terrorist attacks. Somehow, I think that might have brought the price of oil down.

A stunning example of synchronicity: John Quiggin, the nerdiest Left wing critic of the war in lock step with Steve Sailer, the nerdiest Right wing critic of the War:

Dept. of Now-They-Tell-Us: A new cost-benefit analysis by the AEI-Brookings Joint Center for Regulatory Studies on “The Economic Costs of the War in Iraq” concludes that the Iraq War is likely to end up costing over twice what it’s worth:

We estimate that the expected total net present value of the direct costs [of the Iraq War] through 2015 could be $604 billion to the U.S., $95 billion to coalition partners, and $306 billion to Iraq, suggesting a global total expected net present value of about $1 trillion. The net present value of total avoided costs, meanwhile, could be about $429 billion.

The BBC cites a report that shows the Iraq war is now costing more in fiscal terms than the Vietnam war.

The most profitable investment that public agencies can make is in health service delivery and investment. The Lasker foundation has a great series of reports on the benefits from health R & D, especially Exceptional Returns: The Economic Value of America’s Investment in Medical Research, authored by Kevin Murphy.

An Australian version of this report, Exceptional Returns: The Value of Investing in Health R&D in Australia, was put out by Access Economics. The press release $1 INJECTION INTO HEALTH R&D RETURNS $5 ECONOMIC BENEFIT prospects great gains from health investment:

Every dollar spent on health research and development (R&D) returns $5 in national economic benefit, a major new report by Access Economics for the Australian Society of Medical Research reveals.
And Australians’ current life expectancy has increased by eight years compared to the 1960s, because of massive advances in medical research, health promotion and overall healthcare.

When it comes right down to it, the best way to help people is to heal them, rather than wound them.

Let’s see… one trillion dollars is about 20 times Iraq’s entire GDP before the Gulf War, and about 200 times its GDP in 1999 after a decade of sanctions.

With that kind of cash to spend, we could have offered simply to pay Iraq to submit to an international state-building project. This could have been our offer to the Iraqis: We’ll spend half a trillion dollars right now if you allow foreign contractors and NGOs to come in and rebuild your country’s infrastructure, overhaul its court and criminal justice system, fully fund its schools and health care system, and establish free media and civil society institutions. If you hold free and fair elections at the end of a five-year period, as verified by international monitors, you get the other half trillion to endow the budget of the brand, spanking new Iraqi government.

With a few tens of millions of desperate and impoverished Iraqis suddenly screaming “show me the money!” even an autocrat like Saddam might have been forced to take the deal. And if he hadn’t taken the deal, he would have had to face a mad scramble by other Baathists close to the seat of power to put a bullet in him, take control of the government and announce: “a new day for Iraq has dawned – a new era of openness and international cooperation…and prosperity.” Even Saddam would not have been powerful enough to stand in the way of a one trillion dollar tide. There are too many people who would be eager for a chance to get a piece of a trillion dollars worth of action.

Of course, there would have been no tanks and cluster bombs, no shock and awe, and no mountains of dead people. So where’s the fun in that? And paying Iraq to change would have been so dishonorable. As we all know, no amount of death and destruction is too high a price to pay to preserve our national honor, and to prevent a single evildoer from thumbing his nose at us for a decade and getting away with it.

Why spend a trillion dollars building things when you could spend it smashing things instead?

Let’s put these numbers in perspective.

The total budget for the next 10 years is 30 trillion or so, easy .

So at 1 trillion, we’re talking about 3.33% of taxes.

If someone had said to me in 2000, when Bush was running for President the first time, you can have Sadaam Hussein removed from power, a major military presence in the oil fields of the Middle East and drive the liberal establishment completely nuts, all for the incredibly low price of 9.99% of taxes… SOLD!!!

However, since then, I saw Michael Moore’s movie. He really changed my mind about things. Wrong dictator. What’s the going rate to take over a Kingdom?

Slocum, your comparison should include, of course, the fact that the last four years, Bush is president. So your supposition seems to be that if Bush had not invaded Iraq, he would have said, screw it, trashed the sanctions, and welcomed Saddam into the global system?

What is your scenario under which the Iraq war doesn’t happen? One possibility would have been that Saddam granted full access to inspectors, they continued their work, and they certified the lack of WMDs. Why, then, would sanctions NOT have been lifted? After all, sanctions were not to have been permanent, they were only to have lasted until Saddam’s disarmament was completed.

But another possible scenario is that he would have used the opportunity to really get rid of the terrorists who attacked us—you know, Al Qaeda

My counterfactual history with Gore instead of Bush (and I put aside my misgivings and voted for Gore, BTW) includes treating 9/11 as a crime rather than an act of war. Under Gore, I don’t believe we’d have ‘used enough troops to get Bin Laden at Tora Bora’ because we wouldn’t have been anywhere near Tora Bora — nor would Bin Laden have been holed up there. He’d still be somewhere in Afghanistan with his organization intact, hosted by a still-in-power Taliban government. Do you remember how many on the left opposed the invasion of Afghanistan either on ‘moral’ grounds or because it was going to be a disaster (like the Russians and British?). I remember that opposition very clearly.

strengthened our police intelligence with Europe and North Africa so that Madrid, Casablanca, and London could have been prevented

Do you have evidence that sharing police intelligence with Eurpone and North Africa has been neglected?

, and in general not presided over four years of rising terrorist attacks. Somehow, I think that might have brought the price of oil down.

Rising terrorist attacks? We have had serious terror attack since the invasion of Iraq, but we also had many serious attacks before it. Setting aside 9/11, the Bali bombing, for example, was the year before the invasion of Iraq (and was purportedly in response to Australia’s support of East Timor). Do you think that the invasion of Afghanistan was insufficient to motivate continued Al Queda attacks on the West?

And the Madrid, Casablanca and London bombings interfered with oil production and raised the long-term price of oil exactly how?

Of course, there would have been no tanks and cluster bombs, no shock and awe, and no mountains of dead people. So where’s the fun in that?

Indeed:

Minutes before the speech, an internal television monitor showed the president pumping his fist.

“Feels good,” he said.

Uncle Kvetch,
Not to be argumentative, but the 175 number is obviously wrong since the revised numbers were more like 210. This obviously doesn’t change your point, but does show the carelessness of the MSM when quoting a “weblog” that included easily verifiable information.

Snark from the heretofore indefatigable Dan Kervick.

Indeed these are the End Times.

Two comments:

1. The cost of the war to the world is not that much different than the cost to the US, and could even be lower. Many things that are costs to the US, such as reconstruction in Iraq or higher oil prices, are benefits to someone else, like Iraqis or oil producing countries. The notable exception, of course, is that placing a value on the lives of Iraqis who’ve died as a result of the war would add a lot to the cost to the world.

2. Quiggin seems to have a really different analysis of the impact of higher oil prices than Nordhaus. If I’m understanding the two of them right, Nordhaus seems to come up with an impact many times larger (maybe $500 billion instead of $100 billion from the same $5/barrel) due to some sort of indirect effect.