The Three Trillion Dollar War by Stiglitz and Bilmes
- 25 Feb 08, 03:32 PM
The Three Trillion Dollar War by Nobel award-winning economist Joseph Stiglitz and Linda Bilmes of Harvard University is an attempt to put a price on how much was spent invading Iraq.
Stiglitz and Bilmes try to put numerical values not only on the damage to the world's economy but also on the more personal costs of the war. The book counts direct spending by the US and UK before going on to cost everything from lives lost and damage done in the Middle East to replacing military hardware and caring for veterans in the West.
The extract below is from the preface.
The war has turned out to be hugely costly in both blood and treasure. We estimate that the total budgetary and economic cost to the United States will turn out to be around $3 trillion, with the cost to the rest of the world perhaps doubling that number again. In one sense, this book is about that $3 trillion - how America will be paying the bill for this war for decades to come, and why it is that the true costs are so much larger than the cost estimates originally provided by the Bush administration. But the book is also about much more than a single number. By examining the costs, we come to understand better the implications of the war, and perhaps learn how we can extricate ourselves from Iraq with the least amount of damage.
America has already paid a steep price for invading Iraq. The most visible burden is the toll on our fighting men and women. The economic burden is less readily apparent. Current expenditures, largely financed by borrowing, have been grossly underestimated, although even the vast sums we have spent have not been sufficient to achieve our objectives or protect our troops. Future costs, which will continue to escalate after we finally leave Iraq, have been deliberately glossed over.
These costs are certain to be huge and will continue for generations. That is the lesson of the 1991 Gulf War, a conflict that lasted for less than two months, with little ground fighting and 694,550 troops deployed to the Gulf. One hundred forty-eight U.S. soldiers were killed, and 467 injured in direct combat. America’s allies (primarily Saudi Arabia and Kuwait) paid for most of the combat operations of the first Gulf War. If you stop counting there, it seems the Gulf War was almost free. But that fails to take into account the large number of veterans suffering from some form of disability from the war, so that today -more than sixteen years later -the United States still spends over $4.3 billion each year paying compensation, pension, and disability benefits to more than 200,000 veterans of the Gulf War. We have already spent over $50 billion in Gulf War disability benefits. Even that number does not include the costs of ongoing veterans’ medical care, of keeping U.S. forces stationed in Kuwait, of medical research into “Gulf War syndrome” illnesses, and of all the government workers necessary to run these programs. Nor does it even scratch the surface of the broader economic consequences, for instance, from the loss of income for up to 100,000 soldiers exposed to chemicals associated with so-called Gulf War syndrome, 40,000 of whom have long-term disabilities.
To arrive at the $3 trillion figure, we had to look beyond the government’s bad budgeting and misleading accounting. It may sound strange to say it, but going to war is a big business. No modern firm would attempt to run its business without timely, accurate information provided by good accounting systems. Yet the accounting practices used by the government are so shoddy that they would land any public firm before the Securities and Exchange Commission for engaging in deceptive practices.
Just as bad accounting in the private sector misleads investors, so bad accounting in the government misleads ordinary citizens and contributes to major mistakes in the allocation of resources. When Army Spc. Thomas Wilson of the 278th Regimental Combat Team (a Tennessee National Guard unit then stationed in Kuwait) famously asked Defense Secretary Donald Rumsfeld, “Why do we soldiers have to dig through local landfills for pieces of scrap metal and compromised ballistic glass to up armor our vehicles?” Rumsfeld replied, “You go to war with the Army you have, not the Army you might want or wish to have at a later time.” In March 2003, “the Army we had” was desperately short of the resources - such as body armor and reinforced vehicles - necessary to fight a war of this kind and long on submarines and other heavy equipment designed to confront a Cold War–style enemy. At the very same time, officials of the International Atomic Energy Agency (the international agency charged with ensuring that Iraq did not have weapons of mass destruction) begged us to grant them another six months to complete their inspections work. Nevertheless, we were in such a hurry to invade Iraq that we ignored the IAEA and sent our young men and women to fight without even shielding them in proper body armor. Government accounting shows that we spent relatively little during the initial invasion of Iraq - but we are now faced with the long-term costs of caring for soldiers who were wounded during this period.
Five years later, the United States is engaged in a national debate about how to exit the war. Few voices have openly supported the notion of a permanent occupation. The question appears to be not whether we leave, but when. This issue - which economists refer to as intertemporal decision making - is one which modern decision theories have a great deal to contribute. Although President George W. Bush has dismissed our earlier cost-of-war analysis, arguing that military policy would not be determined by accountants in green eyeshades, making informed choices about real-world options should clearly include cost as one of the factors to be taken into account. Our resources are not infinite. We must face the reality not only of how much we have already spent and committed to date, but also the implications of future choices. Decisions are always made with imperfect information, but modern economic techniques can help clarify the available information and enable us to make better decisions in these adverse circumstances.
Extracted from THE THREE TRILLION DOLLAR WAR by Joseph Stiglitz and Linda Bilmes, published by Allen Lane at £20. Copyright Joseph Stiglitz and Linda Bilmes 2008.