Imbalanced look at a bungled war
JOSEPH Stiglitz has held the chair in finance and economics at Columbia University business school since 2001. A former chief economist at the World Bank, he also served on the US Council of Economic Advisers in the Clinton administration. In 2001 he was a cowinner of the Swedish central bank prize for economics, affiliated to the Nobel prizes.
Linda Bilmes lectures in public policy at Harvard’s Kennedy School of Government. She also served in the Clinton administration as a senior official in the Department of Commerce.
The authors of The Three Trillion Dollar War frankly admit that ‘‘ we are both ardently opposed to the war and were against it from the start’’. Unfortunately, this distracts the book from an objective public finance and economic focus or from analysis based on first principles, uncontroversial assumptions and letting facts speak for themselves.
More generally, there are too many forays into strategic policy and international relations, matters well outside the authors’ social science expertise and experience.
Stiglitz and Bilmes ably argue that the
The Three Trillion Dollar War: The True Cost of the Iraq Conflict Joseph Stiglitz and Linda Bilmes Allen Lane, 311pp, $ 32.95
economic costs of the Iraq war are very high, that they include a range of visible, invisible, direct and opportunity ( forgone) costs, that these costs will continue for several decades and that Bush administration estimates have been wrong from the start. They also effectively discuss the macroeconomic effects of the war on the US and international economies.
But they are much less successful when trying to discuss the strategic costs.
The $ US3 trillion ($ 3.2 trillion) figure is their mid- range estimate and is probably much closer to the mark than the figures of up to $ US800 billion quoted by Bush administration officials. Their best estimate is $ US2 trillion; their most pessimistic, $ US5 trillion.
The main cause for the wide differences is that Stiglitz and Bilmes rightly use ( long- term) accrual accounting, whereas official US government figures are mainly the result of current cash accounting methods.
Despite the book’s title, one minor complication throughout is insufficient separation of Iraq war costs from those in Afghanistan ( often because US government accounting systems do not facilitate this), and from costs stemming from wider efforts to counter Islamist terrorism globally. The authors note that the US can afford $ US3 trillion during the decades- long period involved and that expending such sums will not bankrupt the country.
They ask a valid question, however: what else could have been done with the money in economically productive ways or in fixing the problems affecting the future viability of the US social security system? Or, indeed, in forestalling the impending US recession?
It is in their discussion of the antecedents and history of the Iraq war, and the execution of grand strategy and military operations more generally, that the authors fall victim to error, questionable assumptions and general lack of academic rigour. They fail to separate the costs of the war in itself from those resulting from its bungled execution. This is not necessarily a problem but it does skew some of their recommended financial reforms and further weakens their argument for immediate withdrawal from Iraq.
There is also next to no balanced discussion of the economic, financial and strategic costs of the alternatives to the war. These principally involved the continued expensive, complex and failing containment of Saddam Hussein’s regime and the risks to strategic equilibrium in the region and to an international economy so dependent on Middle Eastern oil supplies. These costs also included the serious undermining of the UN’s authority, as its disarmament sanctions were continually flouted by Iraq and others.
The book does mention the likelihood of further wars possibly caused by the intervention and of the opportunity costs of the US being so tied down in Iraq that strategic threats from Iran and North Korea have arguably worsened.
The Three Trillion Dollar War makes nine detailed recommendations for how the US should organise the financing of its wars and a further nine about the long- term care of veterans. The book’s wider contributions to US policy and the formulation of grand strategy are negligible, with three exceptions ( where conclusions are also applicable to Australia.)
First, the costs of a war ‘‘ live on long after the last shot has been fired’’ and are disproportionately borne by war veterans and their families. Second, ‘‘ war has become too easy for America’’. As a check and balance, the costs of any war should be borne by present taxpayers ( not through debt) so that citizens are forced to consider all the implications and sacrifices involved. Finally, in an era in which a democracy’s wars are largely fought by a professionalised defence force made up of volunteers, every citizen must be made to confront the sacrifices in dead and wounded being made on their behalf, by a very small part of the national family. Neil James is executive director of the Australia Defence Association.
Costly conflict: Joseph Stiglitz and Linda Bilmes ably argue that Bush administration estimates of the Iraq war’s costs have been wrong from the start, but their stated opposition to the war diminishes their objectivity