Thursday, January 18, 2007

The cost of Iraq

How much has the Iraq war cost? When the war began, the White House famously downplayed estimates that it could cost up to US$50 billion, saying that it was impossible to tell what the ultimate cost could be. That was of course when they thought it would be in, out, and home by Christmas. The reality has turned out rather differently, and the cost has ballooned - to well over a trillion dollars. US$700 billion of that is the direct cost of salaries, fuel, and ammunition, and the rest - different amounts, depending on how much you ask, but probably another US$500 billion - covers things like the extra medical care required for crippled veterans, replacing the equipment and people squandered in Bush's mad crusade, and (in some estimates) the cost of higher oil prices. No efforts are made to put a price on the 3000 dead soldiers - let alone the estimated 655,000 dead Iraqis.

This points out a flaw in the analysis: that it looks only at costs to America. But while they're paying the bills, it is Iraqis who have paid the price, both in shattered lives and a shattered country.

The New York Times attempts to put the cost of the war in context by comparing it to the cost of domestic spending programmes in the US. Instead of a US$200 billion a year war, the US could have had universal healthcare, universal preschooling, implemented the recommendations of the 9/11 Commission for better port security - and still had the paltry US$0.6 billion a year left over to immunise every child in the world against measles, whooping cough, tetanus, tuberculosis, polio and diphtheria. But this war was ostensibly fought for the benefit of Iraqis, not Americans - so what would it mean to them? And here it gets truly horrifying: the US$200 billion estimated annual cost of the war is five times Iraq's pre-war GDP. If doled out on a per-capita basis, it would have raised per-capita incomes from the pre-war realm of Togo and Nepal to the not-too-shabby (on a global scale) ballpark of Eastern Europe and Chile. If invested in a development program, it would have been bigger than the Marshall Plan, and laid the foundation for a massive and long-term lifting of Iraqi living standards. In short, if the US wanted a democratic beacon in the Middle East to showcase the benefits of western society, they could have just bought one. Instead, they decided it was better value for money to kill people - and spend well over a million dollars per corpse doing it.


"crusade" is the incorrect term.

i believe that 'jihad' is what happens in the middle east.

so the sentence should be " replacing the equipment and people squandered in Bush's mad jihad, and (in some estimates) the cost of higher oil prices.

Posted by Anonymous : 1/18/2007 03:06:00 PM

A complete and utter tragedy for the world, for America and for Iraq.

Posted by Anonymous : 1/18/2007 03:13:00 PM

1) Giving truckloads of money to pre-invasion Iraq was tried: this was the result. "Buying" a democratic beacon is not an option when the political and economic elites can siphon all the money off with impunity.

2) On the left bar of your blog, you have an "Iraq Body Count" banner estimating deaths in Iraq, in the main text you use estimates that are an order of magnitude higher. The positions are inconsistent. Choose.

3) As for the rather silly claim that the war in Iraq is the reason America hasn't socialized healthcare and education and all that other stuff, I'll point out that there's still a lot of money in the American economy, and the Feds need only tax it to achieve these ends you describe. They don't, because they don't think that it's all necessarily good policy. This suggests strongly (but does not prove) Americans would be trooping on without these policies even without the war.

Idiot/Savant, you're a good blogger. This post was well below your usual standard. You've left yourself open to substantive attacks from the right, which I'm pained to have had to bring up myself, because I think that with more care, you might have had a point.

Posted by Anonymous : 1/18/2007 03:42:00 PM

Updates on the Iraq Body Count have trailed off - I don't think it's changed at all in months, possibly years. I don't know why it's still there except to slow down the page load still more.

Posted by Anonymous : 1/18/2007 05:03:00 PM

1) Giving truckloads of money to pre-invasion Iraq was tried: this was the result. "Buying" a democratic beacon is not an option when the political and economic elites can siphon all the money off with impunity.

That is so wrong. The money you're talking about belonged to the Iraqi people, in return for their oil. So did the billions of dollars in cash that went missing, unaccounted (and at least in part embezzled) under Defense Department watch in the early months of the occupation.

So far as I can see, the $1.2 trillion quoted doesn't include the cost of servicing the debt raised - this is an elective war fought on borrowed money, remember. In that sense, the speculation over alterative uses for the money falls down.

Posted by Russell Brown : 1/18/2007 05:48:00 PM

Russell's right on that point - it is borrowed money (mostly). The US Treasury has been financing the war simply by printing money. The economic effects of this don't generally show up, as foreign nations (especially Asia) are still reasonably willing to hold vast quantities of US Treasury bonds and foreign currency. It works a dream for the US, until someone gets panicky. Then things get interesting :)

And to back those rather wild assertions up, here's a link:

Last year, the US stopped printing the figures on the M3 - the total money supply - largely due to the negative effect they would have on the markets. I suppose when all else fails you can always stop publishing the incriminating stats.

Posted by Anonymous : 1/18/2007 08:57:00 PM

(first anon. commenter again...)

Sorry. I was unclear. I'm sober now, so perhaps I won't write such gibberish.

Mr. Brown is entirely right to pull me up. I clumsily conflated two points, and the result was garbage. Here they are separately: first, humanitarian aid doesn't work well when the receiving country has a government that steals from its citizens without compunction; second, the Oil-for-Food scam is one data point suggesting Iraq had such a government.

It's either silly or disingenuous to suggest America could simply have bought a beacon of democracy in Iraq (as Idiot/Savant suggests explicitly in his last paragraph) because many of the civil institutions on which democracy depends had been under systematic attack for decades by Saddam's regime in Iraq. No "Marshall Plan" can work without first rebuilding those institutions, and there is no reason to believe Saddam was interested in rebuilding them.

Clarifying my other point: I am very much in favour of rich countries helping poor countries find clean water and immunize their children. But I'm not obtuse enough to imagine the invasion & occupation of Iraq is the—or even a—reason this hasn't happened. There is enough money elsewhere. (Farm subsidies, public broadcasting, insufficient taxation, whatever. Use your imagination.)

Posted by Anonymous : 1/18/2007 11:02:00 PM

Clearly the US could not have just given money to the Saddam regime and expected that to turn Iraq into a democracy - the money would have gone straight into Saddam and his cronies bank accounts - just like most of the oil for food money.

That's also a reminder that there was a cost to not invading - the sanctions etc.

The counter factual argument that the US could have done other, better, things with that money has a number of problems. First, it needs to take into account the money that would have been spent anyway keeping Saddam contained - that would have gone on till the end of his regime which looked a long way off. And then there is what ever expenditure there would have been involved with his eventual demise - look at how Milosevic ended - lots of US and NATO money involved there.

Also, the missed opportunity argument starts to sound a bit like magic - if it wasn't for the war then we would have ended world hunger etc etc. But there is a bit of reality checking that can be done with this counter factual - BEFORE the war these things were not being done. If the war had not happen they would not have been done.

On a more conciliatory note, for both sides of the war debate it's worth reading this Al Gore speech from 2002 -

Posted by Anonymous : 1/19/2007 09:22:00 AM