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鈥檚 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鈥 medical care, of keeping U.S. forces stationed in Kuwait, of medical research into 鈥淕ulf War syndrome鈥 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鈥檚 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, 鈥淲hy do we soldiers have to dig through local landfills for pieces of scrap metal and compromised ballistic glass to up armor our vehicles?鈥 Rumsfeld replied, 鈥淵ou go to war with the Army you have, not the Army you might want or wish to have at a later time.鈥 In March 2003, 鈥渢he Army we had鈥 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鈥搒tyle 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 by Joseph Stiglitz and Linda Bilmes, published by Allen Lane at 拢20. Copyright Joseph Stiglitz and Linda Bilmes 2008.
Comments Post your comment
Such a mind-blowing figure.
And then we have to factor in the cost of how the war generated anti-USA/UK sentiment, and what is now needed to fund counter-terrorism. The 3 trillion figure then spirals up and beyond. But the truth is that a war waged on trumped-up charges is not worth one lost human life. For me this is the end of Pax Americana, and the start of something horribly unknown.
Complain about this post
Additonal Costs.
Assuming that carbon dioxide is a bad thing how many tonnes were released during the production and implementation of the tonnes of explosives; the collateral burning and demolition of the infrastructure and of the war in general?
Complain about this post
I will read this book.
I thought I heard Dick Cheney say the taxpayers wiould not pay for the war, but it would be paid by oil revenues we would get from the enemy. I still have nightmares of George standing on a ship deck yelling "victory." Oh the Shock and Awe that we continue to experience!
Complain about this post
The title is just convenient; nobody really knows the true cost. Clearly the US is finished as a world power. Watch it implode some time soon. Then we can see the criminals brought to trial. Can't wait....
Complain about this post
It's good to know that, the brainiacs agree with millions of 'we the people'.
Aside from the horrors of what these, bloodthirsty glorified, thugs have done, the debt and damage done to our reputation will hound generations of Americans; yet unborn. Thanks Grendel and Resident Moron!
Complain about this post
If I had the talent of this author I would have written the same. My position is in 100% concurrence with that of the writer.
Complain about this post
I did not read the whole book. But from the preface I have the impression that its message is the following: we should find ways to avoid spending a lot of money in our wars. I think THIS book scratches just the surface of the problem the world is being submerged in.
Complain about this post
Many have believed that our troops;the US men & of many other nations drawn into this conflict should be withdrawn. For they are not wanted or appreciated by the Iraq or Afghanis. Why should our men die for them or the Big business men how profit from the deaths.We do not need an author to tell us the obvious. Tom
Complain about this post
The US administration is not a bunch of fools, who did not know the costs involved while planning the war. Why did they then go to war? Because they must have calculated how much revenue would come from oil. They must have estimated the huge income for the US oil companies from Iraq's denationalised oil and the role of a permanent gigantic base in Iraq to threaten future liberation wars in the Middle East.
Without discussing these issues, the real significance of the 'three trillion dollar war' will not be understood.
Complain about this post
And yet no-one responsible has been called to account, and there seems no prospect of that happening. Quite the reverse, they retire, and will retire, in such financial comfort and personal security, which is, by contrast to what they have done to others, so obscene that in one's more extravagant moments, one wonders whether, if there were any justice, they should be the subject of the grainy images of another Baghdad dawn.
Complain about this post
From the synopsis of the book (Penguin.co.uk):
"The $3 Trillion War will be a devastating reckoning of the true cost of the Iraq war - quite apart from its tragic human toll - which the Bush administration has estimated at $50 billion, but which Stiglitz and Bilmes will show underestimates the real figure by approximately six times."
They do not even get the numbers right. The Bush administration estimates that the the cost so far of Iraq+Afghanistan+national security measures after 9/11 to be below $600 billion. Not $50 billion as it is in the synopsis of the book. And six times $50 billion is $300 billion and not $3 trillion ($3000 billion).
If the book uses the same type of math that is used in the synopsis...
Complain about this post
I guess Mr Stiglitz didn't stop to think for a minute what it would have cost if the war hadn't taken place?
Complain about this post
The Iraq War wasn't waged for the benefit of the American people but for the corporations which back Bush-Cheney. On that score it has been a huge success.
Complain about this post
@Mike:
The cost if the war hadn't taken place? Let's look at that, shall we? Saddam Hussein still in power, supressing his people and blustering at everyone one around him, impotent to do anything with his WMD programs effectively dismantled by international oversight. Sure, he'd still be killing his own people - but they'd be dying at a FAR lower rate than they are now thanks to an American 'victory' in Iraq. It's estimated that around 10,000 iraqis a year were dying (on average) under his rule - while thanks to America's war they have been dying at a rate of around 40-50,000 a year (with something like an estimated 2 million displaced/refugees). Not to mention all the sectarian violence and inter-tribal warfare that will (regardless of what we now do) rip the country apart in the years to come. The west would not be suffering the assaults of jihadists and al'quaeda, nor would we be facing increased tensions between the muslim world and the christian west. Anti-American (and by association anti-european) sentiment would not be running higher than at any time in history, and our economies would not be facing recession or (at least in the case of the US) a possible total meltdown. Energy costs would be far lower, as would, as a consequence, domestic bills.
Wow, you're right, the world is so much better off for G.W.'s actions....
/sarcasm off
Complain about this post
The only thing I like about George W Bush and his Neo-Con cronies is they were so blatant they gave Capitalism a bad name !
Even the least educated and most illiterate have now understood what sorrow large corporations ,whose only endeavor is to turn a profit, can bring to people , to humanity!
Today, with the mass media of global communications it's not so easy to convince people that 'might makes right' ! Hitler is dead ! Hopefully, the 21st centuries will be the time when humanity began to find its own self-respect and thieves , murderers and tyrants will be stuffed and placed in museums like the Dinosaurs ,for school children to study and stare at !
Complain about this post
Another cost might be a weakened America, not only financially and economically with money used to wage war that could have built up the economy, but also in terms of morale,
this may be quite serious with the growing strength of Russia and China,
as to what we do?
Complain about this post
Three trillion and the rest.
As nineteenth century european bankers were well aware war is a highly profitable business for an endebted government is one that can be controlled especially if you also control/own its central bank.
America emerged from WW2 as the worlds` super power and its greatest creditor as Britain had been in its former empire days.From Truman onwards and with the support of Churchill it went on with war in Korea, Vietnam ,the Cold war etc.
etc. By 1968 its bullion reserves were nearly depleted so that by 1971 it could no longer maintain the gold exchange standard. The US bacame a debtor nation from then on and found that it could challenge the world to replace the dollar as the worlds` key currency and get away with it.
Year after year it has paid the world for their exported goods with paper that declines daily. The dollars that creditor nations build up are re-invested (or re-lent) in US bonds which can only be sold to buy more US bonds otherwise a flight out of dollar denominated
assets would undermine the $ and the
ability to continue buying other nations exports. The US also stops creditors from buying hard US assets which may be considered strategic
(eg. ports or overseas pipelines) while insisting that developing
nations open their markets to US
corpns. to do infrastructure deals
(eg water,gas) in order to secure
World Bank/IMF loans which of course are controlled by the Fed. & US monetary system.
This of course is dollar hegemoney which followed on from dollar diplomacy.
The war costs will be inflated away over time though the servicing costs will be borne by US tax payers who are not really important.The erosion of the value of the dollar
denominated debt is in effect a tax on the world. The main three holders are China, Japan,Britain & Europe. The UK holds more US T Bills than any other European nation-that is what our special relationship amounts to plus deeper investemnts in the US and the other way.In other words we are like the child tied to its parent in a three legged race.
Theses creditor nations are effectively underwriting the US foreign policy in the ME. Any nation such as Iraq,Iran,Venezuela or Russia that would like to sell its commodities in a stronger currency are attacked or threatened. Iran has had its sea bed computer connections
severed as it tries to start an oil bourse and Iraq was invaded after 3 years of profitably selling oil in Euros rather than dollars.The US policy is akin to killing all the buffalo to starve the natives during its 100 year long genocidal `sport`,or giving the natives infected blankets.So the answer to the question who`s paying for this its us! We are the patsy at the poker table who after half an hour has not figured out who the patsy is.
3 Trillion is nothing because they can print more and more and stuff it onto the rest of the world. Only a world depression which has been held off by means of derivatives can force the world to radically change its monetary system after it has been purged. The US needs more that a New Deal president -it needs to be reconstituted.
Continuous war is nothing new -the Romans, Venetians and the British all practised it. The practical tactician in the US is Cheney whose wife is closely linked in with former labour leader, fabians and others in the UK. War stratagists were happy to see British protesters shouting about oil while missing that the Anglo Am. real targets are Russia & China. In other words an Empire led by US military power using British Intell. established 400 years ago. So when you control the planet and all fiat money what does the odd trillion matter? Just who is going to make you pay back your external debts?
There are obstacals.Oil,as Churchill well knew, is a vital military material but this can be controlled and rationed by force and without it no other can challenge you. Global warming -much of the Co2 reduction will be acheived by peak oil which happened
in 2005 and will be evidenced by rationing first by price then by dictat within a few years. Population expansion is expected to go to 9.5 bn. in 2050 from current 6.5bn. Peak oil,global warming, war and famine should
keep that big number down.
Of course there will be wars for arable land and resources so the empire`s mother nation can engage in conquering and ruling, mainatainance of technical superiority and enjoyment of the spoils. This won`t be a trading empire but one held by force that enslaves people since population growth cannot be allowed.Resource control will be key as well Britain knew in 18th & 19th centuries.
Our current leaders have no population policies,no post-peak oil policies no sustainable farming policies no alternate economic models. They only talk of phoney terror,fear,security,consumption,infinite growth on a finite planet (how daft is that),party politics,political correctness and a stream of trivia. The media rarely reaches beyond this mentality and so the populace who are told what to think are blissfully ignorant.
So we do get the politicians we deserve.
Three trll.? Nah its nuthing -we`re going to the top.
I`m just sorry for the animals.The planet does not deserve this human excrescence-so perhaps a World Government IS what we really really want.
Complain about this post
This war was waged to keep the prices at the petrol stations soaring. Now we have the insight on how it has influence on our taxes to be paid. There surely must be ways to change the current democratic regimes into real democracy. Not only for our benefit, but for that of mankind.
Complain about this post
I think it is time all nations revamped their constitution to avert the excessive power of the single leader.
Complain about this post
History teaches that wars begin when governments believe the price of aggression is cheap.
Ronald Reagan, Address to the Nation, Jan 16, 1984
"Well, the Office of Management and Budget, has come up come up with a number that's something under $50 billion for the cost. How much of that would be the U.S. burden, and how much would be other countries, is an open question."
Donald Rumsfeld, Secretary of Defense, Jan. 10, 2003
There's a lot of money to pay for this that doesn't have to be U.S. taxpayer money, and it starts with the assets of the Iraqi people鈥nd on a rough recollection, the oil revenues of that country could bring between $50 and $100 billion over the course of the next two or three years鈥e're dealing with a country that can really finance its own reconstruction, and relatively soon."
Paul Wolfowitz, Deputy Defense Secretary, Mar. 27, 2003
Complain about this post
I've read the preface of this book and heard Stiglitz on Newsnight and Start the Week.
My analysis concurs with that of David Harty (above) and the question both programmes omitted to ask Stiglitz was the vast expenditure of natural Earth (therefore Common) resources of fossil fuel and its contribution to atmospheric pollution, which we are all forced to suffer. Does Stiglitz include this in his costings? Simon Lewis (Univ. Leeds) asks, in today's The Guardian, who will fund research into the number of lives lost as a consequence of atmospheric CO2 pollution and global warming? Maybe Stiglitz (and his university) will collaborate with Lewis (and his university) to answer this question? There's evidently plenty of money sloshing around to fund the study - the wretched war apparently 'created' 3 trillion bucks.
Stiglitz (in the preface) says, "Our resources are not infinite." Too bad Newsnight did not challenge him on whose resources he regarded as "Ours", and who he regarded as "Us"? I guess "us" means "U.S.A". Has he yet to realise the Earth's only (reasonably) infinite resources are solar? The philosophy upon which he bases his economics (home management) is outdated and damaging as the boundary he uses is too parochial; akin to that of buccaneers and carpet baggers.
What's disappointing about the much spoken-of growth of China and India is their adoption of the same flawed philosophy; to 'beat them at their own game' rather than using their massive Dollar reserves to radically change that buccaneer's model. An alternative is essential.
Complain about this post
War is good for business.
The question is who owns the businesses involved?
We all know who.. BUT whoever owns or controls Iraqi oil itself is not relevant, every barrel of the stuff from any source now retails at three times the pre-war value. Military arms firms are coining it too - bombs are expensive things. The cash registers of the Republican leadership are ringing merrily whilst the ordinary people fight it out thousands of miles away.
And we are upset at corruption the the developing world?!
The Iraq war is the biggest con-trick in human history, I expect 3 trillion is a conservative estimate.
Complain about this post
Here in its full glory is a quote from Ken Adelman's famous Washington Post article, Cakewalk In Iraq. It appeared on 13 February 2002:
"I believe demolishing Hussein's military power and liberating Iraq would be a cakewalk. Let me give simple, responsible reasons: (1) It was a cakewalk last time; (2) they've become much weaker; (3)we've become much stronger; and (4) now we're playing for keeps."
One wishes that such over-simplified views were exposed much earlier and hopes that Stiglitz's book will prompt the media to question the wisdom of the 鈥渃akewalk鈥 crowd i.e. the likes of Ken Adelmen who misled the American media by claiming 鈥渕easured by any cost-benefit analysis, such an operation would constitute the greatest victory in America鈥檚 war on terrorism.
A more pertinent question is whether the media in the USA and UK has done enough to analyze the consequences and also to discuss the trade-offs: To discuss what difference far lesser resources would have possibly made through development and diplomacy approach.
Complain about this post
This war has nothing to do with freedom or democracy for the Iraqis. It has succeeded,however, in providing a base from which US can dominate the region and access to oil when supply runs down in 20-30 years time.See Bobitt- "The Shield of Achilles" and Chalmers Johnson "Nemesis" The Newsnight item was noteworthy for a pathetic attempt by Paxman to challenge Stiglitz.To attempt to relate the benefit of killing a tin-pot dictator with the human and econ0mic costs of the waris morally,deeply discreditable. I prefer to put the blame on the editorial briefing.Those responsible should be called to account.
Complain about this post
This war has nothing to do with freedom or democracy for the Iraqis. It has succeeded,however, in providing a base from which US can dominate the region and access to oil when supply runs down in 20-30 years time.See Bobitt- "The Shield of Achilles" and Chalmers Johnson "Nemesis" The Newsnight item was noteworthy for a pathetic attempt by Paxman to challenge Stiglitz.To attempt to relate the benefit of killing a tin-pot dictator with the human and econ0mic costs of the waris morally,deeply discreditable. I prefer to put the blame on the editorial briefing.Those responsible should be called to account.
Complain about this post
The interview, based on the book, concentrated only on the stupendous financial cost of a dubious war to US and UK alone.In any objective evaluation of the consequences of such a war the financial cost of reconstruction for near destruction of Iraq has to also find a place. It will turn out to be several billions more.Who will meet this cost?
And what about the self-inflicted human cost to those who waged the war and to the entire Iraqi population who have been victims?
Robert McNamara based on his reflection of the Vietnam experience vowed that America should not repeat such expensive mistakes again. And it is all being re-enacted all over again within our own lifetime!
Complain about this post
Post 17 David: A World Government- yes!
But not a United Nations counterfeit
World Government
We're owed more than that!!
Complain about this post
So are we all going on Stop the War March on Sat 15 March in London or a World against the War activity coming to somewhere near you around that date - as it's the only real "opposition" in town?
Or as individuals are we helpless against this tragic idiocy of democratically elected leaders?
Complain about this post
Respose to No 27
Could`nt agree more but the problem is that there is no true democracy to enable the massive issues facing the world to be addressed collectively.So we are left with an Anglo.American empire or perhaps some other unipolar structure playing last man standing. (It was Paul Warburg who while designing the giant trust or corporate ownership of the US with the money trust said "you shall have a world government by consent or conquest". Meanwhile the rockefellers wre taking control of the media & education.)
This looks like a fine book & well worth reading and topical yet I would always recc. his Roaring Nineties which explans how the Cluinton era brought us to the dot com bubble and crash. There is a J.Stiglitz plus co- author interview on democracynow which fills in a few of the blanks that JP had little time to cover in his fine interview.
Complain about this post
What an interesting way to get people interested in reading! Book trailers are like movie trailers, but for books! You can find them all over the internet now, but here is a site that's featuring them on YouTube.
Complain about this post