How much would a war with Iraq cost?
by Jack Powelson
The Quaker Economist, Letter No. 62
Jan 10, 2003When I was invited to conduct a workshop on this question, at Guilford College later this month, my first thought was, "Why not? I know about as much about that as anyone in Washington, which is of course 'Nobody knows.'"
My second thought was: "If there is going to be a war, Quakers ought to be prepared for the cost." The cost will be registered in human lives, property destruction, environmental damage, hatred creation, deterioration of the world economy, and the effect upon our lives. (Money is a mere measure, by which some will try to grasp the enormity of all the above.)
Economists are already out there, trying to come up with a figure. After months of study, in December the Center for Strategic and International Studies, an American think-tank, made four separate estimates, based on (1) no war, (2) a 4-to- 6 week war, (3) one lasting up to three months, and (4) a 6-month war. Their curious assumption is that a war begins sometime and ends sometime, and the increased cost is what happens in the meantime. Depending on the scenario, they estimate a cost until the end of 2004 of $55 billion for the optimal and $120 billion for the worst case. The Congressional Budget Office estimated $50 to $60 billion for a shortish war. This compares with about $80 billion (in today's money) for the Gulf War. (All these data come from The Economist, 12/07/02).
But on December 31, the White House budget office reduced the estimate to $50-60 billion (NYTimes, 12/31/02). In an age in which self-serving corporate executives deceive their stockholders, why should we believe the estimates of a self-serving White House?
Michael Ignatieff of Harvard estimates $120 billion to $200 billion (NYTimes Magazine 1/5/03). William Nordhaus, economist at Yale, estimates that non-military costs (for peacekeeping, reconstruction, and nation building) would run about $600 billion if all went well, up to about $1.6 trillion if it did not (The Economist, 12/07/02).
Most suppose that an economist always thinks in terms of money. I will surprise you. I believe the cost of war has many dimensions, including the following:
First is the amount of hatred it creates: hating the enemy after the war is over. Here we must be wary. My personal experience in Germany right after World War II and in Vietnam last year found minimum hatred toward the erstwhile enemy. On the other hand, the Vietnamese are currently persecuting the Montagnards, a mostly-Christian tribal community that cooperated with the Americans (NYTimes, 12/28/02). French and Germans hated each other for centuries, and especially the French wanted to settle scores for the 40-year German occupation of Alsace-Lorraine. The atrocities being committed right now in the Middle East will (I believe) bear scars of hatred into the indefinite future.
Israel possesses scientific knowledge that could benefit the whole area if it were not for this hatred. Early on after Israel's entry into Palestine, many suggestions were made on how the Israelis -- with science brought from Germany -- could improve the lives of the Palestinians. For example, water pumped from the Mediterranean and desalinated could make the West Bank bloom. As war and hatred intensified, such suggestions dropped off, since clearly they would not be realized. If you want to put a figure on the cost of Arab-Israeli hatred, it should include the loss to the world from the profitable cooperation that is being missed. How much cost? Enormous.
Our scare tactics on North Korea have brought on new anti-American protests in Seoul. South Korean President Kim Dae Jung has said "that pressure and isolation would not persuade North Korea to end its nuclear arms program. . . Pressure and isolation have never been successful with Communist countries; Cuba is one example" (NYTimes, 12/31/02). Many South Koreans want peace with their northern relatives.
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Second is the loss of lives and livelihood: Iraqis and US soldiers who will die. Long-term health disorders will result from military activity, destroyed water systems, and the like. Compare a wrecked
Afghanistan today with what it would be like if the cost of war had instead been spent on schools, hospitals, and infrastructure. Try to put a figure on the human suffering, break-up of families, children separated from parents, and so on. Robin (my wife) knows about this. In 1949-51, she worked in a resettlement camp for children who had lost their parents in World War II. She knows the heartbreak of kids who will never see their parents again.
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Third is environmental damage. If nuclear weapons are used (which our government does not plan for now) lands will be scorched and radiation set loose. For how long? We don't know. Even without nuclear weapons, damage would be done by fire and explosions, toxins released by various weapons, chemical gases, refuse from thousands of soldiers, and the possibility of burning oil wells as in the Gulf War.
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Fourth is property damage. How great this will be depends on our attitudes after the war. When I lived in a totally-ruined Frankfurt in 1948, Germans were saying that fifty years would be required to rebuild the city. Instead, they pounded the ruins into powder, re-made bricks on the spot, and constructed new buildings. When I returned ten years later, I could see no sign of wartime damage. German factories had been dismantled and shipped to England as reparations, so the Germans got a fresh start and quickly overtook the British.
On the other hand, many buildings in East Germany and Russia and its former satellites remain unrepaired even today. How long will it take Afghanistan and other countries in the Middle East?
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Fifth is the impact on the economy. During World War II, Americans were willing to sacrifice: food was rationed, taxes increased, and Roosevelt told the people they had to suffer for a worthy cause. But the presidents during the Vietnam War thought we could have both guns and butter; the war was thousands of miles away, and civilians would not feel it except as they lost loved ones. The result was sacrifice anyway (in that the costs of war could have been devoted to schools and hospitals), plus a serious inflation that destroyed the value of our currency. Economists speak of "opportunity cost," as the sacrifice of something to buy something else with the same money. The opportunity cost of guns is butter, but also schools, and hospitals.
President Bush is aiming for a tax cut just at the time of increased wartime expenditure. The Wall Street Journal (12/06/02) tells about this cogently: "In January 2001 Americans were told that cumulative budget surpluses from 2002 through 2011 would total $5.6 trillion. Based on this fiscal mirage, a large tax cut was passed. In March this year, the $5.6 trillion estimate was dropped to $1.7 trillion. In August we were told, sorry, it will be only $100 billion. Even that looks highly optimistic. A substantial deficit over this period is far more likely." Our government wants us to buy guns and think they have no opportunity cost -- another untruth!
Another economic impact was "the sixties," a period of protest when many thought the war was not worthy. Young people dropped out of school and took to the streets (including two daughters of ours). A whole generation of Chinese was "lost" because of the "cultural revolution." The opportunity cost of protest is (lost) education. I suspect the same will come over a war with Iraq, unless it is quickly over.
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The sixth cost is intangible. It consists in the changing nature of the American people, from a confident culture that can tackle any hardship into one that is grossly scared. Curiously enough, the Center for Strategic and International Studies did not think the "no war" scenario would be the cheapest. The "lingering uncertainty about a possible war will continue to depress markets and add a risk premium that boosts oil prices and acts as a drag on growth" (The Economist, 12/07/02). Will terrorist acts continue on our shores, even after a war is "ended?" It seems to me our government is scaring us well beyond the desired medium between security and civil liberties.
All these costs must be set against the cost of Saddam Hussein continuing in power. He has set up a nasty thuggish system and has shown remarkable disregard for human life. Geoffrey Williams (of the TQE editorial board) writes: "I have just been reading about Hussein's genocide and his use of poison gas and mass executions of the Kurds who lived in Iraq. I am certainly willing to listen to an argument that war is not the best way to control his destructive and violent nature, but at the very least I would like some acknowledgement of the horrible deeds he has committed, and ideally some comparison of how other solutions might yield a better outcome."
Added to Geoffrey's remark is a quotation by Edward Rothstein (New York Times 1/4/03) that challenges us, particularly pacifists:
"There is still discomfort about absolutes of all kinds. Yet there are also still decisions to be made about how to act when confronted by absolutist enmity. And there are still totalitarian enterprises that come in the garbs of fundamentalist religion and leave their opponents but little choice."
How do you speak to Geoffrey Williams and Edward Rothstein?