Saturday, September 3, 2011

Stiglitz on the Cost of the Bush-Obama Wars

When it comes to economic policy, Joseph Stiglitz is far too Keynesian and too much of a globalist for me, but when it comes toanalyzing the costs of war, Stiglitz gets it the way few do. Below is Stiglitz's take on the costs of the Iraq and Afghanistan wars. It is largely sound, though it is odd that he blames President George W. Bush for all the costs of the war. Bush did play a major role, but President Obama has done nothing to roll back the military spending and on this Stiglitz remains strangely silent:
 The September 11, 2001, terror attacks by Al Qaeda were meant to harm the United States, and they did, but in ways that Osama bin Laden probably never imagined. President George W. Bush’s response to the attacks compromised America’s basic principles, undermined its economy, and weakened its security.
The attack on Afghanistan that followed the 9/11 attacks was understandable, but the subsequent invasion of Iraq was entirely unconnected to Al Qaeda – as much as Bush tried to establish a link. That war of choice quickly became very expensive – orders of magnitude beyond the $60 billion claimed at the beginning – as colossal incompetence met dishonest misrepresentation.

Indeed, when Linda Bilmes and I calculated America’s war costs three years ago, the conservative tally was $3-5 trillion. Since then, the costs have mounted further. With almost 50% of returning troops eligible to receive some level of disability payment, and more than 600,000 treated so far in veterans’ medical facilities, we now estimate that future disability payments and health-care costs will total $600-900 billion. But the social costs, reflected in veteran suicides (which have topped 18 per day in recent years) and family breakups, are incalculable.

Even if Bush could be forgiven for taking America, and much of the rest of the world, to war on false pretenses, and for misrepresenting the cost of the venture, there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit...

Today, America is focused on unemployment and the deficit. Both threats to America’s future can, in no small measure, be traced to the wars in Afghanistan and Iraq. Increased defense spending, together with the Bush tax cuts, is a key reason why America went from a fiscal surplus of 2% of GDP when Bush was elected to its parlous deficit and debt position today. Direct government spending on those wars so far amounts to roughly $2 trillion – $17,000 for every US household – with bills yet to be received increasing this amount by more than 50%...

 The wars’ collateral damage has been massive: by some accounts, more than a million Iraqis have died, directly or indirectly, because of the war. According to some studies, at least 137,000 civilians have died violently in Afghanistan and Iraq in the last ten years; among Iraqis alone, there are 1.8 million refugees and 1.7 million internally displaced people.
The full Stiglitz paper is here.


  1. I am not sure what sort of harm Stiglitz supposes bin Laden to have intended, but it's my impression that we have clear statements from him that suggest that a key goal was to bring down the empire by teasing it into overextending itself. Stiglitz seems to think bin Laden had other goals; I think it could be argued that he achieved precisely what he said he wanted.

  2. great post. one of the reasons i love EPJ: intellectual honesty.
    when they are wrong, Wenzel destroys them, when they are right, he gives credit where credit is due.

  3. I read today that the number killed in Iraq was confirmed as just over 100k...might want to check Stiglitz's numbers.