Costs of War on Iraq



By Christopher Westley

[Posted February 14, 2003]

It's finally dawning on commentators that the economy is in pretty sorry shape.

Stock valuations have fallen 33% since Bush became president; investors are still withdrawing money; consumer sentiment is at historic lows; consumer debt is at historic highs; we face the worst hiring slump in twenty years; production as measured by the GDP minus government is falling; the deficit is ballooning; oil and gas prices are soaring even as retail and travel sectors slash prices; and all of Europe is clearly falling into recession.

What's a government to do? Why, go to war, of course.

Sometime in March, it seems, US troops will cross the Kuwaiti and Turkish borders and descend on Baghdad. While some resistance is expected, it cannot amount to much, given that the Iraqi army is only a shell of its former self of 12 years ago. It has become so weak it almost seems misleading to call this conflict a war. The Baghdad of 2003 isn't the Tokyo of 1945, notwithstanding the effect that thinking otherwise would have on CNN's ratings next month.

In fact, as far as wars go, this one may be as exciting as the 1989 U.S. invasion of Panama to oust Manuel Noriega, a wretched creep who, in hindsight, looks much like today's Saddam Hussein. Both were dictators, although for some reason Manuel outscored Saddam in the strongman category. Both were supported for several years by millions of dollars, courtesy of hapless U.S. taxpayers. (N.B.:  We are certain that Saddam has the dreaded weapons of mass destruction because many of them arrived in pre-1991 Iraq on U.S. transport planes.)  

Both men also lived to see their suitors in Washington turn on them when geopolitical realities changed. I hope that toppling Saddam will prove to be as easy as toppling Noriega, if only because such a scenario would be in line with conservative estimates for U.S. military and Iraqi civilian casualties.

But I also hope that this conflict can still be averted. Its full costs have yet to be considered. This is by design, because their serious consideration would result in much less popular support for the war.

The money costs of this war will be great. Larry Lindsay, President Bush's former economic advisor, lowballed an estimate of 0 billion. (Exactly one twenty-millionth of this amount would pay off my student loan.)  For this, Lindsay was told to resign for having the political idiocy of stating such an astounding figure publicly, as though a healthy democracy does not need to know such confusing data. If truth isn't one of the first casualties of war, then Lindsay's superfluous job surely qualifies.

At least when Lindsay was on the government payroll, his salary was included in the White House budget. Next month's Iraqi Follies, whatever billions they end up costing, are off-budget. After all, budgeting the war would hinder the ability of the political class to target new spending programs to areas of electoral importance, which is why the Bush budget allows the state to grow at an even faster clip than Lyndon Johnson dared.

This decision is not exactly a profile in courage, especially for a president who, in his inaugural, humbly spoke of "confronting problems instead of passing them on to future generations."  Since off-budget spending is most often financed by revving up the dollar's printing press, it is likely that another cost of this war will be a general increase in the price level in years' hence, furthering the downward slide of real incomes that has been occurring over the last three decades. Got milk?  Years from now, you will pay for this war in the form of higher grocery bills.

I say:  If the war is so popular with the present generation, then make it foot the bill now. Such an economic reality, stated firmly by our leadership, may have forced a more realistic assessment of the Iraqi threat and a more serious consideration of less costly alternatives to the present buildup of forces. Surely it is possible that the Constitutional provisions for "letters of Marque and Reprisal" may have been equally effective at effecting regime change, but at a fraction of the final cost.

But this cost, at least in an accounting sense, can never be as devastating as others that do not fit in the official statistics. These costs are the unmeasurables. For instance, resources that your local factory might otherwise use for business expansion can easily be appropriated to support military empire, and result in layoffs and reduced output. The irony is that many of those who are laid off or who otherwise cannot find work will be forced to join the military in order to continue to support their families. Since politicians on the left and the right are seriously considering military conscription, some may have no choice.

There will be other immeasurables. The Constitution is further weakened whenever the president aggressively uses troops against countries that have not threatened us and whose greatest sin is the inability to disprove a negative. One billion Muslims will become even more angry and alienated, while the likelihood  of future 9-11's in response to this latest effort at regime change increases exponentially. How many more liberties will a shaken public trade for security in future years?  Essential rights are  already shaky ground. Is getting Saddam worth it?

Such costs more accurately reflect the full cost of the war in Iraq, and because they are hard to measure, they are more often ignored. But they have been predicted.

"War," said Ludwig von Mises "is harmful, not only to the conquered but to the conqueror. Society has arisen out of the works of peace; the essence of society is peacemaking. Peace and not war is the father of all things. Only economic action has created the wealth around us; labor, not the profession of arms, brings happiness. Peace builds, war destroys." (Socialism, p. 59)



Christopher Westley, Ph.D., is an assistant professor of economics at Jacksonville State University. See his Mises.org Daily Articles Archive.

With the economy edging toward depression - one can to some extent understand the frantic nature of the Bush team to have a "nice" war to get things going again. I'm sure the Carlyle group (and daddy) are offering lots of encouragement.