March 8, 2006 | Commentary on Department of Homeland Security

Iraq: Weighing the costs & benefits

Is the war in Iraq worth it? Skeptics are confident the answer is no, and some are quantifying their certainty by translating the war into dollar terms. Direct costs so far exceed a quarter billion dollars, five times higher than the early rosy estimates of some White House officials, and that's before adding intangibles.

In a recent academic paper, Nobel-prize winning economist Joseph Stiglitz and Harvard University budget expert Linda Bilmes suggest the total "Economic Costs of the Iraq War" will be between $1 trillion and $2 trillion. But anyone who takes a close look can see that their paper isn't much more than a one-sided anti-war lecture, loaded with incessant negativity, inflammatory language and glib suggestions of military incompetence. The authors patronizingly admonish policymakers to "undertake a cost benefit analysis before undertaking any project -- especially one with as significant consequences as war" (their italics). This makes for impressive hubris in a paper which, either hypocritically or naively, considers costs alone.

When I confronted Stiglitz about ignoring the potential benefits of the Iraq war during a BBC debate, he countered that the paper is merely the first in a conversation, hinting that assessing benefits is more difficult. Yet his paper makes no such hedges, concluding bluntly, "Expenditures on the Iraq war have no benefits [for America]."

Elsewhere, they claim that the only clear beneficiaries of the war are "oil companies" and "certain defense contractors." No mention of the Kurds or the Shiites. No mention of the widespread winds of change in Libya, Lebanon, Syria, Egypt and Saudi Arabia.

This is willful ignorance, not the "cool, hard analysis of the kind for which economics has long earned a reputation" that the authors pretend.

Stiglitz and Bilmes insist that carefully assessing benefits is important, then proceed to simply assert that American troops hurt our foreign relations. A few years ago, a colleague (Professor Garett Jones) and I decided to take that question seriously and began to investigate whether the presence of U.S. troops enhanced growth rates in host countries during the last half-century. Our preliminary research suggests it did -- and strongly. We suspect that the active American security umbrella enhances investment. At the very least, the facts are contrary to the thesis of imperial domination.

As for costs suggested in the paper, much of the $2 trillion cost estimate is speculation about lost opportunities, not an actual burden on American taxpayers. It is a number based largely on intangible opportunity costs and assumptions of global macroeconomic and diplomatic damage. Everyone agrees that a soldier's sacrifice implies a life unfulfilled, but Stiglitz should be called on his heartless assumption that our soldiers create zero benefits.

Moreover, the Stiglitz-Bilmes framework implies that Americans shouldn't have fought in Bosnia, Vietnam, Korea or the two World Wars. And forget about stationing 250,000 troops annually in West Germany during the Cold War. Too expensive.

The hard fact is that more American troops died in one day on one beach during 1944 than during the entire Iraq war to date. The cost of Normandy was far higher in blood than the cost of Baghdad, yet who would attribute a value of zero to the liberation of France or the Nazi death camps? Or attach no value to the freedom of 49 million South Koreans?

To paraphrase John Stuart Mill: War is an expensive thing, but not the most expensive of things. A man unwilling to pay any price for the well-being of others is a sad creature indeed.

Tyrannical states such as the Hussein regime tax the human spirit, destroy potential prosperity and spawn terror. Allowing failed states to fester isn't cheap. And now we know: Regime change isn't cheap either. But if history is any guide, the returns on sending American soldiers to the Middle East will be positive.

Tim Kane (Tim.Kane@heritage.org ) is an economist and Bradley Fellow in the Center for Data Analysis at the Heritage Foundation, and a veteran Air Force officer.

About the Author

Tim Kane, Ph.D. Visiting Fellow
Center for Trade and Economics (CTE)

First appeared in the Knight-Ridder wire