2005 December 24 Saturday
Total Iraq Past And Future War Costs Put At $1 Trillion

I can think of a lot of productive ways to increase American security for a lot less than $281 billion, let alone $1 trillion. The Iraq war has a very large negative return on investment.

Nevertheless, oil has long hovered in the background. When the White House's economic adviser, Laurence Lindsey, said in September 2002 that the Iraq invasion could cost $100 billion to $200 billion (an estimate the White House quickly disavowed as too high), he indicated that one could expect an additional three to five million barrels a day of Iraqi oil production following the ouster of Saddam.

As it turns out, the Pentagon will have spent $281 billion on the war and occupation through fiscal year 2005, but Iraq's oil production today remains below the level sustained by Saddam even under international sanctions restricting oil industry investment.

The $281 billion figure, recently calculated by the Congressional Research Service, does not include all of the costs that would continue even if the war were to end now, such as benefits for veterans, contributions to Iraqi reconstruction and interest on the national debt. Nor does it include such economic costs as the impact of higher oil prices induced and sustained, at least in part, by the continuing turmoil in Iraq.

The ratio of injuries to deaths is much higher in Iraq than in previous wars. Those saved who would have died in other wars have far more severe injuries than those who would have survived with older medical technology. So we are going to have the costs of invalid survivors who have to be cared for and who (for those will work at all) will not earn as much in their working careers.

Stephen Walt of Harvard's JFK School of Government says the Iraq war will cost $1 trillion total.

The United States’ involvement in Iraq just keeps getting messier every day. The insurgency is as potent as ever, and U.S. troops and Iraqi civilians are dying at a higher rate than they were a year ago. Efforts to reconcile Iraq’s ethnic and religious divisions have failed, and progress on building competent security forces has been painfully slow. A series of supposedly decisive “turning points” have come and gone—including the transfer of sovereignty in June 2004, national elections in January 2005, and the drafting of a new constitution in August 2005—but the country is no closer to stability. Public support for the war is plummeting in the United States, and current U.S. troop levels cannot be sustained without breaking the Army, the Reserves, and the National Guard. Once U.S. forces withdraw, a full-blown civil war is likely. Although our armed forces have fought with dedication and courage, this war will ultimately cost us more than $1 trillion, not to mention thousands of lives. And what will the United States have achieved? Remarkably, we will probably leave Iraq in even worse shape than it was under Saddam Hussein.

That is about what the US economy produces in a single month. But part of that money already goes to other government programs. So effectively the Iraq misadventure will take about a month and a half of after-tax take home pay from American workers.

You can go through free registration process to get access to articles in Foreign Policy. It is worth the time. He attacks two major lines of defense put forward for the idea of having the war as somehow separate from how it was conducted. The advocates should not have pushed for an invasion without a force large enough to subdue the insurgents. Also, the insurgency was foreseen - albeit not by the Bush Administration's ideologues and fools.

The cost of Iraq would pay for about 35 years of medical research at the current funding levels of the National Institues of Health. Or it would pay for a barrier on the border with Mexico about 100 times over. Or it would pay for perhaps 1000 nuclear power plants (assuming economies of scale in volume). Or it would pay for Nobelist Richard Smalley's proposed $10 billion per year in energy research for 100 years (and the research would solve our energy problems in a small fraction of that time). The Iraq war has a high opportunity cost. It was and remains a bad idea.

Share |      By Randall Parker at 2005 December 24 02:48 PM  Mideast Iraq Costs


Comments
Invisible Scientist said at December 25, 2005 1:55 AM:

Randall Parker,

The $1 trillion wasted, would certainly hinder the energy research, which would certainly make the oil companies happy since they would be saved from competition for at least another generation thanks to this waste.

However, there is one more level of complexity in this context: During the Viet Nam war, the US Army warned the government that it was going to become very difficult to continue that war unless sufficient fuel supplies were generously obtained for the US military...

In the event that there is a serious military emergency for the United States, if there is a shortage of oil, we may have to throw the towel, which would mean a disaster for the United States.

Invisible Scientist said at December 25, 2005 2:20 AM:

As part of the Keynesian theory, one side-effect of "wasting" the $1 trillion on this fruitless Iraq war effors, would be that those 1 trillion dollars that the United States government provided (mostly by deficit spending instead of direct taxation), would accumulate in the coffers of various defense and oil companies, but that money would ultimately be used as venture capital, nurturing research and development in biotechnology, medicine, new materials, etc, with the possible exception of energy research that would be a conflict of interest with the oil companies. But outside energy research, at least the $1 trillion that is being wasted, would certainly get recycled in other sectors of the economy, since when you buy even a useless thing, that money goes to some bank account but the money is not blocked since it would be lent or spent elsewhere as soon as it is deposited in the account. The current government deficit spending is at least 4 % of the GDP per year, and this is why the economy is also growing proportionally, which is great. The only problem is the shortage of raw materials, and of course, the death of soldiers is tragic, but I am just pointing out the outcome of deficit spending...

Hugh Angell said at December 25, 2005 8:45 AM:

I'm always a little dubious as to these 'estimates' of what a war 'costs'. That they cost
something there is no doubt but there is a cost associated with not fighting too. The world
is a dynamic place and failing to fight at one time does not mean that one has avoided for
all time the fight.

It is also true that the cost of maintaining armed forces is there whether or not they are
used in combat. The 101st Airborne Division isn't cost free if it stays in Ft. Campbell nor
do Air Force and Navy assets cease to impose costs if they remain in Omaha or Norfolk. Our
soldiers do receive pay increases when in combat zones and exemptions from federal taxation
on their earnings so that is certainly an additional 'cost' as are costs associated with
increased use of munitions, fuel, inter alia. Still, because our forces are not engaged in
'heavy' combat of the WW2 type where, e.g., 4,000 tons of munitions could be expended on a
single day, in real terms this war has likely cost no more than what the battle of Okinawa
did in WW2. Not even that in terms of casualties.

OTOH the US has gained quite a bit. We and, to a lesser extent, our British ally, now have
combat experienced military units. The 'value' of that can be inestimable and it lasts for
years as todays soldiers move up the ranks and pass on the lessons learned to new soldiers.

I for one am glad Saddam Hussein's regime is gone. We have achieved our prewar objective
of disarming that nation and verifying it has no WMD, something we could not have achieved
absent military force. Failing to do so, after both the Clinton and Bush Administration had
made that a sine qua non for lifting sanctions ( which were rapidly collapsing ) would have
had huge geopolitical ramifications. However because of our attack on Iraq, Libya buckled
and gave up its very real nuclear and chemical warfare program. Had we not acted if is a
fair bet to assume the Libyan program would be ongoing EVEN IF a still regnant Saddam had
not reconstituted in his own programs by this time.

Would we rather have had to deal with these regimes later when they did have operational
WMD. BTW I still would like to know where the anthrax stocks Saddam admitted to having
manufactured have gone to.

Kurt said at December 25, 2005 1:45 PM:

The only reason why the middle-east even matters to us is because we have to buy oil from them. If this were not the case, the middle-east and islam would be as relevent to us as Sub-Saharan Africa.

I would much rather spend that $1 trillion building 1,000 integral fast reactors or space solar power satellites, than to piss that money down that rat-hole called the middle-east. Once we have energy independence from this kind of technology, the middle-eastern regimes will no longer be of bother to us. This is the real way to fight and win the war on terror. The problem is that Bush is too enthrawled with his oil-men buddies from Texas.

Invisible Scientist said at December 25, 2005 5:57 PM:

Kurt,

I mentioned to a financial analyst who specializes on oil reserves, the fact that the future technologies such as the IFR would replace our dependence on oil, and he cynically reponded that anyone who really figures out such a technology commercializable, will die in a mysterious accident. You are offending and underestimating the power of the people who are running the show. Just pay attention to where many of the government officials come from, they have all worked for the oil industry...

Stephen said at December 25, 2005 6:03 PM:

Kurt, oil is mainly for mobile powerplants (ie cars & trucks) and having 1,000 more reactors isn't going to power a single one of them. But, spend your trillion on good public transport and non-oil mobile powerplants and you've got a deal.

Randall Parker said at December 25, 2005 6:42 PM:

Stephen,

Eliminate the need for natural gas for electric power generation and the natural gas can get converted to liquid fuel using the Tropsch-Fischer process. I happen to be be working on a FuturePundit post on this subject.

Engineer-Poet said at December 25, 2005 7:30 PM:

If you can build direct-carbon fuel cells suitable for vehicular powerplants, there's enough coal in the US to run them for centuries.  There even appears to be enough biomass to do the job using charcoal.

Of course, if you get lithium-ion batteries cheap enough (they're already light enough and powerful enough), you don't need fuel cells at all.

Invisible Scientist said at December 25, 2005 9:40 PM:

Stephen,

You are missing the point, if electricity were reasonably priced and plentiful, which would be the case if the new generation liquid metal reactors can be commercialized in 15 years, then you can do anything you want with that energy. The nuclear power can be used to make hydrogen, or to charge batteries. You can even use the nuclear power to transform organic compounds like coal or vegetable oil into diesel fuel. It is only a matter of time until batteries will become cheap and plentiful.

Bob Badour said at December 26, 2005 6:21 AM:

Stephen,

You are missing an even bigger point: Nobody is going to lower their standard of living to satisfy your desire to squeeze everyone onto a train or a bus.

No matter how good you make public transit, I don't want wait somewhere where some asshole just smoked a cigarette only to sit next to some stinky bum or schizophrenic when I can hop in my truck with my dogs and drive away any time I want with privacy and convenience.

The next step is personal aircraft not public transit.

Kurt said at December 27, 2005 11:49 AM:

Stephen,

The 1,000 IFR plants can produce synthetic hydrocarbons which would then be used for transportation. Nuclear power plants are about 26% efficient at converting thermal output to electricity. Much of the remaining thermal energy could be used for industrial processes that require lots of thermal energy, like making synthetic hydrocarbons. Of course, oil shale, tar sands, and coal gasification are likely to be cheaper and will, therefor, be developed sooner. My point remains the same: $1 trillion is more than enough money to develop some kind of energy self-reliance that would break the bank on middle-eastern oil. All of them are far more sensible uses of $1 trillion than the current approach of pouring it into the rat-hole of the middle-east.

Randall Parker has presented excellent reasons why the middle-east is not worth dealing with. I will add a few more. The entire region from Morrocco to Pakistan (except for Isreal, of course) does not produce a single product to competitive international standards. There are more books that are translated from English into Japanese each year than have been translated into Arabic in the past 500 years. There is also the issue of perential investment.

Cultures around the world vary on the level of parential investment placec into kids. I consider parential investment to be the leading characteristic that defines civilization from barbarism. I consider low or non-existant parential investment to be a form of barbarism. Societies such as Japan and China traditionally have high levels of parential investment in their kids. Western societies tend to vary, as do social economic groups within such societies. The only region of the world that has a lower level of parential investment in kids than the middle-east is Sub-Saharan Africa. As we all know, one characteristic of animals, as separate from humans, is that there is no parential investment. As such, is it not arguable that high parential investment cultures are more "human" than low parential investment cultures, not to mention "civilized"?

Bob Badour said at December 27, 2005 6:26 PM:

Kurt,

You lost me on the parental investment issue. Plenty of other species invest lots in raising young. It's true that the human species invests more in raising young than other species, but that is as true for the human populations who invest the least in their young as it is for any other cohort.

Human infants are completely helpless for years. This is as true in sub-saharan africa as it is elsewhere.

Pico said at December 28, 2005 4:55 PM:

The Iraq war was about making west asia safe for Israel. A google search for kivunim will disclose the real reason for the Iraq war. The mission is almost accomplished. Iraq will be divided into three states.

Randall Parker said at December 30, 2005 8:50 PM:

Invisible reminds me of a few other ways that nuclear power could increase the amount of liquid fuels available:

1) Build a nuclear plant next to the Canadian tar sands and use nuclear energy to heat up the tar to extract oil from it. I think over half the energy extracted from the tar gets used to do the extraction. The planned Canadian natural gas pipeline will have part of its natural gas going toward tar oil extraction. That could be avoided with nuclear power. Then more oil could be made from the natural gas.

2) Build a nuclear plant next to the oil shale fields and use nuclear power to heat up the shale under ground using Shell's extraction process.

3) Use nuclear power for agricultural uses such as power water pumps and dry corn. Then biomass liquid fuel production would not use fossil fuels.


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