War isn’t worth it

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Joanne writes today that even she has to “hand it to Virginia Postrel for making some of the soundest arguments for war,” and links to Postrel’s latest column in the New York Times. Postrel cites a University of Chicago Business School study that claims war now is cheaper than ongoing containment. I’m not so sure I’d agree.

According to the article, the study uses “a generous estimate of $125 billion for the direct costs of the war.” But that figure might not take into account all the costs of the war. For one thing, the military has been very surprised by the resistance they are facing in Iraq. This war may very well be longer and costlier than “generously” predicted, especially when you consider the possibility of an unforeseen long occupation.

In the end, the U.S. expects to have close to 250,000 troops on the ground in Iraq. This means reservists are being called up out of the productive sector of society–an economic cost. Also, consumer spending is down to near-decade lows on war fears.

Government spending on war right now means government deficits. Deficits mean higher interest rates and less capital available for productive purposes. Plus, to get this deficit spending through, Bush had to give up $100 billion out of his last tax cut.

Some may not believe it, but this war will also have costs in increased terrorism. Not only in the destruction we can expect, but also in increased security; we have a whole new department for that. As economists note, spending money on locks is wasteful. And I’m also afraid that increased terrorism and WMD-proliferation impelled by this war will give Bush further opportunities to seek other regime changes.

I’m certainly not an economist and wouldn’t even begin to know how to put dollar figures on each of these things. But I do know that corresponding dollar figures exist, and I’m pretty sure that if you were to add them up war wouldn’t look very attractive.

The problem is diffused costs and concentrated benefits.

Mar 28, 2003 | Comments

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One comment posted

  1. Posted by matt pfeffer - 04/02/2003

    I think you’re right about the overall costs of the war likely far exceeding the study’s so-called “generous” estimate. The damage to our relations with Europe and the rest of the world is bound to cost us economically, as well; and if the war drags on, the economic costs at home will start to add up fast — we’ve already had to throw another $3 billion at the airlines.

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