Joseph Stiglitz claims that our Iraq adventure will cost the U.S. three trillion dollars and the rest of the world an equivalent amount, for a grand total of $6 trillion (source). Can this be true? Let’s look at some numbers.
The first number is population. Stiglitz talks about Iraqis being killed, emigrating, or being displaced. He cites the current population at 28 million, in agreement with the CIA Factbook, but fails to note that it was 24 million before the war. Iraq has a much lower death rate per 1,000 population than the U.S. and a much more rapidly growing population. The guy’s Nobel Prize was in economics, not in demographics. If we were worried about weapons of mass destruction and we’re sure which of the Iraqis were developing them, with $6 trillion we could have offered each of the 24 million pre-war Iraqis $250,000 to get them set up in a new country with no major weapons or Jihad industry (the typical Iraqi family has 4-5 kids, so that would be at least $1.5 million per family).
Let’s look at the economy. The CIA Factbook says that Iraq’s current GDP is $55 billion. The $6 trillion cost to the world would therefore be equivalent to 100 years of Iraqi GDP. Definitely not a very good bargain, especially since the world probably derives no more than 5 percent benefit from Iraqi GDP (i.e., it would take 2000 years to get a return on our $6 trillion).
Oil exports from Iraq are 1.67 million barrels per day, about $61 billion per year and, again, roughly 100 years to equal $6 trillion.
How about oil reserves? The CIA says 115 billion barrels. At $100 per barrel, this is worth $11.5 trillion, almost an entire year of U.S. GDP. Again, however, there does not seem to be a plan to confiscate Iraq’s oil and distribute it among the investors in this $6 trillion effort.
One thinks of government and the military as wasteful, but it is tough to believe that we are being this wasteful. When I first heard about the Iraq war and someone said “We’re spending $1 billion per day”, I thought “Who cares? The U.S. military spends about $1 billion every day in peacetime.” But $3 trillion or $6 trillion is real money.
In his essay, referenced above, Stiglitz cites a $2 trillion growth in U.S. debt as evidence for the cost of the war. This doesn’t make sense to me. As a nation, we’ve borrowed money for a lot of things besides Iraq. We’ve borrowed to pay for Medicare, Medicaid, and other entitlement programs. We’ve borrowed so that we could subsidize the melting down of corn into SUV fuel. We’ve borrowed so that we could give billions of dollars to America’s wealthiest farmers and agribusiness. We’ll soon be borrowing to bail out real estate and mortgage speculators.
Who has read this book? Is Stiglitz convincing? By winning the Nobel he has proven that he is smart. Could it be that the rest of us are actually dumb enough to spend $6 trillion on Iraq?