Going bust over a murky war

This review was published in the Sunday Express dated 20 April 2008.

With dubious practices and financed by debt, the Iraq war has benefited no one, least of all the countries directly involved in it, according to Nobel laureate Joseph Stiglitz and Linda Bilmes.

The Three Trillion Dollar War:The True Cost of the Iraq Conflict
By Joseph Stiglitz and Linda Bilmes
Publisher: Norton
Pages: 311
Price: Rs 595

The United States went to war in 2003 against Iraq, or more specifically the Saddam regime, on grounds of it harbouring weapons of mass destruction. Five years on, the war is far from over. On its way, like a juggernaut that no one expected it to be, it has swallowed precious lives, resources, and money. Bilmes and Stiglitz take on the Herculean task of calculating the cost of the Iraq war and succeed.

What was presented to the Congress and the American public almost as a free lunch has since run up costs that will burden the next generation of US taxpayers.The authors point out several glaring flaws in the accounting.

First,the finance department’s murky accounting practices, which have failed every audit for the last decade, make it difficult to keep accounts.Second,there has been a lack of foresight in calculating current and future health costs of the veterans. Third is the lack of funds. The authors clearly state that the war was “financed by debt”. The costs of repairing military equipment were not taken into account.

Projected as a $200 billion war, it has metamorphosed into a many-headed economic monster that affects oil prices,increases inflation, impacts trade,creates refugees not just for the US and the “coalition of the willing” , but also Iraq’s neighbours and the entire world. Other than a few oil exporters, contractors hired by the US government, and private security agencies, no one has benefited from the war. Least of all, the countries directly involved. The authors calculate the projected budgetary costs, the interest on borrowed money, past, present and future inflation, as well as look at counterfactuals and opportunity costs to arrive at more than the three trillion dollar figure. The calculations look at two best case and realistic-moderate estimates. Both are stressed as “conservative”.

The authors also cover the macroeconomic effects of the conflict, the negative impact on America’s image, the worldwide impact of this war, and suggest reforms. On the way, they bust some myths such as wars being good for the economy, which started with WWII. All these claims are then substantially backed up with detailed endnotes.

The authors of this detailed dynamite of a book boldly go where no economist has gone before and come back with solid answers. They agree that counting costs may not help the human lives lost but say it might help the survivors and future generations. The humane concerns, conviction, and the reasoning of this book make it a must-have for policymakers and others. It’s a book that reaches out to those who want answers to facilitate change.


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