My mind is thinking of Iraq this week for some reason (probably cause of sick of thinking about recession and stagflation and the Fed).
Here is a poignant article (adapted from his recent book) on the real costs of Iraq from economist Lawrence Lindsey.
Some key quotes:
"The bill for Iraq over the past five years is now approaching a cumulative $500 billion, or about $100 billion per year on average. My hypothetical estimate got the annual cost about right, but I misjudged an important factor: how long we would be involved."
Seems like the whole Bush administration misjudged that. "Mission Accomplished" Oh wait, no....
"Oscar Wilde's maxim about people who "know the price of everything and the value of nothing" is sometimes applied to economists. When it comes to the Iraq war, the point has validity."
I keep that quote at hand every day.
"Treasury Secretary Paul O'Neill declared it was "not possible" to estimate the cost of a prospective war when the President had not yet decided to go through with it. He hadn't, but does that mean I should have waited for his decision, then made a calculation on the consequences? Suppose my analysis had come up with a different conclusion, so that after the President had made his decision I would have to tell him, "By the way, Mr. President, the decision you just made may be economically ruinous."
...And O'Neil is the guy that said Bush had Iraq planned out even before 9/11 so you would figure he'd be the last guy to act as a Bush hack.
" Five years after the fact, I believe that one of the reasons the administration's efforts are so unpopular is that they chose not to engage in an open public discussion of what the consequences of the war might be, including its economic cost. "
...Couldn't agree more.
"If the Bush administration was less than candid about the cost of the war, the war's current critics are conveniently forgetting that there were costs involved in not going to war."
...I'd agree with that...but the debate is the degree of risk/costs.
"If our military leaders think we can ultimately prevail, we should stay. If we ultimately cannot, we should leave. It's as simple as that."
...That's a bit simplistic. We've been listening to our military leaders for 8 years (or at least Bush has, along with his listening to God) and that hasn't done us much service. This is not such a black and white call - and it's going to take listening to military leaders, the American people, our allies, our enemies, our soldiers.....all of them.
"Lincoln certainly never took a pencil to do a cost-benefit test. Nor did John F. Kennedy when he said, "We will pay any price, bear any burden ... to assure the survival and the success of liberty." Had any of these leaders done that, they would have fallen into the trap that the economics profession is so often accused of: They would know the price of everything and the value of nothing."
That is true. But WWI, WWII, the Civil War were all about something - with clearly defined objectives, a defined enemy, and a defined purpose. Iraq is a morass of confusion, with many half-invisible enemies. We are there with no purpose other than "we broke it and we must fix it???" There is a big difference between Abraham Lincoln's cause and George Bush's. So, even ignoring price, the value isn't even in the same ballpark.