Q & A with Stiglitz on Iraq War

Rolling Stone has an interview with Stiglitz on the costs of Iraq War;

What's wrong with dropping a lot of money on the Iraq War? Didn't World War II pull America out of the Great Depression?
War is a lousy form of economic stimulus. The bang you get for the buck is very low. If we hadn't had to fight during the Depression, we would have become a much richer country by investing the money we spent on the war. Think of the Nepalese contractors doing work in Iraq. They spend their money in Iraq or Nepal -- not in America.

Because the war drove up oil prices, we are also giving more money to Saudi Arabia, Iran and Venezuela. It follows that we are not investing that money. And instead of spending the money we have left on things that will make us wealthier, we are spending it in ways that have just the opposite effect. I don't want to reduce this to cold, hard economics, but when you educate young people for twelve to eighteen years, you're investing a lot of money in them. If you then have them killed, maimed and debilitated, you destroy capital.

How did you arrive at the $2 trillion figure?
There were three parts to the calculations that I made with Linda Bilmes, a professor of public finance at Harvard. The first part is based on actual expenditures -- the impact on the federal budget. But the budget doesn't include a lot of expenditures we will be making in the future as a result of the war today, like paying for the health care and disability benefits of all the people who have been injured. These are lifetime expenditures, but they aren't included in the $600 million a year the Defense Department expects to spend on Iraq. They're just talking about the hardware of war.

The second part of our calculations estimates future expenditures to replace what we lose in the war. The budget includes spending for new ammunition, but not the wear and tear on weapons systems. Eventually the weapons must be replaced, but the administration doesn't count that as part of the projected cost of the war.

A third important category is a little more hidden. The defense budget has gone way up, beyond the money earmarked for Iraq. You have to ask why. It's not like the Cold War has broken out again. We infer that they are hiding a lot of the Iraq expenditures in the defense budget. We only attribute a small fraction of the increase to Iraq, but it would be hard to explain them any other way than the war...

Paul Wolfowitz actually claimed that the war would pay for itself with oil revenue.
You have to wonder: What reward should he receive for such acumen?
Bush made him president of the World Bank.

Related;
Paying for Iraq- Blood and treasure
Blood, oil, and ideology
Season of Change for Iraq Policy