The real, and unreal, costs of war
The cost of the war in Iraq is getting a lot of attention in this political season. A coalition of Democratic groups is raising $20 million for an effort to link the weakening economy with the war effort, and Nobel-winning economist Joseph Stiglitz has co-authored a book (with Linda Bilmes) pegging the war’s true cost at $3 trillion.
Bloomberg columnist Amity Shlaes, however, is ready and willing to poke holes in the Stiglitz-Bilmes analysis. She writes:
The rebuttal to this argument starts with oil. Professor Steven J. Davis of the University of Chicago Graduate School of Business challenges as “unwarranted” their argument that even $5-$10 of the per barrel increase is because of the war. The 2003 drop in oil production by Iraq accounted for less than 1 percent of world production. Overall, world oil output went up from 2002 to 2006.
Howard Gleckman, writing on the TaxVox blog for the Tax Policy Center, likewise finds plenty of problems with the notion that the war is to blame for our current economic ills. He says:
For all of its flaws, the war has nothing at all to do with the ongoing mortgage mess, which most everyone agrees is the proximate cause of our economic slump.
Gleckman also rejects the notion, put forward by Stiglitz and others, that the war has kept us from reforming health care, fixing Social Security and doing a lot of other good things. Without the war, Gleckman acknowledges, we might have had a small budget surplus in 2007. He asks, though:
And what would we have done with it? This is just speculation, of course, but if Stiglitz can do it so can I. The White House would have said, “We have balanced the budget, so let’s extend the 2001 and 2003 tax cuts.” Congressional Democrats would have said, “We have a balanced budget, let’s extend the SCHIP child health program.” And, in the end, they may very well have done a little of both. But long-term entitlement fixes? I don’t think so.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
War (and being prepared for war) always has a real cost to any economy. It’s the opportunity cost of whatever could be produced instead of military hardware and training of personnel. The pertinent question is: What would be the cost of not being prepared, or of not taking military action in a case such as Iraq?
The 9/11 atrocity demonstrated one cost of not having taken sufficient offensive action against al Qaeda, and not having taken sufficient defensive action to secure air travel. What would the cost have been of allowing Saddam Hussein to remain in power, probably with the intent and possibly with the capability of acquiring nuclear and/or biological weapons? Nobody can say for certain, but I prefer a strategy of taking action and incurring a high but affordable cost rather than risking a totally unacceptable one.