The Opportunity Cost of War, Part II

by emptywheel

Cass Sunstein makes a point I made months ago--though Sunstein makes it in very concrete terms. By going to war in Iraq, we've spent the money we could have--should have--spent to counteract global warming.

For the United States, the cost of the Iraq war will soon exceed the anticipated cost of the Kyoto Protocol, the international agreement designed to control greenhouse gases. For both, the cost is somewhere in excess of $300 billion.

[snip]

With respect to the Iraq war, careful estimates come from Scott Wallsten, a former member of the President's Council of Economic Advisers who is now at the American Enterprise Institute. Writing at the end of 2005, Wallsten estimated the aggregate American cost at about $300 billion. With the costs incurred since then, and an anticipated appropriation soon, the total will exceed $350 billion.

With respect to the Kyoto Protocol, the most systematic estimates come from William Nordhaus and Joseph Boyer of Yale University. Writing in 2000, they offered a figure of $325 billion for the United States, designed to capture the full costs of compliance over many decades. This staggeringly large figure helped support Kyoto skeptics in the Bush administration and elsewhere, who argued that the benefits of the agreement did not justify its costs.

For the price of the Iraq War, we could have implemented the Kyoto Protocol.

Now, when I made a similar point months ago, I advocated comparing the cost of the Iraq war with what it could have bought us in terms of alternative energy development (and, as a greedy bastard, I used the larger Stiglitz-Bilmes estimate for the total cost of the war).

What if, rather than going to war, we had invested that trillion dollars into an energy Manhattan Project? What if we had used that money to develop new technologies and manufacturing systems that would diminish the importance of oil in geostrategic equations and in setting the reserve currency?

I would imagine such an investment would have been a massive stimulus to our economy, creating a bunch of high-paying jobs and an economic sector where the US would be dominant internationally. I would imagine it would create technologies the US could export again--stuff other countries wanted to buy. I would imagine such an approach would minimize insecurity, one of the costs Stiglitz and Bilmes associate with the Iraq war. Like I said, I'm not really qualified to answer these questions, but I would imagine that such an approach would have gone a long way to resolve the threats that underlie our reasons for war. All without getting anyone killed.

And as an added bonus, it would have addressed some of the causes of global warming.

But the point is similar. We may have (may have?!?!?) been better off not fighting the war, but instead investing in fixing the problems our oil economy fosters.

This is a point I'd love to see Democrats making in the next six months. And what better time to do it then to coincide with the release of Gore's new film? We had a choice between two "wars" to fight in 2003 (and note, both of these are in addition to the WOT, which as Helen Thomas knows, has nothing to do with Iraq). We could fight an optional war against a country that posed no threat to us. Or we could fight to move beyond the oil economy that leads us to fight such wars of choice.

Cheney is now pushing us to go for double or nothing. What better time to ask, "Should we spend a trillion dollars attempting to band-aid our fundamental problem, or should we spend it fixing the root cause of the problem?"

Comments

[TomK]

Have you seen the page at the National Priorities Project site? It is an attempt to show this cost at the local level.

And what's up with the May 5th comment on your previous opportunity cost? Is someone is using the comments section for a purpose other than political discussion?

[orionATL]

after reading this and your first post on opportunity costs of the iraq war,

and a discussion here earlier about the principle of unintended consequences (i think it had to do with spying),

i would suggest that any public discussion of a war should always involve a discussion of the war's

opportunity costs

and

unintended consequences.

as i recall,

in the iraq war-talk in 2002,

there were lots of comments that fit in the category of unintended consequences.

for example, the likelihood that Iraq would become fertile ground for growing terrorists and the likelihood that in the end iran would be the great benefiter from the war.

but there was little discussion, at least that caught my attention, about the opportunities we would be foregoing or forestalling.

now those costs are becoming evident.

the lies by the bush administration about the level of threat iraq presented not only convinced us that invasion was necessary

but were used to overwhelm discussions of unintended consequences.

[Mimikatz]

Great point, great line. We could have reduced our dependence on foreign oil and not had to fight the wars at all. If Cheney's real motive in going into Iraq was to lower the price of oil and break OPEC (a colossal miscalculation if there ever was one) then he could have at least begun the process with an energy Manhattan Project and done something about global warming to boot.

I do think this is the key point to make this year, and it fits into the theme about the common good. This is also why Al Gore might be the right messenger. But even if not, it strikes me as just the right message. Sustainable energy use, global warming, fiscal soundness--all common good issues that we need to start tackling ASAP. Instead, we have yet another tax cut bill that largely benefits the rich (extending the dividend and cap gains rate cuts and allowing the rich to convert conventional IRAs into Roths now and avoid taxes later on the gains). As Brad de Long says, "Anyone who claims to be a 'deficit hawk' who favors extending Bush's tax cuts is not a deficit hawk, but a deficit turkey."

[emptypockets]

For the United States, the cost of the Iraq war will soon exceed the anticipated cost of the Kyoto Protocol, the international agreement designed to control greenhouse gases. For both, the cost is somewhere in excess of $300 billion.

For comparison, the entire NIH budget is less than $30 billion -- that is what funds nearly all biomedical research in the U.S.

When these numbers get so huge they quickly stop having meaning for me, so that is my point of reference. Bush's cuts to the NIH budget are seriously hurting US research and its future, and what is the savings? Less than a billion -- while he spends 300 times that much on an unnecessary war.

Instead of invading Iraq we could have ten NIHs (not that that would be a good thing, but we could have doubled the research budget and still had enough left over to put into, say, energy research and environmental investment equal to another 8 NIHs).

[sti1es]

This is tangential to your main point, but the Kyoto Protocol doesn't make much sense in terms of a national effort to reduce carbon emissions. Essentially, it would be like a tariff on our home energy bill and all the products that we buy that require energy to make. And that would be dumb.

We might do better to eschew the international carbon trading aspect of the Protocol and enter into the agreement with our own national system, e.g. improved standards and energy taxes that are earmarked for reinvestment in local energy and public transportation systems. This might actually boost those sectors (and the overall economy) while allowing us to make quicker progress toward international emission goals.

[emptywheel]

sti1es

I'd be a bigger fan of putting one trillion into alternative energy and conseravtion over specifically adopting the Kyoto Protocol. But wouldn't the former--assuming it didn't have an all-coal bias--achieve many of the objectives of the latter?

[prostratedragon]

Apart from Kyoto protocol details, on which I'm certainly not up, the larger point about the opportunity costs of digging this big hole are very well taken. If memory serves, during the pre-war period there was little discussion of the expected dollar cost of the war by either pros or cons, so the potential size of the lost opportunity never really got much play. Remember, it wasn't until nearly the start of the war that Lindsey or whoever it was got fired for saying he thought the war might cost as much as $100b (as if we can just throw around sums of $30b or $40b like nothing).

Between the stupid and immoral tax cut and the stupider and more immoral (if there can be degrees there) war, it is appalling the number of other national needs we are having to forego that could easily have been met. As others have said, this has got to become a key part of the Democrats' framework for the Fall. With all that in mind, thanks to orionATL for the National Priorities Project link.

[Nova]

It's figured. We went to war with Iraq over their BIO WMD program, stopped that 'global warming,' and will be investing in NIH when the BIO WMD hits(because Dr. WMD is free) and really understood the Plame/Wilson 'TIME' photo.

Opportunity cost and unintended conseqences are the same.

[lukery]

EW - nice post.

of course, the $350bn cost for the war isnt close to the full cost (even excl. opp costs et al). the $350bn only includes monies appropriated (AFAIK) - whereas the Kyoto costs included decades of projections.

ergo the relevant comparison is with the "at least $500 billion and possibly $1 trillion or more." (and that only includes direct monetary expenditure by the USG)

as an aside, apart from all of the death and destruction, consider the global economic opportunity costs already incurred by having oil at $60 for the last 3 years (or whatever the average is)