Can We Afford the Iraq War? | Big Think

Can We Afford the Iraq War?

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Nobel prize winning economist Joseph Stiglitz on how the Iraq War contributed to the global economic meltdown.

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Joseph E. Stiglitz:

A graduate of Amherst College, Joseph E. Stiglitz received his PHD from MIT in 1967, became a full professor at Yale in 1970, and in 1979 was awarded the John Bates Clark Award, given biennially by the American Economic Association to the economist under 40 who has made the most significant contribution to the field. He has taught at Princeton, Stanford, MIT and was the Drummond Professor and a fellow of All Souls College, Oxford. He is now University Professor at Columbia University in New York and Chair of Columbia University's Committee on Global Thought. He is also the co-founder and Executive Director of the Initiative for Policy Dialogue at Columbia. Stiglitz helped create a new branch of economics, "The Economics of Information," exploring the consequences of information asymmetries and pioneering such pivotal concepts as adverse selection and moral hazard, which have now become standard tools not only of theorists, but of policy analysts. In 2001, he was awarded the Nobel Prize in economics for his analyses of markets with asymmetric information, and he was a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize. His most recent book, The Three Trillion Dollar War: The True Cost of the Iraq Conflict measures the war's opportunity cost to Americans.

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TRANSCRIPT:

Card: Can we afford the Iraq War?

Stiglitz: What we have been doing, as I say, is been borrowing totally to finance this war. In our book with Linda Bilmes, we estimated that the cost of the Iraq war will be over 3 trillion dollars. Some of these are budgetary costs, one and half two trillion dollars, some of it is cost born to our economy that goes beyond the budget. Cost of families and about a fifth of the families in which somebody has been seriously injured, somebody has to give up a job to care for the person who has been injured. And this war, has had a large number of very serious injuries. We estimate that over 40% of those returning from Iraq are coming back with disabilities and we will have to finance that. We have to pay for the healthcare, we have to pay for disability benefits, these… this is… these are numbers that are not yet included in our national deficit and our national debt. These are bills that are yet due. We estimate that that bill itself is in excess of 600 billion dollars. Since we did our book, since it went to press, new numbers are coming out from the [IB] study that shows that a third of the returning veterans are coming back with what I call invisible wounds, traumatic brain injury, post-traumatic stress syndrome, serious depression. Again, huge costs that are going to be born by our society, by our economy, by our taxpayers so these are large costs. Now, the concern is that while the war is been very expensive and the President… the administration was not honest to us, when we went to war… Larry Lindsey was the Chief Economic Adviser at that time said it might cost a 100 or 200 billion dollars. He was rewarded for that [IB], you might say part honesty because, of course, it was a vast underestimate by being fired. The administration said, “Baloney, the total cost would be 50, 60 billion dollars,” we’re now spending that amount of money every three to four months up front, not including the cost of paying for the veterans, the disability benefits, not including the cost of resetting the military because we’ve been using up equipment much more rapidly than we’ve been replacing it. But the saddest part of all of this is that while we’ve been spending so much money, while this huge debt has reduced our room for maneuver to address, not only the economic crisis but a whole set of other social problems that we face, we haven’t even got security. What do we buy for this? Now, economists talk the economic opportunity cost. What we could have done with 3 trillion dollars, 2 trillion dollars, 4 trillion dollars, the mind boggles. The President talked about the problem, “Social Security might bankrupt our country,” he said. Well, the fact is, for about a sixth of the cost of the Iraq war, we could have put the Social Security System on sound financial grounds for the next 75 years or more. And we’ve created a gap, [IB] on disability that is equal to the gap that we had in Social Security. So, that’s just one example.

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