Escalating War in Afghanistan
Apt to Hurt Fragile U.S. Economy
by Sherwood Ross
If Iraq war spending helped plunge the
U.S. economy into its worst slump since the Depression, what does
President Obama think his escalation of the Afghan war will do
Besides forcing taxpayers to cough up fresh billions to enable
the Pentagon to chase down a few hundred Taliban fighters, the
Afghan war is liable to continue to inflate oil prices---and this
means more than the ongoing swindle of motorists at the pump.
Higher oil prices also slow the global economy, causing our trading
partners to buy fewer Made-in-USA goods, thus reducing demand
for our products and leading to layoffs.
Spending money on war also siphons billions of dollars from truly
"Today, no serious economist holds the view that war is good
for the economy," write Nobel Prize-winning economist Joseph
Stiglitz and Harvard government finance expert Linda Bilmes in
their book "The Three Trillion Dollar War: the True Cost
of The Iraq Conflict."
Referring to Iraq, they write, "The question is not whether
the economy has been weakened by the war. The question is only
by how much." They note, "Oil prices started to soar
just as the war began, and the longer it has dragged on, the higher
prices have gone."
Even so, by their estimate, (a word they stress,) the increased
price of oil attributed to the war comes "to somewhat in
excess of $1.6 trillion." Not only consumers but State and
local governments "have had to cut back other spending to
pay the higher prices of oil imports."
The co-authors reason, "Government money spent in Iraq does
not stimulate the economy in the way that the same amounts spent
at home would." A thousand dollars spent to hire a Nepalese
worker to perform services in Iraq does not directly increase
the income of Americans, Stiglitz and Bilmes point out. Ditto
for Afghanistan---and Pakistan, friends.
By contrast, the same thousand dollars spent on university research
in the U.S. directly boosts the U.S. economy, then ripples out
as the university researchers spend their money on goods and services,
many of them made in America.
"The money spent on Iraq could have been spent on schools,
roads, or research. These investments yield high returns. It could
also have been spent more productively within the Department of
Veterans Affairs, in its teaching and research programs, or in
expanding medical facilities such as mental health clinics.Expenditures
on the Iraq war have no benefits of this kind." And by fiscal
year 2010, the Center For Defense Information reports, the cost
of the Afghan fighting will total $739 billion on the cost of
Iraq fighting $2.337 trillion. Imagine the good those dollars
would have done spent at home!
Bilmes and Stiglitz say by the end of last year, the wars in Afghanistan
and Iraq hiked U.S. indebtedness by $900 billion and just the
debt from military spending (excluding veterans' benefits) will
exceed $2 trillion.
Today, the Pentagon sponge not only causes the U.S. to borrow
billions from China and others but it is also putting American
entrepreneurs out of business. "As the private sector competes
for funds with the government, private investment gets crowded
outAs a result, output is lower."
The co-authors add that the crowding out causes a loss in investment
in our economy by $1.2 trillion and "the forgone output"
(unbuilt homes, etc.) could be as high as $5trillion.
Another expense the Pentagon doesn't talk about is the waste involved
when it doles out no-bid contracts to favored insiders such as
KBR. Nearly all of the top 10 war machine contractors are said
to land the majority of contracts without competing bidders. What
a kick in the teeth to capitalist free enterprise!
Have your stocks suffered? U.S. economist Robert Wescott, Stiglitz
and Bilmes write, estimated in the years immediately following
the beginning of the Iraq war that "the value of the stock
market was some $4 trillion less than would have been predicted
on the basis of past performance."
Why? Because, "Uncertainties caused by the war, the resulting
turmoil in the Middle East, and soaring oil prices dampened prices
from what they 'normally' would have been. This decrease in corporate
wealth implies that consumption was lower than it otherwise would
have been, again weakening the economy."
Back in 2007, Democrats on Congress' Joint Economic Committee
issued a report on the two wars estimating their cost from 2002
to 2008 at $1.6 trillion. They put the cost to an American family
of four at $20,900. That's a whopping sum---but given all the
indirect ways the wars have crippled the U.S. economy, probably
a gross undercount.
President Obama's expansion of the Afghan war into Pakistan has
engulfed much of the Middle East in bloodshed that is, sad to
say, of America's making. And pouring more U.S. treasure into
Pakistan will only further weaken the U.S. economy. This writer
believes the American people---who want only what President Eisenhower's
slogan, "Peace and Prosperity," once promised them---are
going to pay dearly for a widening war the majority of them reject.
And it may also bring economic catastrophe our way, courtesy of
the "military-industrial complex" of which Eisenhower
Sherwood Ross is a Miami-based public
relations counselor who formerly worked for major dailies and
wire services. Reach him at email@example.com