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The Three Trillion Dollar War: The True Cost of the Iraq Conflict | 
 enlarge | Authors: Joseph E. Stiglitz, Linda J. Bilmes
Publisher: W. W. Norton
Category: Book
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Avg. Customer Rating:  31 reviews
Sales Rank: 22514
Media: Hardcover
Number Of Items: 1
Pages: 192
Shipping Weight (lbs): 0.6
Dimensions (in): 8.4 x 5.7 x 1.3
ISBN: 0393067017
Dewey Decimal Number: 956.704431
EAN: 9780393067019
ASIN: 0393067017
Publication Date: March 3, 2008
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Product Description
The true cost of the Iraq War is $3 trillion—and counting—rather than the $50 billion projected by the White House.
Apart from its tragic human toll, the Iraq War will be staggeringly expensive in financial terms. This sobering study by Nobel Prize winner Joseph E. Stiglitz and Harvard professor Linda J. Bilmes casts a spotlight on expense items that have been hidden from the U.S. taxpayer, including not only big-ticket items like replacing military equipment (being used up at six times the peacetime rate) but also the cost of caring for thousands of wounded veterans—for the rest of their lives. Shifting to a global focus, the authors investigate the cost in lives and economic damage within Iraq and the region. Finally, with the chilling precision of an actuary, the authors measure what the U.S. taxpayer's money would have produced if instead it had been invested in the further growth of the U.S. economy. Written in language as simple as the details are disturbing, this book will forever change the way we think about the war.
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| Customer Reviews: Read 26 more reviews...
 $3 trillion would have been cheap July 20, 2008
This book puts forth a lot of numbers and tries to put a price on certain things that should not have to have a price on it: such as the price of a human life. But it needs to happen because obviously this country does not value the lives of its soldiers.
This book backs up the sentiment that veterans feel, that their life, sacrifices and the sacrifices of their family are for not. Stieglitz shows how our disabled veterans even if paid at the maximum rate, will not be compensated fully for the cost of their medical treatments even when the payments last a lifetime. This is not including the loss in their potential earnings because of their loss in productivity. Stieglitz goes even farther and shows how the loss of productivity to family members is not accounted for, because they have to take time off of work or even quit working to take care of their veteran.
This work is a must read for everyone. It is a wake up call to all Americans, this war is going to cost us, but the cost should not be passed onto our veterans. Everyone that reads this book should at the very least call their representative and demand that they step up and take care of our veterans.
 The Costs of War - A Flawed Presentation June 23, 2008
3 out of 5 found this review helpful
It's no secret that war is expensive. The question a society at war must ask itself is, Just how expensive is it going to be? And, Is the war worth it? With "The Three Trillion Dollar War", Joseph Stiglitz and Linda Bilmes take a crack at answering these questions with respect to the current conflict in Iraq.
Taking the second question first, Stiglitz and Bilmes stake out their position in the book's very first sentence: "By now it is clear that the US invasion of Iraq was a terrible mistake." (p. ix) The authors are certainly entitled to their opinion. The question readers of "The Three Trillion Dollar War" must consider is the degree to which opinion distorts analysis. Ideally we would like a dispassionate estimate of the dollar costs of this war, and we do get that here. Unfortunately the partisan slant of the presentation will devalue the analysis for a perceptive reader, regardless of that reader's position on the war.
The first third of this short book lays out a well-researched lump sum estimate of the costs to date, and likely future costs based on government scenarios, of the Iraq War. As the book's title suggests, Stiglitz and Bilmes think the war is going to end up costing the United States treasury about $3 trillion, based on final troop withdrawal in 2017. Costs not captured in the federal budget, such as lost earning power of troops killed and wounded, push that number higher.
A number of important points become clear in the course of these early chapters. First, the federal government's budgeting and accounting practices are seriously flawed. A startling lack of transparency surrounds the process. Perusal of the book's extensive footnotes reveals how the authors pieced together their cost estimates from a hodgepodge of scattered publicly available government data, private sector and nonprofit estimates, and Freedom of Information Act requests. It seems that no one really knows how much this war is costing the country. The authors believe that is so because the government wants it that way, and based on the evidence it's hard not to agree. In the book's final chapter Stiglitz and Bilmes suggest several reforms which we would do well to consider, including requiring the Department of Defense to present clear financial statements to Congress so the people and their representatives can accurately track the ongoing costs of the nation's wars. Indeed, this should be a basic requirement of any free society.
Another point that becomes depressingly clear is the extent to which the Bush administration underestimated the costs of the war. In hindsight the administration's selling points seem patently absurd. In April 2003 USAID head Andrew Natsios told Ted Koppel that the total cost to US taxpayers of reconstructing Iraq would be less than $2 billion - Iraqi oil profits and donations from allies would cover the difference. Meanwhile the war has ended up costing the country $800 billion to date. At best, the administration's planners demonstrated gross incompetence; at worst, a willful intention to mislead the public in the push to sell the war.
Reasonable people will agree that $3 trillion is a credible number for the base costs of the Iraq War. Unfortunately there are some serious problems with Stiglitz's presentation. For one, the war costs are just presented as lump sums. In reality, these costs will accumulate over a course of years - in the case of some costs (such as medical benefits for injured soldiers) over a course of decades. The intention seems to be more to shock us with big numbers than to inform and illuminate. The analysis would be better presented in multi-year cash flow format.
It's also a challenge to reproduce the author's cost conclusions just based on the text and footnotes. Stiglitz and Bilmes have set up a slick website to market this book - how can we convince them to make their calculations available online so we can check their numbers? It's ironic that a book which calls for greater transparency in accounting should itself fail to provide transparency.
Thirdly, the estimated war costs are not placed in context. There is no discussion of the size of the federal budget, which would help us understand the depth of our financial commitment. On one estimate, $3 trillion represents approximately 5% of the total federal budget between 2003 and 2017; but we have to keep in mind that many war costs will be incurred after 2017, so the actual proportion is lower. There is no room for a detailed discussion here; suffice it to say that Stiglitz and Bilmes have done their analysis and their readers a disservice by failing to contextualize their figures.
The second half of the book discusses the global costs of the war in Iraq - the economic impact to other countries. The crux of this discussion is the author's contention that high oil prices have retarded global growth and that "a significant proportion of the increase in the price of oil resulted from the war." (p. 117) And there is an attempt to quantify the impact to global economic production.
The problem with this assertion is that it is just wrong. Presumably our Nobel Prize winning economist is familiar with the concept of supply and demand. It is this principle which determines the price of oil on world markets. In 2003, when oil was $25/bbl, Iraqi oil production hit its lowest level in 10 years - 1.344 million bbls/day according to the BP Statistical Review of World Energy 2008. In 2007, Iraqi production topped prewar levels at an average of 2.145 million bbls/day. Meanwhile oil is now trading above $135/bbl.
Not that Stiglitz presents any arguments in support of his oil price assertion. It's just flatly stated. In fact the high price of oil is a function of rising demand from Asia and falling production from major oil fields the world over. Iraq has had nothing to do with it. Of course it's left unstated that the Iraq reconstruction effort benefits from high oil prices.
The worst part is my suspicion that Stiglitz knows all of this. The oil argument is a way to pump his war cost estimates and spur further outrage among the choir. Since winning the Nobel Prize in 2001, Stiglitz has used his honorific as a bully pulpit to advance a decidedly left-leaning political agenda. Which is more than fine; it's just a shame that he also seems to have abandoned the scholar's commitment to fact-based analysis. Perhaps it's time we recognize the great economist for what he has become: a political pundit with an axe to grind.
 Is It Really a '$3 Trillion War'? June 19, 2008
6 out of 14 found this review helpful
This is from the news analysis piece that was posted at Fox News on Monday, June 16, 2008 under the title shown above. The links to the sources are in the original piece.
What is the cost of the Iraq and Afghanistan wars? To many, the answer, at least from 2001 through 2007, is $473 billion -- about a quarter of total defense expenditures over those years. It has averaged less than 1 percent of GDP.
$473 billion is probably an underestimate simply because the fighting has already lasted past 2007 and some wounded veterans will require long-term care. But how much more is it?
In a new book, The Three Trillion Dollar War, Joseph Stiglitz and Linda Bilmes argue that this emphasis on what the government has already spent dramatically understates the true cost of the war. At roughly six times the defense department's numbers, their $3 trillion estimate has generated much news coverage and controversy.
Stiglitz, the former chairman of President Clinton's Council of Economic Advisors and Nobel Prize winner, told FOX News by telephone from Spain that his message has been getting a "very positive reaction" in Europe. Many are angry over how the Bush administration "misrepresented the facts that got us into the war." Other countries that stayed out of the war are "very relieved that they hadn't gotten involved" when they hear how large the costs of the war have been. He claims, "the British are very sorry for their complicity in selling the war."
According to the authors, the normal reliance on total operational costs for the military leaves out many important costs. Among them are: the future costs of running the war ($669 billion), the future costs of taking care of wounded veterans ($630 billion), the loss of life for soldiers killed or injured ($337 billion), interest payments on loans to cover the federal deficit ($616 billion), and the increased cost of gasoline at the pump and its impact on the economy ($800 billion).
But what to count and how to value these various items is highly controversial. Even opponents of the war have expressed doubt over how Stiglitz and Bilmes have added up the numbers.
For example Richard Zerbe, Associate Dean at the University of Washington School of Public Affairs and president-elect for the International Society for Benefit-Cost Analysis, opposes the war, but is concerned that their analysis is "clearly double-counting the costs. It should be obvious." He also has difficulties with the values attached to some of problems created by the war.
Regarding veterans who are disabled and unable to work, Zerbe says that it goes too far to attach the same loss to those soldiers as to soldiers who have died. He feels that the Stiglitz and Bilmes analysis has "too narrow a view of life, way too production orientated." Zerbe argues that just because these disabled soldiers can't work doesn't mean that they place no value on living.
To get an idea of how large Stiglitz and Bilmes's numbers are, compare them the Congressional Budget Office's Matthew Goldberg, the Deputy Assistant Director for National Security, offered last October. Goldberg testified that the future medical care costs, disability compensation, and survivors' benefits up to 2017 would likely range from $10 to $13 billion. (Since the Democrats control congress, they control the Congressional Budget Office.) But with these authors putting their estimate of total costs of veteran injuries at over $900 billion ($630 billion from taking care of the wounded and $273 billion from the harm done to wounded and injured soldiers), it is hard at first to believe that they are talking about the same thing.
Edgar Browning, one of the most cited public finance professors and the author of the forthcoming book "Stealing from Each Other: How the Welfare State Robs Americans of Money and Spirit," is even more critical than Zerbe. He notes that, "$473 billion is the most defensible estimate of the cost of the war over the first five years. Everything beyond that is padded. They invent unrealistic scenarios, double count, and the like."
One simple example involves Stiglitz and Bilmes counting both the expenditures on the war as well as the interest payments paid on the money borrowed to finance those expenditures. As far as the taxpayers are concerned, they care about what they have to pay. If the money is borrowed, you can't count both the current expenditure and the future interest payments because taxpayers don't have to pay directly now for the current expenditures. It is only when they pay off the interest that they will really pay the bill.
The same issue arises when they count both the salaries and benefits paid to the soldiers plus the costs of their medical care on the one hand -- all part of the non-disputed operational costs -- and also attaching additional value of life lost to those soldiers who have been killed or injured. Risky jobs such as being a police officer or stunt man require higher pay and benefits to compensate for the chance of being killed or injured. Indeed, it is this very premium that economists use to calculate the loss from police officers getting killed. Economists traditionally count either one of these costs that Stiglitz and Bilmes include, but not both at the same time.
Given their unorthodox method of counting costs, Stiglitz and Bilmes were asked whether any other economists used the same approach to evaluate these interest costs or values of life and injury, but they were unable to identify anyone. Bilmes responded by telling FOX News that "this book is not an academic paper. It is a book about the cost of the war."
On oil prices, Stiglitz and Bilmes argue that "the longer [the war] has dragged on, the higher the prices have gone. This certainly suggests the war has something to do with the rising prices. On this almost all oil experts agree." But, again, even those who oppose the war disagree with this claim. Peter Hartley, a professor at Rice University who specializes in energy economics, told FOX News that in fact the opposite was more nearly the case: "Almost all oil experts would disagree."
Hartley said that the "increase in prices from the war is only temporary. You can only change prices by changes in supply or demand. The only supply and demand changes that they could point to from the war are some temporary changes from uncertainty."
Al Harberger, an economics professor at UCLA and the current president of the International Society for Benefit-Cost Analysis, mentions another concern about the book. Interest rates enter into calculating the costs of the war not only in terms of interest payments on loans, as we have already discussed, but also how to put into current day dollars costs that may not be born for a decade from now.
Harberger argues that a too low interest rate makes it look like the future expenditures on the war look larger today than they really are. Higher interest rates mean that you don't have to put aside as much money to pay for those future costs. In Stiglitz and Bilmes's case, they use an interest rate below what it costs the government to borrow money. Harberger says that the opposite is true, the rate should be higher and you have to figure out what private investment you are giving up by loaning money to the government.
Surprisingly, Stiglitz and Bilmes' book never mentions or responds to well-know responses from other academics who have criticized their earlier published claims. The most notable critics are Stephen Davis, Kevin Murphy and Robert Topel, professors at the University of Chicago. Even Davis, Murphy and Topel's worst-case estimate of the costs of the war run up to $1 trillion in today's dollars, with their most realistic estimates at less than half that amount.
Then there is the huge cost for the Iraqi people. Possibly the most controversial claim in the book involves their estimate that well over one million Iraqis will have died from the US invasion by the year 2010. Without any caution or hesitation, they rely on an extremely controversial study published in the medical journal, Lancet. Stiglitz and Bilmes took Lancet's estimated 654,965 deaths from the American involvement in Iraq from March 2003 to July 2006 and assumed that Iraqis would continue dying at that the same yearly rate through March 2010. The Lancet number is over 10 times the number of Iraqi deaths claimed by the Iraqi and US governments.
Concerns have been raised about whether Iraqis surveyed were honest and provided accurate information or whether they may have given politically motivated answers to exaggerate "'crimes' committed by the Americans." Some survey experts have attacked the survey for not doing the most basic things to "prevent fabrication" of the data. For instance, there was no effort to trace death certificates to confirm claimed deaths. The survey was conducted and overseen by Riyadh Lafta, a child-health official in Saddam Hussein's ministry of health, whom some claim was biased. Others have questioned why the original surveyors' reports and the raw data have never been released to other researchers.
Still others expressed concern that the timing of the survey's release immediately before the 2006 election was political motivated and that the funding for the survey by George Soros was only discovered long after the publicity for the results had subsided.
While acknowledging these objections to the survey conducted by Lafta, Bilmes told FOX News that their estimate of over one million civilian deaths was an underestimate of Iraqi causalities, 92 percent of which were supposedly killed by bullets, bombs, or U.S. air strikes. She said that the numbers showed that "the costs of the war far outweigh any possible gain."
Perhaps what is most surprising about the extensive news coverage the book has received is that critical comments by other economists have received no coverage in the media. A search of news stories on "The Three Trillion Dollar War" did not show a single economist being quoted as disagreeing with their estimate of the cost of the war.
Professor Browning tried to put the costs of the war in some perspective: "[the war] is expensive, but it isn't anywhere near as expensive as other programs that the government does. The war on poverty over the first five years of the war was over $3 Trillion."
As Bilmes said, the media frenzy over their book has been "crazy." That is not surprising, since three trillion dollars is a lot of money. Yet, serious objections to their estimates cut across the political spectrum. Others place the best cost of the war estimates at a sixth of what Stiglitz and Blimes claim.
Absurd. June 13, 2008
7 out of 13 found this review helpful
The authors have abandoned any reasonable definition of the word "cost" for this book, which is more of a liberal hatchet-job than it is a realistic accounting for the cost of the war.
They have taken every liberty with the concept of "cost" in an effort to paint as negative a picture as possible. The result is book which which is sensational, yet offers no meaningful analysis of the true cost of the war.
In effect, the authors have thrown in everything but the kitchen sink, and in some instances, the kitchen sink, too. This, of course, is not the way the "cost" of a war is defined. Clearly, the objective of the book was not to report the true cost, rather, it was to report inflated values that are in no way representative of the actual cost of the war.
Most telling is the fact that Stiglitz, in 2006, reported the cost of the war at $1 Trillion. Now, a short time later, he has multiplied figure by three in what can only be considered an arbitrary allocation of more cost. It raises the question -- if he was off by a factor of three, how good could his analysis have been in the first place? Could it be that the trillion dollar figure just didn't get quite enough attention for his book? After reading it, I think so.
By all means, read the book. But understand that what you're getting is the view of an anti-war liberal who is trying to paint as negative a picture as is possible. Using his methods, the "cost" of such basic government functions as building roads, airports, the Welfare State, and practically every other government activity would be many times the money that was actually spent.
We do not need people re-writing history. We need honesty in reporting, and this book fails miserably in this category.
 The 300 Trillion Dollar War! May 25, 2008
1 out of 10 found this review helpful
I'm no economist, and definitely not a Nobel Prize winning one, but by my calculations Joseph Stiglitz has under-estimated the cost of the Iraq war by a factor of 100 in his recently released The Three Trillion Dollar War: The True Cost of the Iraq Conflict.
The difference in our calculations is simple enough: I've assumed that the citizens of the United States and Iraq have an equal value. Stiglitz and his co-author Linda Blimes, on the other hand, made a conscious decision to limit their calculations to the cost of the war to the USA.
Fifty billion of the three trillion they estimate the war is costing the USA is arrived at by putting a statistical value on the life of each American killed in Iraq (be they soldiers or contractors) of $7.2 million.
Using an estimate of 700,000 Iraqi dead, quoted by Stiglitz and Blimes, and applying the $7.2 million worth to each of those individuals we come to a cost of 5.04 trillion. And then if we assume that represents about one sixtieth of the total cost to the country concerned, as it does in Stiglitz's comprehensive estimates for the US economy, we come to a figure of 302 trillion dollars.
Okay, so there are a lot of assumptions in those calculations. It's clear that the cost to Iraq of its bombed infrastructure, the exodus of its professional class, the displacement of over 2.2 million people, the ongoing sectarian violence unleashed by the invasion and the hundreds of thousands of maimed individuals won't be exactly comparable to the price being paid by the USA - so the one to 60 ratio may be wrong. (You be the judge of whether it's likely to be too high or too low.)
I went along to hear Stiglitz take part in a discussion entitled The Cost of Iraq at Writers and Readers Week in Wellington, New Zealand, last month, hoping to hear an explanation for the decision not to include figures on the cost of the war to Iraqis - the victims of the illegal invasion.
It wasn't to be.
The session, ably chaired by TV3's John Campbell featured Doonesbury creator Garry Trudeau, English novelist and former journalist James Meek, and Australian theatre director Nigel Jamieson.
The cost to Iraqis was touched on only twice in the 75-minute session. Once in John Campbell's opening spiel when he mentioned the difficulty of knowing just how many Iraqis have died and then when James Meek read an excerpt from one of his last dispatches from Iraq. Written while he was an embedded journalist, the article described watching as a US lawyer dished out $500 to a family of an Iraqi killed by American troops.
It's a superb piece of writing and an important reminder that embedded journalists can - even if most don't - continue to do an important job.
The US Government pays $500,000 to the families of US service men and women killed in the conflict. Which raises an interesting question of the relative worth of US and Iraqi life.
The panel, sadly, moved on without confronting that issue.
It's plainly an uncomfortable topic and as Stiglitz explained to Mother Jones, one that he and his co-author decided was best left alone. Including Iraqi deaths in the calculations would have raised "the question of whether you should or should not value an Iraqi life differently from an American life. That raises fundamental ethical issues, and we didn't want a debate on those issues to detract from the fundamental issue of what America is paying for the war that it brought."
They've definitely avoided the distraction, but at the cost of exacerbating a growing tendency to view the war as a US tragedy rather than an Iraqi one.
If the cost to Iraqis was made clear, perhaps the international demands for reparations for the Iraqi people would grow to a point where they would be included in what America must pay for the "war that it brought."
Returning US soldiers are currently among the few voices calling for the US to pay reparations as Phyllis Bennis recently told the Real News Network. Could that be because they're among the few Americans who know anything about what's actually going on? As Bennis also reports, news about the Iraq war now only makes up one percent of total US news coverage.
The costs that the panel discussion did focus on included: the loss of America's moral leadership (No one laughed. I'm not sure that any state can really claim to offer moral leadership, but the idea that the government of the country that carpet-bombed Cambodia, trained generations of torturers for the dictatorships of Latin America and toppled democratic governments in Chile and Iran had any moral leadership to lose is surely worthy of a chuckle.)
Garry Trudeau spoke of the damage to America's soul caused by the torture at Guantanamo Bay. I'm sure he's right but wonder whether we wouldn't be better focusing on the damage being done to the bodies of its victims.
Stiglitz and Blimes do dedicate 12 pages of their book to the cost of the war to Iraq. They're excellent. They point out that if Iraqi civilian deaths were given the same statistical value they've placed on US lives the cost to Iraq by 2010 would be a staggering $8.6 triillion.
The problem I have with The Three Trillion Dollar War is not one of content but emphasis.
If the delusional Bush vision of a self-financing war had become a reality, would the war be any less objectionable?
After his searing indictment of the working conditions in American meat works, The Jungle, resulted in a commission of inquiry into the safety of the meat coming out those works, Upton Sinclair said he had aimed at the heart of Americans and hit them in the stomach.
By aiming so squarely at the pockets of middle Americans Stiglitz and Blimes seem to be saying their compatriots' hearts are too tricky a target to bother with.
This review was first published by the Scoop Review of Books http://books.scoop.co.nz
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