Cost of Iraq War

The annual meeting of the American Economic Association is taking place this weekend in Boston. Among the papers being presented is one by Joseph Stiglitz (Nobel prize winner) and Linda Bilmes estimating the full cost of the Iraq war, including the "opportunity costs" associated with it. They put the figure at between $1 and $2 trillion! You may recall that Bush fired economic advisor Larry Lindsey for estimating the cost at $200 billion. Bush said the cost would be much lower. Whoops, Bush was not even within several orders of magnitude of the right answer.

As a friend of mine said, "you've got to be pretty stupid if you can't get within an order of magnitude." Of course, he wasn't including possibility of outright lying.

Here's part of the UK Guardian's take on it:

The real cost to the US of the Iraq war is likely to be between $1 trillion and $2 trillion (£1.1 trillion), up to 10 times more than previously thought, according to a report written by a Nobel prize-winning economist and a Harvard budget expert.

The study, which expanded on traditional estimates by including such costs as lifetime disability and healthcare for troops injured in the conflict as well as the impact on the American economy, concluded that the US government is continuing to underestimate the cost of the war.

The report came during one of the most deadly periods in Iraq since the invasion, with the US military yesterday revising upwards to 11 the number of its troops killed during a wave of insurgent attacks on Thursday. More than 130 civilians were also killed when suicide bombers struck Shia pilgrims in Karbala and a police recruiting station in Ramadi.

The paper on the real cost of the war, written by Joseph Stiglitz, a Columbia University professor who won the Nobel prize for economics in 2001, and Linda Bilmes, a Harvard budget expert, is likely to add to the pressure on the White House on the war. It also followed the revelation this week that the White House had scaled back ambitions to rebuild Iraq and did not intend to seek funds for reconstruction.

Mr Stiglitz told the Guardian that despite the staggering costs laid out in their paper the economists had erred on the side of caution. "Our estimates are very conservative, and it could be that the final costs will be much higher. And it should be noted they do not include the costs of the conflict to either Iraq or the UK." In 2003, as US and British troops were massing on the Iraq border, Larry Lindsey, George Bush's economic adviser, suggested the costs might reach $200bn. The White House said the figure was far too high, and the deputy defence secretary, Paul Wolfowitz, said Iraq could finance its own reconstruction