Posted by | September 7, 2010 13:11 | Filed under: Top Stories

by Stuart Shapiro

Harvard researchers Linda Bilmes and Joseph Stiglitz are now calling their earlier estimate of a $3 trillion cost for the Iraq war “an underestimate.”

But today, as the United States ends combat in Iraq, it appears that our $3 trillion estimate (which accounted for both government expenses and the war’s broader impact on the U.S. economy) was, if anything, too low. For example, the cost of diagnosing, treating and compensating disabled veterans has proved higher than we expected.

Moreover, two years on, it has become clear to us that our estimate did not capture what may have been the conflict’s most sobering expenses: those in the category of “might have beens,” or what economists call opportunity costs. For instance, many have wondered aloud whether, absent the Iraq invasion, we would still be stuck in Afghanistan. And this is not the only “what if” worth contemplating. We might also ask: If not for the war in Iraq, would oil prices have risen so rapidly? Would the federal debt be so high? Would the economic crisis have been so severe?

These opportunity costs are always underestimated because they are so hard to measure.  However, they are critical to any assessment of the war in Iraq.  It’s easy to say now, “The Surge worked, Saddam was toppled, many of our troops are home, maybe the war wasn’t so bad.”  But what if we had not only $3 trillion more in our coffers (and none of the casualties of the Iraq conflict) but no war in Afghanistan going on right now because we had won it with some small fraction of the cost of the Iraq war?  Looked at this way, the war in Iraq takes its place with Vietnam as the biggest mistakes this nation has ever made.

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Copyright 2010 Liberaland
By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.