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  • Trying to Make Sense of the Cost of War
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  Stiglitz the Nobelist Gets Math Wrong on Iraq War

  Author:	Amity Shlaes, Senior Fellow for Economic History

  March 5, 2008
  Bloomberg

  Three trillion dollars is the amount that Nobel Prize winner Joseph Stiglitz puts as the cost of the Iraq war. In a new book with Linda Bilmes of Harvard’s John F. Kennedy School of Government, the Columbia University economist argues that the Bush administration has underestimated outlays for the war by hundreds of billions of dollars.

  “The Three Trillion Dollar War” offers a valuable reminder that wars usually cost more than budget figures suggest. Still, the profs are off the mark when it comes to their larger charge that this conflict is necessarily darkening the U.S.’s future.

  Stiglitz and Bilmes start with legitimate points. The first is that the administration hasn’t done a good job with numbers. In the run-up to the Iraq invasion, Larry Lindsey, then a top economic adviser to President George W. Bush, dared to hazard that the conflict might cost the egregious sum of $200 billion. Someone or other tried out $300 billion.

  Defense Secretary Donald Rumsfeld appeared soon after on television, dismissing numbers in that range as “baloney.” As the years passed, of course, it became clear that even the Lindsey estimate was far too low. Just last month, the Congressional Budget Office said the U.S. has already spent some $750 billion on Iraq, Afghanistanand the war on terror, with more to come.

  To arrive at their $3 trillion, Stiglitz and Bilmes start with oil. They carefully note that a good share of the quadrupling of oil prices is a result of non-war reasons such as Chinese andU.S. demand.

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  New CFR Books

  

  In Termites in the Trading System, Jagdish Bhagwati reveals how the rapid spread of preferential trade agreements endangers the world trading system.

  

  America Between the Wars explores how the decisions and debates of the years between the fall of the Berlin Wall and the collapse of the Twin Towers shaped the events, arguments, and politics of the world we live in today.

  

  In The Fall and Rise of the Islamic State, Noah Feldman tells the story behind the increasingly popular call for the establishment of the sharia—the law of the traditional Islamic state—in the modern Muslim world.

  Complete list of CFR Books.

  

  

  New Independent Task Force Reports

  Confronting Climate Change

  This report argues that the United States must lead with domestic action on climate change and proposes a U.S. negotiating strategy for a global UN climate agreement that includes commitments from all major economies, while also promoting a less formal Partnership for Climate Cooperation that would focus the world's largest emitters on implementing aggressive emissions reductions.

  U.S.-Latin America Relations: A New Direction for a New Reality

  This Task Force report examines changes in Latin America and in U.S. influence there, while taking account of the region's enduring importance to the United States. The Task Force offers an agenda for U.S. policy toward Latin America and identifies four critical areas that should provide the basis of a new U.S. approach.

  About Independent Task Forces at the Council.

  

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