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Offlinevintage_gonzo
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The effect of the Iraq War on the US Economy
    #6958757 - 05/23/07 07:54 PM (5 years, 6 days ago)

http://www.globalresearch.ca/index.php?context=viewArticle&code=20050720&articleId=713

Military Spending: Cost of Iraq War is but the Tip of the Iceberg
Since 1948, an accumulated defense budget of more than 20 trillion dollars has sunk the US Economy


by Everett Thiele

Global Research, July 20, 2005



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James Sterngold in CASUALTY OF WAR: THE U.S. ECONOMY points out that over the next ten years "the cost of the war in Iraq could exceed $700 billion." Sterngold goes on to point out that the war "is harming U.S. taxpayers by saddling them with an enormous debt burden, since the war is being financed with deficit spending."

James K. Galbraith in War in Iraq Aims a Bullet at the Heart of the Economy argues that, by stimulating the economy, "wars bring cheerful economic news at first." But in the long run war brings inflation and other economic problems. For example, "Wars upset the trade balance. They gobble imports. And they tend to pull critical resources — scientific talent and key materials — away from exports. Our trade deficit is already staggering."

It is exactly this long term effect that historian Paul Kennedy discusses in his 1987 classic The Rise and Fall of the Great Powers. Kennedy focuses on the relationship of economic to military power as it affects the rise and fall of powers from 1500 to the present. In all cases the rise of power is marked initially by exceptional economic strength but eventually the high cost of the military becomes too much of a burden, and the economy and power of the state weaken drastically. In the words of Kennedy:

"Once their productive capacity [is] enhanced, countries...normally find it easier to sustain the burdens of paying for large-scale armaments in peacetime and of maintaining and supplying large armies and fleets in wartime. It sounds crudely mercantilistic to express it this way, but wealth is usually needed to acquire and protect wealth. If, however, too large a portion of the state’s resources is diverted from wealth creation and allocated instead to military purposes, then that is likely to lead to a weakening of national power over the longer term."

The United States emerged from the Second World War as the strongest economy in the world. Now, however, our debt-ridden economy is anything but strong. The national debt now stands at 7.86 trillion dollars. A different debt is even more telling of our economic weakness. This year "The US is importing $700B more in goods and services than it sells abroad."

Balance of trade deficits accurately measure the weakness in the US economy caused by excessive military expenditures. They show the long term losses caused by the investment of mega-bucks, scientific and engineering talent, and worker’s labor in the military rather than in making products that can be exported or used internally instead of imported products. Our accumulated international debt is now over 4 trillion dollars. This accumulated debt first turned negative in 1985. That was right in the middle of Ronald Reagan’s string of budget busting defense appropriations.

How do these debt numbers compare to military spending. In fiscal 2005 the military budget, including the separate appropriation for the Iraq and Afghanistan wars, totals almost $500 billion or about $5,000 for each of the approximately 100 million US households.

In assessing the effect on the economy, the accumulated U.S. defense spending is more important than any one year’s expenditure. Using defense budget numbers from the US Office of Budget Management, we find that since the wind down of WWII spending in 1947, the accumulated defense budget is, in inflation adjusted dollars, more than $20 trillion. That’s an astounding $200,000 for each US household, or, from a different perspective, that’s $3,200 for each of the 6.2 billion human beings living on this planet.

Some would argue that, despite their crippling effect on the economy, these enormous military expenditures have been necessary to defend our country and our way of life. But, anyone who argues that all this money has been spent for defense must explain why we spend so much more on the military than any other country in the world. Andrew J. Bacevich in The New American Militarism points out that "by some calculations, the United States spends more on defence than all other nations in the world together." Even during the cold war the US used highly inflated estimates of Soviet spending to justify excessive military spending on its so-called policy of containment.

And, anyone who argues that all this money has been spent for defense must explain, by what stretch of the imagination was the Vietnam War a "defensive" war.

And, anyone who argues that all this money has been spent for defense must explain why we have military bases in more than 120 countries. Chalmers Johnson in America’s Empire of Bases explains the real agenda behind our history of huge military budgets" "Due to government secrecy, our citizens are often ignorant of the fact that our garrisons encircle the planet. This vast network of American bases on every continent except Antarctica actually constitutes a new form of empire -- an empire of bases with its own geography not likely to be taught in any high school geography class. Without grasping the dimensions of this globe-girdling Baseworld, one can't begin to understand the size and nature of our imperial aspirations ..."

And, anyone who argues that all this money has been spent for defense must explain why the collapse of the Soviet Union created a crisis in the defense department as they scrambled to find new ways to sell enormous military budgets to the American people. David Armstrong in Dick Cheney’s Song of America writes "Before the Plan was about domination it was about money. It took shape in late 1989, when the Soviet threat was clearly on the decline, and, with it, public support for a large military establishment."

The simple fact is that no country could afford this much military spending. It has not only robbed us and all people of the world of needed healthcare, educational and social programs, but it is responsible for the impossibly large debts we in the US and our children are facing. Barring the apocalypse, it will soon reduce the US to a second rate power.





I have thought about the financial burden that our gigantic military spending is putting on our economy many times and I have wondered if this war really is the end of America as a superpower. We lost in Vietnam but bounced back, is this war any different?


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Offlinefireworks_godS
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Re: The effect of the Iraq War on the US Economy [Re: vintage_gonzo]
    #6958834 - 05/23/07 08:05 PM (5 years, 6 days ago)

Good question. I think its the start of globalization. We are naturally bringing ourselves away from being this majority share-holder/superpower status and this will influence global affairs signfigantly. We are on our way to one global government...


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Re: The effect of the Iraq War on the US Economy [Re: fireworks_god]
    #6960785 - 05/24/07 08:35 AM (5 years, 5 days ago)

Quote:

fireworks_god said:
Good question. I think its the start of globalization. We are naturally bringing ourselves away from being this majority share-holder/superpower status and this will influence global affairs signfigantly. We are on our way to one global government...




I see that happening too. I see something different though. I see, over the next 15-20 years a build up toward a one-world govt, but then a sudden change that will bring many disconnected small governments that don't trust each other. I really don't see the world (or America really) kicking the oil habit. Imagine if the money for this war was spent on research rather than ignorance. Small steps will be made, but too much power is held in certain hands. Hell, on the weather channel website they had a video saying that as gas prices rise, more and more less fuel efficient vehicles are being sold. People don't really care. Or enough don't. Any way, once the oil crisis hits, and I mean HITS. The one world govt will collapse and nations will scramble to protect their own limited resources and there will be a world of GREAT mistrust. This, in my opinion, is just the tip of the ice berg, as most people are not aware of the domination of oil in their day to day lives, from pesticides to synthetics and chemicals, oil provides so much of this comfy life.


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OfflineEconomist
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Re: The effect of the Iraq War on the US Economy [Re: vintage_gonzo]
    #6961490 - 05/24/07 11:53 AM (5 years, 5 days ago)

I disagree with the assesment presented in the above article, because it does not take into account what was happening in America prior to the invasion of Iraq.

The real cost of the Iraq war is not the cost of invasion and occupation, but instead the cost of invasion/occupation MINUS the cost of containing Saddam Hussein for another several decades.

You may recall that during the 1990s we regularly ran bombing runs against Iraqi installations, and even had several emergency forces on call just incase we needed to quickly intervene in Iraq.

This paper: http://faculty.chicagogsb.edu/steven.davis/research/War_in_Iraq_versus_Containment_(15February2006).pdf compares the costs of containment to the costs of invasion.

Quoting from the findings:
Quote:

Containment required the continuous engagement of a potent U.S. military force in southern Turkey, the Middle East and the Persian Gulf. The United States devoted roughly 28,000 troops, 30 naval vessels, 200 military aircraft and other equipment to Iraqi containment efforts prior to the pre-war buildup. We estimate the economic cost of these military resources to be about $14.5 billion per year. Based on our assessment of the likely duration of a dangerous regime in Iraq, absent external intervention, this annual flow translates into an expected present value of nearly $300 billion. Hence, containment was also a costly option for the United States, even under the favorable assumption that it would be completely effective in achieving its national security goals.

...

We also consider the consequences of the war-versus containment choice in two other respects: the economic well-being of Iraqis, and the loss of Iraqi lives. Based on our analysis, we conclude that the war will lead to large improvements in the economic well-being of most Iraqis relative to their prospects under the policy of containment

This conclusion follows from some basic observations. First, the Iraqi economy was in terrible condition before the war, and it would have remained in a sorry state under the policy of containment. Second, the regime of Saddam Hussein was an economic failure of tremendous proportions. The available evidence suggests that real income per capita fell by roughly 75 percent as a consequence of Saddam’s misrule. In addition, much of Iraq’s greatly diminished output was diverted to an oversized military, an apparatus of terror and repression and the relentless glorification of Saddam. Third, the removal of sanctions, the expansion of petroleum exports, large-scale reconstruction aid, and the reintegration of Iraq’s economy into the world economy provide a strong basis for economic gains – even in a society with serious institutional weaknesses. If, over the course of a generation, Iraqis recover even half of the economic losses they suffered under Saddam Hussein, then they will be significantly better off in material terms as a consequence of forcible regime change.





So the question is much more complex.


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Offlinezappaisgod
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Re: The effect of the Iraq War on the US Economy [Re: Economist]
    #6961554 - 05/24/07 12:10 PM (5 years, 5 days ago)

I also love how these two year old and older articles keep popping up with prognostications that are no longer true and haven't actually come to pass. Laughable. You have to wonder why they have to dig so far back to find support for the doom and gloom agenda. Tell me again what percentage defense spending is of GDP. Something like 5%, no?


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OfflineEconomist
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Re: The effect of the Iraq War on the US Economy [Re: zappaisgod]
    #6961584 - 05/24/07 12:18 PM (5 years, 5 days ago)

Quote:

zappaisgod said:
Tell me again what percentage defense spending is of GDP. Something like 5%, no?




Current GDP esitamtes are between 13 and 14 trillion $, so an expense of $700 billion a year would be slightly more than 5%.

I don't think that detracts from the article's case very much. Simply saying that the GDP % spent on the military doesn't prove anything by itself.

That said, the US is still responsible for about 32% of all spending on research globally. China comes in second at between 13 and 14% (source: http://www.inc.com/news/articles/200610/china.html ).

Given that the US is responsible for about 1/3 of the world's spending, and the next runner-up is responsible for just more than 10%, I find the complaint that US military spending is preventing the US economy from spending on r&d not credible.


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Re: The effect of the Iraq War on the US Economy [Re: Economist]
    #6961600 - 05/24/07 12:22 PM (5 years, 5 days ago)

Quote:

Economist said:
I disagree with the assesment presented in the above article, because it does not take into account what was happening in America prior to the invasion of Iraq.

The real cost of the Iraq war is not the cost of invasion and occupation, but instead the cost of invasion/occupation MINUS the cost of containing Saddam Hussein for another several decades.





While you do have a good point, I disagree with your assesment because it assumes that the Iraq war will create a stable situation in Iraq that isn't going to require decades of future intervention. I see no evidence to suggest that the neo-conservative agenda of unilateral intervention in so-called hostile third world nations is anywhere near finished, metaphorically speaking, "putting more drinks on its tab."

Long term you can't really know what will happen and how much we will spend, especially considering how tenuous the situation is.


--------------------
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Offlinevintage_gonzo
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Re: The effect of the Iraq War on the US Economy [Re: zappaisgod]
    #6963190 - 05/24/07 08:08 PM (5 years, 5 days ago)

Quote:

zappaisgod said:
I also love how these two year old and older articles keep popping up with prognostications that are no longer true and haven't actually come to pass. Laughable. You have to wonder why they have to dig so far back to find support for the doom and gloom agenda. Tell me again what percentage defense spending is of GDP. Something like 5%, no?




What in the article was no longer true and hasnt come to pass? The only thing laughable is your ability to spout off and ramble without really saying..anything. I asked a simple question about whether or not we can bounce back ecomonically from the Iraq war like we did in Vietnam. Anything about that zappa or would you like to moan about something else?


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OfflineFrenchSocialist
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Re: The effect of the Iraq War on the US Economy [Re: vintage_gonzo]
    #6964151 - 05/24/07 11:41 PM (5 years, 4 days ago)

I hope you are not suggesting we concentrate on how the war has effected the economy more then we do the lives of the soldiers. Remember that they fight, so that you don't have to--that goes especially for you Economist.


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Offlinezappaisgod
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Re: The effect of the Iraq War on the US Economy [Re: vintage_gonzo]
    #6964794 - 05/25/07 07:11 AM (5 years, 4 days ago)

Quote:

vintage_gonzo said:
Quote:

zappaisgod said:
I also love how these two year old and older articles keep popping up with prognostications that are no longer true and haven't actually come to pass. Laughable. You have to wonder why they have to dig so far back to find support for the doom and gloom agenda. Tell me again what percentage defense spending is of GDP. Something like 5%, no?




What in the article was no longer true and hasnt come to pass? The only thing laughable is your ability to spout off and ramble without really saying..anything. I asked a simple question about whether or not we can bounce back ecomonically from the Iraq war like we did in Vietnam. Anything about that zappa or would you like to moan about something else?




The article is two years old, posits bad news for the economy as a result of this and that and none of it has happened. Bounce back from what? Unprecedented prosperity? There is nothing to bounce back from, the economy is in excellent shape, and no amount of chicken little blathering can change that.


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Re: The effect of the Iraq War on the US Economy [Re: FrenchSocialist]
    #6965180 - 05/25/07 09:43 AM (5 years, 4 days ago)

Quote:

FrenchSocialist said:
I hope you are not suggesting we concentrate on how the war has effected the economy more then we do the lives of the soldiers. Remember that they fight, so that you don't have to--that goes especially for you Economist.




No, but I didn't start this thread.

I just think that if you're going to argue about the economic costs of war you should at least try to be accurate about it. If, instead, you scare monger and ignore obvious realities (like the ongoing cost of containment) then you're ultimately being non-productive.

If you want to start a thread about the human cost, that's a separate issue all together.


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OfflineFrenchSocialist
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Re: The effect of the Iraq War on the US Economy [Re: Economist]
    #6969016 - 05/26/07 09:49 AM (5 years, 3 days ago)

Quote:

Economist said:
No, but I didn't start this thread.

I just think that if you're going to argue about the economic costs of war you should at least try to be accurate about it. If, instead, you scare monger and ignore obvious realities (like the ongoing cost of containment) then you're ultimately being non-productive.

If you want to start a thread about the human cost, that's a separate issue all together.





And I'm sure this:

Quote:

On November 20, 2004, the Paris Club of creditor nations agreed to write off 80% ($33 billion) of Iraq's $42 billion debt to Club members. Iraq's total external debt was around $120 billion at the time of the 2003 invasion, and had grown by $5 billion by 2004. The debt relief will be implemented in three stages: two of 30% each and one of 20%.[12]




Had nothing to do with improving Iraq's economic prospects.

It is true that growth was 23% slower under Saddam then under the monarchy. However you omit how Iraq's growth rate was 34% even under Saddam, before the usurper launched an eight year war with Iran.

The current rate of growth is 2.4%.

I'm not saying you are necessarily wrong, but there are a lot of factors to consider. And your article merely replaces one set of real economic projections with a hypothetical set. Do they really know we would have spent 300 billion in Iraq? That Saddam's regime, with sanctions and debt removed, would not have grown at pre-Iranian war levels?

Even if your hypothetical figures are accurate, which is dubious as they project a radically different history over a four year course, the fact remains that 300 billion is still less then half of what we are projected to spend.

And mind you, that number should have included how that wealth was spread over the entire UN, not just the US, seeing as the sanctions were multilateral whereas the current invasion and occupation is unilateral.


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Re: The effect of the Iraq War on the US Economy [Re: vintage_gonzo]
    #6973322 - 05/27/07 10:10 AM (5 years, 2 days ago)

im kind of playing the devils' advocate here...but theres one effect of the war on the economy that you wont hear about in the media...

US militarism rests on the assumption that weapons are to mineral rights what options are to stocks.. ie that every dollar spent on armaments translates directly into land seized upon deployment of the said armaments...

this is of course a very arrogant presumption of US invincibility.. which was already proven false in korea and vietnam.. but was unfortunately reinforced by victory in the cold war and the success of the 1991 gulf war...but this is again being challenged in iraq.. hence the subsequent decline of the dollar against gold and foreign currencies as the value of these "options" is diminished...

as such..a defeat in iraq would destroy the value of the investment in military spending as land options...this would in turn result in catastrophic inflation..since the de facto premise of militarism has been that the US owns options on the entire world except russia (ie that we were expecting a cakewalk everywhere)...

unfortunately..but understandably..the currency markets will continue to hold out hope as long as the war continues..even if it cant be won...and at this point in time..i doubt that the war could be won without escalating it out of control...ironically..such an escalation becomes more likely in the wake of a short-term military defeat in iraq that destroys the land-option funding of the dollar...


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Re: The effect of the Iraq War on the US Economy [Re: Annapurna1]
    #6977036 - 05/28/07 08:39 AM (5 years, 1 day ago)

if we pull out of iraq the U.S. will still have the largest economy in the world. if we stay in iraq the U.S. will still have the largest economy in the world. also keep in mind that the U.S. economy has been growing each year. the growth isn't as fast as it has been in the past but it is still growing.


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Re: The effect of the Iraq War on the US Economy [Re: vintage_gonzo]
    #6984135 - 05/29/07 08:03 PM (5 years, 3 hours ago)

Quote:

vintage_gonzo said: We lost in Vietnam but bounced back, is this war any different?




Sure. And it only took 12 years of near-bankruptcy.

Fuck it! Go for broke!


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Re: The effect of the Iraq War on the US Economy [Re: FrenchSocialist]
    #6988317 - 05/30/07 05:39 PM (4 years, 11 months ago)

Quote:

FrenchSocialist said:
It is true that growth was 23% slower under Saddam then under the monarchy. However you omit how Iraq's growth rate was 34% even under Saddam, before the usurper launched an eight year war with Iran.




And I'm sure this had everything to do with the success of Saddam's governance, and not the price of oil from 1979 (when Saddam to the reigns) to 1981 (when the Iran-Iraq war started).

Quote:

FrenchSocialist said:
I'm not saying you are necessarily wrong, but there are a lot of factors to consider. And your article merely replaces one set of real economic projections with a hypothetical set.



No...

The article I posted considers actual economic factors in Iraq. The article that started this thread included pie-in-the-sky numbers about R&D spending in general in the US.

Quote:

FrenchSocialist said:
Even if your hypothetical figures are accurate, which is dubious as they project a radically different history over a four year course, the fact remains that 300 billion is still less then half of what we are projected to spend.




Did you read the actual paper? The numbers were updated through January of 2006. The article at the start of this thread is from some time in 2005.

Quote:

FrenchSocialist said:
And mind you, that number should have included how that wealth was spread over the entire UN, not just the US, seeing as the sanctions were multilateral whereas the current invasion and occupation is unilateral.




The $300 billion figure is the estimated net-present value of US expenditure on containing Iraq, and does not include money lost from the sanctions.


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OfflineFrenchSocialist
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Re: The effect of the Iraq War on the US Economy [Re: Economist]
    #6988452 - 05/30/07 06:03 PM (4 years, 11 months ago)

Quote:

Economist said:
The article I posted considers actual economic factors in Iraq. The article that started this thread included pie-in-the-sky numbers about R&D spending in general in the US.




What I noted was that a lot of the above was hypothetical- based on an alternative history.

"Based on our assessment of the likely duration of a dangerous regime in Iraq, absent external intervention, this annual flow translates into an expected present value of nearly $300 billion."

"We also consider the consequences of the war-versus containment choice in two other respects: the economic well-being of Iraqis, and the loss of Iraqi lives. Based on our analysis, we conclude that the war will lead to large improvements in the economic well-being of most Iraqis relative to their prospects under the policy of containment"

"This conclusion follows from some basic observations. "

It is amazing how you demand so much rigor in your opponent's sources and references, while you think it's ok to present hypothetical evidence, based upon what the economy might look like if history had unfolded differently.

I'm not saying by the way that you cannot do this. But don't deny it.

Also those aren't pie in the sky numbers. That is the official request for aid made by the Pentagon:

http://www.npr.org/templates/story/story.php?storyId=10098216

"Secretary of Defense Robert Gates says he wants $700 billion to fund the Pentagon and the war in Iraq. If he gets it, he will preside over the equivalent of the 10th-largest economy in the world. Gates explained the Pentagon's budget request to lawmakers Wednesday."



Quote:

Economist said:
Did you read the actual paper? The numbers were updated through January of 2006. The article at the start of this thread is from some time in 2005.




So the fact that one is simply published a year later is itself a refutation in your mind. By that logic, since Duane Gishe's book Evolution the Fossils say No! is far more up to date then Darwin's Origin of Species, Duane Gish's book refutes Charles Darwins. In other words, the chronology of publication alone determines truth value.



Quote:

Economist said:The $300 billion figure is the estimated net-present value of US expenditure on containing Iraq, and does not include money lost from the sanctions.




How does this relate to my statement?:

"And mind you, that number should have included how that wealth was spread over the entire UN, not just the US, seeing as the sanctions were multilateral whereas the current invasion and occupation is unilateral."


(btw your link doesn't work)


--------------------


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Ralphster's Spores
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