Unemployment Is the Real Price of War

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Price of WarBy Gregg Easterbrook

The cost of ongoing U.S. wars in Afghanistan, Iraq and Libya is up to at least $1.2 trillion. What would the economic recovery look like if that money hadn't been spent?

The GDP was about $10.1 trillion when U.S. forces invaded Afghanistan, and is $14.7 trillion now, an annualized growth rate at around 2 percent. That the U.S. economy still was able to grow despite war cost - every penny of it borrowed - other runaway borrowing, and the 2008 revelation of systemic perfidy on Wall Street, at the big banks and at Fannie Mae is testimony to America's vibrancy.

But imagine if $1.2 trillion had been added to the economy, rather than spent on war. Of course lower military spending does not translate one-for-one into increased economic growth - the two aren't directly correlated. But they are related, and as Harvard economist Martin Feldstein said last week, "each dollar of extra deficit adds much less than a dollar to GDP."

So imagine that $1.2 trillion had not been spent smashing things, including America's own military hardware, in Iraq. Afghanistan and now Libya. War, after all, is about killing people and destroying resources. Economic growth is about empowering people and creating value.

Add war costs back into the economy and the U.S. GDP would be around $16 trillion today, an annualized growth rate of roughly 3 percent for the last decade. At that level of growth, unemployment would be lower, deficits would be lower and the national mood brighter.

Not having spent money on war would be no panacea. If there'd been no Afghanistan, Iraq or Libya wars, the United States nevertheless would have felt the economic turbulence all the West has flown through. The European Union spent almost nothing on these wars, and its economies cooled, too.

But without at least $1.2 trillion spent on the last decade's wars, the United States would be in much better economic and fiscal condition. And the true cost may be higher. The 2010 book "The Three Trillion Dollar War" by Joseph Stiglitz, a Nobel-winning economist, and by Linda Bilmes estimates that long-term expenses such as disability payments will drive the number to that level. Destroying resources gets expensive fast. Last week, the White House acknowledged that U.S. air strikes in Libya have already cost $1 billion.

While the Base Realignment and Closure Commission has been engaged in a two-decades-long tooth-pulling exercise to shutter military installations within the United States, we've been furiously opening new ones overseas - nearly 100 U.S. military facilities now operating in Iraq and Afghanistan. The value of the dollars that funds these bases leaves the United States, weakening the U.S. economy.

It is far from clear that United States wars in Iraq, Afghanistan and now Libya were national security requirements, or morally defensible. Outgoing Defense Secretary Robert Gates, a Republican and lifelong pillar of the military and intelligence establishments, just told Thom Shanker and Elisabeth Bumiller of the New York Times the country should avoid "wars of choice."

After 9/11, the United States was justified in counterattacking Afghanistan in self-defense. Al Qaeda there is long since routed and Osama bin-Laden is dead, yet a huge U.S. military force remains - doing what, exactly? The White House can't even explain what the Afghanistan war is supposed to be achieving.

Eight year later, no coherent explanation for the invasion of Iraq has been offered by presidents of either party. Saddam Hussein is long since dead, and Saddam's purported atomic weapons program has long since been shown nonexistent by Pentagon investigators in conquered Iraq. Yet the United States still spends lavishly in Iraq, including, the Washington Post just reported, by giving the Iraqi army American M-1 tanks, the best - and by far most expensive - tank in the United States arsenal. One of the original stated reasons for invasion of Iraq was to disarm it. Now Iraq is receiving powerful advanced armaments at American expense. Set aside whether this makes any sense; the cost is depressing the U.S. economy.

Ninety days ago, the United States began bombing Libya. President Barack Obama has already become sufficiently Nixonian in that he just told Congress three months of bombing does not constitute "hostilities" under the War Powers Act. The stated reason a U.S.-led NATO force began bombing Libya was to prevent the Qaddafi government from killing civilians. Now NATO is killing civilians in Libya. Set aside whether this makes any sense; the cost is depressing the U.S. economy.

Not only does the $1.2 trillion represent money invested in destruction rather than creation: as borrowed money, it gives business reason to think the nation's future is dim. Businesses that think the U.S. future is dim are investing their capital outside the United States, in nations not engaged in budget-busting military adventures their own leaders can't explain.

In 1781, George Washington said the cost of the Revolutionary War must be repaid immediately, lest his peers "ungenerously throw upon posterity the burden which we ourselves ought to bear." The Revolutionary War bought something of great value, liberty. America's three ongoing wars are buying what, exactly?

Photo: U.S. Army soldiers from the 2nd Platoon, B battery 2-8 field artillery, fire a howitzer artillery piece at Seprwan Ghar forward fire base in Panjwai district, Kandahar province southern Afghanistan, June 12, 2011. REUTERS/Baz Ratner


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