Nobel-winning economist Joseph Stiglitz says two surprising facts about the Iraq War are becoming increasingly hard to ignore.
The war effort will end up costing more than World War II, he estimates. Yet the industrial gain economists expect from waging a war simply will not appear.
In fact, Iraq is not hurting the U.S. economy, Stiglitz told the New York Times.
"It used to be thought that wars are good for the economy. No economist really believes that anymore," Stiglitz said.
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Stiglitz’s new book, "The Three Trillion Dollar War," published by W.W. Norton, is due out Monday. He and co-author Linda Bilmes figure the Iraq war’s true costs have hit at minimum $3 trillion.
World War II, adjusted for inflation, cost the United States $5 trillion.
Now five years running, the Iraq war was initially billed as a wash, since increased oil exports would finance the Iraqi’s own self-defense.
That hasn’t happened, Stiglitz argues, while the bills for veterans’ care and the heavy costs inflicted on U.S. military capacity have come due.
Stiglitz adds in the drag on the economy due to high oil and other indirect costs resulting from the war.
He calls the $3 trillion "conservative” and figure it’s low, a decision made in part to offset political criticism that the former Clinton adviser might be motivated to exaggerate the costs.
The costs are just beginning to pile up, Stiglitz told the Times, as the U.S. economy’s caretakers contort themselves to keep things afloat now.
"To offset that depressing effect, the Fed has flooded the economy with liquidity and the regulators looked the other way when very imprudent lending was going up," Stiglitz said.
"We were living on borrowed money and borrowed time and eventually a day of reckoning had to come, and it has now come," he said.
Not surprisingly, Stiglitz argues, the result has been to make the United States even more beholden to Middle Eastern oil interests than ever before.
Sovereign wealth funds, stuffed with Arab oil cash, have been our lenders of last resort.
"The reason was obvious. The war had led to high oil prices. The war had meant that America had to borrow more money,” Stiglitz said.
"There weren't sources of liquid funds in the United States. The sources of the liquid funds were in the Middle East," he said.
Most shockingly, Stiglitz and Bilmes argue that there is more bad news to come: For instance, massive underreporting of casualties by the Pentagon.
The Pentagon reports 30,000 wounded in action.
Yet Stiglitz and Bilmes say data they have uncovered shows an additional 40,000 injured in non-combat situations who nevertheless will need medical attention, increasing costs.
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