Opinion by Richard Reeves, YAHOO.news, Jan 18, 2007.
Excerpt: … Here is one definition, this from the Business Knowledge Center: “The opportunity cost of a decision is based on what must be given up (the next best alternative) as a result of the decision. … Example: If a shipwrecked sailor on a desert island is capable of catching 10 fish or harvesting five coconuts, then the opportunity cost of producing one coconut is two fish.”
For those still reading, economists, commentators and even a few government officials are now calculating the opportunity cost of our national shipwreck in the desert. The National Priorities Project (nationalpriorities.org) posts one of those running totals of what the war is costing us. The total when I looked last Thursday morning was heading north of $359 billion.
The project then calculates that with that money you could provide total health care and insurance for more than 215 million children a year. Or, you could hire 6,224,739 schoolteachers for a year. Or, you could provide more than 17 million full four-year college scholarships.
There are many more non-economic ways to calculate the opportunity costs of the war, including lost self-respect, national power and credibility, the lost lives of young American men and women and of Iraqis of all ages, and the lives that will be lost in the future wars this fiasco will inevitably generate. It is, to use another economic term, a bad piece of business.
In The Washington Post a couple of weeks ago, Richard Clarke, the former national coordinator of counterterrorism, took his cut at opportunity cost by listing the problems that are being ignored now by the White House because of the time and mental energy being devoted solely to trying to persuade people that victory is possible in Iraq. His list: “Global warming … Russian revanchism … Latin America’s leftist lurch … Africa at war … Arms control freeze … Transnational crime … the Pakistani-Afghan border.”
In The New York Times last Wednesday, the paper’s economics columnist, David Leonhardt, reports on and analyzes a dense 36-page report, “The Economic Costs of the Iraq War,” written by Linda Bilmes of Harvard’s Kennedy School and Joseph Stiglitz, the Columbia economist. Bilmes and Stiglitz estimate the cost of the war at $2 trillion, the highest figure I have seen cited. They get to that number by estimating the economic stimulus that would have been provided at home if all those billions weren’t being drained into the sands of Araby.
Leonhardt’s estimate is a more conservative $1.2 trillion. He calculates direct military spending of something like a billion dollars a week for all those tanks and helicopters and their fuel and maintenance, the combat pay of soldiers, and direct costs of reconstruction of the country we leveled. (How much of that reconstruction money is being stolen is another story.) He then adds the $20-a-barrel increase in the cost of oil that is generally attributed to war and chaos in the Middle East.
Whatever. It is a lot of money, much of it wasted, most of it needed at home. Also, most of it is not included in the federal budget, but it still has to be paid, and paid back, by the American people – or, really, the children and grandchildren of all of us. And then we will pay the ongoing medical bills of combatants for two or three more generations … (full text).