Wednesday, November 14, 2007

The “COST” of Iraq War?

If you want to think that way, how about we consider the net economic benefit of “cost avoidance”?
H/T Instapundit

I contemplated spending some time debunking the Democrat talking-point memo masquerading as a report on the cost of the “Iraq War” when the news broke yesterday, but decided to write about something else, thinking that the Dem’s analytical basis was so lame that someone with much greater readership would chop it down to size – and today I was proved correct.

James Pethokoukis at US News & World Report takes the Democrats to task today for failing to consider the costs of containing Iraq in his blog:

Should we then assume that by not waging the war, Uncle Sam would be a trillion dollars to the better? That would be a questionable assumption, a product of a sort of "static analysis" that assumes if you change one critical factor, all the rest stay pretty much the same. Professional futurists, like the ones at the Big Oil companies, know better than that. They give clients a range of scenarios based on different values for different variables. And that is also what three economists at the University of Chicago's business school did in 2006. They looked at the costs of not going to war with Iraq back in 2003.
Mr. Pethokoulis then points out, the U of Chicago study examined the costs of CONTAINING Iraq (emphasis mine).

Advocates for forcible regime change in Iraq expressed several concerns about the pre-war containment policy. Some stressed an erosion of political support for the containment policy that threatened to undermine its effectiveness and lead to a much costlier conflict with Iraq in the future. Others stressed the difficulty of compelling Iraqi compliance with a rigorous process of weapons inspections and disarmament, widely seen as a critical element of containment. And others stressed the potential for Iraqi collaboration with international terrorist groups. To evaluate these concerns, we model the possibility that an effective containment policy might require the mounting of costly threats and might lead to a limited war or a full-scale regime-changing war against Iraq at a later date. We also consider the possibility that the survival of a hostile Iraqi regime raises the probability of a major terrorist attack on the United States.
That last sentence was the key one for me and we’ll get back to it in a moment. Pethokoulis’ analysis continues:

Factoring in all those contingencies, the authors find that a containment policy would cost anywhere from $350 billion to $700 billon. Now when you further factor in that 1) a containment policy might also have led to a higher risk premium in the oil markets if Iraq was seen to be gaining in military power despite our efforts to box it in, and 2) money not borrowed and spent on Iraq might well have been spent on something else given the White House's free-spending ways, it's easy to see that doing a cost-benefit analysis on "war vs. containment" might have left administration officials with no clear-cut economic answer.
Mr. Pethokoulis parenthetically provides a link to the House Republican reply to the Democrats ‘defective report’. The response is too soft on the hard numbers to my way of thinking – but that is OK, considering it is a ‘quick-turn’ response to a Democratic sneak attack. Mr. Pethokoulis closes by pointing out that others have reminded us that the cost-benefit isn’t all that important in the scheme of things via a 2006 reference to the Becker-Posner Blog.

So how can we think about the VALUE of taking Saddam out?
With the status quo being what it was in 2001, what were the chances that Saddam would have been passive in the wake of our success in Afghanistan? Does not the fact that Zarqari moved into Iraq after he was treated in Iran for injuries received in Afghanistan, or the fact that Saddam had allowed/supported the training of thousands of terrorists leading up to the invasion of Iraq perhaps indicates that Saddam was anything BUT passively standing on the sidelines?
Finally, the fact that we have spent the last 4 or so years killing an increasing number of foreign radicals that came to Iraq AFTER we freed it from the Baathists MUST be recognized by any rational mind that if we can kill or capture a radical Islamist in Iraq, they won’t be able to do evil in the United States.
So, can we provide some reasoning to logically characterize the economic BENEFIT of taking Saddam down in Iraq? Of course!
I was going to take a stab at it but a funny thing happened while researching the problem tonight. There is already an analysis out there! One that we can use to give us a feel for the cost avoidance we’ve accomplished to-date with the war in Iraq and our subsequent ‘nation building, as a CRITICAL PART of the Global War on Terror(GWOT)--something the Left would like to ignore and have the rest of us to forget.
The analysis pre-dates the latest Iraq War and was produced by Professor Looney with the Center for Contemporary Conflict (CCC), a ‘research arm’ of the Naval Postgraduate School in Monterrey. It is titled: “Economic Costs to the United States Stemming From the 9/11 Attacks”.

Using the professor’s assessment of the impact from the 9/11 attacks, we can easily see the value of successfully preventing further attacks on US soil. Now I admit this approach is based on the belief that the terrorists WOULD stage such attacks if they were capable of doing so. This is an idea that does not require any imagination to accept, but I would argue requires a seriously fantastic imagination to deny.

Professor Looney estimated that the 9/11 attacks cost the United States approximately $22.5B in direct costs in the short term, but added to that in indirect costs based upon the impact of 9/11 on the economy:

Immediately after the attacks, leading forecast services sharply revised downward their projections of economic activity. The consensus forecast for U.S. real GDP growth was instantly downgraded by 0.5 percentage points for 2001 and 1.2 percentage points for 2002. The implied projected cumulative loss in national income through the end of 2003 amounted to 5 percentage points of annual GDP, or half a trillion dollars (emphasis mine).
So rounding down to easy numbers, we have the cost of the 9/11 attacks estimated at “half a trillion dollars” over a two year period. Taking an extremely conservative approach, and ignoring the compounding effects of multiple attacks on the US economy, we can see that every attack similar to 9/11 that is prevented since that time is worth 1/3 of the total cost that the Democrats claim to-date. Ergo, all we would have had to have accomplished in the GWOT so far was to keep Al Qaeda and their ilk too busy to carry out three lousy follow-on attacks and the War in Iraq is a big-time money-saver!

Add a little more realism to the assumptions by factoring in the compounding effect that repeated attacks of possibly even smaller scale or lesser success might have on the US, and the War in Iraq becomes a freebie! At least, that’s how it would look to any moron who actually thought the cost of doing the right thing was in any way as relevant as doing something because it WAS the right thing.

Hey! This is the second post in a row that I get to close with:
As the old saying goes: "Too many people know the price of everything but the value of nothing".

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