The Iraq War has cost more than three trillion dollars and is likely to have contributed to the financial crisis, says Nobel Prize winning economist Joseph Stiglitz. The withdrawal of troops has come too late, the damage is done.
Writing in the Washington Post, Stiglitz and Linda Bilmes say that their initial 2008 estimate that the war would cost $3 trillion was too low. Furthermore, they say it has left the US economy badly damaged.
"The global financial crisis was due, at least in part, to the war,'' they write."Higher oil prices meant that money spent buying oil abroad was money not being spent at home. Meanwhile, war spending provided less of an economic boost than other forms of spending would have. Paying foreign contractors working in Iraq was neither an effective short-term stimulus (not compared with spending on education, infrastructure or technology) nor a basis for long-term growth. Instead, loose monetary policy and lax regulations kept the economy going – right up until the housing bubble burst, bringing on the economic freefall."
Actually, the financial crisis would have happened anyway. Slack regulation and the US housing bubble would ensured that, war or no war.
But there is no doubt that the war has left the US government struggling beneath a mountain of debt. And that has given it less flexibility and room to move. Because of this war, the US government is fighting an economic disaster with one arm tied behind its back.
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