bolo121

The three trillion dollar war | Joseph Stiglitz and Linda Bilmes - Times Online

Ouch, no wonder the defence contractor guys are disliked so much on teh intarweb..
So do the statistics hold water?

gunnut

No.

Major Shek has the more precise figure...with documents to back it up.

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"Only Nixon can go to China." -- Old Vulcan proverb.

Shek

Some things to think about re: the article.

1. This is not a cost-benefit analysis. In other words, it is only attempting to evaluate the costs. Decisions should not be made based on looking at costs only, but instead based on both costs and benefits.

2. The comparison of costs across time of various is misleading, as it doesn't account for the ability for the United States to bear the costs. In other words, they simply look at expenditures without looking at national income. The appropriate comparison is costs as a % of GDP (or some other measure of national income).

As an example of the flaw in this thinking, if I were to state that someone bought a Hyundai and at some other point in their life bought a BMW 7 series, which was most costly? One answer is to state the BMW. However, if I then added context by stating the Hyundai was bought right before college graduation and the BMW 7 was bought right after becoming the CEO of a hedge fund, I'd believe that most folks would change their answer, as the Hyundai was a huge burden on the person without a job and still (most likely) having student loans to pay off, while the BMW 7 is is drop in the bucket (most likely) of the CEO's income.

3. The comparison of costs per troop across time periods is also specious reasoning. Today's model of equipping soldiers is to substitute capital for labor (i.e., use more technology and equipment to make each individual soldier more lethal), which should mean that we are spending more money. Basic microeconomics provides the model for this, and you can go to slide #11 in this presentation (warning: 11MB file) to see how much more the soldier has been "capitalized" since 1999. Now think about the difference between today's soldier and the soldier of WWII (or even Vietnam for that matter). You can also look at slide #21 to see the defense spending as a % of GDP comparison across time.

Stiglitz and Blimes do have some good analysis in the paper they have on the direct and indirect costs, but I'm afraid that their intent is partisan as they consistently present the glass is half (or fully) empty viewpoint. Instead of a balanced cost-benefit analysis, they simply focus on the cost side and assume away the benefit side as being too hard to do (I agree that it's much harder to pin down since it's hard to quantify many of the benefits, but out of balance, it needs to be addressed). Furthermore, they include sunk costs in their, which is a complete no-go in economics. It should be addressed as a means of potentially calculating future costs, but it should be segregated when it comes time for the policy analysis or explicitly addressed at a minimum, even if policy analysis is not explicity discussed.

As an interest look at Professor Stiglitz, here is an October 2003 quote from him:

Internet - defense spending
Radar - defense spending
Jet engines - defense spending

Where is his discussion of the positive externalities (benefits) that will emerge from the R&D/equipping that occurs for OIF?

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"So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

Bluesman

Bottom line: top-notch defense is expensive. Defense-on-the-cheap is even moreso.

__________________
"The quickest way of ending a war is to lose it, and if one finds the prospect of a long war intolerable, it is natural to disbelieve in the possibility of victory."
- George Orwell

T_igger_cs_30

__________________
FEAR NAUGHT

I don't work here ...I am an analyst!

S-2

"...not my strong point dontchya know."

Ah, but all the money in the world doesn't make a nineteen year old ruck-up and hump hills like a sergeant-major's carefully-parsed words of wisdom.

__________________
"This aggression will not stand, man!" Jeff Lebowski

T_igger_cs_30