1/10/06: Interview with economist Joseph Stiglitz on PRI's "The World"
Host: Marco Werman
Marco Werman: Figuring out how much the war is costing the United States is a tricky proposition. But economist Joseph Stiglitz decided to do the math anyway. Stiglitz is a professor at Columbia University and winner of the Nobel Prize for Economics back in 2001. He's also a former chief economist for the World Bank and a former advisor to President Clinton. Stiglitz says the price tag for the conflicts in Iraq and Afghanistan is much higher than previously thought. He presented his findings last weekend. Professor Stiglitz, what was your objective here? What were you trying to do?
Joseph Stiglitz: The war in Iraq is one of the major projects that the United States has undertaken. Typically when the Defense Department or any other division of the government undertakes a major project, it does a cost-benefit. It looks at benefits. It looks at the cost price and it compares them. In this particular case, we undertook a major project without a careful analysis of the cost.
MW: And when you say "we," you mean the United States...
JS: ... The United States. The administration. The Administration came up with numbers around 60 billion. One person in the Administration, Larry Lindsey, talked about 100 to 200 billion and was severely criticized and actually eventually dismissed saying those numbers were much too high. He was wrong. But he was wrong because his numbers were much too low.
MW: So what is the bottom line? What was your lowest estimate of the economic costs of the war in Iraq for the US. And if 100 to 200 billion is severely shy, then what do you estimate is the bottom line?
JS: Well, it ranges from just short of a trillion to around 2 trillion dollars. These are big numbers! We look at it in two different ways. First, what are the budgetary costs -- not just the money that's being spent month by month for the Armed Forces, the military equipment that we're using up, but the costs that are going to go on for years and years. Disability payments to the soldiers when they come back, the healthcare costs --16,00 have already been injured, 20% of them with serious brain injuries, 6% amputees. These are costs that are going to go on for a long long time. So what we did is we estimated what these costs were going to be and we take what we call the present discount [?] of value, the current value of those costs extending into the future. Then we did one more thing. What the government spends is not a full estimate of the cost to the economy. For instance, if you get an automobile injury, if you get killed in an automobile, you get compensated for the loss of your economic potential. The disability that the government pays is much less than that. There are standard estimates that we have of the economic value of a life. And so we estimated what the loss of the economic value of the life, the loss of economic potential in those that are seriously injured, a whole series of calculations that look at not just the budgetary costs, but the costs to the economy, a small estimate fraction of the cost of the increase in the price of oil attributed to Iraq... Some macro-economic costs as well were put into the analysis.
MW: One of the uncounted costs, as you've pointed out, has been the cost of past and future medical care and pension benefits for the sick and wounded. You've got some pretty grim statistics and stories within your figures. 3200 men and women with permanent brain damage from the war in Iraq. Can you give us just a breakdown from your estimates of the care of just one of those brain-damaged young veterans?
JS: Well, there's a range of numbers. But the number that seems to be the central estimate of a number of analysts who have looked at it is around $2.7M. They're going to need day-in day-out care for the rest of their lives. Obviously some are not quite as damaged. Some are going to need numbers as high as 4 to 5 million. Each one of these individuals....
The full transcription is available at The Scribe.
