Iraq War Will End Up Costing At Least $6 Trillion


As I wrote in a previous PolicyMic article, the human costs of the Iraq War are truly horrifying. The millions of lives lost, the casualties, the displaced, the widows and orphans ... dying Iraq War veteran Tomas Young, in an open letter to George W. Bush and Dick Cheney, captures all of this toll perfectly. 

But as we pass the 10th anniversary of the U.S. invasion and subsequent occupation, two new reports documenting the the financial costs of the war and the corruption in Iraq's "reconstruction" haven't even begun to be fully realized and will continue to be a reminder of the economic consequences of war.

According to the Costs of War Project by the Watson Institute for International Studies at Brown University, the Iraq War will end up costing more than $6 trillion. The Special Inspector General for Iraq Reconstruction, in review of building and infrastructure projects in Iraq, found "fraud, waste, and abuse," funds shoveled mostly to Pentagon contractors, and "different masters with different agendas" thanks to the rivalry of the Defense and State Departments.

This shouldn't come as too much a surprise. War, like any other government program, is run by bureaucracies, influenced by special interests, funded by either taxation or inflation, and suffer from the Hayekian "fatal conceit" of central planning. Bombing and then expensively rebuilding bridges, factories, schools and entire cities is the perfect Keynesian government stimulus program.

Trillions were spent by the U.S. government invading and occupying Iraq. These trillions were stolen from Americans and the market. The costs are seen not just in the price of the war, reconstruction, and the damage done to the wealth and property that existed in Iraq, but in the opportunity costs. 

Just think about the wealth that was thrown down the drain. The great French economist Frederic Bastiat called this the "broken window fallacy." In the story, later elaborated on by Henry Hazlitt, a shopkeeper's window is broken by his careless son. But this, however, should not be seen as an act of wealth destruction; it is actually the beginning of an economic boom of consumer spending. The shopkeeper will have to pay the repairman to fix the window, the repairman will spend that money on food or new clothes, and the "multiplier" of spending ripples to prosperity.

But what is ignored is what the shopkeeper would have spent the money on rather than fixing the window. New machinery? An assistant? Increased savings for a future loan to expand? Magnify this concept by the trillions, and you have the unimaginable wealth that could have instead been created in the private sector by capitalists, entrepreneurs, investors and consumers in the free market.

Rather than innovating, expanding production, driving down prices, increasing value, and expanding on the market order of the peaceful division of labor serving humanity voluntarily and freely, this wealth was instead confiscated and sent into the black hole of bureaucracy. War is the worst offender, and the Iraq War, based on documented lies, gave a far too literal example of broken windows as an entire country was smashed to pieces.

Not only did the Iraq War drain funds away from the productive sector, it made corporatist cronies rich. There is not enough space here to name the complex of corporate interests that acquire their wealth not by offering a product or service at a price consumers are voluntarily willing to purchase but by sitting at the trough of government auctioned funds. I pray for the day Lockheed Martin, Raytheon, General Atomics and the rest of these welfare queens are cut off from this military socialism; let's see how long they last on the free market.

The Iraq War may officially cost upward of $6 trillion, but the damage done to economic progress and growth is truly incalculable. Unfortunately, as the Obama administration continues to increase military spending, militarizes West Africa and eyes Syria and Iran, the financial costs of war and empire are lost on those with nothing to lose from the windows they break.