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  • Morning Bell: Costs and Benefits in Iraq

    Yesterday the Associated Press reported that the last major remnants of Saddam Hussein’s nuclear program had been dismantled in Iraq. This Saturday marked the end of a top secret two-week airlift of 550 metric tons of yellowcake uranium from Baghdad to a Canadian uranium producer. Also removed earlier this year from the Tuwaitha nuclear complex 12 miles south of Baghdad were four radiation-exposure devices that experts say could be used in a nuclear weapon. The success of this operation and news from both Baghdad and Mosul that al Qaeda is being chased out of Iraq underscore just some of the major accomplishments U.S. forces have achieved.

    Unfortunately, far too many analysts completely ignore all the gains our troops have made when they assess U.S. policy. The worst offender is economist Joseph Stiglitz, who claims the decision to remove Saddam from power has cost the U.S. $3 trillion. Leaving aside the fact that even Stiglitz admits his numbers may be off by as much as $2 trillion, few respected economists believe the assumptions underlying his numbers have any relation to reality at all.

    Inflated Expenditures

    To conjure up his “best case” scenario numbers, Stiglitz uses military cost estimates from the worst pre-surge days of the war. His numbers do not reflect the reality of the significant drop in U.S. causalities since the surge began. Heritage economist Bill Beach notes: “For example, the monthly average casualty rate in 2007 stood at 75, but that rate fell during the last three months of the year to an average of 33. During the early months of 2008, the monthly casualty rate was half that of 2007, at 40 per month. Stiglitz … assumes that the ‘rate of death and injuries per soldier continues unchanged’ over their forecast period.”

    Worse, even after Stiglitz inflates the number of casualties, he still wildly overestimates what the U.S. will spend. Congressional Budget Office Deputy Assistant Director for National Security Matthew Goldberg testified that the future medical care costs, disability compensation and survivors’ benefits up to 2017 would likely range from $10 billion to $13 billion. Stiglitz pegs these costs at more than$900 billion.

    Oil

    Another huge slice of Stiglitz’s $3 trillion figure comes from the cost to the U.S. economy from higher oil prices. While the war has caused temporary loss of some oil supply, not only is Iraq making progress getting its fields back on line, but most experts agree that the growing economies of India and China, not the war, are the main cause of high oil prices. Beach notes: “Well before the war, during the period 1997 through 2000, oil prices as measured by the benchmark U.S. index rose three times the long-run rate of growth over the period 1965 through 2008. … Doubtless one day we will know what has caused this latest and very visible surge in petroleum price. One suspect clearly will not be in that line-up — and that’s the war in Iraq.”

    The Costs of ‘Staying the Course’

    Completely ignored by Stiglitz is the fact that leaving Saddam in power had its own steep costs. University of Chicago professors Steven Davis, Kevin Murphy and Robert Topel estimate that the 28,000 troops, 30 naval vessels, 200 military aircraft required to enforce sanctions and contain Saddam cost about $14.5 billion per year. Combining these costs with the potential of Saddam’s collaboration with international terrorist groups or the regimes eventual descent into chaos, and the professors estimate that the cost of staying the course on containment would end up in the range of $350 billion to $700 billion.

    Quick Hits:

    • U.S. government fingerprinting of detainees captured on the battlefield revealed that many insurgents have criminal arrest records in the United States.
    • The liberal majority in the Supreme Court’s 5-4 decision banning the death penalty for those who rape children erroneously claimed there was a “national consensus” against the punishment, ignoring the fact that the U.S. Congress included the punishment in the Uniform Code of Military Justice just two years ago.
    • According to Rasmussen Reports, 52% of voters disagree with Senate Majority Leader Harry Reid’s claim that oil and coal “makes us sick” and “is ruining our world.”
    • According to a new study funded by Renewable Energy Foundation, wind power is costlier and emits more carbon than previously estimated.
    • India’s new climate policy released last week not only rejects caps on its own carbon emissions, but also rejects IPCC claims that climate change is linked to human contributions to global warming.
    Posted in Ongoing Priorities [slideshow_deploy]

    9 Responses to Morning Bell: Costs and Benefits in Iraq

    1. Michael Levy Florida says:

      A Drop of Truth and a Barrel of Propaganda by Michael Levy

      It takes time to take a misrepresentation of authentic facts, turn it into propaganda and then hear prestigious and distinguished voices talk their truth which has grown out of the original fallacy. History is littered with examples how cults, religions, financial skullduggery and political parties, succeeded in fooling most people, for a period of time.

      The Nazi cult is a prime example how death and destruction can emanate from a spiritual belief. Yes, The Nazi party was founded on spiritual principles that became distorted by lies and propaganda to the extent that millions of followers believed in it as their truth. There are numerous other past examples in many areas of mortal existence that brought misery and suffering to humanity.

      In the past twenty years many financial markets have brought agony and distress to millions of people who bought into the notion; ‘It is different this time.’ The fact is it is never different, rather, the intellectual cleverness of a few experts managed to convince the majority of investors to follow what seemed to be financial reason and logic. Certainly, it is very hard for the average person to question folks who are well respected leaders in their field of expertise.

      So how can anyone determine what is truth and what is just propaganda dressed up by people with the mastery to induce people to follow their advice. Even many experts honestly believe they are speaking truth when they say prices should go to $200.00 if oil supply keeps outstripping demand.

      The dot com boom and bust, the housing boom and bust are two up-to-date examples of how people got sidetracked. Now we are at the pinnacle of the oil boom and the bust is yet to materialize. All fallacies in the monetary world depend of fear and greed to feed their audience. That is why greed makes for strange bedfellows. The are a few select groups who are making piles of money while economies all around the world are facing increasing hardship.

      The experts and speculators will argue we need free markets and any interference will take away free trade. Well, in many cases they may be correct, however, when it comes to essential commodities of food and energy they are completely out of order. The criteria they base their rationale is, supply outstripping demand, so prices have to rise. Well, under the present method of commodity pricing they have a point. But the question nobody is addressing is, how fair and proper is the commodity market system at balancing the scales of what is deemed to be ethical and moral.

      At the end of World War Two, in the UK, people were given ration books so that nobody went hungry. Everyone got their fair share and there was no price gouging. If we do have a future shortage of oil, (which may be twenty years from now if no new discoveries are made) then hiking the prices will not stop it. It will only make the speculators rich and the rest of the world poorer in wealth and spirit.

      Just for clarity for the dexterous folks who state there is no excessive speculation in oil, any futures contract in the oil market, no matter where is comes from, is a speculation on future prices and in truth, can only be classed as a speculation. Essential commodity markets require new legislation and here are some home truths that are not spun from greed and fear

      1. There has been no shortage of gas at any filling station for the past 10 years yet prices are up 1200% because of futures trading going out more than eight years. Even the Saudi oil minister has recently stated the price of a barrel of oil should be no more than $70.00. Demand from China and India is still far less than that of the USA. The Chinese stock market is down 50% signifying a sharp slow down. This news still is not enough to stop the wild speculators hiking the oil prices.

      2. When hurricanes hit Florida many gas stations are closed and there is a real shortage of gas for a few days. However, if a gas station increases its prices they will be prosecuted for price gauging. Therefore, if we take the experts argument that there is a shortage of oil then that still does not give anyone the right to profit from the shortage as this is deemed to be prices gauging. How can the USA governments have double standards and prosecute gas station owners who price gauge and not treat commodity markets in the same manner?

      3. Oil is an essential commodity for every day living in the same way as water is an essential commodity. It makes no sense to trade water so why leave oil in the hands of anyone who wants to make a quick buck gambling on prices.

      4. Pension and hedge fund managers have invested billions of dollars in oil futures. The futures markets are very volatile, thus, no place for pension funds to risk the money for people who trust them to build future wealth. The fiduciary duty of a pension fund manger is to find reasonable returns with low risk and the commodity markets is not that place.

      5. If the price of oil was regulated between $40.00 – $80.00 a barrel, the price could go up and down on supply and demand. This would be fair to everyone, for even when supply was plentiful, the price would not drop below $40.00 which will still give a fair profit to most oil related industries. When oil is in short supply the price would be limited to a ceiling of $80.00 which is more acceptable to world economies.

      6. There is a moral issue that greed cannot come before peoples basic needs … No right-minded, ethical, principled government can allow starvation and financial ruin because of a system of trading that is completely out of control.

      7. The price of a barrel of oil effects transport, food supply, industrial production and every part of modern day living. If terrorists wanted to devise a plan to destroy the world economies what better way than finding a method to allow oil to trade at $140.00 a barrel. Why play a game that makes terrorists and anarchists happy.

      8. Goodwill to all people is the credo every democratic country is built upon. $140.00 a barrel oil delivers no goodwill. It only brings hardship and political uneasiness.

      9. Noble deeds and fair dealing is the hallmark of success for every truly prosperous person. Since the world is made-up from people, where are the noble deeds and fair dealing in the commodity pits.

      10. We are all put on earth to help each other succeed in the pursuit of freedom, liberty and happiness. There is no freedom when people are slaves to greed. There are only liberty takers when oil trades over $80.00 a barrel. And finally financial hardship brings misery and discontent.

      The time for change in essential commodity trading is now. To quote a few voices from the past…

      “Experience demands that man is the only animal which devours his own kind, for I can apply no milder term to the general prey of the rich on the poor”_Thomas Jefferson

      “For greed all nature is too little.”_Seneca

      “He who is greedy is always in want.”_Horace

      “What shall it profit a man if he gains the whole world but loses his soul.”_Jesus Christ

      Michael Levy

    2. Alex, NH says:

      What do we do about the fact that the Iraqi government wants our new security agreement to be a temporary 'Memorandum of Understanding' with troop withdrawal soon on the horizon? Should we continue to stay the course against the will of the local government? I guess that would make our excursion to grant the people sovereignty and independence a farce.

    3. dave, laguna niguel, says:

      Its so disheartening to see our overwhelmingly liberal media complex continually tout extreme exagerations, like those of Mr Stiglitz, to cast a negative shadow on the so-called "war" in Iraq and at the same time absolutely refuse to publish accounts of resolute heroism and "country building" by the greatest assemblage of folks on the planet, OUR US MILITARY! The association of "liberal trash" which currently makes up our media needs to be completely ousted and replaced by those who simply want to report the "truth", in every area,rather than what we have now, spinners and those who jam their liberal "theories" and lies down our throats on a daily basis. We "used" to be the strongest country on the planet until the liberals took hold,ignoring or trying to change our constitution, and continuously dragging us down so we can be more like Ethiopia or some other third world country. If Obama is elected, as he stated, we will be just like Ethiopia because we as Americans simply have more than anyone else, whish to him is unfair! The truth is, WE WORKED HARDER THAN ANYONE ELSE AND WE DESERVE WHAT WE HAVE! We are also the most generous nation on the planet,but after a stint of Obama we will have nothing left to give because his socialist government will take away everything we have! Don't believe it? Better start reading about the history of socialism/communism and wake the heck up because time is running out and this train wreck may be unstoppable. And where are the protestors against those who suicide bomb innocent people? I know the war protestors like to lie and say we are the cause of it which really shows how ignorant these people really are. You know the ones who scream "free Tibet" and "get out of Iraq" at the same time. HUH?

    4. dave, laguna niguel, says:

      Terrorists kill everyone who is not like them for religious reasons, at the behest of an Imam or other insane person. Our soldiers fight to protect a country and everyone in this country, regardless of their religious affiliation or belief, or non belief. Our soldiers fight for freedom, rather than some non-senseical notion of 72 virgins! You mean to tell me a guy will blow up himself and hundreds of women and children just for a lie about 72 virgins in the next life?! Selfishness to the extreme!

      We can not pretend these people do not exist!

    5. CAN in Gorham, ME says:

      Why is it not appropriate for a small portion of the Iraq oil production to return to the US coalition in some form like a repayment or supply guarantee as soon as Iraq stabilizes? And why hasn't this thought crossed the minds of the Iraqi government? Are they not grateful that they have been set free from a barbaric dictator? Freedom is only cheap to those who haven't paid anything for it.

    6. Joe in Texas says:

      This is my first day to read Morning Bell and I like it. I'm glad to find a comments opportunity. Some of the commentators need a lot educating about history and logic.

      M. Levy needs to dig into the origins of the Nazi party. Look up Tulian Society. The Nazis had no spirituality until Himmler interjected occultism and the worship of ancient German gods.

      M. Stiglitz should have his feet leld to the fire and be made to explain every jot and tittle of his theory. If they are foun to be spurious he should be defrocked.

    7. Justin Passing says:

      "four radiation-exposure devices that experts say could be used in a nuclear weapon"

      source? and who are these (uncited of course) "experts"?

      "If Obama is elected, as he stated, we will be just like Ethiopia because we as Americans simply have more than anyone else, whish to him is unfair!"

      source? when and where did Obama say US will be "just like Ethiopia"?

      "We are also the most generous nation on the planet"

      source?

      you get the idea. easy to make ludicrous claims, harder to back them up.

    8. Chas. , Millstadt, I says:

      We can't turn back time to get everyone to recognize the truth. Truth recognition starts in childhood and the education system obfuscates the truth. Spiritual faith can present the truth and help us to recognize it when it hits us in the face. I wish that you at Heritage Foundation could hit EVERYONE in the face with the truth about how the liberal media, liberal politicians and other surrogates/puppets are trying to crush The United States of America and bring us to our knees to kiss the socialist agenda and bring us into line with other third world countries.

      How can we make all people aware of the danger inherent in their lack of action and knowledge of the present situation?

      Thanks for the forum,

      Chas.

    9. MAJ V. Suarez, Ft Be says:

      I am concerned that Dave’s (from Laguna Niguel) comments are reflective of a commonly heard and quite superficial understanding of our enemy.

      Although I do agree with him that the underlying motivation to the Islamic extremist/terrorist movement is their perverse interpretation of Islam and their will to spread it world-wide, but to simply use the trite "72 virgins" rationale as the justification and/or reward for their cause only creates the illusion that the terrorist masterminds and their foot soldiers are mindless cavemen seeking only carnal glory in the after-life. It also serves in a pejorative, yet simpleton manner to make light of our deadly focused enemy and perhaps offend a good majority of decent minded Koran reading Muslims who are or have been won over with our counter-insurgency strategy in Iraq right now.

      These terrorists, especially the masterminds such as al-Zawahiri, al-Zaqawi and bin-Laden are not just looking to get laid in perpetuity after they’ve been killed. These men and their ilk are deeply calculated and sophisticated in their approach to manipulate millions of people to their cause by using political, social and informational methods of manipulation. They even demonstrate a willingness to demonstrate constraint in their violence against their own people and heretical moderate clerics, only to capitalize on manipulating scores of Muslims to support their cause (read 2005 intercepted letter from al-Zawahiri). They even know how to turn Americans away from defeating them by appealing to their lack of historical and cultural understanding and masking their ultimate intent to re-establish a new Caliphate in the Middle East with ill intentions for those who value freedom.

      Yes, these people appear to be "sick" in relation to our western mindset, but in order to defeat them, we must first know and understand the cultural, political and historical underpinnings motivating them to carry on their jihad. We then can take actions, not necessarily always by kinetic force to marginalize them and finally defeat them for the long run.

      Fortunately, the US Army, under General Petreaus' foresight and understanding of our strategic problem in Iraq is training an entire generation of company and field-grade officers well versed in history, culture and counter-insurgency warfare to defeat these people on behalf of those who want a free and secure society. I'd recommend reading "Crisis of Islam" and the Army's new counter-insurgency manual before spreading the notion that these terrorists are doing this to have their “72 virgins”. There is much more at stake than that in their motivation and one of the key tenets to defeating your enemy is to understand him.

      Best Regards,

      V. Suarez

      MAJ, MS

      Student, US Army Command and General Staff College

      Ft. Belvoir, VA

      Note: The views expressed in this blog are those of the author and do not reflect the official policy or position of the Department of the Army, DOD or the US Government

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