I agree. After all, if in 60 years the world could totally forgive Japan, Italy, and Germany for WWII (actually, it probably took less than 20), how mad could they possibly be at us for North Korea, Iran, and Iraq after 2025 or, worst case, 2065?

How much did WWII cost after adjusting for inflation?

Near as I can tell, Pepys, WWII cost the U.S. around $3.85 trillion in 2005 dollars. (CPI was roughly 18 in 1945, 198 in 2005; war cost $350 billion in current dollars.)

Ghostcat's and Stiglitz's numbers don't look equivalent to me. There's no way this war is 25-50% as expensive as WWII. WWII had to have been hugely more expensive, by 10 or 50 times.

We talked about this over at Rantburg a couple days back: if you read the article carefully, the cost is amortized for things such as medical care for injured soldiers over the next 20 years, etc.

In other words, it isn't that the cost is 1/6 of one year's GDP, it's less than 1% of the next 20 years GDP combined. For that kind of spending, let's whack Kimmie, Castro, Zim-Bob, etc -- say one a year.

Also, my numbers do not include reconstruction. Don't know if the Iraq numbers do.

This is our job. We will be paid for it.

The transitional government of North Korea is sitting in South Korea. They have an elected government. NK will be like East Germany. Just roll the formerly communist territory into the capitalist structure.

Iran is even easier. Abolish the Council of Guardians. hold new elections. Without Iraq's ethnic problems, it should only take a few weeks.

As I understand, the biggest "costs" of the war in Stiglitz's estimate are due to (1) he expects that terrorism will be tripled due to the Iraq war - a lefty talking point - and therefore that the cost of the war on terror will be greatly increased; and (2) he expects the price of oil to be increased for a long period of term as a result of the war, thereby raising energy costs.

In fact, Iraq reduces the terrorist threat and reduces the price of oil because Iraq will soon be producing more than Saddam could under sanctions. Plugging those facts into Stiglitz's formula makes the Iraq war highly profitable.

ghostcat - By Stiglitz's model, we've barely begun to pay for WWII. We won't be done defeating the Nazi regimes that were created by the war against Hitler until 2073.

So when he calculates the cost of WWII does he take into account the more than tripling of Communism's reach?

There were 292,000 American deaths in WWII compared to 2,000 in Iraq--how much does he count each death as costing?

I just love these folks who deliberately confuse/conflate/fudge the difference between one-time and recurring costs.

I would venture to say that the cost of replacing equipment, either at the end of a lifespan or blown up, is a recurring cost. As is the veteran's care cost. Those are part of a yearly budget.

OJ:

Indeed, all those numbers, even if true, silently assume there was a free alternative.

Well, I read the article and it's about what you'd expect it to be: political criticism masquerading as accounting. My favorite part is when he discounts future costs by 4% annually and then assumes that all the costs of the war will be borrowed -- at 4% annually. I have an idea -- let's assume that our taxes pay for the core functions of government, like national defense, and that we're borrowing for the fripperies.

The real point is OJ's. Stiglitz' $2 trillion estimate is over the next 55 years (I think, he's a little unclear). Along with the last two years, that's 57 years of GDP or, in today's dollars and assuming no real growth for more than two generations, $660 trillion or .3%. Clearly, we need at least two more so we can at least get to 1% of GDP.

If 20th century history is any guide, the '60 U.S. GNP, in today's dollars, will be at least $ 45 trillion, possibly as much as $ 75 trillion.

That would mean that over the next 55 years, the U.S. will see a cumulative total of between $ 1,500 - $ 4,500 trillion worth of economic activity, measured in 2005 dollars.

For various reasons, the higher total is much more likely than the lower total, and as an interesting point of trivia, in 2060 the richest person in the world has a good shot at being worth a staggering one trillion 2005 dollars, and will certainly be worth $ 250 billion, if American history over the past three hundred years is a good guide.

Also, by 2060 the gap between America's "rich" and "poor", as measured by quintile, will have become a gulf measured in lightyears, although being "poor" will be even more subjective than it is now, since the average "poor" American in 2060 would be considered "rich" in any previous century - including the 20th.

Posted by: Michael Herdegen at January 14, 2006 5:34 AM