Iraq's Price Tag

Trying to calculate the costs of war.

Jeff Taylor from the July 2006 issue

In a March study for the American Enterprise Institute, three economists at the University of Chicago—Steven Davis, Kevin Murphy, and Robert Topel—attempt to calculate the cost of the invasion and occupation of Iraq. They conclude that those expenses are not dramatically different from the alternative: maintaining the pre-2003 no-fly zone over the country, coupled with the costs of economic sanctions.

The trio pegs the cost of war at $410 to $630 billion in 2003 dollars up through the end of January. Containing Saddam Hussein, they say, comes to between $350 and $700 billion. The researchers take direct government costs, such as the billions spent on military responses and reconstructions, and then add in indirect costs, such as the crippled Iraqi economy both post and pre-invasion. A significant portion of their argument rests on their claim that Saddam’s rule produced a decline in Iraqi real income per capita of about 75 percent.

One factor the paper leaves out is that not all interventions are identical. The U.S. did not have to undertake regime change and occupation to serve its goal of excising supposed Iraqi threats, or even to secure permanent military bases in Iraq, thereby assuring that America would bear tremendous postwar rebuilding costs.

The attempt to cost-out different sizes of armed intervention primarily underscores what we already know: Any such action is tremendously costly and tends not to go according to plan.

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