September 2011, Week 1


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Tue, 6 Sep 2011 21:45:04 -0400
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The Price of 9/11

By Joseph E. Stiglitz
Project Syndicate
September 1. 2011


NEW YORK - The September 11, 2001, terror attacks by Al Qaeda
were meant to harm the United States, and they did, but in
ways that Osama bin Laden probably never imagined. President
George W. Bush’s response to the attacks compromised
America’s basic principles, undermined its economy, and
weakened its security.

The attack on Afghanistan that followed the 9/11 attacks was
understandable, but the subsequent invasion of Iraq was
entirely unconnected to Al Qaeda - as much as Bush tried to
establish a link. That war of choice quickly became very
expensive - orders of magnitude beyond the $60 billion
claimed at the beginning - as colossal incompetence met
dishonest misrepresentation.

Indeed, when Linda Bilmes and I calculated America’s war
costs three years ago, the conservative tally was $3-5
trillion. Since then, the costs have mounted further. With
almost 50% of returning troops eligible to receive some level
of disability payment, and more than 600,000 treated so far
in veterans’ medical facilities, we now estimate that future
disability payments and health-care costs will total $600-900
billion. But the social costs, reflected in veteran suicides
(which have topped 18 per day in recent years) and family
breakups, are incalculable.

Even if Bush could be forgiven for taking America, and much
of the rest of the world, to war on false pretenses, and for
misrepresenting the cost of the venture, there is no excuse
for how he chose to finance it. His was the first war in
history paid for entirely on credit. As America went into
battle, with deficits already soaring from his 2001 tax cut,
Bush decided to plunge ahead with yet another round of tax
"relief" for the wealthy.

Today, America is focused on unemployment and the deficit.
Both threats to America’s future can, in no small measure, be
traced to the wars in Afghanistan and Iraq. Increased defense
spending, together with the Bush tax cuts, is a key reason
why America went from a fiscal surplus of 2% of GDP when Bush
was elected to its parlous deficit and debt position today.
Direct government spending on those wars so far amounts to
roughly $2 trillion - $17,000 for every US household - with
bills yet to be received increasing this amount by more than

Moreover, as Bilmes and I argued in our book The Three
Trillion Dollar War, the wars contributed to America’s
macroeconomic weaknesses, which exacerbated its deficits and
debt burden. Then, as now, disruption in the Middle East led
to higher oil prices, forcing Americans to spend money on oil
imports that they otherwise could have spent buying goods
produced in the US.

But then the US Federal Reserve hid these weaknesses by
engineering a housing bubble that led to a consumption boom.
It will take years to overcome the excessive indebtedness and
real-estate overhang that resulted.

Ironically, the wars have undermined America’s (and the
world’s) security, again in ways that Bin Laden could not
have imagined. An unpopular war would have made military
recruitment difficult in any circumstances. But, as Bush
tried to deceive America about the wars’ costs, he
underfunded the troops, refusing even basic expenditures -
say, for armored and mine-resistant vehicles needed to
protect American lives, or for adequate health care for
returning veterans. A US court recently ruled that veterans’
rights have been violated. (Remarkably, the Obama
administration claims that veterans’ right to appeal to the
courts should be restricted!)

Military overreach has predictably led to nervousness about
using military power, and others’ knowledge of this threatens
to weaken America’s security as well. But America’s real
strength, more than its military and economic power, is its
"soft power," its moral authority. And this, too, was
weakened: as the US violated basic human rights like habeas
corpus and the right not to be tortured, its longstanding
commitment to international law was called into question.

In Afghanistan and Iraq, the US and its allies knew that
long-term victory required winning hearts and minds. But
mistakes in the early years of those wars complicated that
already-difficult battle. The wars’ collateral damage has
been massive: by some accounts, more than a million Iraqis
have died, directly or indirectly, because of the war.
According to some studies, at least 137,000 civilians have
died violently in Afghanistan and Iraq in the last ten years;
among Iraqis alone, there are 1.8 million refugees and 1.7
million internally displaced people.

Not all of the consequences were disastrous. The deficits to
which America’s debt-funded wars contributed so mightily are
now forcing the US to face the reality of budget constraints.
America’s military spending still nearly equals that of the
rest of the world combined, two decades after the end of the
Cold War. Some of the increased expenditures went to the
costly wars in Iraq and Afghanistan and the broader Global
War on Terrorism, but much of it was wasted on weapons that
don’t work against enemies that don’t exist. Now, at last,
those resources are likely to be redeployed, and the US will
likely get more security by paying less.

Al Qaeda, while not conquered, no longer appears to be the
threat that loomed so large in the wake of the 9/11 attacks.
But the price paid in getting to this point, in the US and
elsewhere, has been enormous - and mostly avoidable. The
legacy will be with us for a long time. It pays to think
before acting.

[Joseph E. Stiglitz is University Professor at Columbia
University, a Nobel laureate in economics, and the author of
Freefall: Free Markets and the Sinking of the Global Economy.]

Copyright: . www.project-syndicate.org


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