The War as Investment

Imagine you picked up the newspaper one morning and read that the supposedly unbeatable investment fund safeguarding your retirement savings was a pyramid scheme, that the fund managers' preening assurances of low risk were lies, that their investment strategies were colossally flawed, and that your money was gone with nothing to show for it. What would you do? Would you do as the fund managers suggest and send them yet more money, perhaps your child's college savings, hoping for a miracle before the grand jury convened? Or would you run for the exit as fast as you could, salvaging whatever pennies remained?

Not really much of a decision, is it? No one in their right mind would continue investing in a red-ink scheme marred by hubris, error and fraud, would they?

Of course not... Unless that investment is called Iraq, where good money follows bad no matter how dismal the prospectus.

In a sane world, at least some of our national leaders and pundits would see to it that this massive, speculative and risky investment we call the Iraq War received at least the same cost-benefit analysis we'd give a new mutual fund or a stock tip or an email from the son of the late Zairian President Mobutu Sese Seko offering astonishing returns on a few simple bank transfers. You'd think someone in power might suggest we take a hard-nosed, fiscally conservative look at the costs and benefits of investing further, as well as consider alternative, potentially more profitable investments for our tax dollars. You'd think that would be a no-brainer, given just how colossally wrong the war supporters have been about everything from Saddam's non-existent nukes to the flower showers that were supposed to greet our troops, but you'd be wrong: This essential, commonsense analysis is entirely and bizarrely missing from our national discourse about the war, as it has been from the very start.

What we have instead is a lot of posturing about patriotism, democracy agendas, how "they" hate us for our freedoms, denouncement of MoveOn.org's freedom to criticize a general whose name rhymes with "betray us," and the need to give meaning to the lives already sacrificed by... sacrificing more lives. Such expressions of sentimentality, partisanship, ego and ignorance masquerade as analysis, but serve only to obscure the real bottom line questions that our Congress, president and media elite studiously avoid, namely: Are we receiving a sufficient return on our Iraq investment? And if not, why are we still cutting checks?

And just to be sure we know what we're talking about here, the investment to date has exceeded 3,800 American lives, 200,000 Iraqi lives, and $450 billion (with another $125 billion added for the companion war in Afghanistan). That investment has brought us no measurable returns (except for negative ones) in terms of what should be our bottom line: increased national security, increased energy security, increased economic security.

If that level of investment with nothing to show for it sounds staggering, grab onto something quick: We're on target right now, without any further debate, to double down, and possibly triple down, that investment. That's right: According to current projections by the nonpartisan Congressional Research Service (widely ignored in media reports about the war), dollar costs of the current Iraq and Afghanistan war plan will rise to somewhere between $1 and $1.4 trillion before the last soldier comes home... ten years from now.

Let's set aside the question of whether the Iraq War can be rightly compared to a pyramid scheme, because even if the war's conception were entirely on the up and up (which most non-delusional Americans now understand it was not), the question still remains: How can this president, this Congress and this country embark on and continue such an immense investment with no serious, rational, informed debate over its costs versus its benefits?

The absurdity of this omission was hit home this past week in two ways. There was the scathing and unprecedented public assessment from the former top commander of troops in Iraq, Lt. General Ricardo Sanchez, who described the current war strategy as a "catastrophic failure" and the war itself as "a nightmare with no end in sight." Makes you really want to dump more money into that investment, doesn't it?

The second absurdity came when President Bush vetoed bipartisan legislation that would have expanded subsidized health benefits to 4 million uninsured children who are not covered by current government programs. Bush asserted his veto of a five-year, $25 billion appropriation for these uninsured kids was an act of fiscal responsibility. And he even kept a straight face as he simultaneously demanded yet another $190 billion investment in a war effort now costing taxpayers $12 billion a month ($400 million a day, $16.7 million an hour, $287,000 a minute).

What Bush was actually saying with his veto pen was that two more months of improvised explosive devices, flag-draped coffins, Blackwater scandals, and phony "secure" market scenes staged for flak-jacketed network anchors are more important than making sure every child in America has quality health care.

This sort of comparison this is exactly how we should weigh our investment in war -- as a money pit sucking away resources that we could be investing in something that might actually make America better and stronger. And this begs the larger question of what other alternative investments, costs and benefits we could be choosing but are not even talking about. A trillion and a half dollars, after all, isn't exactly chump change.

We are, in fact, spending enough money on this war to do just about everything this country so desperately needs doing, if Congress had the gumption to just say no. Consider this alternative investment portfolio:

* Restore the G.I. Bill. Modern America was built on the back of the original GI Bill, which provided home ownership and free college degrees for the Greatest Generation. Current benefits, however, are a stab in the back to our troops, who are being cheated out of meaningful educational and mortgage benefits by a paltry law and dirty tricks -- such as the recent pullout of 2,600 Minnesota National Guardsman after 729 days in Iraq, exactly one day short of earning full GI Bill college benefits. A mere $10 billion, equivalent to less than one month of war, could make sure every veteran who has served any length of time since the year 2000 could get a free ride to any college that accepted them, and a direct home loan from Uncle Sam with no money down once they graduate. Senator Jim Webb of Virginia is pushing legislation that would vastly improve the GI Bill. Now it's time to really support the troops.
* Make college affordable again for the rest of us. Tuition costs have accelerated at a far great pace than either personal income or inflation, and what was once a virtual middle class entitlement is now slipping out of reach for many families. About $35 billion (less than three months in Iraq) in direct additional aid to state universities and colleges for the sole purpose of tuition reduction would enable most to reduce the cost of attendance by half or more. Consider it a sound investment in the future: Every dollar invested by the World War II-era GI bill in college education for young men and women netted a $7 return to the economy.
* Fix health care. Under President Clinton, a revamped government-run health care program became a model of efficiency, cost control, patient satisfaction and medical excellence that beat the private sector on every measure. Believe it or not, this medical miracle was called the VA, which by 1998 had become a model for what single-payer care could accomplish. Bush's government-can-do-nothing-right crowd destroyed the evidence with cuts, cronyism and deliberate underestimates of war casualty numbers -- one of the great untold scandals of this presidency. But the Clinton VA model proved affordable health care for all can be achieved in the US. Conversion costs from our current broken system could easily require a $200 billion upfront investment, but the savings from a VA-style national HMO that finally reined in out-of-control consumer medical costs- the single largest cause of personal bankruptcy in America -- would pay for itself over and over.
* Energy Independence. Convert no less that 50 million homes to solar power within a decade, our generation's version of Kennedy's ten-year moon challenge. Creating quasi-public solar panel manufacturing plants -- treating solar energy as a non-profit -- would jumpstart what is currently a niche industry. Economies of scale would then cut in half current solar installation costs of $11,500 per average home (after tax breaks), and government backed loans and rebates would cover the rest. Investment Cost: $300 billion, plus another $50 billion for solar tax incentives for businesses. Investment return: Going solar on that scale would significantly cut U.S. fossil fuel use, greenhouse gas emissions and dependence on Middle Eastern oil, not to mention catapulting the U.S. to the forefront of the growth industry of the century, sustainable energy.
* Global Warming Smackdown: Create a crash program to put plug-in electrical cars and hydrogen-powered vehicles (and hydrogen fueling stations) in a position of market dominance over the next ten years. A non-profit, quasi-public network of hydrogen fueling stations must be constructed, making hydrogen vehicles practical for long-haul driving, while the solar home initiative would free up enough electrical generation capacity to power up plug-in vehicles for urban transit. Cost: $200 billion for R&D, $150 billion for hydrogen fueling network startup. Generous tax incentives for vehicle manufacturers (and consumers) who toe the green line, and severe tax penalties for those who continue to guzzle would close the deal. Benefits: say goodbye to petroleum financed terrorism, predatory multinational energy conglomerates, catastrophic global warming (if we're not too late), and place the U.S. auto industry once again at the top of the heap.

So there you have it. For less than the $1 trillion dollars that Iraq is going to cost us in the future, we could make a huge investment with returns that would measurably outstrip what we spend: Supporting our military, educating the next generation, achieving affordable universal health care, breaking our addiction to Mideast oil, decisively combating global warming, and making America the world leader in green energy and transit technology.

Or we could continue paying for the nightmarish pyramid scheme our current leaders and all but a couple presidential wannabes still embrace, investing in a war launched at the wrong time for the wrong reasons against the wrong enemy with the wrong expectations and no measurable pay-off for that half trillion dollars down the tubes and the trillion more yet to be spent. Sadly, at least for now, that check's still in the mail.

Edward Humes is the author of Over Here: How the GI Bill Transformed the American Dream and Monkey Girl. He is at work on a new book about environmental philanthropy and activism. More information at www.EdwardHumes.com

Follow Edward Humes on Twitter: www.twitter.com/edhumes

Comments

[ErnestineBass]

Good question. Bush is kinda like my former stock broker. This twit would call me about four times a year with some hot damn! stock tip, but I learned after being burned twice that the guy was a stooge. After that, I did just the opposite of what he told me to do and I made money. At least the guy was a known quantity, if you follow my drift.
Bush? Just like that. Do the opposite of what he wants us to do and we might stand a chance of saving this country.

[Mormondude]

As long as we're looking at public policies as investments, how about Social Security and Medicare.

You know, the programs where you PAY MONEY into them for your entire life, and then expect to get money and insurance in RETURN for it. That actually sounds kind of like an investment, unlike the war. But it's NOT an investment. So say the libs.

But what if it were an investment? According to economists, every new child born today inherits $170k in unfunded liabilities from these programs. So, they start out day 1 with a $170k mortgage, which they must pay off by the time they retire.

Now, assuming that this mortgage increases at 5% interest, which is low historically for 30 year bonds, and assuming that this child will retire at age 70, they would have to start paying $730.56 a month starting at birth. Of course, they can't pay that amount as a baby, or a growing child, but let's assume their family covers it until they get a job, just for simplicity's sake.

So, $730.56 per month multiplied by 840 months = $613,670 paid in over their lifetime.

For this $613k investment, they get medicare coverage, valued at $11k per year, and a SS check worth roughly the same. They would have to live to be 100 years old to break even on their investment. In other words, every person that lives to be less than 100 is getting robbed blind.

Of course, this is just a simple analysis, which doesn't take into account the additional money paid in FICA taxes over this newborn's lifetime, which would all add directly on top of this calculation, but I think most people get the picture. Ponzi schemes STINK as investments, and we have no business being involved in one, or forcing our kids and grandkids to pay for grandpa and grandma and mom and dad's mistake of allowing the system to perpetuate itself.

[ErnestineBass]

Bush should be working the phone banks selling penny stocks and junk bonds.

[leftLibertarian]

Some of the only people who are making a killing on the Iraq War are close personal friends of Bush and Cheney who are riding high on their war profits.

[AlteredEgo]

Thank you for stating so clearly what all Americans need to be demanding of our so-called representatives.

[matahari888]

This war is investment and well planed long ago....people just not aware what this administration want.....they need this war and they wont finish it soon because the oil pipe is not start pumping oil for US throught Israel...and why they have to leave Iraq, for the fact that they plan to stay there till the oil is finish pumping...thats why they build embassy so HUGE as a city inside city...this is a foreign country that under our ilegal occupation we're talking about....for the money they spent in Iraq...they don't have to care...is not the money in their pocket from....but the result could going to their pocket.....every bussiness or organization that has a profit from this war is a criminal war too....they all don't want to end this war soon.....s­omeday...s­omeway....­.justice will come to serve these evil people......

[Nova16]

The failed Halliburton asbestos venure has becom the Halliburton War Corporation with an operation financed by the federal government to insure that when Bush leaves the White house and returns to whatever the hell he does and Cheney leaves "public service" and returns to his sometimes position of CEO of the Halliburton War Corporation, they willl live like Saudi princes on the money pilfered from the US treasury and placed in the greedy hands of their cronies. This nation is the victim of the biggest criminal fraud ever perpetrated in its history by its own government. And all these years we were worried about the Mafia, who were amateurs compared to the criminals in Washington.

[joja]

Oh, Mr. Hume, how can you be so naive?

Don't you get it? There's a shitload of money to be made by having a continuous war. Why would we want to end it?

Just look at the obscene profits made by defense contractors! You know, the guys like Blackwater & Haliburton & Lockheed Martin -- they could never compete in an unrigged market place -- they need those no-bid contracts from their DoD buddies.

And forget about providing quality goods and services to their clients -- the men & women in the services. It's so much more profitable to give them crap like the 41-yr.-old M16 rifles instead of upgrading to something more modern. Or poisoned food. Just think of all the money to be made off of meds to counteract the diseases they get from eating shit!

You see? You're thinking is so quaint. You should really get with the Neocon Program -- motto: No Profit Margin Too Big!

[Jellymonster7]

Great Blog!

There are always different choices which CAN be made. And it is good to point them out in a way that shows real costs in comparison (I know- figures can always be argued- but at least it is worth a try to get an idea about cost dimensions).

Governments have so much power to steer the whole "ship" one way or another.
In Germany, the last government pushed e.g. alternative energy programs and organic agriculture. As a result more people put solar panels on their roofs, invested in local wind turbines, whole villages started programs to become "Bioenergiedörfer" (which means that these villages have a small power station of their own, which runs by locally grown crops like corn, and delivers all energy needed to run heating systems, warm water and possibly electricity).

Unfortunately the recent German government, which is more conservative, has already cut tax relief for a lot of these programs, but hopefully they won't succeed in the long run (so much is already on its way).

I really hope that many Americans become aware of THEIR choices (yes there are still choices to be made) and make the right ones (see above) in the near future.

Good Luck!

[Misanthrope2]

The purpose of the Iraq war was to stop Iraq from producing oil. Just before the war, the French and Germans had entered contracts to increase Iraq oil production form 3 million barrels a day to 10 to 12 million barrels a day. Saudi Arabia produces about 9 million barrels a day. Oil prices would fall if Iraq produced four times as much oil.

We attacked before the sanctions could be lifted and the oil could flow. The oil never flowed and production fell to 2 million barrels a day. Oil prices soared. Despite demand, and promised oil revenue to pay for the war, oil production fell. That proves we never wanted Iraq to pump more oil.

The problem is that the costs of the war are paid by the taxpayers. The benefits of the war (higher oil prices) accrue to oil companies. Thus, costs have been externalized, and the oil companies soak up the benefits. From the perspective of the oil companies, the war should go on forever to keep oil prices high.

The war is lot more understandable once you realize the goal is to prevent oil production to keep prices high.

[SisterAnn]

It is good that someone has written that. Saddam was a threat because he could pump too much oil and could sell for less.

It isn't only the oil companies raking in the profits while charging the expenses of war to the taxpayers. There are the companies like Lockheed that sell products for war. There are hundreds of companies profitting from the war.

They say there aren't enough resources to take dangerous child porn off the net. There is a priority here that is soooo wrong.

[Misanthrope2]

I am not worried about child porn but I think you are right to point out that all the war corporations are also profiting. True synergy for these multinational corporations.

[seawolf77]

Very interesting theory. As good as the peak oil theory I subscribe to. It will be interesting when we finally find out the truth, though they are not mutually exclusive events. They could indeed be keeping it off the market till the price really gets going. Then they will be sitting on a gold mine.Russia is the big bad 800 pound gorilla in the room. They are now by far the energy king. Funny how history works out.

[Misanthrope2]

The problem with peak oil theory is that they keep changing the date of the peak and the size of the reserves.

Although the finiteness of the earth's oil supply means that peak oil is inevitable, technological innovations in finding and drillng for oil have delayed the appearance of peak oil on several occasions. For example, the National Center for Policy Analysis states: [6]

* In 1855, people could only access whatever oil happened to seep to the surface, and an advertisement for Kier's Rock Oil stated, "Hurry, before this wonderful product is depleted from Nature’s laboratory."

* In 1874, the state geologist of Pennsylvania, the United States' leading oil-producing state, said that all the oil would be gone by 1878.

* In 1920, the U.S. Geological Survey stated that the world only had 60 billion barrels of oil left.

* In 1950, geologists estimated that the world had 600 billion barrels of oil.

* In 1970, scientists estimated that the world had 1,500 billion barrels of oil.

* In 1994, the U.S. Geological Survey estimated that the world had 2,400 billion barrels of oil.

* In 2000, the U.S. Geological Survey estimated that the world had 3,000 billion barrels of oil.

None of this means that new oil is forming, or that peak oil will never happen. It means that newer technological advances allow us to find and recover more oil, though later estimates are based on unaudited claims by countries that withhold field production data and are therefore inconclusive.

http://en.wikipedia.org/wiki/Peak_oil

[darker]

Bush-Cheney's MISSION ACCOMPLISHED is to continue massive shoveling of USTaxpayer money into pockets of RICH CORPORATE WAR PROFITEER WELFARE QUEENS, pals of Bush-Cheney.

It's about the PROFITS.
It's about the BOTTOM LINE.
War --pays!

[Pero]

We are all aware about fascist billionaire W.R. Hearst "yellow journalism" (propaganda for war with Mexico, extermination of Indians, incredible polution of his copper mines in the US and Latin America, assembly line fabrication of grotesque lies, etc.)

Please REMEMBER:
William Randolph Hearst = is = Rupert Murdoch

They are exactly the same in all respects: billionaires, fascists, war agitators, racists -- producing an endless stream of Big Lie fabrications -- without any scruples, principles, or morals.

[andrew1]

"Not really much of a decision, is it? No one in their right mind would continue investing in a red-ink scheme marred by hubris, error and fraud, would they?"

What return on investment has this country had on the "War on Poverty?" How many hundreds of billions have we spent to have the poverty rate stay at exactly where it was when we started this "war" over 4 decades ago?

[SisterAnn]

Not all returns of investments can be measured in profit.

The war on poverty has tried to give all babies an equal start from the womb and after they were born. Programs like WIC gave them access to the same baby food and milk as the rich. It gave them access to medical care. It kept young children from going to bed or school hungry. It kept them from sleeping on the street. It tried to give them a normal life.

A poorly nourished baby doesn't grow up to be an intellegent adult.

[SisterAnn]

intelligent, not intellegent. (What a word to mispell. I am so embarrassed.)

[realitytrumpsbull]

You apparently didn't get the memo...Congress
is now CHex N Scram, LLC.

[Merrysunshine]

Ha! I asked my congressman what our ROI was for the war in Iraq. He didn't answer me.

No surprise there.

[Earl]

The ROI is simply the short-term gains on Wall Street. The Bush cabal will p!ss away ninety-nine ninety-five in Iraq to make a nickel in the US. Remember, somebody had to pay KBR or Blackwater or whoever to hand out those bricks and pallets of hundred-dollar bills. It's hard work handing out twelve billion dollars - somebody has got to pay for that!