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Estimates of the cost of the Iraq war continue to escalate to levels well beyond what its optimistic architects once promised. Most notable, perhaps, has been the estimate of Columbia University’s Joseph Stiglitz, who, in a January 2006 paper with Harvard’s Linda Bilmes, put the full cost at around $2 trillion. By the end of the year, the two had grown even more pessimistic:
The $2 trillion number – the sum of the current and future budgetary costs along with the economic impact of lives lost, jobs interrupted and oil prices driven higher by political uncertainty in the Middle East – now seems low.
Assessing the full costs of war, direct and indirect, as opposed to the immediate and obvious ones, is a crucial task for those who favor nonintervention. But at least as important is assessing the costs of the warfare state itself, whether or not it is currently engaged in actual fighting. The public is inclined to think of the costs of the military establishment in terms of the annual defense budget. The true costs, however, are much greater, although usually hidden.
Robert Higgs has made the important point that the true cost of defense extends well beyond the official Pentagon budget.
Expenditures for “homeland security” surely belong in any reckoning of defense spending. Additional programs involved in defense are spread throughout the budgets of various other Cabinet departments. Then there is the supplemental spending earmarked for present military adventures (not part of the defense budget, contrary to popular impression), in this case Afghanistan and Iraq, as well as the portion of the federal government’s net interest payments that is attributable to deficit-financed defense spending in the past. Higgs concludes that the real defense budget is probably about twice as large as the sum officially allocated to the Department of Defense.
There are a great many other costs to the warfare state as well, albeit ones less easily quantified. For one thing, between one-third and two-thirds of all U.S. research talent has been siphoned off into the military sector over the past several decades. Human limitations being what they are, there exists a fixed amount of such talent; and government diversion of that talent – through high, tax-funded salaries with which the private sector has repeatedly expressed its inability to compete – necessarily leaves fewer people available for research and development work in the private sector. Military research thereby crowds out commercial research aimed at improving people’s standard of living. It is hard to quantify this effect, of course, and being unseen it is typically overlooked, since we can never know exactly what innovations never appeared as a result of the diversion of resources and brainpower into the service of the military. This is one of many opportunity costs associated with the military establishment.
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