Backtalk, March 15, 2007

End of Cowboy Diplomacy, Part II?

Dear Mr. Lobe,

I am very grateful for your perceptive and rich articles, and I have been reading them for years. This last piece is particularly encouraging. In addition to the strong case you make about the ascendancy of the realists, I thought it would further strengthen your argument to remind readers that Robert Gates was the co-chair with Zbigniew Brzezinski of the Council on Foreign Relations independent task force report of November 2004 “Iran: Time for a New Approach,” which calls for immediate diplomatic engagement with Iran.

~ Hani Asfour

More Sand In Our Faces

Thank you for this new information. From the cerebral stratospheres of PBS with David Brooks down to the junkie talk show host Michael Medved, Richard Armitage is being blamed for the leak. Poor Scooter Libby has to go to jail just because he told a lie, and they went after him when they should have gone after someone else because it made better hunting. The lies apparently continue, and I wonder if we will ever get to the bottom of this. But fortunately reporters such as yourself are still on the case.

~ Kathy Berkowitz

Gordon Prather replies:

I suppose you meant it as a compliment, but I am NOT a reporter. I am an anguished Reaganaut, an experimental nuclear physicist by profession, counting many of the players in this immorality play of the past six years to be friends and colleagues. But I say with Brent Scowcroft, I thought I knew Dick Cheney, but I don’t know this guy. As for Rich Armitage – whom I have known for thirty years, worked with and even worked for – I wish to be on record as believing that if Rich (who was in the running) had been named SecDef in 2001, with his friend Colin Powell as SecState, NONE of this would have happened. None of it!

How Much is the War on Iraq Costing You?

Excellent article! More information such as this should be provided to readers. Americans should be made aware of the amount of their dollars used for this war, rather than for Social Security, Medicare, schools and education, and most needed improvements in transportation infrastructure. Henderson should be published often and throughout this country.

~ June Cassidy

David R. Henderson replies:

Thank you. You point out correctly that war has what economists call an “opportunity cost.” You’ve listed many of the things that the money to finance the war could have been used for. Your Social Security example is particularly apropos. Social Security is in a long-term mess and, had George Bush avoided this war, there would have been funds to pull off his plan for personal accounts. Although we will never know for sure, I believe that the idea died mainly because of the deficit.

I note that you tended to focus on items that the government could have spent money on. It’s also true that with the tax cuts we could have had without the war, individual citizens and non-citizens in America could have had more funds to buy the things they wished. As I pointed out to the members of my local peace coalition who gave examples like yours, “Let’s not minimize the importance of drinking beer and going to Hawaii.” That we have less of those things is also, in part, due to the war.

~ David R. Henderson

Mr. Henderson:

Enjoyed the first part of your “How Much is the War on Iraq Costing You?” but would like for you to consider the following: first, though it seems upper income people bear the brunt of taxation to fund the war, it would seem logical that they probably benefit most from the war; for instance, it is likely these folks invest in the military-industrial complex that drives this war or have family members that do.

Second, they benefit by NOT being in the financial situation that would cause their children to feel joining the military is their best way out of poverty or low income, because their sons and daughters will likely be able to go to the most prestigious universities, and, thus (and with their upper income networking connection) get the high-paying jobs after college, probably with no college loan debt to haunt them.

Third, if they are well connected, even if their kids do join the military they are NOT likely to be sent to Iraq (or Afghanistan for that matter) and are more likely to be sent to a cushier spot like Europe or South Korea or Japan, and also are more likely to be officers.

Now, as for low income people, though they pay little tax-wise for the war, they pay the most in lives lost. It is well known that the lowest incomes are in rural areas, where a disproportionate number of killed troops come from rural counties, while another low income area are inner cities that also have high attrition rates. And yes, the higher cost of oil will affect low income people the most, especially those in rural areas where there are longer driving distances to do anything so more gas is consumed by these people (plus, the price of gas is ALWAYS higher in rural areas!). Given this however, I think it is possible that the quintiles in the middle, who, while not paying the higher percentage of taxes as those in the uppermost, still pay a high enough percentage of their incomes to truly bare the brunt of the war AND send enough sons and daughters there to die to truly feel the horror of this war that are being squeezed more than low or high income people.

Further, should tax increases be necessary, it is the folks in the middle who (as they do not have upper income connections nor the sympathy of the “tax-and-spend liberals”) will wind up, as always, paying the most.

~ Deborah Lagarde

David R. Henderson replies:

Dear Ms. Lagarde,

Thank you for your thoughtful letter. I’m glad you enjoyed the first part of my article. You raise a number of important issues and I want to respond to each. Doing so will take a good deal of time and so my plan is to write a longer response as a future column because I think your concerns are shared by many readers of this site.

Let me just respond to one issue you raise now and leave the rest for later. It is true, as you say, that high-income people are probably disproportionately invested in the military-industrial complex. And this does mean, as you say, that they will benefit from an expenditure on this complex. But their benefit from the expenditure will be less than the cost to them of the expenditure. Take a numerical example. Assume that the government taxes $1 billion and that, given my earlier estimates, high-income people pay half of that, or $500 million. Now let’s say that the government spends all of this $1 billion on a firm that’s a member of the military-industrial complex. Say this firm produces bombs that are dropped on Iraq. The $1 billion spent is not a net gain to the firm. The firm must pay for manpower, material, buildings, etc. The typical profit as a percent of revenue for a U.S. firm is somewhere between 5 and 10%. Let’s apply the top end of that estimate to the $1 billion. That means that the firm’s net gain is $100 million. So even in the extreme case, which does not hold, that the firm was owned entirely by higher-income people, paying $500 million to get back $100 million is not a good deal. And notice at each stage of this analysis, I have stated key numbers to lead to an upper estimate of the gain. Benefiting the upper income class by spending on war is like feeding sparrows by feeding horses. But at least the horses don’t have to pay; here the horses do. What this illustrates is the tremendous deadweight loss of war, that is, a loss to the economy that benefits no one. In my $1-billion example above, the deadweight loss (and that’s assuming the bombs do no harm) is $900 million.

More to follow in a soon-to-be written future column.

A Corrupt Endeavor


King Abdullah’s speech reminded me of an idea I had a while back and inspired me to submit it to you and your readers.

The U.S. gives something like $4 billion per year to Israel in foreign aid. My thought is to put this money to better use by (1) stating our intention to put each year’s allocation into an escrow account to be used for compensating Palestinians who lost land/homes, (2) pressuring the EU to match our contributions (after all, Herzel’s solution was primarily a product of European anti-Semitism), and (3) holding the funds in escrow for an extended period with the understanding that there will be significant reductions via a formula that would be based on specified terrorist attacks in Israel and the U.S.

If you assume that this would result in $8 billion per year and also assume 800,000 claims (the approximate number of original refugees), the ten year per-claim total would be $100,000.00.

It seems to me that this could benefit all sides in several extremely significant ways, including enhancing security in Israel and the U.S., putting the U.S. in the role of “honest broker,” dealing with one of the toughest obstacles to peace (right of return/compensation), and possibly improving mood of the “Arab street” toward the U.S.

And – get this – it wouldn’t cost U.S. taxpayers one extra cent (as opposed to the billions we’re wasting in Iraq).

If you or any of your readers think that this is a good idea, please feel free to borrow or steal it from me.

~ Greg Brownfield, Bartlett, IL

Why Are Some American Christians So Bloodthirsty?

Dear Dr. Whitehurst,

Your article is well written. I had basically figured my Republican Christian friends had lost their minds. Most were willing to give their children to this war because they believed even an Iraqi infant dying was going to save us from future terrorists. My friends recommended that I get my news from a pro-war Web site (I don’t recall which).

I was stunned by their reactions to the senseless war and their reaction to me. I became an unacceptable person to be around. Those who felt horrified like I did encountered similar reactions. I was confused why my Christian friends were so gung-ho. I, too, am a Christian, but I was devastated. While I could understand the hunt for bin Laden, I couldn’t understand why the shift went to Saddam Hussein. No weapons of mass destruction would be found.

I also figured that if the Iraqi people wanted Hussein dead, he would be dead. As we can see they are fiercely trying to defend their country from the “invaders.” I wonder what propaganda they are probably receiving as to why we are even there. I’m sure they are being fed false information also.

After much searching on the Internet, your article makes a lot of sense. You are correct about what they are hearing. Even the most mild-mannered of the stay-at-home moms became bloodthirsty. Her children could no longer be near my children. I just wish she (they) had the sense to question the one-sided news that was used as the daily talking point.

Finally, it seems that many now are realizing what a colossal fiasco we have been led into and I pray that they regain some compassion for all of God’s children. In putting George Bush on the same level as Jesus Christ they have committed a horrible blunder. We can’t put our faith and trust in man. When we do, we are disappointed every time.

~ Martha Lane

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