Krugman on Iraq

August 30, 2003 2:23 PM

Krugman on Iraq"The direct military cost of the occupation is $4 billion a month, and there's no end in sight. But that's only part of the bill. This week Paul Bremer suddenly admitted that Iraq would need "several tens of billions" in aid next year. That remark was probably aimed not at the public but at his masters in Washington; he apparently needed to get their attention."
posted by skallas (41 comments total)

A bit op-edish, no?
posted by Space Coyote at 2:43 PM on August 30, 2003

Yes, its an op-ed and an excellent one at that.
posted by skallas at 2:54 PM on August 30, 2003

"We have not yet begun to fleece."
posted by Busithoth at 3:01 PM on August 30, 2003

"several tens of billions" = Trillions.
But it's an op-ed, and it's only money, so by all means, just ignore it.
Maybe I can get a nice time-share condo on the Euphrates after we fix the place up.
posted by 2sheets at 3:14 PM on August 30, 2003

Too bad we can't run Krugman for some kind of federal office.

It'll be interesting to watch the media spin as the true costs of the US invasion of Iraq becomes apparent. Will this adventure still be popular after the continued guerilla attacks kill more US soldiers? Will it still be popular after contributing to the bankrupcy of the US treasury? I'd like to see neither situation continue, so how can we make the occupation unpopular before more lives are lost and the economic stability of the US weakens?

And I just realised, I shouldn't ever refer to this as the Iraqi war or the war in Iraq. There never was a war, it was an invasion and an occupation.
posted by elwoodwiles at 3:16 PM on August 30, 2003

It's fun to pillory the Bush admin, and I have a tiny, tiny bit of schadenfreude as the consequences that the whole nation should have been thinking about and seen coming come to pass, but mostly I'm thinking: what's the best thing to do right now? Is there a way to lighten the burden of occupation, other than just pulling out and leaving it as bad or worse than before? Is there a way to make things more stable? We need solutions, not just criticisms.

I think what Krugman is getting at is that we're going to need the help of other nations, and that the only way to get this is to send the Bush admin packing, because they don't have the diplomatic skills necessary. If that's his point, I wish Krugman had drawn a straighter line....
posted by weston at 3:28 PM on August 30, 2003

>Is there a way to lighten the burden of occupation

I think the writing has been on the wall for quite some time. EU member states will not help unless the UN takes control. The Bush administration refuses to give up commandership (?) of Iraq, so we've been at a stalemate. I can't say I blame the other UN nations, without some kind of UN blessing they'll be facing the pressure of participating in an illegal war, justfying lying to start a war, etc that Bush and Blair have been facing. Not to mention why should the US be in charge when its pretty much saying "We screwed this up and can't handle it. Help!" The Bush administration has shown its incompetence, many don't think they should be allowed to command Iraq any further.

The world is waiting for Bush and Blair to eat some humble pie before they send their own boys off to die in Iraq. The world also seems to want a real mulitnational administration and a real people's democracy movement in Iraq.

Russia recently pledged to help with a US commander but only after a UN vote.
posted by skallas at 3:47 PM on August 30, 2003

"hios masters in Washington"? I sure appreciate objectivity rather than the tripe writing we get from corporate media.

Deficit spending is good. Just watch Arnold get Calif out of debt and follow his model.
posted by Postroad at 3:51 PM on August 30, 2003

weston and skallas: I agree totally. In order to lessen the impact of occupation on US forces and the US economy, the administration needs the UN and the rest of the world to participate. Unfortunatly, W and friends will never ask for help, nor would they concede they commited any error or deception. And finally, the White House is not willing to let go of any power they have in Iraq (real or imagined.) The solution is to get W out of office as fast as legally possible and replace him with a candidate willing to work with the rest of the world. Howard Dean comes to mind.
posted by elwoodwiles at 3:58 PM on August 30, 2003

"Just watch Arnold get Calif out of debt and follow his model."

And you're basing this on what exactly? His ability to negotiate the challenge of the "Running Man" course?
Perhaps the stellar performance of Planet Hollywood?
His success with bodybuilding in the 70's?

I'm really trying to understand this, because I just don't get it.
posted by 2sheets at 4:16 PM on August 30, 2003

While the federal government can run a deficit because they control the money supply (that's an oversimplification, but approximately correct), states do not have that luxury.

The closest thing they can do is to sell bonds. Of course, they are obligated to pay those bonds back and there's a good chance their bond rating will drop through the floor if they take on too much debt....
posted by bshort at 4:25 PM on August 30, 2003

Just watch Arnold Angelyne get Calif out of debt and follow his her model.
posted by homunculus at 4:28 PM on August 30, 2003

Also see 'Baghdad girl blogger' Riverbend's take on idle Iraqi engineers and construction companies watching foreign companies take and over-price rebuilding contracts. Highly recommended.
posted by skallas at 4:46 PM on August 30, 2003

krugmans calls it like it is - bush is a whistle ass.
posted by specialk420 at 5:35 PM on August 30, 2003

"several tens of billions" = Trillions

Well technically, you need at least a hundred "tens of billions" to get a trillion, two hundred to get "Trillions", but then that doesn't seem unbelievable. Especially given that it's increasingly apparent that this is all make-work for Halliburton et-al.
posted by inpHilltr8r at 5:45 PM on August 30, 2003

"several tens of billions" = Trillions
I always figured that "several tens" meant something like $70B. A nice chunk of change, but not an overly huge amount of money: something like 1/25th of the US annual budget or 1/120th of the US GDP for a single year.

Given the importance of the task, it sounds to me like a bargain.

I would also note that Kuwait rebuilt by exporting around $11B in oil per year, plus running the government, subsidizing all kinds of nice perks for their 2M citizens, buying plenty of Grumman and Boeing products, etc. Indeed, reconstruction was largely done after only a couple of years. Keep these numbers in mind when talking about the size of the job. Iraq is a country with ten times as many people, but remember that their oil industry is going to come online sometime, and they won't be on the dole forever.
posted by ednopantz at 6:26 PM on August 30, 2003

What, like this is a surprise to anyone?
posted by Cerebus at 6:39 PM on August 30, 2003

When it is suggested that the UN would *improve* the situation in Iraq, I have to laugh. Only the major powers have any juice--the first world does all the work and pays the bills under almost any circumstance. The rest of the UN is a bunch of uneducated, corrupt, superstitious and peasant-like people. Not nations, people. Mostly relatives of whoever is in power in their home country.
Think about the US UN ambassador. Whoever it is. Does he set policy? Does he make any decisions? Then why think that any of the other delegates do?

So then, it's the Security Council. The US and Britain are already in Iraq, China doesn't want the US around at all, and Russia and France have crude vested interests--they don't care about the Iraqis, they want MONEY. And to stick it to the US if at all possible, on general principal.

And these are the people who would HELP the situation?

The issue before us now is MONEY, that's all. Not too long ago there was a debate about whether Iraq should support itself *when* its oil is flowing, or whether its oil could be optioned out, so that Iraq could have money up front. The decision was made that the US would support Iraq up front, because "The oil belongs to the Iraqi people, and it's not right we should mortgage their future."

So will the US continue to pay enormous bills? Yes, until the oil flows, and can do so reliably. But when will that be? When the US has finished training the Iraqi military, whose #1 job will be to protect their pipelines; AND, when the 30,000 or so Iraqi policemen come back from their intensive training in Hungary.

At that point, the US can leave the cities to Iraqi control and retire to the countryside, a much safer place. The Iraqi government will start having major income and will be motivated to get and keep its economic recovery in order.

Then the price of it all will drop dramatically. The US will probably not be paid back directly, but will profit handsomely with low gas prices for years to come--worth a hundred times more then the money now being spent.
posted by kablam at 6:56 PM on August 30, 2003

have crude vested interests--they don't care about the Iraqis, they want MONEY.

who are we talking about again?
posted by mcsweetie at 7:04 PM on August 30, 2003

If these people are sitting atop so much oil why does Iraq needs "tens of billions"?

'cause we all know this war was all about ripping off the Iraqis for their oil, right? I mean, I read it in forums here and elsewhere, so it must be true.
posted by clevershark at 8:02 PM on August 30, 2003

4b/month x 12 months = 48b/year
Iraq GDP (est. 2002, CIA World Factbook) = 58b
hmmm, I see several ways to better spend the money in Iraq and still provide profit to

another opportunity cost: mission to Mars, 40-60b over several years.

Then the price of it all will drop dramatically.
You forgot OPEC, the price will not go bellow $15-20/barrel.

The US will probably not be paid back directly, but will profit handsomely with low gas prices for years to come--worth a hundred times more then the money now being spent.

Right now US imports ~3.5-4 billion barrels of oil per year. In order to get 48b back (no other costs assumption), the price of the oil would have to go down $13 for one year, $6.5 for two years, or $3-4 for 3 years. The benefit is far from "a hundred times more then the money now being spent", even if you include spill over effects such as GDP growth. Technicality: this drop in price has to be caused only by the US intervention in Iraq, and not by any other causes (market conditions, OPEC, no wars, etc.), something that is not easy to be identified by statistical methods.
posted by MzB at 9:05 PM on August 30, 2003

>think about the us un ambassador. whoever it is. does he set policy?

Oh come on, every ambassador does what his or her country tells them to do. Its a job. Yes, the real power is in the security council. That's no big secret and lets not overemphasize the British contribution here either. Bash the UN all you want, but the countries Bush is asking help from wants UN backing. That speaks volumes more than some anonymous web poster.

>So will the US continue to pay enormous bills? Yes, until the oil flows, and can do so reliably.

I've read more than one source that claims that we're past the breaking even point even if Iraq was at its peak flow right now.

>When the US has finished training the Iraqi military

I would think getting a government to control that military would be more important and right now the various factions are fighting it out for control. A lot of good a military is without a centralized national government, unless you want a military dictatorship.

I agree with the simple concept of "once they get peace, money, and stability they'll be okay," but the road there seems very difficult if not impossible and there have be no major breakthroughs in that direction, thus this is becoming more costly. You don't have to belive me, the US is asking other nations for help. There is no master plan at work here, just a crappy plan falling apart.

>he US will probably not be paid back directly, but will profit handsomely with low gas prices for years to come

Nonsense, this will never be profitable in the long run for the US and no credible person is government is claiming it will be. Halliburton and other military outsourcers may see a windfall, but that's it.

In the meantime I'm waiting for the truckloads of captured WMDs and Al'Qauda warriors to be shown to the press.
posted by skallas at 9:20 PM on August 30, 2003

I would also note that Kuwait rebuilt by exporting around $11B in oil per year, plus running the government, subsidizing all kinds of nice perks for their 2M citizens, buying plenty of Grumman and Boeing products, etc. Indeed, reconstruction was largely done after only a couple of years. Keep these numbers in mind when talking about the size of the job. Iraq is a country with ten times as many people, but remember that their oil industry is going to come online sometime, and they won't be on the dole forever.

People should read this. Or this. Or this. Or this. Or ... do your own searching.

Iraqi oil isn't going to pay for squat. The idea that oil revenue would pay for reconstruction was pure masturbatory fantasizing by the neoconservative faction, based on the assumptions 1) that oil prices would stay inflated, and 2) that Iraq could return to production levels it hasn't had since the 1970's-- before the Iran-Iraq war, for heaven's sake-- and 3) that no-one-- not OPEC, or Kuwait, or al Quaeda, or Hezbollah, or ... well, anyone-- would spit in the soup.

It ain't happening. And as that country descends into the chaos of civil war-- and you're a blind fool if you don't see that that's what the hit on al-Hakim really means to Iraq's Shi'ites-- it ain't going to happen.
posted by Cerebus at 10:11 PM on August 30, 2003

I understand the initial urge to think it silly when other nations demand a UN vote before participating, and I am not one ot overestimate the efficacy or scope of the UN. However, it's important to remember how this diplomatic mess began. The US showed an abject disregard for proceduralism, both international (ignoring a UN vote) and domestic (presidential, not congressional, declaration of war), and the disputes about alleged lies and stacking the evidentiary deck wouldn't even be relevant were this not the case.

Insitutions that place a high value on procedure--like the UN or any consitutional government--do so for more than the sake of pomp or nostalgia, and to toss such process aside in tense times is to ignore the hallmark of the integrity of federal and international republicanism: strict adherence to process yields vigorous discussion and facilitates real accountability. The current Iraq situation--a diplomatic quagmire at least--could use a healthy infusion of both.
posted by Ignatius J. Reilly at 10:26 PM on August 30, 2003

a healthier economy would probably be able to sustain the very costly occupation of Iraq, the problem is the "Mystery of the 'jobless recovery'"

Employment growth at the moment is the lowest for any recovery since the government started keeping such statistics in 1939. The labor force shrank in July as discouraged workers stopped seeking employment. The number of people employed has fallen by more than 1 million since the "recovery" began in the fall of 2001.
posted by matteo at 7:58 AM on August 31, 2003

it's a bit troubling to think that, for as long as perle, cheney et al had this war with Iraq thing in the works, they've still managed to blow it.
posted by mcsweetie at 8:59 AM on August 31, 2003

Cerebrus, when you use polemical phrases like "masturbatory fantasizing" are you really suggesting that senior policy makers actually masturbate to petroleum forecasts or is just polemic of the sort that is satisfying to the writer and causes others to dismiss the rest of their comment without reading it? I think you know what I mean here.

To suggest that Iraqi oil will pay for reconstruction costs over the next two years is just silly. To suggest that over the long run it will provide the guaranteed income necessary to fund basic infrastructure is another.

The CSM makes a lot of the size of Iraq's government expenditure. I would note that like basically every other Arab state, the Iraqi one was grossly bloated. Cut the army from half a million men to a more reasonable number, eliminate the secret police, torturers, informants, palaces, kickbacks, etc. and a lot of dough can be saved. Absent sanctions, would government rations really be necessary? In 2006 will Iraqis be getting most of their calories from state hand outs? I doubt it. Indeed, the size of the state and its arbitrary and capricious power is one of the chief obstacles to economic and social progress across the region. Better it starve.
posted by ednopantz at 9:48 AM on August 31, 2003

ednopantz:
When you use the word "silly" do you really mean that Cerebus is wearing a rainbow clown wig and making ballloon animals? Or are you just using language non-literally to communicate a point?

Better it starve.

It=They. Ask the hundreds of thousands of Russians who fared poorly following the end of communism. Getting people used to and participating in a market economy is complicated and difficult, and can't be accomplished by a mere Nordquisting "drowning" of the Iraqi state. As distatsteful as you may find it, socialism is still the infrastructural and additudinal reality in Iraq.
posted by Ignatius J. Reilly at 10:27 AM on August 31, 2003

When you use the word "silly" do you really mean that Cerebus is wearing a rainbow clown wig and making ballloon animals? Or are you just using language non-literally to communicate a point?

Actually, you have it backwards. Had I said "take off the clown wig", I would have used hyberbole in a fashion that could potentially undercut the argument. In such a case, 'don't be silly' is probably preferrable. Mostly my reaction comes to the increasingly strident language one sees on the "Left" that comes from only reading/listening to those who share their worldview. (Needless to say the "Right" does the same. Indeed, the bloggers today sound like the Spectator editors in 1998.) People who have contributions to make alienate an audience. Preaching to the converted does little good.

And on to the main point: 1) Iraq hardly qualifies as a socialist state, despite rhetoric to the contrary. 2) It is a lot worse shape than the former USSR and it didn't get that way overnight. Things in Iraq are likely to get better not worse with the demise of the Baathist welfare state if only because have gotten so much worse on its watch. Beating that track record should be a snap. 3) Given the quantity of human misery that lies at the doorstep of the "Socialist" Arab states, I lean towards with Grover on this one. (Only the most loony libertarians can compare the IRS to the Special Republican Guard with a straight face.) 4) One doesn't need to cut everything at once: just because you think say, the Pentagon is a waste of money doesn't automatically make one a critic of the school lunch program. 5) APCs are expensive, cooking oil is cheap. One can easily imagine a state providing another two years of rations in some places and still being half the cost of the prewar state because it isn't getting swindled by Saddam's cousins in its deals for banned spare parts for weapons, etc.
posted by ednopantz at 1:06 PM on August 31, 2003

So let's see, ednopantz, previously you predicted that the 'amateurish' Al Qaeda, as you described them, may very well have peaked...

Of course, there is this today--Mosque Blast: 19 Al Qaeda Nabbed. Gee, those hamhanded amateurs with their clumsy crude preplaced remote control car bombs--they just don't know when their asses are whipped, do they?

Now you share with us your light-at-the-end-of-the-tunnel economic forecasts--no doubt as accurate as your predictions of Al Qaeda's imminent demise. Insofar as prognostications are concerned, beating your track record should be a snap.
posted by y2karl at 1:36 PM on August 31, 2003

Wow, so we aren't just building democracy in Iraq, we are building a republican democracy? That's scary as hell as it implies that Iraqis will have no choice what form their new "democracy" takes.

I'm not sure how the Bush admin. can work itself from under the fact that the occupation is going to cost more money and more lives then anyone involved was willing to commit to.
posted by elwoodwiles at 2:28 PM on August 31, 2003

op-ed by left - lauded
op-ed by right - criticized and "discussed" in metatalk

nope, no leanings here...
posted by alethe at 3:42 AM on September 1, 2003

nope, no leanings here...

Yeah, heaven forbid anyone should have an opinion.

This isn't a publication claiming a public service-- i.e., presenting the reporting of news. It doesn't have to be unbiased.

Christ, I hate that. I hear it from the Right all the time. Any time I express my opinion I'm biased-- of freaking course I'm biased you pack of morons, I'm a thinking damned person.

Of course, right-wing opinions are "objective."
posted by Cerebus at 1:39 PM on September 1, 2003

Don't forget Fair and Balanced.
posted by soyjoy at 10:30 PM on September 1, 2003

Christ, I hate that. I hear it from the Right all the time. Any time I express my opinion I'm biased-- of freaking course I'm biased you pack of morons, I'm a thinking damned person.

you obviously didn't understand the point -- when an opinion from the right is posted it is criticized and taken to metatalk to "discuss" whether op-ed articles should be posted.
but when an opinion from the left is posted, it is lauded and "discussed" on metafilter. that's a double standard - if you can't see that, then not only are you biased but you're blind too.
posted by alethe at 6:25 AM on September 2, 2003

Thanks, alethe, for a brilliant example of right-wing rhetoric: Name-calling while whining about some elusive "double standard" that favors liberals, backed up, as usual, by no evidence whatsoever. So it's up to those of us who actually think to post citations to the contrary...
posted by soyjoy at 8:14 AM on September 2, 2003

when an opinion from the right is posted it is criticized and taken to metatalk to "discuss" whether op-ed articles should be posted.

Did you ever stop to think that maybe, just maybe, it's because the "opinion from the right" invariably ends up being some ranting, vitriolic screed with no point whatsoever except casting aspersions as far and wide without any shred of reasoned analysis or proof by example?

Whereas the "opinion from the left" typically has all those pesky facts & figures embedded in it from which it draws a conclusion, complete with a step-by-step trace of the reasoning to get there, all of which in and of themselves are worth discussing?

Did that ever occur to you?
posted by Cerebus at 12:44 PM on September 2, 2003

Did you ever stop to think that maybe, just maybe, it's because the "opinion from the right" invariably ends up being some ranting, vitriolic screed with no point whatsoever except casting aspersions as far and wide without any shred of reasoned analysis or proof by example?

... because opinions from the left are never rants or screeds etc etc. -- sadly enough the 'right' didn't start this name calling on this thread or the thread i referred to - "This is garbage." http://www.metafilter.com/mefi/27854 - http://metatalk.metafilter.com/mefi/3482 - (for more evidence you only need to go to metatalk and the archives of metafilter).

...all of which in and of themselves are worth discussing?Did that ever occur to you?

so, no, that didn't occur to me in this thread because it didn't happen. (especially when you suggest only left opinions meet this criteria). i will agree that there are opinions on both sides worth discussing, but when i see something worth discussing from the right and it is immediately slammed then i see a double standard.

soyjoy - just for reference the posts you link to are mostly left of left so that there are still numerous left posts that were lauded by the posters here and not dragged to metatalk. so i will consider your points if you can show me an example of a right thinking post that you liked or thought worth discussing. (and if you don't think articles from alternet or motherjones are left of left then i guess you really can't come up with an example).
posted by alethe at 2:36 AM on September 3, 2003

if you can show me an example of a right thinking post that you liked

All the posts I like are right-thinking.

Seriously, it's comical of you to try that "you can't come up with an example" crap. Man, I thought Cerebus was being unduly harsh with you, but no longer. You made a statement about what happens with right-leaning threads vs. what happens with left-leaning ones, providing no citation whatsoever, though it was obviously understood that you were basing the "trend" on ONE recent MeTa callout.

If your assertion were true, I would find ZERO counterexamples. Finding even ONE would cancel out the "trend." But I found FIVE and only stopped there because it was plenty to make my point. Now you are making a whole other assertion and asking me to research it for you. Sorry, but it's up to you now to support your initial statement by finding AT LEAST SIX examples of what you said happens with right-leaning threads - though for your statement to be even close to the truth, the number of call-outs on your side should be a multiple of mine, i.e. TEN or FIFTEEN.

I'll wait here.
posted by soyjoy at 11:01 AM on September 3, 2003

If your assertion were true, I would find ZERO counterexamples.

you should really read my posts instead of glossing over them - i already addressed your examples and gave one of my own. i don't much need to find any more for you based on your arbitrary numbers. i supported my statement - it's fine if you don't like it, but i made my point and i'm done.
posted by alethe at 12:05 PM on September 3, 2003

Whuh? You've never "supported [your] statement" beyond spelling out the one thread you were obviously referring to in your original comment, which was, just in case you didn't bother to read it before posting it:

when an opinion from the right is posted it is criticized and taken to metatalk to "discuss" whether op-ed articles should be posted. but when an opinion from the left is posted, it is lauded and "discussed" on metafilter.

So I produced five counterexamples - in each one an "opinion from the left" being "criticized and taken to metatalk to "discuss" whether op-ed articles should be posted" - and challenged you to give me at least that many more to make your assertion even marginally true. Instead you come up with this new "left of left" category, as if your right-wing perspective on the posts trumps the actual evidence at hand. Sorry, but that's not "addressing [my] examples."

This is classic right-wing strategy, as Geoff Nunberg showed in tracking down the actual numbers and debunking a similar claim: "There's a bias against conservatives! And don't tell me any facts to the contrary, what I say goes!" Again, I thank you for illustrating it so clearly.
posted by soyjoy at 12:46 PM on September 3, 2003