Professor Anita Dancs

Who Benefits from the Midddle East Wars?

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I’m speaking with Prof. Anita Dancs , a Professor of Economics at Western New England University and contributed to the Costs of War study, recently released by Brown University.

I’m speaking with Prof. Anita Dancs, a Professor of Economics at Western New England University and contributed to the Costs of War study, recently released by Brown University.

In your study you went into the costs of war. Are there any economic benefits from the war that might offset, in the long run or in the short term, the outlays for the wars, such as reconstruction contracts, cheaper oil, etc?

Certainly, every time the government spends money, it contributes to what economists call aggregate demand and increases GDP. The problem with looking at that rather simple economic analysis is that there are opportunity costs of that money. All of the money being spent to wage war in Afghanistan, Iraq or whatever could have been spent on other types of economic activities, for example education or renewable energy to replace the oil, which we increasingly import. One of the contributors did a study showing that when you spend on these other types of economic activities, such as education or renewable energy, you actually can create more jobs than you can through military spending. So, in reality, economic benefit from waging war is what economists call a “broken window policy”. Yes, if you break the window it increases GDP, but really wouldn’t it be better to spend that money on other things that have more substantial long-run benefits to our economy?

$4 trillion. That’s a lot of money. Most of us can’t imagine that much. Can you give our listeners a bit of an  idea of, if that was spent on creating jobs, hiring teachers or something, how much could $4 trillion buy to help the American public?

Certainly, if we just look at what was spent on military prosecution in Iraq and Afghanistan, we see that millions more jobs could have been created, if we had spent the money on something else, on education, on health care, on the smart grid, on mass transit, what have you. You can see those figures for yourself if you come to the website CostsOf War.org.

As an economist, have you seen any change in Obama’s policies as opposed to those of former president George Bush?

I don’t see a great change. But I think there is some prospect for a change. But, certainly, the Obama Administration began certain policies and reversed certain policies with respect to the war on terror. So, I think the future is still open-ended. I think we, as Americans, still have a chance to change our future and change our destiny as far as the so-called war on terror. But I have to say that the Obama Administration hasn’t changed the policies that much from the Bush Administration.

I’ve recently spoken with counterterrorism experts and some other experts. And they all said about the same thing – they don’t know why the US is in the Afghanistan, for example. Economically, do you see any reason why the US is in Afghanistan?

Well, no. Certainly, the economic benefit of the US waging the war in Afghanistan is really nothing, because, again, if we could spend these amounts of money in other ways that would be more beneficial to our economy. Certainly, from an economic perspective there is no gain to the war in Afghanistan.

No reconstruction contracts, or cheaper oil? Nothing like that?

The war in Afghanistan isn’t going to lead to cheaper oil. It’s not clear if any war is going to lead to cheaper oil. I think the long-run prospect is to reduce the oil dependency through changing our policy, not through waging war. And I think from a moral standpoint, not even from an economic standpoint, but both from an economic and moral standpoint, it’s ridiculous to think that we should wage war in order to secure cheaper oil. But certainly, the economics don’t really make sense. We could build up an infrastructure in the US that’s better for our economy, that reduces our dependency on oil. So, no, I don’t think there are real economic benefits to be had.

The reason of your study was to get the government to be a little bit more open on the actual costs being spent. Do you think many of the war on terror costs have been hidden under the blanket of security? And who is taking advantage of this – if anyone?

Yes, I think there’s been an amazing amount of propaganda around security, and the war of terror, if anything, has undermined our security and created more hostility towards the US around the world. It’s widely perceived by Muslims as a crusade. So, I think, clearly, it hasn’t added to American security. And at the same time it has undermined, I would argue, our economy.

Did you have any obstacles in doing your study? Did you run up into any brick walls of areas, where you couldn’t get information?

 I think the biggest issue with doing a study like this is that it’ an ongoing project, a project that many more researchers need to work on. We’ve only hit the tip of the iceberg, as far as showing what these costs are and measuring them in quantitative ways. I think there’s just a lot more of work to be done to come up with quality estimates around what the real costs are, whether they are human costs, social costs, economic costs. I just think there’s more work to be done.

Again, who is profiting from these wars – if anyone?

I think one of the side effects of the war on terror has been to create a new industry. We’ve always had defence contractors. But I think we’ve created this whole new industry around war profiteering. And I think that’s a problem. I think they are politically powerful, they are going to be part of our economic infrastructure in the future and they are going to weigh in on policy in ways that are really detrimental to the average American. So, yes, there is this whole new set of businesses all set up around the war on terror. That’s really problematic, and we are going to have to take that on and deal with that.