Bryan Caplan  

What Nordhaus Said in 2002

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Economists are great at "predicting" events after they happen. Unfortunately, the real trick is predicting events before they happen. Friedman thus deserves extra credit for foreseeing stagflation. Donald Wittman deserves extra credit for foreseeing the base closings bill. Now I'd like to hand out another foresight award to Bill Nordhaus. Here's what he said about the Iraq War back in 2002:

Particularly worrisome are the casual promises of postwar democratization, reconstruction, and nation-building in Iraq. The cost of war may turn out to be low, but the cost of a successful peace looks very steep. If American taxpayers decline to pay the bills for ensuring the long-term health of Iraq, America would leave behind mountains of rubble and mobs of angry people. As the world learned from the Carthaginian peace that settled World War I, the cost of a botched peace may be even higher than the price of a bloody war.
Economists of all people should have been open to the possibility that intervention in Iraq would actually make matters worse. But Nordhaus was one of the few who saw it coming, and went on the record. Well done.


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COMMENTS (26 to date)
Barkley Rosser writes:

Well, heck. On the day that Tikrit fell I wrote an editorial column that was published about a week later in the Harrisonburg Daily News-Record. I said that there were three good things that would come out of the war and three bad things. The good things were that 1) Saddam would no longer engage in human rights violations, 20 that US troops would be largely withdrawn from Saudi Arabia (not needed for overflying Iraq, which would reduce the al Qaeda propaganda about infidel troops in the Islamic Holy Land), and 3) that international economic sanctions would be withdrawn against Iraq, thereby improving the prospects there, irrespective of what government would eventually come to power (or at least reduce the costs).

The bads were that 1) women would lose rights (they must now wear veils in most of southern Iraq and even in much of the central part of the country, among other restrictions), 2) Christians would experience discrimination and represssion (half of the nearly 2,000 years in place Christian population has left Iraq since the end of the war due to this mostly unreported phenomenon), and 3) that al Qaeda and international terrorism would gain and get more recruits due to international opposition to our invasion, with this opposition most acute in the Muslim world (which I considered to be the most important of all these effects at the time).

I would claim to have been right on all these points.

z writes:

One can reasonably infer that Nordhaus was saying that we'd better not screw up the peace.

I also note from Nordhaus that WW II cost 130% of GDP. Was that worth it?

And I calculate that the Iraq war, using Nordhaus' figures of $2 trillion, hell, lets kick in another trillion to $3 trillion, costs 1.7% of GDP, assuming our average GDP in constant $ from 2003 to 2007 can without growth equal $54.6 from Trillion from 2008 to 2013.


Is this worth the possible benefit of a stable democratic Iraq in the midst of totalitarian regimes?

Wes Johnson writes:

A professor in Economics should know better.

There were thousands of predictions and predictors of the consequences of going to war in Iraq. Most of them were wrong, but of course, just by sheer luck, some of them were right.

I'll bet some sportswriters or fans correctly predicted that the Red Sox would be going back to the World Series this year.

Is that because they are just so knowledgeable about baseball that their analysis lead them inexorably to the conclusion that the Red Sox would be back int he Series?

No. Lucky guess.

Nordhaus did not have possession of such superior knowlege and wisdom that he was able to correctly predict the current situation in Iraq. He made a guess which turned out to be, arguably, correct.

Barkley Rosser writes:

Wes,

Actually knowledge does help. There were very well informed people in certain places in the US government (State and CIA and DIA) who knew a lot and forecast most of the problems that happened later. However, they were roundly ignored before we went in. As for me, I have spent a lot of time in the Middle East. I don't know about Nordhaus. Maybe he was just lucky.

The only problem for Nordhaus being that Iraq isn't worse off. At least according to this:

...three and a half years after the start of the insurgency, most of the big questions in Iraq have been resolved. Moreover, they have been resolved in ways that are mostly towards the positive end of the range of outcomes imagined at the start of the project. The country is whole. It has embraced the ballot box. It has created a fair and popular constitution. It has avoided all-out civil war. It has not been taken over by Iran. It has put an end to Kurdish and marsh Arab genocide, and anti-Shia apartheid. It has rejected mass revenge against the Sunnis. As shown in the great national votes of 2005 and the noisy celebrations of the Iraq football team's success in July, Iraq survived the Saddam Hussein era with a sense of national unity; even the Kurds—whose reluctant commitment to autonomy rather than full independence is in no danger of changing—celebrated. Iraq's condition has not caused a sectarian apocalypse across the region. The country has ceased to be a threat to the world or its region. The only neighbours threatened by its status today are the leaders in Damascus, Riyadh and Tehran.

....Understanding this expensive victory is a matter of understanding the remaining violence. Now that Iraq's big questions have been resolved—break-up? No. Shia victory? Yes. Will violence make the Americans go home? No. Do Iraqis like voting? Yes. Do they like Iraq? Yes—Iraq's violence has largely become local and criminal. The biggest fact about Iraq today is that the violence, while tragic, has ceased being political, and is therefore no longer nearly as important as it was.

Some of the violence—that paid for by foreigners or motivated by Islam's crazed fringes—will not recede in a hurry. Iraq has a lot of Islam and long, soft borders. But the rest of Iraq's violence is local: factionalism, revenge cycles, crime, power plays. It will largely cease once Iraq has had a few more years to build up its security apparatus.

There have been four main sources of political violence in Iraq since the invasion. The "insurgency," which means the Sunni violence, comprised three of these four elements: Baathists, Sunni religious fundamentalists (whom we will call Wahhabis after the most important of their closely related strains), and Sunni tribes. (The fourth source of violence is Shia, about which more later.) Baathism, modelled from its birth in the 1940s on German national socialism, is a secular movement. Wahhabism, fighting for a return to the pure days of Islam in the 7th century, is the opposite. It was clear from the beginning that these two tendencies, which today are fighting each other in much of Sunni Iraq, would not get along forever.

Equally clear was that neither could win in their battle for Iraq. The Baathists wanted a return to the privileges they enjoyed under Saddam. The Wahhabis wanted a return to the days of the prophet. Neither was going to happen; for the 85 per cent of the country that is not Sunni Arab, these forms of Sunni Arab totalitarianism were the ultimate non-starter. Sunni power was broken by the invasion: Iraq, finally recognising a group three times as numerous as the Sunnis, had become a Shia country; Baghdad, the dowager capital of Islam, is today a Shia city for the first time since 1534.

All this was foreseen in the first phase of the violence, from the insurgency's start in spring 2004 until the Samarra mosque bombing in February 2006. The Baathists, thugs but rational actors, would eventually give up and sit down to bargain for as much as they could get from the mess they had made. And the Wahhabis, answering to a higher power and mostly foreigners anyway, would keep blowing themselves up. All sides acknowledge that this is what is happening today: the Wahhabis continue to cross the border in search of their 72 virgins in paradise, and the Baathists are negotiating with the Shias and the Americans to come inside the tent.

Wes Johnson writes:

Barkley,

I don't doubt that there were. But there were also those who predicted the opposite. To sit here today and with 20-20 hindsight say "well, those who predicted correctly were obviously the ones with superior predictive abilities" is the functional equivalent of predicting events after they occur.

I thought Nordhaus' analysis was pretty interesting. But he also warns of the possibility of weapons of mass destruction being used, and that the Iraqis might employ urban warfare tactics, neither of which came true.

TGGP writes:

Bryan, Steve Sailer challenged you a little while back to state what your opinion of the war was in the month of the invasion. I'd be curious to know as well.

Barkley Rosser writes:

Wes,

As I noted, I am not particularly defending Nordhaus. I agree that he was lucky. I am not aware of him having any special knowledge of Iraq or the Middle East.

Patrick Sullivan,

Your authorless link is full of lots of baloney, although some of it is correct (some of my forecasts depended on an expectation of a somewhat democratic outcome, namely that fundamentalist Shi'a would come to rule, which would damage the status of women and the Christians). I will simply note three points.

1) In many instances the presence of US troops or overseers has made things worse rather than better. The resistance of the Baathists has been largely due to our stupid de-Baathification and dismanting of the Iraqi army after our overthrow of Saddam. In Anbar there is good reason to believe that the tribal sheikhs would have turned against the foreigners sooner without the US there. The puffing of the role of the surge in that is a joke. It was happening before the surge. And, although I did not write it in my column, I did expect US troops to quickly become viewed as imperialistic occupiers whose presence would inspire recruitment and violence.

2) The Kurds may yet go for independence. War is boiling on their border with Turkey, thanks to their support of the PKK. They are cutting oil deals with foreign companies (such as Bush's buddy Hunt's company), against the wishes of the central Baghdad government. All kinds of pollyannas have been declaring an oil deal to be done or about to be done for many months, but it is still not done. Indeed, oil production has never gotten back to where it was under Saddam, so all the flap about the groups wallowing in the oll trough is just a sick propagandistic joke.

3) Most recent estimates have up to a million dead with it likely expenditures will reach a trillion dollars. All this in just over four years, far eclipsing any deaths that Saddam pulled (and he had not committed genocide against the Kurds since 1988, when his doing so was winked at by the US). Indeed, he had done little killing of anybody, aside from the occasional political execution, for quite some time. In the meanwhile, Salafic fundamentalism (not so much Wahhabism) and its accompanying terrorism has been stimulated globally by our activities. Was all this worth it? Your linked comment is not even worth being a joke.

spencer writes:

Wes--We have not been seeing urban warfare tactics for the last 4 years?

Could have fooled me.

spencer writes:

Stagflation was often forecast, but it never really happened--real GDP growth was stronger in the 1970s than in the 1980s.

average real gdp growth:
1970-79....3.3%
1980-89....3.1%

Nathan Smith writes:

I'd be interested to see Bryan argue that "intervention in Iraq... made matters worse." But then, I always thought the "give me liberty or give me death" line made sense, so perhaps I'm unrepresentative. Yet Iraqis also think the war was worth it:

Iraqis still think it was worth it
Although some people still try to pretend otherwise, it has long been clear that in 2002-2003 most Iraqis (unlike most non-Iraqi Arabs, most Europeans, and many others) favored the war to overthrow Saddam Hussein & his regime, however ambivalently. Non-Iraqi Arabs, in particular, wanted Iraqis to sacrifice themselves to the last Iraqi for Saddam, but Iraqis overwhelmingly felt otherwise.
Since then, Iraqis have suffered through almost three years of chaos, mismanagement, violence, large-scale unemployment, economic failures, and other problems. They have also been repeatedly polled, and with only one ambiguous possible exception I am aware of, Iraqis have continued to say by decisive margins that, on balance, getting rid of Saddam Hussein was still worth it.
They have now said this again. In a poll conducted in January for WorldPublicOpinion.org by the Program on International Policy Attitudes (PIPA) at the University of Maryland, Iraqis were asked, among other things:
“Thinking about any hardships you might have suffered since the US-Britain invasion, do you personally think that ousting Saddam Hussein was worth it or not?” 77% say it was worth it, while 22% say it was not. [my emphasis]
Polling results should always be taken with a grain of salt, but it is worth pointing out that just about all the relevant data available from the past four years points in the same direction.

(link: http://jeffweintraub.blogspot.com/2006/02/iraqis-still-think-it-was-worth-it.html)

Perhaps Bryan just places an unusually low value on liberty?

TGGP writes:

Nathan Smith, I think it's arguable whether Iraqis have freedom now.

Bryan also doesn't think the American war of independence was worth it.

Tom writes:

"3) Most recent estimates have up to a million dead with it likely expenditures will reach a trillion dollars. All this in just over four years, far eclipsing any deaths that Saddam pulled (and he had not committed genocide against the Kurds since 1988, when his doing so was winked at by the US). Indeed, he had done little killing of anybody, aside from the occasional political execution, for quite some time."


Barkley,
The Lancet 1 million number was quickly refuted. The usually accepted number is still under 100k.

And while Saddam's appetite for killing was less than before, he surely would have killed many more in the same time period.

TGGP writes:

Tom, who debunked Lancet? I admit I wasn't paying much attention at the time.

Caliban Darklock writes:

I think Bryan's talking about "worse" as in "for the world", not "for Iraq" or "for America". America's political climate will certainly be different; Iraq's situation will certainly be different; but the impact is still worldwide. It's simple ignorance that leads Americans to think the war in Iraq is just about America and Iraq - it affects everyone. It affects our allies, our enemies, our own people, the people of Iraq, the community of Islamic people, it just cascades all around the world.

The irony is that all the opposition to the war just reveals us to be a nation full of spoiled, selfish, ignorant little children who would rather just let Iraq burn than spend our tax dollars on it... and that doesn't make us look very good.

Nathan Smith writes:

"I think Bryan's talking about "worse" as in "for the world", not "for Iraq" or "for America". America's political climate will certainly be different; Iraq's situation will certainly be different; but the impact is still worldwide."

Well, okay. If that's what Bryan meant, it would be interesting to see Bryan argue that that the Iraq War has made things worse for the world. Let's start by noting that this is probably the best time in the history of the world. That more people are alive, free, long-lived, and literate than ever before in history has probably been true at any time within the past couple of decades: when the world is steadily improving, it's always better than it's ever been. What is unique now is that for four years or so we've had global economic growth at unprecedented pace, touching every region of the world. (See my blog post: "How Good is the Economy?" http://freethinker.typepad.com/the_free_thinker/2007/05/how_good_is_the.html.)

Now, that probably doesn't have much to do with the Iraq War, though it might. Dictators might have seen what happened to Saddam and drawn a conclusion like this: "Whoa, look at that! America just overthrew a guy just because they wanted to! Well, and because he was a murderous tyrant who made life miserable for his people. But he didn't do anything specific to trigger the invasion. That could happen to me! How can I prevent it? If I liberalize politically, I'm very likely either to get toppled, or else to have to bloodily repress protesters and oppositionists and get bad press coverage abroad that could lead to my overthrow. So how do I minimize my chances of being overthrown? Well, if I run the economy so as to encourage lots of economic growth, that will weaken the humanitarian case for overthrowing me. Iraq was an economic ruin as well as a grotesque murderocracy. It would have been harder to argue for 'liberation' if the Iraqi people had been prospering. So the best way to prolong my tenure in office is to keep the screws on political liberty tight, but try to get a lot of economic growth."

Even if you don't buy that argument-- and I'm too lazy at the moment to study whether that's really what's happened-- how does one argue that the Iraq War made the world worse off, when the world is doing unprecedentedly well? You could, of course, argue that the world would be even better off without the war. Still, what concrete harms have been done to anyone other than America and Iraq? The violence doesn't seem to have spread to the rest of the Middle East, let alone the world. There hardly seem to have been negative economic reverberations. A lot of al-Qaeda terrorists have been killed, and if more have been recruited as the chattering classes are constantly speculating, they haven't pulled off anything noteworthy.

One would expect that if anyone would be harmed by the war, the victims would be Americans, whose blood and treasure have been sacrificed (as well as that of the British and other allies', of course) or the Iraqis, who have done most of the dying in the civil war. That the rest of the world has been against the war is hardly surprising: not being directly affected, they are rationally uninformed, and "war" sounds like a bad thing. But it's hard to see why they should be the victims.

Student writes:

How does Paul Krugman not get props for this very same prediction? Oh. I think I know why.

1) In many instances the presence of US troops or overseers has made things worse rather than better.

Which is irrelevant. The question before us is 'on balance' is Iraq better or worse off. 'Many instances' doesn't tell us anything worth knowing.

The resistance of the Baathists has been largely due to our stupid de-Baathification and dismanting of the Iraqi army....

The army dissolved by itself, there was nothing we could do about it. Many soldiers were conscripts who didn't want to be there in the first place.

As for de-Baathification being stupid, that's hindsight, and you can't know things would have gone smoother if we done something else with the Baathists--they weren't very popular with the bulk of the populace, were they?

In Anbar there is good reason to believe that the tribal sheikhs would have turned against the foreigners sooner without the US there.

They wouldn't have been there except for the US deposing Saddam. What you have to show is that the entire country--not just the Sunni tribes--is worse off with the foreign jihadists than they were with Saddam in power. You haven't done that.

The puffing of the role of the surge in that is a joke. It was happening before the surge.

Again, you offer nothing in the way of evidence. Just a bald assertion. There are people blogging from Iraq who have different opinions, why should we believe you over them?

And, although I did not write it in my column, I did expect US troops to quickly become viewed as imperialistic occupiers whose presence would inspire recruitment and violence.

Again, irrelevant. The issue on the table is not would SOME view us as imperialists--many have for years before we invaded--it's ON BALANCE is Iraq better or worse off. You simply are not addressing that.

2) The Kurds may yet go for independence.

'may' isn't a fact.

War is boiling on their border with Turkey, thanks to their support of the PKK.

That the Kurds don't get along with Turkey (or Iran) isn't exactly news.

They are cutting oil deals with foreign companies (such as Bush's buddy Hunt's company)...

Oh, you're one of those.

....3) Most recent estimates have up to a million dead...

That's been demolished for a long time. It's a ridiculous claim for a nation of 25 million people. There'd be huge refugee camps in adjoining countries if it were so. And lots more evidence of destruction of property.

Barkley Rosser writes:

Tom,
There were people who claimed Lancet was refuted, but most of them did not have much credibility. It mostly still stands. The more recent number comes from a recent British study, reemphasizing the credibility of the original Lancet study.

Barkley Rosser writes:

Patrick R. Sullivan,

I hate to be Realpolitik and all, but in this situation I am more interested in what is good for the US. I see huge costs and loss of international standing and increases in foreign terrorism and recruitment from our invasion of Iraq. I see very little gained, other than two of the three things listed.

The army did not dissolve itself and pretty much everybody who knows anything now agrees that the de-Baathification was a massive act of stupidity. Excuse me, but you have no credibility yourself, if you are going to spout this drivel.

BTW, it is very likely that a majority of the Iraqis are pleased that Saddam is gone. I listed that as one of the good things. But is it good for us? What was he doing to us? Not a damned thing, as it turns out, although there was a lot of phoney hype and claims that he was.

Also, of course, the millions who have fled the country and the million who are dead are not answering any polls. I would say that they are all worse off.

Barkley Rosser writes:

Sullivan,

BTW, do you want to tell us who wrote that drivel in that link of yours? One of those neocons who was forecasting that we would have flowers strewn in the streets for us? Frankly, my track record on forecasting there beats all of theirs put together, and this bozo's as well.

Barkley, an appeal to your own authority is one of the worst of the logical fallacies.

Nathan Smith writes:
Also, of course, the millions who have fled the country and the million who are dead are not answering any polls. I would say that they are all worse off.
I wouldn't. A lot of people would have liked to emigrate from Saddam's Iraq and couldn't. I could say that freedom to emigrate is one of the benefits of the invasion, but that's only one side of the coin: for many, emigration is abandoning a beloved home and represents a terrible personal tragedy. And to the extent that systematic ethnic cleansing has taken place it's a cause for grave concern. Still, it's not clear that the refugees and emigres have been made worse off by the invasion.

If the US were ruled by a guy like Saddam and a foreign invasion gave me a chance to emigrate, I'd regard that as a great benefit.

Nathan Smith writes:

If Bryan meant that the Iraq war would make things worse for the US, that's an easier argument to make. But it's irrelevant for those of us who supported the war because we wanted to liberate Iraqis from tyranny even at some cost to ourselves. What we spent liberating Iraq is a fraction of the handouts we give to affluent retirees every year.

Barkley Rosser writes:

First of all, I am going to apologize to both Bryan and to all the readers of this blog. I have indulged in far more than my usually overblown egomania and pomposity in even putting up my first comment, much less the more recent comments I have made. Therefore, this will be my last comment here. Those who disagree may feel free to have the final word(s). Maybe I just felt a bit odd to have Nordhaus being praised, whose forecasting on this matter was a mixed bag, whereas I pretty much got everything I publicly commented on right (the original column is still up on my website, although there were some matters I did not comment on regarding which my expectations and private forecasts were wrong (I, along with all the major intel agencies, thought Saddam had chem weapons; I did not forecast that a serious military insurgency would arise (again, along with pretty much the rest of the known universe), although I foresaw serious political problems (and my column preceded the moronic de-Baathification and shutting down of the Iraqi army carried out by Bremer)).

So, Sullivan. Your point is logically correct. However, I do think track records matter. Mine has been impeccable on this matter, if I may point it out for the last time here. Again, I still do not know who your link is, so cannot comment on his/her past track record. But there are a lot of people who were wildly wrong about nearly every aspect of this from top to bottom, begining to now, who are still being sought out publicly to comment on this situation, as well as related ones, such as Iran, where many of them seem to me to be as wrongheaded as they were on Iraq, and who tend to hand out the sorts of views expressed by your link. As for you, I would be curious what your views and forecasts were when Tikrit fell (or before the invasion), if you are willing to go public with your own track record on this matter.

And, btw, I will repeat that your link is simply wrong about which branch of Islamic fundamentalism has been the biggest problem in Iraq and elsewhere. Although Salafism and Wahhabism overlap to some degree, it is the former that is the main problem.

Nathan Smith,

Of course you are right that we do not have good data on whether refugees and emigres are better or worse off in various senses. However, at least one part of your argument is wrong. Saddam's regime did not forbid people from emigrating, in contrast to the former USSR. And the majority of the emigration has occurred in the last two years or so, that is well after Saddam fell, and after the (post) war got going with all its assorted ills. Certainly interviews with the Christian emigres make it clear that they are leaving because they were being oppressed by the new regime in contrast to the Saddam regime, as I accurately forecast (gad, more egomania). And, of course, I would hope that you do not wish to argue that the dead are better off, whatever their numbers.

Regarding costs, well, there are a lot of other countries out there that are tyrannical dictatorships, quite a few worse in various ways than Saddam's Iraq, especially after he was put in a box after the first Gulf War and stop doing much of anything all that terrible. Burma, North Korea, and some others come to mind readily. Would it be worth invading them also? Why was Iraq so much a higher priority than them or some others? Those nonexistent WMDs?

I will also note that while more Iraqis say they are glad we overthrew Saddam than not (last figure I found from googling was 49% to 26%, with the Kurds and majority Shi'a favorable, while the formerly ruling Sunnis are not), a vast majority would like us to leave now, among all groups, and there is good reason to believe that our leaving (or at least seriously announcing we will) is what would bring about that as-yet-unachieved political reconciliation that was the official rationale for the surge. (Yes, deaths seem to be declining, although 2007 will turn out to be the deadliest year yet for US troops, and as ethnic cleansing leads to a nearly completed self-segregation, one would expect declines in deaths of Iraqis).

I will close by noting that there remains a deep incoherence in our policy that could become a very serious problem in the future. This is that on the one hand we support the current government and national independence from Iran, or claim to, while on the other hand we are battling against the most anti-Iranian and Iraqi nationalist group among the majority Shi'a, the Mahdi Army of Moqtada al-Sadr. The current government is chock full of people allied with Iran to varying degrees. The current shift from fighting various Sunni insurgents to fighting certain Shi'i fctions, notably the anti-Iranian Mahdi Army, simply makes this incoherence all the clearer, and seems to be motivated by even more insanity, namely the current push by the same old crowed to get in a war with Iran. But, this is a different topic for a different thread. And that's all from me on this for now, folks!

> how does one argue that the Iraq War made
> the world worse off, when the world is
> doing unprecedentedly well?

The argument is not that the Iraq war itself makes the world worse off, but that American taxpayer opposition to the war makes the world worse off. In dead-simple terms, taxpayer demand for troops to come home raises the opportunity cost of keeping them in Iraq.

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