What is state failure? See my conceptualisation of state failure on the right flank below.

Thursday, December 24, 2009

Cost mania

Linda Bilmes is selling some conceptual nonsense to Xinhua, about the costs of the war in Afghanistan.
It is interesting nonsense, for sure. Quote:
'In World War II, for example, the peak year for paying out disability benefits came in the 1990s, as medical care becomes more expensive when veterans become older.
"And for Vietnam we are nowhere near the peak year for paying out disability," she said.'
Statements like these are intellectual stimulation to the curious mind, and I would not deny that they have practical relevance.
But pretending that as a supersmart economist one can count the costs of a policy (without mentioning a huge number of necessary caveats) is just a non-starter as far as I am concerned.
Why doesn't Linda Bilmes count the costs of maintaing the United States of America with its institutions? Clearly, it is a prerequisite to having a U.S. policy towards Afghanistan.
Don't tell me I am taking this beyond some reasonable limit just to portray as absurd that what she is saying. She is doing this herself. Her arguments include that the next Bill Gates (you heard it right) may not be born as a result of sacrifices in Afghanistan, and she is critical of "Pentagon accountants" because of this...
And how can an economist assume that all the money spent partly fuelling the U.S. economy through contracts of all sorts (including in defence procurement), giving opportunities to U.S. (and other Western) companies, is money that is all lost?
Are there only costs, or will Linda Bilmes care to count benefits as well...? I mean, if we shouldn't take this as a statement that she doesn't see any benefits. And what about alternative costs...? And so on...
Finally, to get out of the box which I wouldn't allow Linda Bilmes to impose on me, as to "the peak year for paying out disability:" why not regard these years right now as years of paying out disability in Afghanistan (to Afghans), given all the fruits of U.S. policy since July 3, 1979 (when, let me remind you again, U.S. President Carter decided to give the green light to providing support to Islamist insurgents there, starting U.S. war involvement in Afghanistan).
Having said that, I am all for her advice on the need to increase development spending. But even there one would need to see that it is not something that can come instead of spending on military operations.
Update: Here is another funny example of how self-confident economists can get lost in the woods. The story of a UK guy who thinks he is not spending any money and that thereby he is "self-sufficient." Cycling around... on roads that were built and maintained by whom, huh? In the general safety of working law and order maintained by whom? Not to mention the terrible alternative cost if we assume that he could as well be the next Bill Gates, instead of just wasting time out there in the wilderness (which is otherwise perfectly fine with me).

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