The opportunity cost of war
Among the responses to this post on the costs and benefits of the Iraq war, quite a few commenters doubted that it was reasonable to express the opportunity cost of war in terms of the alternative of an allocation to foreign aid.
This NY Times editorial refers to the fact that the main EU nations have finally made a serious commitment to increase overseas development aid to 0.7 per cent of GDP, a target that’s been around for a long time, but never reached. The US currently gives about 0.2 per cent, and an increase to 0.7 per cent would cost around $50 billion per year, which is pretty close to the annual cost of the Iraq war effort. It’s the one major country that’s holding out against making any sort of commitment.
Of course, it might be said that Americans, unlike the citizens of other developed countries, are prepared to pay to kill people, but not to help them, so the opportunity cost calculation is still irrelevant. Apart from being closely akin to the slur that Arabs are incapable of handling democracy, this runs up against the problem that many Americans support the view that the US government should give large amounts of foreign aid, well in excess of 0.7 per cent of GDP. The problem is that they imagine that the government is actually doing this on a still more lavish scale. On average, Americans think that 24 per cent of US government expenditure is allocated to foreign aid – the true figure is 1 per cent.
A more plausible objection is that it’s possible to do both. The UK was part of the Iraq war (though its contribution, in relative terms was much smaller than that of the US) and it has committed itself to meet the 0.7 per cent goal. To this my response is, let the US make a substantial commitment on aid first, and then it will be time to recalculate the opportunity costs of war.