Home > Economics - General > Has the US Defense Department killed a million Americans since 2001?

Has the US Defense Department killed a million Americans since 2001?

October 21st, 2011

I’ve spent the day at a workshop on benefit-cost analysis where a lot of discussion is on valuing policies that reduce risks to life of various kinds.  US policy, for better or worse, is focused on  the idea of Value of a Statistical Life. Typically a policy that reduces  risks of death will be approved if the cost per life saved is below $5million, and not otherwise.  (There are similar numbers applied to publicly funded health care services, prescription  drugs and so on, usually per year of life saved).

A striking thing I found out is that anti-terrorism policies of the Department of Homeland Security are subject to  the same benefit-cost requirements as EPA  and Transport. But Homeland Security is only one way  the  US  government spends money with the aim of protecting Americans against attacks from terrorists and other enemies. Defense spending is far bigger and not subject to BCA, even though money spent on defense is money that can’t be spent on reducing terrorism risk through DHS or more reliably on reductions in environmental, health and transport risk

The numbers are quite striking. The ‘peacetime’ defense budget is around $500 billion a  year, and the  various wars of choice have cost around $250 billion a  year for  the last decade (very round  numbers here). Allocated to domestic risk reduction, that  money would save 150 000 American lives a year.

So, since 9/11, US defense spending has been chosen in preference to measures that would have saved 1.5 million American lives. That’s not a hypothetical number – it’s 1.5 million  people who are now dead but  who could have been saved. I think its fair to say that those people were killed by the Defense Department, or, more precisely, by the allocation of scarce life-saving resources to that Department.

What can be said that might suggest that the defense budget didn’t really cost all those lives.? Some objections can be dismissed fast.

First, a lot of people are uncomfortable with notions like valuing statistical lives. But  there’s no need to believe in this notion as far as the  argument here is concerned.  What matters is that there are lots of  policy  options that would save lives at a cost  of  around $5 million each, and those  options are not being taken up.

Second, there are various  responses that amount to the claim taht refusing to  do things that would reduce death  risks is, in some important moral sense, different from doing things that increase death risks. Avoiding the statistical aspect, not saving people when you could do so is morally different from kiling them.[1] I can’t formulate these claims sensibly enough  to refute them, but that doesn’t stop people making them.

More seriously,  it’s not really plausible to think of eliminating defense spending altogether. But if the US spent 2 per cent of GDP like other rich countries (around $250 billion a year) and didn’t engage in wars of choice, it could have saved a million US lives over the past decade.

A still more serious objection  is that  money saved on defense wouldn’t be used to save lives anyway. A couple of responses to this.

 First, even  if the money was just handed back in tax cuts, around 15  per cent would probably be allocated to health care and more to  things like education that are positively correlated with health status. Rounding to 20 per cent, that would still have saved something like 100 000 lives over a decade.

Second, saving American lives is much more expensive than saving lives in poor countries. US military interventions are usually presented as being, at least in part, a kind of foreign aid. But  civilian foreign aid can save lives at a much  lower  cost, perhaps  100 times lower. After deducting various forms of quasi military aid the  US currently spends around $10 billion a year on development aid.  Diverting 2 per cent of  regular defense spending would allow  that to be doubled, and could save something like a million lives a year.

 

fn1. As Clough put it “Thou shalt not kill, but needst not strive, officiously to keep alive”.

Posted via email from John’s posterous

Categories: Economics - General Tags:
  1. TerjeP
    October 21st, 2011 at 12:25 | #1

    More seriously,  it’s not really plausible to think of eliminating defense spending altogether. But if the US spent 2 per cent of GDP like other rich countries (around $250 billion a year) and didn’t engage in wars of choice, it could have saved a million US lives over the past decade.

    That is a lot of lives. I like this line of argument. It is another good point against the whole interventionist military strategy that the US seems locked into. Ron Paul and Gary Johnson are the only presidential candidates that seem serious about fixing this. Although admittedly I have not looked much at the candidates from the left. Obviously Obama isn’t going to deliver.

  2. sam
    October 21st, 2011 at 12:30 | #2

    The claim that sins of omission are less egregious than ones of commission might not be philosophically justifiable, but we all live our lives that way. I’m sure no one here would start a scheme that gave them $1000 while killing a statistical African child. On the other hand, no one here has reduced themselves to penury giving their money away to charities that *save* African children for $1000 a pop.

    Just saying “I do give some of my money away for such purposes” doesn’t help you either. However much money you have already given, if you have $1000 spare after satisfying your basic necessities, you are choosing luxury over life.

    I think a practical ethics (one that stands any chance of adoption) has to be consistent with some amount of personal indulgence.

  3. Jim Birch
    October 21st, 2011 at 12:44 | #3

    I think the trolley data indicates that our moral intuition (biologically-based mythology) is that failing to act, or reckless action, has lesser culpability than intentional harm. In the case of a government, it is reasonable to demand a higher standard, that is one more based on facts rather than intuitions and myths. This is produces dissonance in a democracy, when voters select their government – and thus policies – intuitively.

  4. October 21st, 2011 at 12:44 | #4

    Well, yes.

    But the question is then why there is this massive misallocation of resources.

    That said, the misallocation in the American health care system is even more perverse.

  5. Tom
    October 21st, 2011 at 13:34 | #5

    @Robert Merkel

    Well they would spend a trillion on a war to invade another country, destorying their culture and harm countless innocents; while couldn’t care about their own citizens dying from diseases because they can’t afford to see a doctor. Good old US of A.

  6. Ronald Brak
    October 21st, 2011 at 13:44 | #6

    Human beings, being human, tend to live their day to day lives according to their nature and this nature, which is the result of the interaction of biology and environment, is far from entirely rational. But when one sits down to make policy it is usually a good idea to make policy that compensates for this lack of rationality rather than to ignore or reinforce it. As the majority of people want peace and prosperity, it is probably best to formulate policies that are likely to create these two conditions rather than the opposite.

  7. sam
    October 21st, 2011 at 14:19 | #7

    I totally agree with the point being made here by the way. Just imagine how much good could have been done with 3 trillion dollars if it hadn’t being spent on the Iraq war. How many vaccines, mosquito nets, birth control pills, micronutrient tablets etc could have been delivered to the developing world? The lost opportunity of this past decade is just staggering.

  8. Freelander
    October 21st, 2011 at 15:20 | #8

    A credible case could be made that if the US had not been spending so much on ‘defense’ for the last thirty plus years, it wouldn’t have had 9/11 to worry about in the first place. What journalist ought to have noted, but didn’t, is the massive treasure troves of weapons that the ‘good guys’ had to blow up when they invaded Afghanistan. How many of those weapons were courtesy of US funding during the ’80s? If the US had not been funding crazy people to create mischief for the Russians, those crazy people would not have had the training they had, and the learning by doing. Instead, they would have had to get some other line of work. The US ought to have been more careful where it was sprinkling its money. The legacy for the area has not been good.

    The benefits the US could have had at home, which would have been considerable, are only a small part of the equation.

  9. matt
    October 21st, 2011 at 16:00 | #9

    “More seriously, it’s not really plausible to think of eliminating defense spending altogether. But if the US spent 2 per cent of GDP like other rich countries (around $250 billion a year) and didn’t engage in wars of choice, it could have saved a million US lives over the past decade.”

    Defenders of US military strategy (I am usually not one) would argue that many other ‘rich’ countries – and a not-insignificant number of poor ones – are to some extent free-riding on US defense spending. It’s at least plausible to argue that Europe would have been forced to spend more to protect its citizens over the last 20 years, had America spent less.

  10. Freelander
    October 21st, 2011 at 16:19 | #10

    Over the last twenty years it is not clear what Europe has had to defend itself from that might have required considerable military might. As it is, both the UK and France have the all the nuclear weapons any nervous nation could want. They also have submarines and a variety of other requiste toys, and they both have significant armaments industries. Seems plenty for any nervous nation in the absence of a real threat, or maybe I am being too generous about the state of their nerves?

  11. Donald Oats
    October 21st, 2011 at 16:21 | #11

    If the US Defence simply put big piles of weapons in the Nevada desert, blew them to smithareens, rinse and repeat, ad nauseum, they could not only continue to support all of the military-industrial corporate welfare, but no US lives would be at risk on the frontline.

    BTW, for every US soldier killed in action, how many are severely injured with lifelong disability? Is it 10 : 1, 7 : 1 or somewhere in between (Injured : KIA)? That’s a lot of money on welfare support for the injured party’s rest-of-life. Imagine not sending them to fight in Iraq, for instance.

  12. Freelander
    October 21st, 2011 at 16:32 | #12

    @Donald Oats

    And how many come home psychologically damaged only to inflict further damage on American society, on their families, and others? Part of military training is to train people to kill other people, something that most of us have a natural reluctance to do. That sort of training makes a limited positive contribution to civil society outside of wartime.

  13. TerjeP
    October 21st, 2011 at 16:33 | #13

    It would be good to use this form of analysis to calculate the number of people dead due to the existance of the US federal government in it’s entirety. Of the Australia federal government for that matter. All government programs have severe opportunity costs.

  14. Fran Barlow
    October 21st, 2011 at 17:28 | #14

    @matt

    Defenders of US military strategy (I am usually not one) would argue that many other ‘rich’ countries – and a not-insignificant number of poor ones – are to some extent free-riding on US defense spending. It’s at least plausible to argue that Europe would have been forced to spend more to protect its citizens over the last 20 years, had America spent less.

    Without accepting the claim, I can’t begin to imagine why that would have been a bad thing.

    Perhaps the Europeans would have spent the money more wisely than the US — hard to imagine I know. ;-)

    A cut in defence spending in the US could have lessened the baleful influence of defence contractors on US politics. Perhaps the US would have thought twice before committing to pouring aid into the Afghan mujihadeen via Pakistan or later invading the place and then later going after Iraq. Perhaps they’d also have been more judicious in how they spent their defence dollars. Spending $10bn each month in Iraq seems an awful lot. For that kind of money, you could have gifted all those subprime houses to their occupants. It makes you think.

    More broadly, if we are going to do a CBA on the US defence department, we have to look at net deaths. If for argument’s sake, the US loses 4000 soldiers dead and 20,000 with life altering incapacity, then this has to be accounted on the debit side of the ledger in lives saved.

    And what about the lives of non-Americans lost — the so called “collateral damage”. It is very clear that one of the effects of the occupation of Afghanistan is to make “security” a must have in the country. That has meant the growth both of armed gangs aimed at getting the security work and of rivals wanting to take it from them by setting roadside ambushes. The money invested has thus increased morbidity and subverted governance.

    In Pakistan, it’s a rare six month period in which there are not 60 drone strikes and in one period of about three months up to the end of 2010 there were apparently 106. These strikes kill about 10 people each of which approximately 9 are believed by the Americans not to be criminals, or at any rate not people who deserved death, as far as they knew. Now admittedly, Pakistanis and Afghans aren’t as valuable in the eyes of US planners as are Americans, but it does rather raise the question of the relationship between saving lives and the military. Just at a guess, I’d say that mass murdering Pakistanis might just prejudice the security of Americans, especially those travelling there.

    Thinking more broadly still, I wonder how much Australians are worth. During the heatwave in Southern Australia in early 2009, not counting the Black Saturday morbidity, apparently an extra 474 people died in SA and Victoria from heat related conditions. At $5million each, thats $2,374,000,000. Throw in the fires and we have even more. Now we can’t actually prove that this was a consequence of anthropogenic climate change, but what we can say is that events like this one and Yasi are a feature of climate change and we are going to have considerably more of them. Presumably, other countries must be looking at the same thing. If we added all these up we ought to get quite a budget for doing something on climate change.

  15. matt
    October 21st, 2011 at 17:43 | #15

    @Fran Barlow

    I’m not saying that I think it’s a bad thing, nor even that I accept the claim – though I think that it’s plausible and worth considering. I bring it up in response to the implication JQ’s piece, that the US either could or ought to have spent 2% GDP “like other rich countries”. I’m saying that there’s a case to be made that US military spending and other-rich-countries military spending are not entirely independent variables.

  16. Tim Macknay
    October 21st, 2011 at 18:32 | #16

    I think the trolley data indicates that our moral intuition (biologically-based mythology) is that failing to act, or reckless action, has lesser culpability than intentional harm. In the case of a government, it is reasonable to demand a higher standard, that is one more based on facts rather than intuitions and myths. This is produces dissonance in a democracy, when voters select their government – and thus policies – intuitively.

    That doesn’t make sense. In order to have a standard based on “facts”, you need a way of determining which facts are relevant. All such standards arise from moral intuitions, or at least moral assertions, of some sort or another.

    Prof Q, I think the thing that is missing from your argument is the basis for your (implied) assumption that US military spending doesn’t save US lives. I’m not saying that it does, mind you – just that you appear to have made that assumnption without justifying it.

    Of course, since the defence spending isn’t subject to the relevant analysis, it’s difficult to estimate what, if any, lifesaving value US defence spending has. It doesn’t follow that the figure should be zero though (although it might be, I suppose).

  17. sam
    October 21st, 2011 at 19:20 | #17

    @Tim Macknay
    And the figure might very well be negative too. 4000 Americans died in Iraq directly.

  18. Robert Wiblin
    October 21st, 2011 at 19:46 | #18

    “around 15 per cent would probably be allocated to health care”

    How much would we have to spend on marginal healthcare in the US to save an extra life? If the reviews of Robin Hanson among others are taken seriously, marginal healthcare spending in the US kills as many people as it saves!

  19. boconnor
    October 21st, 2011 at 19:55 | #19

    matt :
    @Fran Barlow
    I’m not saying that I think it’s a bad thing, nor even that I accept the claim – though I think that it’s plausible and worth considering. I bring it up in response to the implication JQ’s piece, that the US either could or ought to have spent 2% GDP “like other rich countries”. I’m saying that there’s a case to be made that US military spending and other-rich-countries military spending are not entirely independent variables.

    Sure, and if your defence policy is to spend only enough to deter would-be aggressors from invading you then you may actually need less than 2% of GDP. And you could spend less than the “rich country” average just by bringing to bear some of the cost-effectiveness requirements reserved for social support services that are strangely never applied to the military – if social security projects were as late, over budget and below specification as defence projects there would be an outcry and Ministers would be sacked.

  20. Mulga Mumblebrain
    October 21st, 2011 at 20:37 | #20

    Sorry, but discussing hypothetical US lives, when the USA and its thug stooges have killed millions of really existing humans since 2001 (to add to tens of millions since 1776), and continue to do so to this day, with an ever increasing bloodlust, most recently directed at Libya (50,000 dead) and with Iran and Syria also firmly targeted, seems base, to me at least.

  21. Mulga Mumblebrain
    October 21st, 2011 at 20:40 | #21

    To speak of the trillion spent per year by the USA on terrorising and intimidating the rest of humanity, killing with utter callousness and planning ever more aggressions and ever more hideous horror weapons, as ‘defence’ expenditure, is sheer moral insanity.

  22. CJ
    October 21st, 2011 at 22:37 | #22

    Would you ‘save’ 150,000 lives per year, or would you merely extend the lives of 150,000 people for a finite period?

    I am genuinely curious about what it means to save a life. If a person would have died on 1 December 2011, but for an intervening action, and they then die on 1 January 2012, was the person’s life saved?

    I think it would be more interesting and more meaningful in a statistical sense to give an indication of what the change in life expectancy would be.

    If for the same cost we can keep 50 people alive for an extra year, or one person alive for 50 additional years, which should we choose?

  23. John Brookes
    October 21st, 2011 at 23:27 | #23

    I really like JQs argument. The climate “skeptics” run their version of this argument to show that “green” policies are killing people. They cite the case of an undeveloped country where poor farmers were killed so that their land could be used to produce biofuels.

    It is such a crap argument that it is hard to believe. I mean, presumably they’d have killed poor farmers if they wanted their land to grow cocoa, or to mine diamonds, or gold. How its the fault of the crop or mineral and not a failure of governance is beyond me…

    So thanks JQ, next time the “skeptics” shove that argument in my face, I’m coming back at them with your figure of 1 million.

  24. Freelander
    October 21st, 2011 at 23:47 | #24

    Having made the rest of the world so much better by promulgating their ‘knowledge’, the monty pelicans have now turned their (in)sights on the Arab world. As a warm up they had t

    http://www.usmba.ac.ma/suite.php?newsid=343

    As a warm up for the incursion they had they had their most recent general meeting in Turkey.

    http://www.incise.org.au/2011-10-21/the-limits-of-what-we-know/?utm_source=rss&utm_medium=rss&utm_campaign=the-limits-of-what-we-know

  25. Freelander
    October 21st, 2011 at 23:51 | #25

    “Limits of what we know”, what multitude of positions is that dog-whistle for?

  26. Jack M
    October 22nd, 2011 at 00:34 | #26

    John, long time listener first time caller here. Usually i react to your posts with a silent ‘right you are’ but i feel i am missing something with this one.

    while i share your sentiment about the US Defense Dept, i don’t understand why this claim about ‘killing people’ would hold any more for them than it would for any other government program that diverts resources away from saving lives.

    Would one also be able to say that education, while bringing clear benefits, does so at the expense of killing people? (i imagine thinking of all government spending in such terms would appeal to some!) Or is there something special about the Defense Dept I am not understanding?

  27. McBrideR
    October 22nd, 2011 at 03:49 | #27

    Leaving out all the other objections to US projections of force in the past 10 years or so, I am not comfortable that the argument agrees with the facts. Seems to me that the assumption that there has been an allocation of resources, although that assumtion is basic economics, is not what one observes in the US political system to date. It is also hard for me to accept the mis-allocation of resources has resulted in an increase of ~6.25% of the US death rate during a 10-year period when the gross death rate has been declining significantly and the “age-adjusted” death rate (a stat that makes me cringe a bit) has fallen rather sharply.

    I am skeptical about claims of lives saved (or lost) in general. I would like to see a compilation of all the claims of lives lost because of doing or not doing something. I’m guessing that such a compilation would over-explain the number of actual deaths.

  28. Ikonoclast
    October 22nd, 2011 at 06:10 | #28

    Given that we have already overshot the world’s limits to growth, saving (prolonging) lives now and concomittantly increasing live births will mean that many more of these lives are cruelly curtailed later.

    Whilst existent lives ought to be prolonged (up to a point) and enhanced, we need to implement humane population policies to stabilise world population. The US DOD “population control” policies, inside and outside the US, are clearly not humane. However, blindly implementing population increasing policies, far from just avoiding a “sin of omission” will prove to be a new “sin of commission”. As more than one thinker has said. If we avoid the necessity to humanely limit world population, then nature will do it for us and much more cruelly.

    How do we humanely limit population? The best effort would be to channel as much public spending and aid as possible into increasing the status and educational standard of women worldwide whilst alleviating poverty. Well-educated women who have access to birth control and are freed from material want and fears of high child mortality tend to choose to have 2 children on average.

    Again however, as with sustainable policies and the steady state economy, we may be up to 40 years too late in implementing these policies. A crash program might still be possible but it would require such a radical change in national and world politics it simply does not feasible now that it will ever happen.

  29. Quentin R
    October 22nd, 2011 at 07:17 | #29

    @Jack M
    Thank you Jack M. I agree with you. But that is not to disagree with John.

    Alternative uses of government taxes involve many programs that are justified with BCA. Someone has made the decision that spending $X on defence/wars is better than additional marginal expenditure on alternative programs. John has simply pointed out that whomever made the defence/war expenditure decisions has imposed a huge cost on US society in terms of foregone benefits from alternative programs. This seems to suggest one of two things:

    1. The benefits of the defence/war expenditure are huge. As homework for John’s BCA workshop, they might like to develop a BCA for recent defence/war expenditure … in some country.

    2. The decision maker has no concept of BCA or perhaps believes that government expenditure on defence and wars, GDP growth because of that expenditure, a strong defence industry and related support for the incumbent government are all factors that justify the expenditure.

    For 1, there might be some variables that will need to be stretched beyond usual limits to get a benefit cost ratio greater than one, but that’s just my guess. I think 1 would be a worthwhile exercise, before jumping to 2.

    2 could be the “something missing” about US Defense Dept. Regards.

  30. Dan
    October 22nd, 2011 at 10:04 | #30

    Ikonoclast, just a comment on 27:

    As goes sustainability, I think the carrying capacity of the earth is about 2bn people.

    *But* we need to be clear that the planet’s resources are not being substantively depleted by sub-Saharan African families with eight kids; they are being depleted by Westerners and people in developing nations adopting Western lifestyles.

  31. Dan
    October 22nd, 2011 at 10:05 | #31

    TerjeP@13: all expenditure anywhere has opportunity costs.

  32. John Brookes
    October 22nd, 2011 at 15:28 | #32

    @TerjeP
    Terje, I suspect that most governments save lives.

    They enhance social order, and provide a justice system which reduces revenge attacks and feuds.

    They redistribute income from those with far more than they need, to those with less.

    They provide medical care. They look after public health. They make safe roads.

    The presence of armies, of sensible size, stops wars.

    But what else have governments done for us?…….

    Governments are fundamentally good – or at least they should be.

  33. Freelander
    October 22nd, 2011 at 19:07 | #33

    “Your comment is awaiting moderation.” Still problems when including links?

  34. Freelander
    October 22nd, 2011 at 22:56 | #34

    I noticed over at CrookedTimber that the question of which of ‘cost-benefit’ or ‘benefit-cost’ analysis is better has apparently been solved.

    Using Google Search about 6,810,000 results for the first and about 415,000 results, or about 16.4096386 to 1 (approximately).

    Using Google Scholar Search about 564,000 results for the first and about 33,400 results, or about 16.8862275 to 1 (approximately).

    Armed with this evidence, and extrapolating, and assuming the Dark One to be an ignorant fellow and omniscience to confer knowledge we can confidently assert that Satan usually uses ‘benefit-cost’ and God talks of nothing but ‘cost-benefit’.

    Looking at Google’s ngram research, however, shows that before the late 1960s ‘benefit cost’ usage dominated. Benefit cost does seem natural given that a natural ratio is the value of benefits divided by cost. But such useage seems a rejection of the divine, whose useage, unsurprisingly, makes little sense (once more demonstrating a tendency to move in mysterious ways).

    So, as it turns out, it is a matter of religion.

  35. J-D
    October 23rd, 2011 at 17:54 | #35

    matt :
    @Fran Barlow
    I’m not saying that I think it’s a bad thing, nor even that I accept the claim – though I think that it’s plausible and worth considering. I bring it up in response to the implication JQ’s piece, that the US either could or ought to have spent 2% GDP “like other rich countries”. I’m saying that there’s a case to be made that US military spending and other-rich-countries military spending are not entirely independent variables.

    It’s possible that if, hypothetically, US policy-makers had not spent so much money so stupidly, the policy-makers of other rich countries would have responded in that hypothetical scenario by increasing their countries’ stupid expenditure, but I cannot regard that as being exactly a justification.

  36. Harald Korneliussen
    October 24th, 2011 at 22:40 | #36

    “Second, there are various responses that amount to the claim taht refusing to do things that would reduce death risks is, in some important moral sense, different from doing things that increase death risks. Avoiding the statistical aspect, not saving people when you could do so is morally different from kiling them. I can’t formulate these claims sensibly enough to refute them, but that doesn’t stop people making them. ”

    I can maybe help you then. I do agree with Thoreau when he says:

    “It is not a man’s duty, as a matter of course, to devote himself to the eradication of any, even the most enormous wrong; he may still properly have other concerns to engage him; but it is his duty, at least, to wash his hands of it, and, if he gives it no thought longer, not to give it practically his support.”

    In other words, I agree that your negative obligation to not harm and exploit people comes ahead of any obligation to help them. So yes, not saving people when you could do so is morally different from kiling them.

    But this is hardly relevant here, as long as we see both military spending and health spending as positive efforts. They are both “optional”.

    The reason why states (ultimately, people) are willing to spend more on defense than healthcare is something quite different, the kind of thinking which underlies “Millions for defense, but not one cent in tribute”. The same kind of thinking which leads people to take a hit in the ultimatum gave in order to punish practices seen as unfair. People place a premium on feeling in control of their situation with regards to other people, that they don’t with regards to events not seen as intentful (e.g. disease, natural disasters). We would rather waste $1000 rather than having 100$ taken from us by force, in order to discourage such attacks.

    Whether this is reasonable, even on their own terms – whether the terrorist really threaten to take away enough that the “defense” investment is worth it – is another question.

  37. Freelander
    October 25th, 2011 at 00:23 | #37

    Harald Korneliussen :
    …whether the terrorist really threaten to take away enough that the “defense” investment is worth it – is another question.

    Gee, the US had a great terrorist problem before it spent up large to create mischief in other peoples countries?

    I don’t think so. True, the Vietnamese didn’t end up flighting planes into American buildings but eventually, as Obama’s pastor put it, “The chickens come home to roost.”

  38. ken n
    October 25th, 2011 at 07:13 | #38

    An interesting use of opportunity cost. Personally, though, I don’t need an economic analysis to show that the Iraq war (and in retrospect, the Afganistan one) were bad decisions.
    By the same logic, and assuming VSL of an Australian is $5 million, the NBN at $43 billion is going to kill 8000 or so people.
    Now, it is said that there will be benefits to the health system from the NBN but without a cost benefit analysis, we don’t really know, do we?

  39. Freelander
    October 25th, 2011 at 11:35 | #39

    And with a cost benefit analysis would we really know? No. Calls for cost benefit analysis and motherhood statements that they should be done sound great, but unless they are for something that is done regularly enough so you have good data to do the study with they can be more a wasteful exercise in creative justification of what you have already decided, that is, going ahead or not going ahead. Some might say, why waste the money. But then that might be said of a lot of reports that get done to justify decisions already made. All part of the never ending task of covering your posterior. Without the brilliant reforms (in telecommunications), part of the great leap forward of microeconomic reform(s), none of which were done with cost benefit analysis, a further reform, the NBN would probably not have been required. The mess in telecommunications has been the result of letting a semi-privatised Telstra run riot and allowing them to retard the development of broadband. Of course, telecommunications was not the only mess from the great leap forward. Electricity is hardly a success story.

  40. ken n
    October 25th, 2011 at 13:16 | #40

    Free – the fact that some cost benefit studies are poorly done does not mean we should not do one before spending a very large sum of money.
    Anyway, I’m not going to reopen the argument here and now. I believe we will see fairly soon that it is a disastrous investment – like the desalinations plants, which were similarly decided without any worthwhile study.
    So let’s take it up again in a few years when we have some real world facts.
    Meanwhile, I suggest it be called the Stephen Conroy NBN so it in never forgotten who deserves the credit/blame.

  41. rog
    October 25th, 2011 at 13:45 | #41

    Ken,

    “I’m not going to reopen the argument here and now”

    your insincerity is glaringly obvious

  42. ken n
    October 25th, 2011 at 14:23 | #42

    rog – huh?

  43. Dan
    October 25th, 2011 at 15:35 | #43

    Ken – you can’t do a CBA on the NBN the same way you couldn’t have done a CBA on the copper network at the time it was rolled out (“…and in the mid-1990s, lots people will start using this thing called the internet…”). Nobody knows what the technology will be used for in even 10 years time, let alone by the time the network has reached the end of its operational lifespan.

  44. ken n
    October 25th, 2011 at 16:00 | #44

    Dan – I was once trying to get approval fora large investment that had benefits difficult to quantify. I explained this to the board and the financial director asked me to put a figure on the benefits. I saidI could not. He said that I already had – by asking for approval I had said that there were to be benefits which would have a present value at least equal to the investment. Otherwise, he assumed, I would not want to spend the money. So, he went on, let’s talk about what the benefits are and how we might put values on them.
    It was a very valuable lesson.
    You can always do a CBA – it might not be accurate but it is a debate worth having.
    Anyway, I only raised this in the context of JQ’s “deaths as an opportunity cost” thesis.
    And as I said we will know fairly soon – within five years or so I reckon – whether the NBN was a great nation building project or just another dopey idea that governments of all colours seem to make a habit of.

  45. rog
    October 25th, 2011 at 17:56 | #45

    Obviously you are thicker than I thought Ken, despite your earlier statement that you would not reopen the argument you then reopened the argument.

    To add to the already steaming pile you then describe a situation where you requested funds without any quantifiable benefits and without a CBA. It’s OK for Ken (who has no money) to spend someone elses money without a CBA but its not OK for a govt which has a mandate to spend the money and is the national CFO.

  46. ken n
    October 25th, 2011 at 18:17 | #46

    Troll rog troll.

  47. rog
    October 25th, 2011 at 19:01 | #47

    Well? It seems that it’s ok for you to wander around the place making demands on people to meet unspecified or unwarranted levels of compliance without having to apply that same criteria to your own cozy outlook.

  48. rog
    October 25th, 2011 at 19:12 | #48

    Ken, let me refer you to this comment of yours over at HCs re Barry Jones

    “I can’t take Jones seriously since he began calling himself “Doctor” – or allowed the ABC to do so – when his only earned degree is a masters.”

    That statement is just so wrong on many counts, Barry Jones has earned the right to be called “Doctor” through his own work and has done so more than once.

  49. Freelander
    October 25th, 2011 at 21:59 | #49

    CBA, like other rituals, is of benefit more for the comfort and income it provides practitioners, than for any other reason.

  50. Dan
    October 25th, 2011 at 22:59 | #50

    Ken – five years is a silly criterion to hold a piece of infrastructure like that to, even indicatively. You can have it if you want but I think it’ll be seen by most thinking people for what it is: a nay-sayer saying nay. The correct time to judge its worth is when it is superseded.

  51. Joe
    November 3rd, 2011 at 10:50 | #51

    Does this cost benefit analysis consider the protection of property as in the entire nation from attack? The World Trade center’s destruction and the subsequent turmoil in financial markets is only one example from just one small group of attackers, what would be the cost of a full scale attack on the US?

    Sure that sounds like an unimaginable event today but that’s because of the enormity of the US military, would that still be the case if the military was only the size of Australia’s?

    What about the utility American’s get from the National Pride flowing from their super power status or what about the positive externalities that their allies such as Australia enjoy by freeriding?

    My point is not to disagree with the article but just to raise the possibility that a cost/benefit analysis of something that has such broad benefits is incredibly difficult and could quite easily lead to the wrong conclusions.

  52. Freelander
    November 3rd, 2011 at 11:49 | #52

    @Joe

    The point is that spending as much as the rest of the world combined is not necessary for the defence of any country no matter how paranoid and fearful that country’s citizens happen to be. The surprising destruction of the World Trade Centre, which had been designed to be hit by airliners, was an act of terrorism, carried out by terrorists. Dramatic as it was that was all it was. Not an ‘attack on the US’, just a terrorist act by terrorists. Turning the whole thing into a war, as in “War on Terror” was simply political hyperbole, resulting in dangerous thinking that has created the costly mess with a much greater terrorist threat that we have today. Of course, worked out fine for the military-industrial complex which had groped around for a credible threat after the big bad soviets ceased to exist. Now, US government expenditure on defence will continue unabated, even as the country itself collapses under a mountain of debt. “Mission Accomplished” as some American intellect once said.

    The ‘utility’ perverse Americans may get from ‘national pride’ and fantasies of world domination is more than offset by the disutility the rest of the world suffers from a belligerent failed state that has demonstrated no respect for international law, human rights, and other nations, being so heavily armed.

  53. Fran Barlow
    November 3rd, 2011 at 13:19 | #53

    The point about the attack on the WTC is that however dreadful it was — and it was a very serious criminal act — the only responses that were warranted were those that had a plausible prospect of

    a) preventing similar attacks in the future

    and/or

    b) bringing the perpetrators to justice

    subject to tests of proportionality, non-injury to non-combatants and so forth. At least, if policy were based on reason and evidence, that is how one would go about assessing the possible responses.

    Plainly, waging an open-ended non-specific series of armed conflicts against remote enemies would not and could not meet such tests and was certain to have many deleterious impacts, not merely on non-combatants but on interests even the US normally regards as valuable.

    The misnamed WoT prejudiced the safety of every apparent westerner abroad in western Asia and the Middle East and as we saw, in parts of Europe as well. It has been massively dispruptive to air travel and expenditure on internal security has increased massively, with all that implies for the much vauinted liberties of Americans (and others). It cost the US a fortune and led the US to strengthen the position of Iran. It entailed a massive and pernicious diversion of US funds into destructive expenditure, prolonged the political life of the Bush administration and hobbled the Obama administration after it and has so far claimed the lives of about 4000 US servicemen and ruined the lives of at least 20,000 others (not including their family and friends). In the end, the US will be forced to abandon it on terms much worse than if they’d not started it in the first place. Oh … and something like 30,000 Pakistanis, perhaps 1 million Iraqis and who knows how many Afghanis have been killed.

    The prospect of an Israeli-Palestinina settlement have been set back with all that implies.

    That’s what happens when instead of having a policy based on reason and evidence, you have one based on populism and wag the dog and pork-barrelling military contractors.

    I think it is very likely that this policy has ruined the lives of 1 million Americans, however many have had them shortened based on claclulations of utility. Indeed, if only 1 million Americans since 2001 were worse off, I’d be very surprised indeed.

    Frankly, it seems reasonable to assume that the bottom three quintiles at least have all been seriously harmed (directly or indirectly) and that outside the US the damage is also very widespread. This utterly dwarfs 9/11′s direct impact.

  54. Freelander
    November 3rd, 2011 at 13:55 | #54

    But Dick Cheney made lots of money from his Haliburton shares, as did lots of his friends, so it was all worthwhile!

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