We’re starting to see some analysis of the Bush doctrine of pre-emption and what it all means. As an economist, I’m at least as interested in what it will cost and who will pay.

On the first question, I’d estimate that the annual cost of any serious attempt to implement the Bush doctrine would be at least $100 billion per year and probably closer to $200 billion per year. To get a ‘back-of-the-envelope’ approach to these numbers, I assumed that the a conservative implementation of the doctrine would entail deploying a front-line force of 100 000, and backup and logistic forces of 500 000 with an average annual cost of $150 000 per person. I’m assuming that this will be additional to existing forces. There’s some scope for redeploying forces from NATO but this can be overstated. Much of the US force structure in Europe has already been reoriented from defence against the Red Army to a forward deployment against enemies in the Middle East and elsewhere. To come at the estimate another way, the cost of the Gulf War is estimated at $80 billion, and it only lasted a few months. The Bush doctrine implies a semi-permanent occupation of Iraq and probably the recipients of future pre-emptive defence.

Who will pay. As we’ve repeatedly been reminded, the US is the wealthiest country in the world. However, wealth belongs, by definition, to the wealthy, and nowhere is this more true than the US. The owners of wealth in the US have demonstrated, in a number of ways, that they have no intention of paying anything. Among the signs
(i) Conspicuous consumption on a scale unparalleled in history
(ii) Flagrant tax evasion/avoidance accompanied by moralistic attacks on ‘welfare queens’ and workers cheating the earned income tax credit (both get far more investigation than the rich or big companies
(iii) the massive tax cuts introduced at their behest by George W. Bush
As a result of the tax cut and other policy initiatives, the US government was in chronic deficit before the announcement of the Bush doctrine.
The natural inference is that other US taxpayers will either have to pay more or accept less in non-defence services. But there’s very little capacity to do this. No-one is going to propose an increase in taxes for the middle classes without first repealing the tax cut for the rich, and the latter is not going to happen. On the services side, there are already big unmet demands, such as the prescription drug program promised by both sides.

Another alternative that has been proposed is that the Iraqis and others could hand over oil as reparations. There are, of course, a number of names for pre-emptive demands for reparations of which extortion is one of the less unpleasant. It seems doubtful that even the Bush Administration could seriously entertain this idea.

The truth is that, as in the Gulf War, the Europeans and Japanese will pay, only this time they will be lenders rather than donors. The obvious question is when the pile of US dollar denominated debt will get so high that lenders start to worry about adding to it. At that point, but probably not before, the Bush doctrine will run out of puff.