Sunday, August 1, 2010

A number of years ago a progressive friend of mine pointed me to the National Priorities Project (NPP) Cost of War website, commenting on the number of things we could have done without the current wars in Iraq and Afghanistan. Most damningly, he pointed me to the Trade-offs page, which list the things we could have spent the money on instead. It wasn't until later that I went over the details of their calculations and realized how misleading, and downright deceptive they are with their numbers.

First off, the site lumps the wars in Afghanistan and Iraq together, yet very few Americans view Afghanistan as illegitimate as they view the war in Iraq. Iraq alone is about 72% of the total. But these top level numbers are abstract, the spending alternatives are the interesting part, and the most misleading. First off, the site lists a series of programs, delineating them with ORs. Unfortunately, some people will read it as an AND. This is a common rhetorical device, one my friend fell for. More egregiously, the site conflates the 8 year cost of war, and compares that to one year costs of other programs.

But the underlying calculations for the trade-offs are very deceptive. The site lists the cost of hiring firefighters, police or elementary school teachers. To come up with these numbers, their notes and figures page states "Each state's number is based on the average amount of annual pay a firefighter receives, plus 25% for other expenses associated with employment such as benefits." They use the same 25% number for police and teachers as well. However, the Bureau of Labor and Statistics notes that the average cost of an employee is 42% higher than their wages. And that in the private sector, where benefits are significantly less generous than the public sector. But even this isn't the full picture. The cost of hiring and retaining an employee is significantly more than their salary plus their benefits. As you add employees, you need to add more HR people to hire and track these employees. You need more managers to supervise them. You have to provide them with office space, computers and office equipment. You need insurance to cover yourself. You need to pay for training. The typical business school number I've heard is that the cost of an employee is about two to three times their salary, as a rough rule of thumb. This page puts it at 2.7.

These numbers add up. For example, the site tells me that the cost of both wars could have provided 3,466 elementary teachers in Tennessee for one year. But, divide that by eight years to compare one year costs to one year costs. Then, divide that number by 2 to factor in the real cost of hiring a teacher. You wind up at 216 teachers. Then, multiply by .72 to limit yourself to Iraq. 155 teachers still sounds like a lot. But, there are 982 elementary schools in Tennessee. That's 0.16 more teachers per elementary school, or 0.027 teachers per school per grade level. Now, considering that class size doesn't seem actually have all that big of an effect on educational outcomes, the cost of the war seems decidedly muted. The NPP also compares the cost of war to Head Start and Medicaid, two other programs with dubious quantitative outcomes. The other comparisons are similarly misleading.

As of this writing, the site lists the total cost of both wars at a little over $1.023 trillion. $128 billion a year is a lot of money. For comparison, Social Security runs nearly $680 billion per year, Medicare another $680 billion. TARP was over $150 billion last year, and interest on our debt nearly $190 billion. Our government has a lot of trimming it can do, but the war in Iraq will end, eventually. The same isn't true for everything else on our ledger.
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