From: rakeshb@stanford.edu
Date: Thu Feb 06 2003 - 15:38:54 EST
Quoting Bill Cochrane <billc@waikato.ac.nz>: > For a more 'orthodox' view take a look at "The Economic Consequences > of > a War with Iraq" (Nordhaus, 2002) - available from > http://cowles.econ.yale.edu/ - there is also a whole lot of other > stuff > on the site assessing Iraq military capacity, likely post war US > strategy and the like. All good stuff for those inclined towards > Engel's > fascination with the martial. Bill, quickly skimming the article, I would say that Nordhaus underestimates how easily the US may be able to finance its deficits through sales to foreigners of govt paper (Asian govts may want to maintain the relative strength of the dollar to keep their own exports competitive; the dollar remains attractive as it is the reserve currency and oil is priced in dollars; a meldown of the US economy is not in their interest for various reasons; the US can always strong-arm foreign govts--perhaps even the German and French) and how willing the US may be to run a Marshall Plan in reverse in Iraq, i..e., use Iraqi oil revenues to pay for its occupation no matter how starved that leaves Iraq. Nordhaus, Krugman, DeLong and many other economists are worried about how military-driven govt deficits will lead to capital crowd out, inflationary worries, higher long term interest rates. It's not obvious to me that Bush does not have a better estimate of the power of the US imperial state to run massive deficits without negative effects on its economy--whether they will be enough of a stimulus is another question. It seems that the economists are working from textbook models, and Bush is working from a better sense of actual imperial power and all that implies and allows. Yours, Rakesh
This archive was generated by hypermail 2.1.5 : Fri Feb 07 2003 - 00:00:00 EST