Last Friday, in an op-ed for the New York Times, I made the case that the Pentagon has dramatically understated the cost of our war with Iran. In that piece, I argue this war isn’t costing tens of billions, but hundreds of billions — and maybe even trillions.
That means thousands — perhaps tens of thousands — per American household.
I’m pretty proud of this analysis. It attempts to fill what I see as a glaring void in the current public debate. The Pentagon is putting out nonsense, Wall Street is quietly crunching numbers and emailing them to clients, and government analyses (which I hope exist) are kept secret from the folks who paid for them.
This video is my Director’s Cut of that analysis. I wanted to work through my numbers — out in the open, with you — to provide insight as to how economists approach a question that is big, messy, and unfamiliar.
The costs of this war far exceed the price tag on bombs fired, planes flown, and gear destroyed. We must go beyond the Pentagon’s ledger and compare the world we have now to the one we might have had — the opportunity cost of this chosen path.
And once we start with the right baseline, we can follow the clues through oil prices, interest rates, geopolitical risk, the stock market, GDP, and future defense budgets to arrive at a less precise, but far more honest answer.
Ultimately, my analysis echoes both commonsense and historical lessons: War is hell, and hell comes with a hefty price tag.
