War is good for the economy, but terrorism is fatal. Or so it would seem with the benefit of hindsight. Is 9/11 the underlying reason the economy is in collapse?
The 1% Doctrine
A few years back I read Ronald Suskind’s book The One Percent Doctrine about Dick Cheney’s approach to fighting terrorism. To paraphrase the philosophy, if there was even a one percent chance that a perceived threat was real, the policy was to treat that threat as a certainty and act on it. It was a philosophy that was enormously appealing in the highly emotional wake of terrorist attacks on American soil that seemed designed to “shock and awe.” And it led to our own expensive campaign of “shock and awe” in response on foreign soil. But when we stand back and look at the costs associated with our actions over the last ten years, a sobering picture emerges.
We are all aware of some of these obvious costs, but as with all spending, we soon got used to a “new normal.” The costs associated with fighting terrorism became invisible through familiarity, and to question those costs was equated with being weak in the “war” on terror. What are those costs? There were immediate costs in the aftermath of the attacks, including:
- Gold prices spiked upwards, from $215.50 to $287 an ounce in London trading. Oil prices also spiked upwards. Gas prices in the United States also briefly shot up, though the spike in prices only lasted about one week.
- The dollar fell sharply against the Euro, GBP, and yen. European stock markets fell sharply (4.6% in Spain, 8.5% in Germany, and 5.7% in London). Stocks also fell in Latin America (9.2% in Brazil, 5.2% in Argentina, 5.6% in Mexico).
- Insurance losses due to 9/11 were over 1.5 times greater than than Hurricane Andrew, including business interruption ($11B), property ($9.5B), personal liabilty ($8B), workers compensation ($2B), and others ($2.5B).
- Flights were grounded in various places across the United States and Canada and airlines were also required to refund ticket purchases for anyone unable to fly. This was a huge blow to an industry that is often running on a razor thin margin. Midway Airlines was one early casualty. All airlines and airplane manufacturers suffered from plummeting stock prices. The federal government had to provide $10B in loan guarantees and $5B for short term assistance.
- Tourism in New York City (a $25B business employing 280K Americans) suffered major losses. Throughout NYC, there were 430K lost job months and $2.8B in lost wages in the 3 months following the attacks. Export businesses were hit hardest. NYC’s GDP was estimated to have declined $27.3B. The government provided $11.2B in immediate aid to NYC and $10.2B in 2002 for economic development and to address infrastructure needs. Approximately 18K small businesses in Lower Manhattan were destroyed or went out of business.
- Driving fatalities dramatically increased as Americans were too nervous to fly.
One analysis shows that the immediate impact of the attacks was a GDP growth reduction of 0.5% and an increase to the unemployment rate of 0.11% (or 589K jobs). Those immediate costs are nowhere near as concerning as the long-term costs of our new normal, though.
There are also long term, ongoing costs:
- Wars in Afghanistan, Iraq, and Pakistan. The cost is estimated between $3.2 and $4 trillion, including medical care and disability for war veterans. This does not include future interest on war-related debt. Additionally, more than 31,000 people in uniform have died in these conflicts (including our soldiers, military contractors, and Iraqi and Afghan allied security forces). At least 137,000 civilians have been killed in these conflicts. 7.8M refugees have been created among Iraqi, Afghan and Pakistani peoples. Because war financing has been based almost entirely in borrowing, $185B in interest has already been paid and another $1T (yes, that’s one trillion dollars) could accure through 2020. Additional federal obligations to veterans of these wars will likely total between $600 and $950B, peaking around 2050.
- Homeland Security (DHS). An entire division of government was created in the wake of 9/11 and has continued to this day. In 2010, the DHS was allocated a budget of $42.7B. Operating costs at the end of 2010 totalled $56.4B. Due to looseness in financial accounting of the department, KPMG was unable to complete an effective audit of the DHS’s finances.
- Increased airport security. The costs include TSA agents (as well as snazzy new uniforms for many – or so I noted in my travels), air marshalls on flights, additional procedures that lengthen wait times for travelers, and high tech screening equipment (thanks to the underwear bomber) to essentially see what’s under our underwear!
- Anti-Terrorism Regulations. The USA PATRIOT Act is one example of anti-terrorist legislation that added expensive and procedurally burdensome bureaucracy to businesses which also put a drag on productivity. Some measures were doubtless wise, but others strained common sense in their application (e.g. common names flagged as potential terrorists). The slowdown in commerce associated with additional inspections costs the US (and other nations) millions of dollars.
- Innovation Loss. Making immigration more difficult deprives us of labor and innovative minds. Between 2001 and 2003, educational Visas fell by 100,000 applicants. Tourism is also diverted to other nations. America hunkered down and became a less friendly place to visit (and spend your foreign cash), to do business or get an education, and to pursue the American dream.
- Opportunity Cost. Because resources and funding are not limitless, spending more in one area always equates to trade-offs. What might we have done with a portion of this money if wisely directed elsewhere? Defending Iowa from terrorist attacks is not worth it once you factor in the other ways that money could have been spent.
Not surprising, perhaps, that the national debt was $5.73 billion when President Bush took office, and stood at $10.7 billion when he left the White House.
And were these costs necessary to combat terror? No. In fact, they far exceed the actual risks for several reasons:
- Terrorists have to get here. Local terrorist cells are usually essential to success. Other countries that have had terrorist attacks have had internal extremist cells in their borders (London, Spain, Indonesia). Not so in the US, despite fears to the contrary.
- Human nature leads us to overestimate the likelihood of novel and uncontrollable dangers.
- Feeding the fear machine – reporters, politicians and profiteers benefit from fear-mongering, whether well-intentioned or not. Being on constant alert may adversely impact consumerism. Contractors and lobbyists have disincentives to tell us how safe we are.
Wheat & Tares 
Hawk,
Great analysis.
The terrorists are modern day Gadianton Robbers and have had the same impact on our society as they did then as illustrated in Helaman 11:27
“Now behold, these robbers did make great havoc, yea, even great destruction among the people of Nephi, and also among the people of the Lamanites.”
Likewise, the people of Nephi were given the promise if they would live righteously they would prosper and would be protected from these robbers. The same holds true for this land now — if we are righteous we will prosper and will be protected from this evil. We have not and are paying the consequences of our collective actions. The economic and political problems will continue until there is collective repentance.
So to provide a direct response to your post. Yes, they are winning because our society is crumbling within.
Ok. We have had more people die in automobile accidents than in all the wars we have ever fought.
If we had spent the money on automobile safety and made no military changes we probably would have come out ahead.
I used to do simulations as a hobby. Have to admit that I ended up in areas that are fun but have no application. But I think a lot about trade-offs.
If I had two trillion dollars to spend right after the trade center attacks I would have:
a) spent 500 billion on geothermal energy.
b) spent 200 billion on bio-energy (plankton farms).
c) spent 100 billion on safety related to ocean drilling.
d) spent 10 million on increased intelligence work locating the guy behind the attacks.
e) spent 50 million dropping a nuclear weapon on him to make a statement.
f) spent 100 million on reducing drunk driving.
g) spent 500 million buying solar panels (not investing in any particular solar energy company) for government buildings — increased purchases will create improvements in production.
h) spent 100 million in pre-emptive investigation and disclosure of the trends in mortgages and credit.
i) spent 100 million in grants for reporting on the deficit and the threat it is to our security.
Gee, that leaves me with a lot of money unspent that we’ve basically spent (or consumed, to be paid for later) for the wars we engaged in.
But we would be much safer today. The deficits we have are the largest threat to our own security that we face.
But, to answer your question, darn right that Dick Cheney did more harm to the United States than any other terrorist, politician or enemy of the state in the history of the Union.
Not only does it affect America. America requires similar airport screening to theirs to be carried out in foreign countries that wish to fly to American ports.
The response has been totally out of proportion. 3000 americans are killed and in response somewhere in excess of 10 times that number have been killed in retribution. And is the world safer, is America safer? Or are some of those involved in the decision just wealthier(haliburton, Chaney and Bush).
American used to claim the moral high ground, but now will kill someone it’s intelligence (the same intelligence that said Sadam had weapons of mass destruction)believes are threats, and not be concerned if a few dozen others die as well.
Torture is accepted as the American way.
Bush was the leader of the greatest christian nation, and his response is the opposite of christian. Suppose the same amount of money and effort had been put into constructive dialogue with the muslem countries, suppose it had been applied to eradicating poverty. Diplomacy is ignored if a terrorist can be killed but when it comes to helping the palistinians for example,we can’t offend the Isralies. Bin Ladin said that how America and Israel treated Palestine was one of his motivations
for 9/11.
Perhaps the mess America is in financially can be connected to 9/11, but there is no questioning that america is no longer to be respected morally, and so many ideas such as innocent until proven guilty, etc etc have been overruled in the name of anti terrorism
America has lost much more than money as a result of how Bush responded to 9/11, it has lost any moral authority it once had.
Yes, absolutely. Dick Cheney, and Osama bin Laden have put the U.S. on a path to bankruptcy. The beauty is (from bin Laden’s standpoint) is that this is exactly what he had in mind. http://articles.cnn.com/2004-11-01/world/binladen.tape_1_al-jazeera-qaeda-bin?_s=PM:WORLD
And then
Isn’t that exactly what has happened?
I’ve always felt that “provide for the common defense” meant “provide for the common defense.” I don’t see any way to justify our behavior as “defense.” It’s offense. If we are taking the war to foreign soil, to hunt our prey, we have crossed the threshold of offense. Had we used that money to actually provide for the common “defense” I think our economy would be stronger, and we would be safer. Why we’re STILL doing this is beyond comprehension to me. And as FireTag pointed out in his last post, we haven’t really made the problem any better.
The Gadianton Robbers are among us. We haven’t purged them but aggrandized them. A better response would have been to stop intermeddling in other countries affairs and stop overthrowing other governments’ leaders, which we have been doing for the last 60+ years. Get rid of the Robbers, like the CIA, etc.
This is not a red vs blue problem since they both have the same owner, we need to get rid of that owner, how do we get rid of the owner? By getting the people to repent:
I notice that nowhere in your post does the word “tax” occur, nor “tax cut.” I am referring to the Bush-era tax cuts that were implemented around the same time as the wars in Iraq and Afghanistan began. Where is the fiscal sense in a government cutting taxes while fighting two wars? That ought to be a major consideration. If President Bush and Congress had abstained from tax cuts, we would have had more revenue to offset the costs of the wars. If you want wars, you should make a good faith effort to pay as you go. We did not. And as all of your numbers above underscore, the tax cuts failed to stimulate the economy to a degree that offset new spending.
@Childe Jake,
Laffer curve:
http://en.wikipedia.org/wiki/Laffer_curve
If only there were a candidate who would end the wars, cut spending, and balance the budget.
Oh, wait.
But if only there were a candidate who understood the financial crisis and could see the housing bubble and bust years in advance.
Oh, wait.
And if only there were more Americans asking tough questions.
Unfortunately, the war on Terror has been good business for a number of firms in the US and around the world.
It’s always about money.
Dick Chaney and Geo W Bush are war criminals and should be prosecuted.
Don’t forget the war criminal Obama, he doesn’t like being left out.
I’d say the terrorist did win in so far that they wanted to make life as misserable for amercians as it is for them under the “Imperialist Satanist Empire of the USA”
I remember people saying over and over that if our lifesytles (in the west) change then the terrorist have won, well our lifestyles with regard to air travel and some personal freedoms have certainly changed. Now I can’t even take a 600ml bottle of coke onto an airplane, something very common during the 90’s.
But its also true that many have made money out of these wars, and continue to. Money that would have probably gone into real estate speculation so yes, the terrorist won there too by indirectly causing the subprime crisis.
Its similar to what happened in WW11, America won the battle part of the conflict but then Germany and Japan made fortunes selling products to the US mainly. You’d wonder who won that conflict in the long term too.
We can put this on our leaders all we want, but the reality is this is a republic – we elected them. We voted (speaking collectively) Bush in a second term will full knowledge of the senseless wars in Iraq & Afghanistan. Effectively, we voted to spend our treasure. Likewise, we voted (again speaking collectively) for the redistribution of wealth with Obama and all the problems associated with this collectivist approach.
We can say this person should be prosecuted
or impeached or so forth; but the reality is we the people created the problem and only we the people can solve this problem.
We’ve let fear take over our decision making, and no one wants to be the one to step it down. We’ve spent ourselves into a hole to make it a 1 in 4.5 million chance you’ll die from a terrorist attack rather than a 1 in 3.5 million chance.
#10
And if only there were more Americans asking tough questions
I would add – If only there were more Americans demanding tough answers..and then demanding accountability for words, actions and answers. We let too much rhetoric slide past us, thus we are part of the problem.
#14
We can say this person should be prosecuted
or impeached or so forth; but the reality is we the people created the problem and only we the people can solve this problem.
I agree with your comment. However, it is easy to feel like our problems have become too massive and overwhelming and where and how in the heck do “we, the people” start to solve said problems.
The standard answer is “vote. We have a voice.” I believe it will require much more than that. We have become passive as a nation and are willing to let the “other guy” solve the problem.
I don’t know the answer. I am tossing my opinion out there and invite feedback. I do believe we need to be more assertive in holding elected officials accountable. I believe in term limits. I don’t know how to make it happen.
I believe in Americans and our collective ability to bring about change.
@tosaneara,
Civil disobedience, opting out, etc.
Thanks Jon. That is an option. But then do I become part of the problem and not the solution?
@tosaneara,
It depends on what you are doing, I suppose.
If you don’t like war, then you don’t join the military, if there were enough people that didn’t join because of their belief that the offensive wars we fight are unjust then the state couldn’t wage unjust war. If you are in the military and don’t believe it is just then you can get out using the system and organizations that help people to get out legally. This is what I call “opting out of the system.”
So, what if there is a draft? Well, you could dodge the draft, like those during Vietnam. This is what I call “civil disobedience.” The war against Vietnam ending, in my opinion, in part due to the draft dodgers and protests.
What about government schools. Put your kids in private schools, or home school. Opting out.
What about the illegal war on drugs? Smoke in front of the people and let them haul you away. Civil disobedience. I wouldn’t do this since I don’t want to do any harmful drug (and I would prefer not to participate in “good” drugs either if I can help it). There is an older man out that does this, been hauled away multiple times for smoking weed on campus (he’s a professor emeritus I believe, don’t remember his name).
I think opting out is the preferred method since it doesn’t require doing anything that will get you in jail or beat up by cops.
Another important thing is education. Hopefully this country won’t see a violent revolution anytime soon because most, it seems, don’t understand what freedom and liberty are and we would be likely to get more a tyrannical government out of it.
Voting isn’t a solution, as long as people don’t understand liberty and freedom and don’t come to Christ, voting is useless. I still vote, but some offices I don’t vote for anyone because they are all bad choices.
I was around for Vietnam. I agree that the protestors eventually had a huge impact on that war. The cost was high for our vets when they came home and for years after. I was young enough to think the protests were cool and eventually old enough to better understand the issues.
I can, and do, opt out individually. That worked for me for awhile as I felt a personal statement was all I was trying to make. Now, it feels like whatever action will get our country on a healthier (in all ways) track, requires more than individual opt outs.
Maybe a gigantic flash mob is in order. It is late. I am attempting humor but I think sleep will better serve me. Thank you for expanding your views for me.
This has nothing to do with anything.
Why are some of the thumbs up and down red and green and others are gray? This is a big one : ] not!
Love Suskind’s book on the One Percent Doctrine.
It gave me an idea as to how to defend Blackwater in their upcoming trial:
http://themormonworker.wordpress.com/2008/12/13/in-defense-of-blackwater-gangs-neocons/
“gray” on a thumbs up/down means you’ve clicked on it already, can’t vote twice.
You can’t ‘lose’ a war that you’ve in effect created. While I do acknowledge that there are Muslim terrorists out there, I have significant doubts as to how much of a threat that they actually pose, and how it could possibly be in the interests of the United States to have a military presence in Iraq and/or Afghanistan, be allies with Egypt, Saudi Arabia, and Pakistan, or be cold towards Algeria, Libya, and Syria, OR..be openly supportive, both politically and financially, of Israel, a nation profoundly able to take care of itself.
What we’ve been losing, in the name of combating terrorism, is more and more of our freedoms. “Nine-Eleven” was a harbinger of things to come. I wonder when the next “false flag” event will occur?….
Here is a an alternate spiritual “history” post 9/11 that could have been–rather then a “false flag” it could have been an opportunity for a quantum spiritual leap forward:
http://themormonworker.wordpress.com/2011/09/09/speaking-truth-to-power-911-my-reflections-ten-years-later/
maybe next time, but real Christianity is rare–and even rarer by Christians–see King Ashoka as an example of a real Christian response by a non-christian
“As one news source put it (linked above), “a handful of desperate men set the world’s greatest hyper-power on a path of self-destruction.”
This is a common variation of an argument I’ve heard made in every anti-terrorist campaign since Libya. That would be Libya, 1973; not Libya, 2011. Don’t hit back. That’s just what they want you to do!
But if true, than they will just keep hitting you until you do hit back. You get all the violence and cost in the end anyway, PLUS the damage you took before you started to fight.
JMB:
The premise of your argument is that there is a strategy, which if followed since 911 would have allowed us to win. Maybe.
But consider the more sobering possibility that our failure to make better moral choices far earlier in our history has already insured our decline as a people. The scriptures promise happy endings, but the middle can still suck.
D&C 98, pretty clear. And don’t forget who’s been over there for the last 60+ years, if anyone has a right to attack the other person it is them against us for what the military and CIA have been doing to their countries over the past decades, we need to repent and give back “four fold.”