I’m not an economist, but I did specialize a bit in international political economy in grad school, and I read a couple of economics blogs, so I have learned a couple of home truths. One is that with every disaster, there seems to be some well-meaning person who attempts to find the silver lining in the cloud of despair. The piece ususally goes something like, “One positive thing to come out of the disaster will be the economic jolt from spending on reconstruction.” Since people will be employed rebuilding things, it will create jobs, thus boosting the economy, right?

Wrong. This BBC story details the first attempts to come to grip with the costs. I hate to be the bearer of even more bad news, but this is an unmitigated (and unprecedented) disaster. While many of the people who were killed or who have been made homeless were very poor, they had some wealth, and that wealth is gone now. Furthermore, many, if not most, of the deaths were of those who are or will be producers of wealth. So future wealth creation has been curtailed. In the short term, the efforts to provide food, clean water, shelter, and disease treatment to these people will be much more expensive than had they not been affected–another net cost. Any money spent on disaster relief is money that will not be spent on some naturally productive area of the global economy.

That money must be spent, spent gladly, and spending more now will prevent spending even more later. But just because disaster relief is a good thing doesn’t mean that it will be a good thing for the global economy. Remember the Asian Flu of the late 90’s? Only the Internet bubble and some fancy maneuvering on the part of the global financial community kept that from affecting us in the West. This may have a measurable impact as well.

One more note about economic rhetoric. The BBC piece talks about some of the countries “lowering taxes and spending more to stimulate the economy.” That is more realistically phrased as “borrowing from future generations to invest in reconstruction now in the hopes that a future economy will be stronger and able to pay of the debt.” It’s a reasonable move in the short term, though anyone watching the current US Administration will find that policy strangely familiar and unsettling. The longer you finance current consumption with debt, the greater the bill when it comes due–and it will come due.

Fortunately, it’s a good bet that this area will be more wealthy in the future. And it’s a sound investment to provide them relief now so a greater tragedy is averted. Remember, all that relief doesn’t have to come from the government: you can and should help, too.

Suddenly, lots of CEOs are probably rethinking how much they want to acquire hordes of Indian programmers, since they might get arrested for cooperating with the police there.

Now I’ve seen a furious debate over the question Spc. Wilson asked Defense Secretary Rumsfeld. Both sides have good points: the fact that so many soldiers cheered means that there’s a HUGE morale problem. But it’s also true that there’s a tradeoff in armor versus mobility, and yes, soldiers and marines and sailors get killed in war, and we won’t change that any time soon.

However, one way Rumsfeld completely ducked his and the Bush administration’s responsibility infuriated me, and nobody I’ve seen has commented on it. His reply supposedly included this sentence: “You go to war with the army you have.”

Sure, when Iraq attacked through Cuba and took Miami so soon after 9/11/01, I was shocked and ready to go to war, too, and I think people complaining about timing should complain to Saddam Hussein since he start-

Oh Wait, WE Started This One

We could have gone to war with any army we wanted. We had the luxury of choosing the time and place, and, according to the Bush administration now, weapons of mass destruction weren’t a major reason to go, just an also-ran. So there was no time pressure, and Rumsfeld could have prepared for the contingency of taking Iraq with a “transformed” army (which he did well) and then holding it with a follow-on larger force (which he has failed to even consider until now).

Furthermore, Bush could have actually spent some time bringing the rest of the world along so we had partners in the initial invasion and even more to do the dirty, dull, dangerous drudgery that is occupation. We could have French and Spanish and German and Japanese and Saudi and Yemeni and Egyptian and maybe even Russian or Turkish troops on the ground being shot at along with us, providing some visibility and keeping the pressure on would-be terrorists.

But, Mr. Rumsfeld, you failed to plan, you failed to argue for more time, and you implemented a policy pretty much doomed to this kind of slog. It’s not yet hopeless, but if you had a bit of honor you would have stepped aside and let someone else finish this one.

I agree with The Economist: Resign, Rumsfeld.