November 16, 2007

I rarely write about detailed economics because I am neither a mathematician nor an economist. But, recent news items have prompted me to take a shot at writing about money.

A few days ago, a report emerged that stated the U.S. would spend almost four trillion dollars on the wars in Iraq and Afghanistan by the year 2017. Estimates on the amount spent already in the Iraq conflict have surpassed the trillion-dollar mark.

How much is a trillion dollars? I will use the American standard for discussing the following. The British use different figures for what a billion represents, so I want to clarify the system I am using.

A million dollars is still the benchmark for a wealthy person in the West. Take a thousand million and you have a billion. Then, take a thousand billion and you have a trillion. That is a one with 12 zeros following: $1,000,000,000,000. That’s a helluva lot of money.

Let’s go back to the pre-liberated Iraq days preceding March 2003. Paul Wolfowitz told the people of the U.S. that the invasion of Iraq would not cost the U.S. taxpayer one penny. He predicted that any conflict would be short-lived and whatever the U.S. would fork over for the cost, somewhere in the vicinity of $20 billion, would soon be replaced by the selling of Iraqi oil to pay back the U.S. for the favor of bringing democracy to Iraq. Such a deal.

Things did not work according to plan. One trillion dollars later (and the deaths of more than a million Iraqis, plus thousands of U.S. personnel and a few people of other nationalities), there appears to be a bottomless pit for spending that will not close itself soon. Every few months or so, the U.S. Congress approves tens of billions of dollars to keep the conflict going. But, this is only chump change when you look at the overall picture.

Let’s get back to Wolfowitz and his prediction. There is a lot of difference between $0 and $1,000,000,000,000. He was slightly off in his budgetary forecasting. Normally, someone who made such a blunder would be discredited. Not Wolfowitz. George Bush appointed him the director of the World Bank. This move had about as much logic as the B’nai B’rith giving Adolf Hitler a posthumous humanitarian award for the advancement of Jewish-German relations.

Once in office, Wolfowitz made a huge blunder. It only took him a short time to outdo himself. In a classic letting your penis take charge of your brain scenario, he gave his girlfriend a high-paying job with no responsibilities. A scandal emerged and Wolfowitz resigned, although me maintained that his girlfriend’s appointment had nothing to do with his resignation. I hope, for his sake, that his mistress gave a world-class blowjob.

No one has been held accountable for the great loss of money spent in destroying Iraq. It has been treated as a minor error in financial judgement.

With the common use of the word trillion, the word billion becomes outdated and represents, in the minds of the public, an insignificant amount. Soon, we will run out of zeros. What will be next? A jillion dollars? A zillion dollars? Someday we may be talking about real money.