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Putting a Price Tag on War, Quake This entry was posted on 4/30/2006 10:32 AM and is filed under Perspective. BY GVK
As someone visiting this country I find aspects of life, an NRI here might dismiss as mundane, so fascinating to be worth writing home about. For instance, the Americans' penchant for putting a price tag on things. Read somewhere they spend $ 200 million a day on Iraq; have spent $ 320 bn till now on the war there; and that the war costs have doubled since the fall of Saddam. The projected combined bill on hostilities in Iraq and Afghanistan is put at $811 bn. And they still have to account for Osama. I am sure they have a point in keeping count, but it can't have anything to do with strategy to contain war costs or put an end to the seemingly unending war. If cost consideration were a governing factor in global conflicts, no cost-conscious nation would go to war. I suspect that the US of A keeps tab on costs of imponderables such as war and earthquake, only to keep their accountants at full employment level. My neighborhood paper, ' San Ramon Valley Times', reports that a quake in the Bay Area could set us back by $ 135 billion to $220 billion, depending on its magnitude. A 6.9 quake would cost $ 135 billion at today's dollar rate. A calamity on 7.3 scale would mean 85 billion more, according to Don Windeler of Risk Management Solutions. He makes it sound as if we have an option, to choose between 7.3 level quake and a less expensive 6.9 quake. Putting a price tag makes sense, to my mind, only if cost is negotiable. Can't ask for a cut-rate quake, can we. In the 1868 quake, they say, we got away with a damage of a mere $300,000. We have Don's word that the next one would be much more costly. Wonder how these risk management guys come up with these intimidating figures, though I can see 'why' they do so. Risk management solutions need to factor in the cost of a calamity. Putting a price tag on a disaster makes it grimmer (and, hopefully, helps sell disaster insurance) . Quantifying a quake is the hallmark of an analyst. You and I aren't going to question analyst's figures. If risk management folks say a 6.9 quake would cost $ 135 b, who am I to differ? And who would print me in newspapers, anyway. Posted by GVK. Can be reached at gv.krishnan@gmail.com. CommentsDisplay comments as (Linear | Threaded)
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