ONE COLD WAR WAS ENOUGH, THANKS

Sovietizing the economy (Martin Hutchinson, 8/25/2003, UPI)

The United States economy has changed significantly since the September 11 attacks, in a thoroughly unpleasant direction. While Gross Domestic Product has risen by 4.6 percent (in real terms) from the third quarter of 2001, government consumption has risen by 8.2 percent, while private fixed asset investment has declined. As always, disaster has tended to "Sovietize" the economy, increasing the share of output absorbed by products and services that nobody wants. [...]

The September 11 attacks brought a major re-orientation to the U.S. economy. Some of it was reflected in public spending. Airport security was federalized, a new Department of Homeland Security was created, military reserves were called up, defense spending rose, and an airline bailout fund was created (the last being off-balance-sheet as far as the federal government was concerned.)

Other diversions of resources occurred in the private sector. Property insurance premiums rose, for the same or lesser amount of coverage. Airline charges rose, to cover the new security costs. New "security construction" was undertaken to make businesses more secure against terrorist attacks.

Still further costs of the attacks are not reflected in economic data at all. As anyone who has flown in the last year will tell you, the average check-in time for flights originating in the U.S. has lengthened by 30-60 minutes. For passengers, this is completely lost time, accompanied by a considerable amount of aggravation, yet it is not reflected in published data.

The Immigration and Naturalization Services has tightened up its controls, and introduced many new procedures, requiring students coming to the U.S., for example, to file a new application annually, rather than simply one for the course of study as a whole. As a consequence of this, and of tightened enforcement, students validly attempting to attend U.S. colleges are being sent back to their home country, at enormous deadweight cost to them and their families. Again this is not reflected in official economic statistics -- INS inefficiency, and that of the colleges, of course greatly increases this cost burden.

In all three ways, therefore, the disaster of September 11 has diverted resources to items people don't want. This is not the same as diverting them to the public sector. A Medicare prescription drug provision, for example, would provide senior citizens with goods they undoubtedly do want -- prescription drugs -- albeit in a manner that may be inefficient and economically damaging. Conversely, higher insurance premiums do not provide customers with any services they are not already getting, they merely increase the costs of those services. Disasters thus reduce the efficiency of the economy; they increase expenditure on services and goods that provide no additional value to their consumers, while apparently increasing economic activity.

This case was most famously expressed, though with dreadful timing, by Paul Kennedy in his book, The Rise and Fall of the Great Powers:

Once their productive capacity [is] enhanced, countries...normally find it easier to sustain the burdens of paying for large-scale armaments in peacetime and of maintaining and supplying large armies and fleets in wartime. It sounds crudely mercantilistic to express it this way, but wealth is usually needed to acquire and protect wealth. If, however, too large a portion of the state's resources is diverted from wealth creation and allocated instead to military purposes, then that is likely to lead to a weakening of national power over the longer term. In the same way, if a state overextends itself strategically--by, say, the conquest of extensive territories or the waging of costly wars--it runs the risk that the potential benefits from external expansion may be outweighed by the great expense of it all--a dilemma which becomes acute if the nation concerned has entered a period of relative economic decline.

But the problem with his particular application of the thesis--his argument, explicit or implicit, that the United States was forcing its own decline by waging the Cold War--was that the U.S. was not, in fact, in a period of economic decline and that, though the Cold War had indeed been a costly mistake, we were about to win it even as he wrote. The collapse of the Soviet Union and the current twenty year economic boom both unfortunately served to discredit an argument that has much wisdom to it. One result is that we are probably not paying as much attention to the Buchanacons as we should, though their hysteria admittedly makes it difficult to do so.

It is a worthwhile and well-justified task at the moment to confront terrorists and terror regimes, particularly Islamicists in the Middle East and the remaining Communist state (N. Korea, Cuba, China), but we should remain aware of the price we stand to pay in terms of retardation of our own economic development and moral compromise as we co-operate with despicable "allies" and we should limit ourselves to the doable, not necessarily the easily doable, but certainly the conceivably doable. So, for instance, toppling the Taliban was ridiculously easy, but building a stable democracy in Afghanistan seems little more than a pipe dream. Right now, the Afghan government has sufficient control and credibility that it has allowed us to duck out gracefully, but it seems unlikely that this government can endure in the long term, given the ethnic/tribal rivalries that have characterized that unhappy country's history. We should by all means lend them financial and political support and hope that they do manage to create a relatively liberal and democratic society, but if they do so it will be surprising and it will be because of their determination, not because of our continuing intervention. Nor is such a government truly necessary to our purposes. It will take less time, effort, and money to vanquish subsequent enemy regimes there than to try to prop up a friendly one.

Similarly, one has to be concerned about stories like the following, Get real: Driven by a neo-conservative dream, the US is loath to relinquish control in Iraq. But the price for Washington's stubbornness may be failure (Brian Whitaker, August 26, 2003, The Guardian):

Talk of impending failure in Iraq may sound like whinging when it comes from those who opposed the war, but last week the unspeakable seven-letter F-word was uttered by one of the bastions of US neo-conservative hawkery.

Under the headline "Do what it takes in Iraq", an editorial in the Weekly Standard called for a huge commitment of more troops, more money and more civilian workers to fend off disaster.

"Make no mistake," the magazine said. "The president's vision will, in the coming months, either be launched successfully in Iraq, or it will die in Iraq ... the future course of American foreign policy, American world leadership, and American security is at stake. Failure in Iraq would be a devastating blow to everything the United States hopes to accomplish."

Unfortunately for President Bush, this is true. He has left no face-saving escape route for himself or his country.

The neo-conservative solution is to devote to Iraq whatever it takes and for as long as it takes, for a whole generation if necessary. The Weekly Standard wants an immediate allocation of $60bn (£38.4bn) for reconstruction. If the Bush administration is serious, "then this is the necessary down payment," it said, while the official Washington line has been that reconstruction will be funded by Iraq's (still largely non-existent) oil revenue.

Only total commitment on a scale not seen since the end of the second world war can ensure US success in Iraq, the Weekly Standard insisted, but the problem for George Bush is that he can't give that commitment, at least not if he values his presidency.

This is absurd. The rebuilding of Europe didn't work out terribly well--as its cultural decline and economic stagnation demonstrates--but it had at least been an integral part of the West and there was some reason to believe it could be salvaged. Most importantly, the people of Europe obviously wanted our help and shared a substantial portion of our vision of how they might be saved (though not a large enough portion as things turned out). The same can hardly be said for Iraq and the idea that we should make a commitment comparable to the one we made in post-War Europe is deranged. It is the triumph of hope over reason and of ideology over self-interest.

Better to heed the counsel of a great scholar of the Middle East, Put the Iraqis in Charge: Why Iraq is proving much tougher than Afghanistan. (BERNARD LEWIS, August 29, 2003, Wall Street Journal):

What then should we do in Iraq? Clearly the imperial role is impossible, blocked equally by moral and psychological constraints, and by international and more especially domestic political calculations. An inept, indecisive imperialism is the worst of all options, with the possible exception of subjecting Iraq to the tangled but ferocious politics of the U.N. The best course surely is the one that is working in Afghanistan--to hand over, as soon as possible, to a genuine Iraqi government. In Iraq as in Afghanistan, a period of discreet support would be necessary, but the task would probably be easier in Iraq. Here again care must be taken. Premature democratization--holding elections and transferring power, in a country which has had no experience of such things for decades, can only lead to disaster, as in Algeria. Democracy is the best and therefore the most difficult of all forms of government. The Iraqis certainly have the capacity to develop democratic institutions, but they must do so in their own way, at their own pace. This can only be done by an Iraqi government.

Fortunately, the nucleus of such a government is already available, in the Iraqi National Congress, headed by Ahmad Chalabi. In the northern free zone during the '90s they played a constructive role, and might at that time even have achieved the liberation of Iraq had we not failed at crucial moments to support them. Despite a continuing lack of support amounting at times to sabotage, they continue to acquit themselves well in Iraq, and there can be no reasonable doubt that of all the possible Iraqi candidates they are the best in terms alike of experience, reliability, and good will. It took years, not months, to create democracies in the former Axis countries, and this was achieved in the final analysis not by Americans but by people in those countries, with American encouragement, help and support. Ahmad Chalabi and the Iraqi National Congress deserve no less.

One suspects that we'd do best to make Mr. Chalabi's group share power pretty extensively with the Shi'ite majority, but all we're really looking for is a graceful way to get out, having fulfilled our mission already when we got rid of the Saddams. As Mr. Lewis says, we can stand by ready to help if the Iraqis choose to create and maintain democracy, but right now we're really just in the way and the worst option available is the neocon notion of trying to rebuild the whole place ourselves.

We're quite fortunate--though our good fortune, it must always be remembered, is the residue of brilliant design--in that our political, military, and economic power is so massive that we've been able to conduct a couple of wars on the cheap. It would be an ill-fated decision though that saw us devote ever larger portions of our economy to the essentially imperial task of trying to govern the Islamic world from Washington. The Buchanacons are wrong about the use of American military might, but right about the futility of nation-building and correct to worry about what such exercises will do to our own society.

By all means let us wage war on terror--including in N. Korea, Syria, and battles yet to come--but let us do so rapidly, ruthlessly, and efficiently, and let us be cognizant of the insidious way in which seeming military strength can conceal structural damage being done to an economy and a resulting decline in real power. The war on terror should be treated like a war, in which we confront and defeat enemies, and that shouldn't take terribly long--perhaps five or six years. Talk of turning it into a generational struggle, with us taking responsibility for the future shape of the Middle East is truly frightening. The neocons have long been looking for a national greatness project, some excuse for conservatives to wield a big government. But this is not a project that conservatives should support. Statism, under whatever guise, is destructive of society, of the economy, and ultimately of liberty.

MORE:
Iraqis must be left to build democracy at their pace (David Warren, 8/30/03, National Post)

The issue in Iraq is...not whether the U.S. should stay or leave. It is instead the extent to which the U.S. should engage in "nation-building" there. As his critics remember, and his friends, too, George W. Bush campaigned against the whole idea of nation-building by Americans abroad.

What he has been trying to do comes perilously close to what he rightly campaigned against. Not nation-building, by the U.S., but a concentrated U.S. effort to enable nation-building to take place within Iraq, and Afghanistan, and soon elsewhere. I compared it myself, a year ago, to one of the labours of Hercules -- the cleaning of the Augean stables. He is trying to create the conditions for the "river of democracy" to wash through the Middle East; just as President Reagan before him tried to create those conditions for Eastern Europe.

The American role in Iraq should thus be limited to providing security, for the transition to an Iraqi government much more acceptable to Iraqis and to the world, than the horrific government that preceded it.

Leave it to America: There are now calls for greater UN involvement in Iraq. That’s the last thing the country needs (Mark Steyn, 8/30/03, The Spectator)

The Canal Hotel turned out to be a perfect microcosm of the UN: a group of naive internationalists refusing to take the murkier characters prowling the corridors at face value and concerned only to keep the US at arm’s length. Yet for Kofi Annan, the French, the Democratic party and the world’s media, the self-inflicted insanity of what happened to the UN in Baghdad apparently demonstrates the need for Washington to hand over more control of Iraq to the blue helmets because ‘they’ve got far more experience in these kinds of situations’. The UN’s track record at nation-building varies according to the strength of the local obstructionist. Mr Vieira de Mello did such a good job transforming East Timor from the brutalised province of a Muslim dictatorship to a functioning infidel democracy that whoever makes Osama bin Laden’s audio tapes these days added it to his list of grievances against the West. But the dapper diplomat did a less impressive job in Cambodia, where Hun Sen decided to hijack the state, King Sihanouk strung along, and the UN colluded in the subversion of its political settlement.

If Kofi got his hands on Iraq, as world opinion so devoutly wants, the Cambodian scenario would be more relevant than the East Timorese. The most determined obstructionists in this case would be Iraq’s Arab neighbours: Egypt, Syria, Saudi Arabia and co. don’t care whether the country winds up under another Baathist psychotic or a rent-a-rant mullah, or even a restored Hashemite as long as he’s at least minimally repressive. But they object very strongly to the idea of the Iraqi people living in liberty under a representative government with a free press, etc., because that’s not the kind of thing they want catching on. Putting the UN in charge of Iraq is a vote for ‘stability’ in the Middle East — the fetid cesspit stability of the Assads and Ayatollahs that, as argued in this space many times, is the principal ‘root cause’ of the region’s problems.

That’s why I’d rather the Americans stayed in control.

Posted by Orrin Judd at August 30, 2003 8:16 AM