Meanwhile, Back in Iraq…

…there’s this piece of bad news, courtesy of the Jamestown Foundation:

In the midst of rising tensions between the Turkish and Iraqi governments over the presence of Kurdistan Workers’ Party (PKK) rebels in northern Iraq, the PKK has managed to expand to other parts of Iraq outside of their traditional strongholds in the northern mountains. It seems that the PKK has taken advantage of the lax security in the capital city of Baghdad and government distraction to open the “Ocalan Culture Center,” a PKK contact bureau, just steps away from the Turkish Embassy. Although Iraq has pledged that it will do what it can to crack down on the presence of PKK fighters in Iraq, the Ocalan Culture Center was opened with the approval of local government authorities, according to documents plastered on the walls of the center (Turkish Daily News, July 14). This comes despite the fact that the PKK is ostensibly an outlawed organization in Iraq.

The PKK is also designated as a terrorist organization by the United States, the European Union and Turkey. Turkish intelligence estimates that there are between 4,000 to 5,000 PKK fighters in the mountainous border region in northern Iraq. The PKK began infiltrating back into Iraq from Turkey after it called off its unilateral cease-fire in the summer of 2004. The PKK already has a contact bureau in the northern Iraqi city of Kirkuk.

[…]Turkish officials fear that [the Baghdad center] will also be used to plan and facilitate terrorist operations around the border area and in Turkey (Cihan News Agency, July 12). Turkish officials officially opposed the opening of the Ocalan Culture Center in Baghdad. Diplomatic sources stated that Turkey delivered a note via the Turkish Embassy to the Iraqi government demanding the closure of the contact office, citing Iraq’s pledges that it would not allow Iraq to be a sanctuary for terrorist organizations (Anatolia News Agency, July 20).

The Turks have absolutely no love for the PKK, and things have been heating up both diplomatically and militarily between the Turks and the Iraqis.  In a country that doesn’t need any more flashpoints, this could easily become one.

Mercantilist Logic Flounders at Sea

The good news from the listing cargo ship near Alaska’s Aleutian Islands is that all 23 crew members were plucked safely from the ship by helicopter last night. (See news story.) The bad news is that the 5,000 cars aboard the ship bound from Japan to Canada may not survive the mishap.

Come to think of it, would it be such bad news if those 5,000 cars sank to the bottom of the ocean? According to the mercantilist mindset that seems to dominate Washington’s discussion of trade policy, the loss of merchandise in transit from one country to another may be the best of all possible worlds.

Mercantilism is a centuries-old approach to trade that believes that exports are the big payoff from trade and imports a burden. By definition, then, a trade surplus signals success for trade policy and a trade deficit failure.

From a mercantilist point of view, then, the loss of those 5,000 cars at sea should be a blessing to the global economy. The people of Japan would have occupied themselves producing those 5,000 cars for export, while the people of Canada would not have shoulder the “burden” of accepting them as imports. Japan can add to its trade surplus without Canada being forced to suffer a deficit.

The great French economist Frederic Bastiat exposed this fallacy more than 150 years ago in an essay, “The Balance of Trade” (Chapter 6 of his Economic Sophisms). If the mercantilists are right, we should all be praying for bad weather in the sea lanes carrying all those cars, shoes, shirts, and laptop computers to our showrooms and store shelves.

Rent-Seeking Weasels

We’ve all heard about how actor-director Rob Reiner sponsored an initiative in California in 1998 to raise cigarette taxes to fund preschool programs. Reiner then became chairman of the state agency created by the initiative. And then he funneled $230 million of state spending through the ad and PR agencies that had worked on the initiative. And then he spent another $23 million of state money to support Proposition 82 this spring, to create universal preschool programs. He had to resign from his position, and voters turned down Prop 82.

But he’s not the only person sponsoring an initative that would benefit himself, his family, or his friends. A wealthy real estate developer who thought stem cell research would benefit his diabetic son spent $3 million of his own money to get Californians to create a $3 billion taxpayer-funded stem cell research organization, which he then became chairman of.

And now comes Vinod Khosla, a founder of Sun Microsystems and former partner in the fabulously successful Silicon Valley venture capital firm Kleiner, Perkins, Caufield and Byers, and recently number 1 on Forbes magazine’s Midas list of “the people who most successfully use venture capital to create wealth for their investors.” He’s been the subject of two admiring profiles in the Washington Post (one reprinted from Slate) in the past two days for his latest venture: ethanol. If Vinod Khosla says ethanol is a good investment, don’t bet against him. Or against fellow Silicon Valley megamillionaire Bill Gross, who says that “reinventing energy … dwarfs any business opportunity in history.”

But if it’s such a good investment, why is Khosla ”supporting an initiative on this fall’s ballot in California that would tax oil companies to generate $4 billion to help encourage the use of alternative energy,” as Slate writer Daniel Gross notes? Khosla told Post columnist Sebastian Mallaby that he wants just a little help from the federal government, too: “Khosla wants government to require auto companies to make more flex-fuel cars that run on gasoline or ethanol… .  Khosla wants government to require big gasoline distributors to install ethanol pumps at a tenth of their gas stations.” Oh, and a better subsidy.

Taxing your competitors to subsidize your industry is a rent-seeker’s dream. Usually you have to be more subtle about it. But if you have a “green” business idea, you can get liberal journalists to write gushing stories about you without even stopping to ask, “Hey, aren’t you going to benefit from these initiatives and laws you’re pushing? Isn’t that sort of like, you know, corporate welfare? Like we’re always accusing the oil industry of?”

We shouldn’t bet against Khosla. But if his latest investment is really such a great business opportunity, we should feel free to vote against subsidizing it.

Hillary’s Health Care Initiative Gets off to a Bad Start

Pop quiz.  Finish the following sentence:

No factor does more to hold back America’s economic growth and keep American workers from earning as much as they deserve than _________________.

A. the soaring cost of health care [16.5 percent of GDP]

B. the soaring cost of government [31.4 percent of GDP]

If you understand the “greater than/less than” thing, you picked B.  But if you are Sen. Hillary Rodham Clinton, you picked A.  In fact, that is how Senator Clinton completed the first sentence of the “Affordable Health Care” section of her “American Dream Initiative,” released yesterday. 

Just one sentence into her vision for health care, and I am already disappointed.

Confessions of a Former (and Maybe Future) Hawk

Once upon a time, way back in 2002-03, I had my own blog. Unsurprisingly, given the times, I wrote frequently about issues relating to the war on terrorism. I took a hawkish line, supporting the U.S. invasion of Iraq and the resort to force, if necessary, to prevent other terror-sponsoring states like Iran from developing nuclear weapons. Based on my blog writings, I was invited to participate in a Reason online debate with John Mueller back in November 2002 on whether to go to war with Iraq. I argued vociferously in the affirmative.

The views I expressed were extremely controversial within Cato and the larger libertarian camp. Cato’s foreign policy scholars, reflecting the “orthodox” libertarian opposition to an interventionist foreign policy, strongly opposed the Iraq invasion. But for a minority of policy staffers at Cato, as well as many other libertarians, waiting for the other guy to take the first swing no longer seemed to make sense in a post-9/11 world.

Since the fall of Baghdad, I haven’t written a word about foreign policy. Virtually all my writing energies have been directed elsewhere: to a book, due out next spring, that examines the effect of mass affluence since World War II on American politics and culture. Much has changed in the past three-plus years, including my own views as I struggle to make sense of ever-changing circumstances. As a one-time outspoken “libertarian hawk,” I feel a responsibility to explain where I stand now and how I got here. Given recent (and incorrect) speculation about my views on the brewing crisis with Iran, now is as good a time as any.

First, on Iraq, my support for the invasion was based on the assumption of active biological and nuclear weapons programs. That assumption, of course, proved incorrect. I also failed to anticipate the Sunni insurgency that has been at the root of Iraq’s post-Saddam problems. And, perhaps most egregiously, I placed my trust in the Bush administration to assess the Iraqi threat accurately and do all within its power to make the occupation of Iraq a success. That trust, however foolishly offered, was badly betrayed.

So, if I had it to do all over again, would I oppose the invasion? Honestly, I don’t know. I just can’t quite bring myself to wish Saddam back in power and, with the sanctions regime probably moribund by now, enjoying $75 a barrel oil and emboldened by having survived the Gulf War and its protracted aftermath. On the other hand, I certainly wish that the United States had not assumed responsibility for Iraq’s post-Saddam future. That mission was undertaken on the basis of totally erroneous expectations regarding its difficulty and without any Plan B in the event of unforeseen problems. Consequently, the occupation has been a fiasco – failing to accomplish its objectives, costing thousands of U.S. lives and hundreds of billions of dollars, tying down a major chunk of the U.S. military in what appears to be an exercise in futility, and highlighting the limits of U.S. power and resolve in a way that encourages our enemies.

And what to do now? For a long while I kept hoping that political progress in Iraq would lead to progress in subduing the insurgency. It hasn’t, and now the country seems to be spiraling into sectarian civil war. I don’t see any prospect for things to get better in the foreseeable future, and thus I see no U.S. interest in maintaining our presence there. So I’m in favor of getting out. We rid Iraq of a horrible tyrant and gave the country a new constitution and government. It’s up to the Iraqis now, for better or worse.

Meanwhile, the experience of the past few years, including but not limited to the experience in Iraq, has led me to reconsider my earlier support for preventive military action against Iran. I cannot say that there are no conceivable circumstances under which I would support such action. But for the time being, I do not think that preventing an Iranian bomb is worth hazarding another war – especially since it is probably the case that we still have several years before Iran succeeds in its quest for nukes, and it is certainly the case that our non-military options are far from exhausted.

My change in views is not due to any deep-seated philosophical reversal. Today, as before, I’m afraid I’m immune to the attractions of any grand foreign-policy abstractions, whether realist, idealist, or otherwise. And I’ve yet to find refuge in any bright-line rules on when military force is and isn’t called for. To my mind, international relations is a field that just isn’t amenable to much theoretical illumination.

As a libertarian, I have a healthy appreciation of the law of unintended consequences. Accordingly, I start with a strong presumption against doing anything as drastic as going to war. Unlike many of my fellow libertarians, however, I believe that this presumption can be rebutted in cases other than an outright or imminent attack on the United States.

So I muddle along, weighing the risks of action against the risks of inaction on a case-by-case basis. What has changed, for me, since the spring of 2003 is the weight I assign to the relevant risks. In particular, I currently consider the threat of Islamist terrorism to be far less grave than I feared it to be in the wake of 9/11. Yes, it is a very real threat, and one that should be addressed with the utmost seriousness. But my best reading of the available evidence tells me that both the scale and the sophistication of anti-U.S. terrorist activity are currently rather limited. Consequently, I am less persuaded than before of the need for bold and risky moves against terror-sponsoring states. At the present time, I therefore prefer a more cautious approach in dealing with rogue regimes.

But I stand prepared to flip-flop once again should changing circumstances warrant. In the words of Keynes (whom I don’t get to quote very often), “When the facts change, I change my mind – what do you do, sir?”

The DLC Moves Left?

By teaming up with the Democratic Leadership Council, is Hillary Clinton moving to the center in preparation for a presidential run? Or is the DLC moving left to get closer to the front-runner? Yesterday Senator Clinton released a DLC plan, the “American Dream Initiative,” a laundry list of government transfers and handouts.

The New York Times called the programs “modest” and “relatively small-scale.” Taxpayers might have a different view if they read the Washington Post, which noted that DLC president Bruce Reed estimated the cost of the programs at $500 billion over 10 years – and taxpayers have learned by now that government entitlement programs often cost far more than their advocates estimate in advance. (Remember when Medicaid was projected to cost $1 billion a year? Oops.) And the DLC promises to raise taxes to cover the costs.

There are millions of libertarian-leaning voters disgruntled with the Republicans’ social conservatism, soaring spending, and ill-fated war. And Democrats are doing everything they can to discourage those voters from switching parties.

Gerecht Misses the Mark

Forgive the length, but below is my humble contribution to the debate that is now heating up over at Cato Unbound.

It is odd that Reuel Marc Gerecht criticizes my colleague Ted Galen Carpenter for looking at America’s successes in deterring totalitarian regimes with nuclear weapons for insights on the prospect of deterring the Iranian totalitarian regime, should it get nuclear weapons. Mr. Gerecht offers soliloquies on the (genuine) oddity of twelver Shi’ism (as does Mr. Luttwak, more briefly), but somehow misses the proper starting point for a discussion of US foreign policy: US interests and the costs and benefits of available US policy options. Indeed, Mr. Gerecht does not deign, at any point in this discussion, to evaluate even briefly the prospective costs and benefits of his preferred policy option: preventive war.

Mr. Gerecht points out that “in a pre-9/11 world, Shi’ite and Sunni radical Islamic terrorism should have been one of those things that scared us the most.” He then explains that “to President Clinton’s shame, he couldn’t compel himself into preemptive military action against the rising Sunni menace. Yet it would appear in 2006 such holy warriors scare Mr. Carpenter not much at all. They should.” (my emphasis)

It is a useful rhetorical device for Gerecht to switch back and forth between Sunni al Qaeda terrorists and the Shiite government in Tehran, but the historical record deserves to be corrected as to Carpenter’s concern about terrorism.

To that end, I would humbly point him to Carpenter’s 1995 Handbook for Congress article in which he warned that

Americans have become targets of international terrorism. Unfortunately, that danger is likely to grow rather than recede in the coming years…

Back to Mr. Gerecht’s case for war. Mr. Gerecht implies that there is something inherent in the regime in Tehran—whether theological or political—that is inevitably pushing us toward conflict with Iran. In so doing, he chooses to ignore the decades-long US policy of meddling in Iran’s internal politics and trying to overthrow the government there; one could start with the CIA-backed coup in 1953 and the 1964 SOFA agreement, to the efforts of Gerecht’s colleague Newt Gingrich, then Speaker of the House, to allocate millions of dollars to attempt to overthrow the Tehran government, to the Iran and Libya Sanctions Act of 1996, to…well, to last week’s meeting at the White House between Mr. Gerecht’s other colleague, Richard Perle, and the NSC’s Eliot Abrams, with a host of dissidents whose publicly stated goal is to overthrow Iran’s government. And to think that the Iranians believe that we are trying to overthrow their government!

As for a brief commentary on the prudence of various policy options, I would refer to a useful analogy offered by Mr. Gerecht’s other colleague, Michael Rubin, in referring to our options in dealing with the Islamic republic:

When faced with a hornet’s nest, the choice to destroy it or leave it alone is better than the compromise of lightly tapping it with a stick.

Agreed. For his part, Mr. Rubin did us the courtesy of openly advocating a full-blown regime-change type assault against Iran, but it is not clear whether Mr. Gerecht is advocating destroying the Islamic republic, or just tapping it with a stick. We would do quite well to learn whether Mr. Gerecht is only in favor of striking the nuclear facilities in Iran, or also attacking the locations of the Iranian Revolutionary Guard Corps, the missile sites, the presumed chemical and biological weapons sites, and the Iranian leadership. Of course, this would lead to a discussion of targeting, which would put hundreds, if not thousands of aim points on the table, and we would ultimately be talking (once again) of a preventive war to remove a foreign bogeyman who supposedly poses an intolerable threat to this, the most powerful country in the history of the planet.

Finally, one is hard pressed to imagine how Mr. Gerecht will explain away the reckless and shameful incompetence of the hawk faction in the Bush administration as described by the Washington Post. The Iranians approached the Bush administration directly in 2002 (after the ridiculous “axis of evil” speech!) and proposed cooperating against al Qaeda, informing the US of the identities of 290 members of al Qaeda that Iran had captured and sent back to their countries. The Iranians proposed further cooperation against al Qaeda. The Bush administration’s response?

Representatives of Cheney and Defense Secretary Donald H. Rumsfeld fought back. Any engagement, they argued, would legitimate Iran and other historic state sponsors of terrorism such as Syria… Participants said Bush’s divided national security team was unable to agree on an answer. Some believe important opportunities were lost.

Why would Iran make such overtures? Moreover, even after being rebuffed, Iran cooperated with the US on al Qaeda by transferring some of them to Afghan custody, and provided the US information on more of them. More to the point, why would the Bush administration turn them down, if they were serious about diplomacy?

The sad irony is that there is no good reason that even hawks like Mr. Gerecht should oppose offering a grand bargain to the Iranians. If the issue is indeed the nuclear program, not the regime, then we lose nothing by putting a deal on the table. We offer an irrevocable international inspections regime of Iran’s existing nuclear program, along with all attendant safeguards, in exchange for full diplomatic recognition of the regime in Tehran, lifting of the US sanctions, and a public pledge not to attack Iran unprovoked. If the Iranians turn such a deal down, there is nothing (except prudence) that would prevent us from then attacking Iran. But Mr. Gerecht seems uninterested in serious diplomacy as a matter of principle.

Mr. Gerecht’s original essay, in addition to the lengthy description of the weirdness of the Iranian government, offers little in the way of policy guidance. Gerecht’s preferred policy, for the Bush administration to “begin a crash course in covert and overt Iranian democracy-promotion, firing all those in the bureaucracies who seek to sabotage the mission” is one that he admits “isn’t going to happen.” And that tells us a good deal about its viability. Or does Mr. Gerecht believe that the Bush administration is somehow at peace with the Islamic republic going nuclear? If so, why all the public fuss about it?

So we end up back at what has become the default neoconservative option, preventive war. Gerecht should at the very least answer Carpenter’s worry about how this third US-initiated war against an Islamic country (this one truly unilateral) in the past five years would go over in the Muslim world. Would it have a negative effect, a positive effect, or no effect on the allure of anti-American terrorism for young Muslim males? Would it deflate, or substantiate the arguments of Osama bin Laden about America’s intentions? Would it help, or harm the US mission in Iraq? What would the Iranian response likely be: for America, for Israel, or for Iran’s neighbors? Would another war serve the national interests of the United States more than it harms them?

These are the obvious questions. Unfortunately, Mr. Gerecht provides no answers.