Tag: George Will

The Tire Tariff and the Invertebrate President: A Fable

Anyone still inclined to minimize the meaning of President Obama’s Chinese tire tariff decision should read George Will’s column today.

It is not only the direct costs of this particular decision, which are numerous and tallied in the article (and in this paper), that should concern us. Will’s bigger concern is the foreshadowing of more protectionism from a president who has proven to have no qualms about looking straight into other people’s eyes and claiming that his administration opposes protectionism, favors free trade, and is working to advance pending trade agreements through Congress, all while remaining “invertebrate as he invariably is when organized labor barks.”

Is this a sign of schizophrenia? No, it’s worse. What we have here is a president who views trade policy as nothing more than a tool to advance his own political standing with groups that are hostile to commerce. Since groups on the left have grown disenchanted that some of the most socialist elements of the health care debate might be left on the cutting room floor, why not try to placate them with anti-business, anti-consumer, anti-globalization protectionism? Will makes the link between tire tariffs and the health care debate in his concluding sentence.

A president who fancies himself economically enlightened and internationalist would treat trade policy as a means to promoting economic growth and sound foreign relations. This president, regrettably, views trade policy as a sacrificial pawn in the service of politics as usual.

Making Enemies in Afghanistan

Yaroslav Trofimov’s article in Wednesday’s Wall Street Journal explains how Ghulam Yahya, a former anti-Taliban, Tajik miltia leader from Herat, became an insurgent. The short answer: because the American master plan in Afghanistan required the retirement of warlords. The trouble is that in much of Afghanistan “warlord” is a synonym for “local government.” Attacking local authority structures is a good way to make enemies.  So it went in Herat. Having been fired from a government post, Ghulum Yahya turned his militia against Kabul and now fires rockets at foreign troops, kidnaps their contractors, and brags of welcoming foreign jihadists.  Herat turned redder on the color-coded maps of the “Taliban” insurgency.

That story reminded me of C.J. Chivers’s close-in accounts of firefights he witnessed last spring with an army platoon in Afghanistan’s Korangal Valley. According to Chivers, the Taliban there revolted in part because the Afghan government shut down their timber business. That is an odd reason for us to fight them.

One of the perversions of the branch of technocratic idealism that we now call counterinsurgency doctrine is its hostility to local authority structures.  As articulated on TV by people like General Stanley McChrystal, counterinsurgency is a kind of one-size-fits-all endeavor. You chase off the insurgents, protect the people, and thus provide room for the central government and its foreign backers to provide services, which win the people to the government. The people then turn against the insurgency.  This makes sense, I suppose, for relatively strong central states facing insurgencies, like India, the Philippines or Colombia.  

But where the central state is dysfunctional and essentially foreign to the region being pacified, this model may not fit. Certainly it does not describe the tactic of buying off Sunni sheiks in Anbar province Iraq (a move pioneered by Saddam Hussein, not David Petraeus, by the way). It is even less applicable to the amalgam of fiefdoms labeled on our maps as Afghanistan. From what I can tell, power in much of Afghanistan is really held by headmen — warlords — who control enough men with guns to collect some protection taxes and run the local show. The western idea of government says the central state should replace these mini-states, but that only makes sense as a war strategy if their aims are contrary to ours, which is only the case if they are trying to overthrow the central government or hosting terrorists that go abroad to attack Americans. Few warlords meet those criteria. The way to “pacify” the other areas is to leave them alone. Doing otherwise stirs up needless trouble; it makes us more the revolutionary than the counter-revolutionary.

On a related note, I see John Nagl attacking George Will for not getting counterinsurgency doctrine. Insofar as Will seems to understand, unlike Nagl, that counterinsurgency doctrine is a set of best practices that allow more competent execution of foolish endeavors, this is unsurprising. More interesting is Nagl’s statement that we, the United States have not “properly resourced” the Afghan forces.  Nagl does not mention that the United States is already committed to building the Afghan security forces (which are, incidentally, not ours) to a size – roughly 450,000 – that will annually cost about 500% of Afghanistan’s budget (Rory’s Stewart’s calculation), which is another way of saying we will be paying for these forces for the foreseeable future.

It probably goes too far to say this war has become a self-licking ice-cream cone where we create both the enemy and the forces to fight them, but it’s a possibility worth considering.

Afghanistan = Bottomless Pit of Massive Social Engineering

Obsidian Wings echoes my frustrations about the debate surrounding the war in Afghanistan. Publius notes, “The goal of preventing Taliban control isn’t a sufficient reason to stay.”

That analysis is absolutely right. As I mention in my forthcoming white paper (co-authored with TGC), Escaping the Graveyard of Empires: A Strategy to Exit Afghanistan, the resurrection of the Taliban’s fundamentalist regime doesn’t threaten America’s sovereignty or physical security. The Taliban is a guerilla-jihadi Pashtun-dominated movement with no international agenda or shadowy global mission. Even if their parochial fighters took over a contiguous fraction of Afghan territory it is not compelling enough of a rationale to maintain an indefinite, large-scale military presence in the region, especially since our presence feeds the Pashtun insurgency we seek to defeat (as Publius also acknowledges) and our policies are pushing the conflict over the border into nuclear-armed Pakistan, further destabilizing its already shaky government.

Even if the Taliban were to reassert themselves amid a scaled down U.S. presence, it is not clear that the Taliban would again host al Qaeda. In The Looming Tower: Al-Qaeda and the Road to 9/11, Lawrence Wright, staff writer for New Yorker magazine, found that before 9/11 the Taliban was divided over whether to shelter Osama bin Laden. The terrorist financier wanted to attack Saudi Arabia’s royal family, which, according to Wright, would have defied a pledge Taliban leader Mullah Omar made to Prince Turki al-Faisal, chief of Saudi intelligence (1977–2001), to keep bin Laden under control. The Taliban’s reluctance to host al Qaeda’s leader means it is not a foregone conclusion that the same group would provide shelter to the same organization whose protection led to their overthrow.

Moreover, America’s claim that the Taliban is its enemy seems less than coherent. After all, although some U.S. officials issued toothless and perfunctory condemnations of the Taliban when it controlled most of Afghanistan from September 1996 through October 2001, during that time the United States never once made a substantive policy shift toward or against the Taliban despite knowing that it imposed a misogynistic, oppressive, and militant Islamic regime onto Afghans. For Washington to now pursue an uncompromising hostility toward the Taliban’s eye-for-an-eye brand of justice can be interpreted as an opportunistic attempt to cloak U.S. strategic ambitions in moralistic values.

On a side note, another conservative joins George Will for getting out of Afghanistan.

George Will Says It’s Time to Leave Afghanistan

Conservative columnist George Will wants out of the war in Afghanistan.  And his recommendation is getting some notice.  Reports Mike Allen in Politico:

George F. Will, the elite conservative commentator, is calling for U.S. ground troops to leave Afghanistan in his latest column.

“[F]orces should be substantially reduced to serve a comprehensively revised policy: America should do only what can be done from offshore, using intelligence, drones, cruise missiles, airstrikes and small, potent special forces units, concentrating on the porous 1,500-mile border with Pakistan, a nation that actually matters,” Will writes.

President Obama ordered a total of 21,000 more U.S. troops into Afghanistan in February and March, and casualties have mounted as the forces began confronting the Taliban more aggressively. August saw the highest monthly death toll for the U.S. since the invasion in 2001, the second record month in a row.

Will’s prescription – in which he recalls Bismarck’s decision to halt German forces short of Paris in 1870 - seems certain to split Republicans. He is a favorite of fiscal conservatives. The more hawkish right can be expected to attack his conclusion as foolhardy, short-sighted and naïve, potentially making the U.S. more vulnerable to terrorist attack.

The columnist’s startling recommendation surfaced on the same day that Army Gen. Stanley McChrystal, the commander of U.S. and NATO forces in Afghanistan, sent an assessment up his chain of command recommending what he called “a revised implementation strategy.” In a statement, McChrystal also called for “commitment and resolve, and increased unity of effort.”

With a liberal Democrat having become president and made Afghanistan his war, and George Will leading the charge, might conservative Republicans rediscover their inner anti-war feelings?

Did the New Deal ‘Help’?

While Barack Obama’s economics team hammers out its $800 billion fiscal stimulus plan, the commentariat is battling over the effectiveness of what some consider the prototype stimulus package, the New Deal.* The suppressed (and problematic) conclusion to all this punditry seems to be: Because government spending under the New Deal helped/didn’t help to end the Great Depression, the Obama stimulus plan will/won’t help to end the current recession.

One of the opening salvos was this exchange between George Will (anti-New Deal) and Paul Krugman (pro). More recently, New York Times editorial board member Adam Cohen (pro) wrote this column, responding to an op-ed by former Business Week bureau chief Andrew Wilson (anti) in the Wall Street Journal.

So who’s right? Did New Deal government spending “help,” as Cohen puts it?

To answer that, we first have to define Cohen’s term — what would it mean to say that government spending under the New Deal “helped”? Two possibilities come to mind:

  • New Deal spending boosted consumption, thereby increasing production, reducing unemployment, and ending the Depression.
  • New Deal spending aided people who would have otherwise been destitute during the Depression.

The first sense considers the New Deal as a stimulus program to revive the economy; the second considers it as a welfare program to aid the poor. The two notions are far from equivalent. My reading of the literature suggests that the New Deal did little as an economic stimulus, but it did provide welfare benefits.

The figure below sketches U.S. GDP and government spending (all levels) for the Great Depression era. The wildly fluctuating GDP line clearly marks the Great Contraction of 1929-1932, the Recession within the Depression of 1937–1938, and the return of GDP to pre-crash levels in 1940. In contrast, government spending has only a very mild upward slope over the period (until the 1941 ramping-up for World War II). In 1930, the second year of Herbert Hoover’s administration, government spending totaled $10 billion; at the height of the New Deal spending boom in 1936, government spending reached $13.1 billion. (In comparison, that rate of government spending growth is just below the average for the entire post-WWII era.) This raises the question of whether there was much New Deal fiscal stimulus at all.


We get a somewhat different view if we consider the federal budget surplus/deficit. Much of the benefit of fiscal stimulus is supposed to come from the fact that it’s deficit spending. In essence, government borrowing moves future consumption to the present and hopefully boosts the economy to a permanently higher level. As the figure below shows, the federal government dramatically ramped up deficit spending in the last year of Hoover’s administration, as tax receipts sagged and Hoover enacted his own emergency programs. FDR continued the borrowing to fund components of the New Deal.

However, this borrowing was not dramatic by today’s standards. As a share of GDP, the New Deal deficit peaked at 5.4 percent of GDP ($3.6 billion) in 1934; in dollar terms, it peaked at $5.1 billion (4.3 percent of GDP) in 1936. In contrast, President-elect Obama recently announced that he expects “trillion-dollar deficits for years to come,” even without the $800 billion stimulus package that his administration is preparing. With a U.S. GDP of roughly $13.8 trillion, the Obama-projected deficit (not counting the stimulus package) represents 7.2 percent of GDP.

Does the New Deal experience thus suggest that, when it comes to fiscal stimulus, just a little bit can have large effects? Interestingly, economic research suggests the opposite. Long before she was named chair of Obama’s Council of Economic Advisers, Christina Romer wrote a short paper for the Journal of Economic History titled “What Ended the Great Depression?” The paper provides empirical evidence that FDR’s fiscal policy provided little stimulus during the Great Depression. As shown in the figure below (reproduced from Romer’s article), the results of the New Deal’s fiscal stimulus (solid line) were little different from what she projects would have resulted from “normal fiscal policy” (dotted line). Both the deficit spending and the multiplier effect from that spending were too small to budge GDP.

What did end the Great Depression? Romer argues that another FDR policy — doubling the fixed exchange rate for the dollar relative to gold — did the trick, though the New Dealers seem to have lucked into that result rather than planned it. The rate change worked as a monetary stimulus, inducing large gold flows into the United States, where they could now buy twice as many dollars. That buttressed bank deposits and increased bank willingness to lend, encouraging investment. The lending resulted in a sharp increase in the money supply, pushing against the Depression’s price deflation and encouraging consumption. From the moment the exchange rate changed, the United States began to climb out of the Depression — albeit slowly; more slowly than many other countries.

Romer’s explanation dovetails with Milton Friedman and Anna Schwartz’s work on the root cause of the Depression: the Federal Reserve’s sharp reduction of the money supply in the late 1920s, in order to moderate the stock market boom and return the United States to the pre-WWI dollar-gold exchange rate. It also dovetails with evidence that other nations’ recoveries from the Great Contraction began soon after they abandoned efforts to return their currencies to pre-war gold exchange rates. My reading of the economic literature indicates that the “monetary policy did it” thesis has been generally accepted by economic historians (contra Cohen’s graf 9).

So it was FDR’s monetary policy that ended the Great Depression, not such New Deal initiatives as the WPA, the CCC, NIRA, and the rest of the alphabet soup. This follows the findings of a later paper that Romer co-authored with husband David Romer on U.S. recessions in the post-WWII era, which found that monetary stimulus proved superior to discretionary fiscal stimulus in restoring the economy.

What, then, to make of our warring pundits? In the fight between Krugman and Will over the stimulatory effects of the New Deal, it seems that opposing sides can both be wrong. Will was incorrect to argue that economic conditions grew worse during the New Deal era — conditions did improve, albeit slowly, and were temporarily reversed by the Recession within the Depression. Krugman, on the other hand, was wrong to argue that FDR’s fiscal stimulus helped to remedy the Depression and that only the large fiscal stimulus of WWII ended the Depression — in fact, GDP had returned to pre-Crash trend (as calculated by Romer) by 1940. And both mischaracterize the 1937–1938 Recession in the Depression. Although federal deficit spending did decrease along with the economy, the recession appears to have been largely the product of onerous new banking regulations that weakened the monetary stimulus (a point that today’s eager-to-regulate Congress should bear in mind).

Concerning Wilson and Cohen, Wilson goes too far in claiming that FDR (and Hoover) “were jointly responsible for turning a panic into the worst depression of modern times.” If anyone merits that distinction, it is the Federal Reserve for its pre-Crash contractionary monetary policy. Cohen is wrong to claim that “as a matter of economics … F.D.R’s spending programs did help the economy.” However, he does have a point that the various New Deal jobs programs provided income for many people who would have otherwise been destitute. As indicated in the figure below, at their height, the programs provided “emergency jobs” to just over 40 percent of laborers who likely would have otherwise been jobless. As state unemployment insurance and federal safety net programs largely did not exist at the time of the Crash, the New Deal jobs programs were likely a godsend for those who got the jobs (though they did little for the millions more who didn’t). Today, however, several government programs provide income and other benefits to the jobless and the poor, so the welfare benefits of the New Deal do not need to be replicated.

Where does all of this leave us in evaluating policy responses to the current recession?

First, the economic history of the New Deal and the rest of the 20th century raises serious doubts about the effectiveness of discretionary fiscal stimulus packages in reversing an economic downturn. Monetary stimulus has a far better track record (which is not to say that we shouldn’t have concerns about such policy — but that is a discussion for another blog post). And though there is no longer a fixed gold exchange rate for the dollar and the Fed has dropped nominal short-term interest rates to near zero, the Fed has other monetary weapons that it can use to fight this recession. Second, the helpful welfare benefits of the New Deal are now carried out automatically by other government programs.

This leaves us with an important question that has so far gone unasked by the commentariat: Given the above, is $800 billion in new government deficit spending worthwhile?

* As Tyler Cowen points out, it’s wrong to think of the New Deal as a comprehensive, unified set of fiscal initiatives; FDR tried many different policies, and sometimes changed approaches, to fight the Depression.