The Inevitability of Bureaucratic Bloat

I’m not a big fan of bureaucracy, mostly because government employees are overpaid and they often work for departments and agencies that shouldn’t exist.

Today, motivated by “public choice” insights about self-interested behavior, I want to make an important point about how bureaucracies operate.

We’ll review two articles about completely disconnected issues. But they both make the same point about ever-expanding bureaucracy.

First, the Economist has an article about central banks, specifically looking at how they employ thousands of bureaucrats. What makes the numbers so remarkable, at least in most of Europe, is that they no longer have currencies to manage.

Central bankers around the world have long pondered why productivity growth is slowing. …But might central banks themselves, with their armies of employees, be part of the problem? …many central banks in Europe look flabby. Although the euro area’s 19 national central banks have ceded many of their monetary-policymaking responsibilities to the European Central Bank (ECB)—they no longer set monetary policy by themselves, for instance—they still retain thousands of employees… the Banque de France and the Bundesbank each employ more than 10,000 people… The Bank of Italy employs 6,700. All told, the ECB and the euro zone’s national central banks boast a headcount of nearly 50,000. …The Board of Governors in Washington, DC, where most policy decisions are made, had about 3,000 staff at last count. When the Fed’s 12 regional reserve banks are included, the number rises to more than 20,000.

I actually wrote about this issue back in 2009 and mentioned the still-relevant caveat that some central banks have roles beyond monetary policy, such as bank supervision.

That being said, this chart suggests that there’s plenty of fat to cut.

What I would like to see is a comparison of staffing levels for countries that use the euro, both before and after they outsourced monetary policy the European Central Bank.

I would be shocked if there was a decline in the number of bureaucrats, even though monetary policy presumably is the primary reason central banks exist.

By the way, there’s a sentence in the article that cries out for correction.

Although central banks have become more important since the global financial crisis, it is not clear why they need quite so many regional staff.

It would be far more accurate if the sentence was modified to read: “…have become more of a threat to macroeconomic stability since the global financial crisis that they helped to create.”

But I’m digressing.

Let’s now look at the next article about bureaucracy.

John Lehman, a former Secretary of the Navy, recently opined in the Wall Street Journal about bureaucratic bloat at the National Security Council.

The problems that plague the NSC trace to before its founding in 1947. The White House has long sought to centralize decision-making to overcome the political jockeying that often takes place within the national-security establishment. …The NSC was established in the 1947 National Security Act, which named the members of the council: president, vice president and secretaries of state and defense. …under President Nixon…, Mr. Kissinger grew the council to include one deputy, 32 policy professionals and 60 administrators. …the NSC has only continued to expand. By the end of the Obama administration, 34 policy professionals supported by 60 administrators had exploded to three deputies, more than 400 policy professionals and 1,300 administrators. The council lost the ability to make fast decisions informed by the best intelligence. The NSC became one more layer in the wedding cake of government agencies.

Wow.

A bureaucracy that didn’t exist until 1947 and didn’t even have a boss until 1953 then grows to almost 100 people about 20 years later.

And then 1700 bureaucrats by the Obama Administration.

Needless to say, I’m sure that the growth of the NSC bureaucracy wasn’t accompanied by staffing reductions at the Department of State, Department of Defense, or any other related box on the ever-expanding federal flowchart.

Whenever I read stories like the two cited above, I can’t help but remember what Mark Steyn wrote almost ten years ago.

London administered the vast sprawling fractious tribal dump of Sudan with about 200 British civil servants for what, with hindsight, was the least-worst two-thirds of a century in that country’s existence. These days I doubt 200 civil servants would be enough for the average branch office of the Federal Department of Community Organizer Grant Applications. Abroad as at home, the United States urgently needs to start learning how to do more with less.

As always, Steyn is very clever. But there’s a very serious underlying point. Is there any evidence that additional bureaucracy has produced better decision making?

Either in the field of central banking, national security, or in any other area where more and more bureaucrats exercise more and more control over our lives?

Maybe there is such evidence, but I haven’t seen it. Instead, I see research showing how bureaucracy stifles growth, creates waste, promotes inefficiency, crowds out private jobs, delivers bad outcomes, acts in a self-serving fashion, and bankrupts governments.

P.S. The best example of bureaucrat humor is this video.

P.P.S. If you want more, we have a joke about an Indian training for a government job, a slide show on how bureaucracies operate, a cartoon strip on bureaucratic incentives, a story on what would happen if Noah tried to build an Ark today, a top-10 list of ways to tell if you work for the government, a new element discovered inside the bureaucracy, and a letter to the bureaucracy from someone renewing a passport.

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Extraterritoriality, the Obama-Trump Policy of Sanctions, and Risks to America’s Economy

In order to protect against “Goldfish Government,” it’s very important to make sure that the powers of government are constrained by national borders.

This is the reason why I’m a passionate defender of tax competition and fiscal sovereignty (even if it means being subjected to slurs, attacks, and imprisonment!).

And it’s why I oppose extraterritorial tax laws such as FATCA.

The fight against extraterritoriality isn’t limited to fiscal issues. It’s also become a big problem in the area of financial regulation.

In a new study for the Center for Freedom and Prosperity, Bruce Zagaris addresses the over-use of sanctions and how they produce undesirable unintended consequences.

The widespread use of economic sanctions constitutes one of the paradoxes of contemporary American foreign policy. Although sanctions are often criticized, even derided, they are simultaneously and quickly becoming the policy mechanism of choice for the United States. The U.S. has economic sanctions against dozens of countries. Even though the success rate of sanctions is unimpressive, sanctions are so popular that they are being introduced by many states and municipalities. …In a global economy, unilateral sanctions tend to impose greater costs on U.S. businesses than on the target, which can usually find substitute sources of supply and financing. …As the U.S. is increasingly resorting to unilateral sanctions, they are inadvertently mobilizing a club of countries and international organizations, including U.S. allies, to develop ways to circumvent U.S. sanctions. …Sanctions are criticized due to their lack of effectiveness, adverse humanitarian effects, and adverse public health effects. Sanctions foment criminalization both during and after the sanctions as a way to circumvent sanctions. Sanctions also result in unintended negative effects on neighbor countries… The excessive use of economic sanctions, especially when U.S. allies oppose them and become targets, produces diplomatic tension, and damages the U.S.’s economy and reputation abroad. The growing number of countries in the club of targets has caused countries to develop innovative means to circumvent the use of the dollar.

I’ve previously written about how the dollar’s role as the world’s reserve currency could be threatened by extraterritoriality, so I fully agree with the concerns in Bruce’s study.

Interestingly, even the U.S. Treasury Secretary acknowledges that there is a problem.

[RTRS] 14 Dec – 07:20:39 AM – U.S TREASURY MNUCHIN SAYS IF WE ARE NOT CAREFUL WITH SANCTIONS, PEOPLE WILL START USING OTHER CURRENCIES

— Alastair Williamson (@StockBoardAsset) December 14, 2019

The issue also has been featured on the op-ed page of the Wall Street Journal.

Sahil Mahtani of Investec Asset Management opined that excessive sanctioning by Obama and Trump creates risks for the dollar.

Will the U.S. dollar soon lose its status as the world’s pre-eminent currency? …Developments in foreign-exchange markets during the past 18 months point toward dedollarization. …The increasing use of economic sanctions under Presidents Obama and Trump is the immediate cause of dedollarization. …the change in posture among the trans-Atlantic democracies is noteworthy. …the emergence of a genuinely multipolar world means the coming market cycle is likely to be different. The U.S. dollar may finally be knocked off its pedestal.

Other experts also have warned about how sanctions can backfire on the American economy.

With its weaponization and extra-territorial use of financial and now tech sanctions the Trump administration is doing its best to undermine over time the role of the dollar as the key global reserve currency. https://t.co/ShozLhWSbz

— Nouriel Roubini (@Nouriel) July 18, 2019

 

The Economist also has highlighted how promiscuous use of sanctions is both wrong and could backfire against America.

The United States…has increasingly punished foreign firms for misconduct that happens outside America. Scores of banks have paid tens of billions of dollars in fines. In the past 12 months several multinationals, including Glencore and ZTE, have been put through the legal wringer. …America has taken it upon itself to become the business world’s policeman, judge and jury. …as the full extent of extraterritorial legal activity has become clearer, so have three glaring problems. …Facing little scrutiny, prosecutors have applied ever more expansive interpretations of what counts as the sort of link to America that makes an alleged crime punishable there; indirect contact with foreign banks with branches in America, or using Gmail, now seems to be enough. …Second, the punishments can be disproportionate. In 2014 BNP Paribas, a French bank, was hit with a sanctions-related fine of $8.9bn, enough to threaten its stability. …Third, America’s legal actions can often become intertwined with its commercial interests. …American banks have picked up business from European rivals left punch-drunk by fines. Sometimes American firms are in the line of fire—Goldman Sachs is being investigated by the DOJ for its role in the 1MDB scandal in Malaysia. But many foreign executives suspect that American firms get special treatment and are wilier about navigating the rules. …escalating use of extraterritorial legal actions will ultimately backfire. It will discourage foreign firms from tapping American capital markets. It will encourage China and Europe to promote their currencies as rivals to the dollar… Far from expressing geopolitical might, America’s legal overreach would then end up diminishing American power.

To be sure, not every issue should be decided solely on the basis of economics. More GDP is good, but not at the cost of sacrificing honor and dignity.

Some nations might be so evil that sanctions are justified.

But policy makers should be fully aware that there are costs when sanctions are imposed.

Those costs include foregone trade, which would be bad for American consumers, workers, and businesses.

Most important, those costs could mean the dollar gets weakened or dethroned as the world’s reserve currency and the U.S. loses its “exorbitant privilege.”

And that could mean less investment in America, which translates into fewer jobs and lower wages.

P.S. The study by Bruce Zagaris is the third in a series on why extraterritoriality is a bad idea. The first study focused on extraterritorial taxation. The second study analyzed extraterritorial financial regulation.

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The United States Should Stay Out of Syria

You would think the never-ending mess in Afghanistan would have taught us lessons.

Or maybe we might have learned lessons from the never-ending mess in Iraq.

Notwithstanding those unpleasant experiences, President Trump is expanding America’s intervention in Syria with missile strikes.

This rubs me the wrong way, but let’s look at what others are writing on this issue.

One of my colleagues at the Cato Institute, Gene Healy, isn’t impressed by Trump’s intervention.

Thus far, the administration has said nothing about the legal authority for the strikes. There’s not much that can be said: they’re plainly illegal. He had neither statutory nor constitutional authority to order them. …Without statutory cover, all that’s left is an appeal to presidential power under Article II of the Constitution. But that document vests the bulk of the military powers it grants in Congress, with the aim of “clogging, rather than facilitating war,” as George Mason put it. In that framework, the president retains the power to “repel sudden attacks” against the US; but he does not have the power to launch them. …

Kevin Williamson of National Review is equally unhappy with Trump’s unilateral intervention.

As Daniel Pipes and others have persuasively argued, the United States does not have an ally in Syria. The United States does not have any national interest in the success of the ISIS-aligned coalition fighting to depose Assad. The United States does not have any interest in strengthening the position of the Assad regime and the position of his Russian and Iranian patrons. …Of course the Assad regime is murderous. It is murderous in an awfully familiar way: a Baathist despot in cahoots with jihadists using chemical weapons against a civilian population. …The Trump administration has no authorization to engage in war on Syria. Congress has not declared war or authorized the use of military force; there is no emergency to justify the president’s acting unilaterally in his role as commander in chief; there is no imminent threat to American lives or American interests — indeed, there is no real American interest at all. President Donald Trump is acting illegally, and Congress has a positive moral obligation to stop him. …All decent people feel for the Syrians. We also feel for the Ukrainians, the North Koreans, the men and women languishing in Chinese laogai, Russian gulags, and Cuban prisons. We do not go to war for the sake of sentiment. We go to war for the sake of pressing national interests that cannot be otherwise secured. There is no casus belli for knocking over the Assad government, odious as it is.

And Sean Davis of the Federalist asks 14 questions. Here are the ones that caught my attention.

…proponents of military action to depose Assad have not explained is what our clear national security interest is there, what political victory looks like, what our main risks are, and what costs we will be required to pay in order to achieve that victory. …If our nation is going to wage war, and if we are going to pay a price in dollars and in American lives as a result of that decision, we are owed answers to questions that were never adequately answered before we went into Iraq.

1) What national security interest, rather than pure humanitarian interest, is served by the use of American military power to depose Assad’s regime?

2) How will deposing Assad make America safer?

3) What does final political victory in Syria look like (be specific), and how long will it take for that political victory to be achieved? Do you consider victory to be destabilization of Assad, the removal of Assad, the creation of a stable government that can protect itself and its people without additional assistance from the United States, etc.?

6) What costs, in terms of lives (both military and civilian), dollars, and forgone options elsewhere as a result of resource deployment in Syria, will be required to achieve political victory?

8) Should explicit congressional authorization for the use of military force in Syria be required, or should the president take action without congressional approval?

10) If U.S. intervention in Syria does spark a larger war with Russia, what does political victory in that scenario look like, and what costs will it entail?

14) What lessons did you learn from America’s failure to achieve and maintain political victory following the removal of governments in Iraq and Libya, and how will you apply those lessons to a potential war in Syria?

I try to avoid commenting on foreign policy, but all of the excerpts I just shared make total sense. Nobody is claiming that America’s national interests are being threatened. Instead, the case for intervention is that Assad is a bad dictator who is doing bad things.

But if that’s the criteria for intervention, why aren’t we bombing China, Venezuela, North Korea, Saudi Arabia, and the Central African Republic?

Heck, here’s a map from Freedom House. The purple nations are “not free,” which means systematic repression of political rights and civil liberties. Syria is on the list, of course, but if having an oppressive government is what triggers U.S. intervention, there will be perpetual war.

Finally, I can’t help but call attention to a story in the New York Times that looked at many of the Republicans and Democrats who have flipped and flopped when commenting on Obama’s 2013 intervention and Trump’s 2017 intervention.

But there are some notable exceptions, particularly two of the more libertarian-leaning Republicans who actually put principle over partisanship.

And even though I admit I’m not a foreign policy expert, I sometimes play one on TV. And if you look at this interview from 2013, you’ll see that my views also have been consistent.

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Great Moments in Defense and Foreign Policy

If you did a word-association test with people after describing jaw-dropping examples of government incompetence, you would probably get answers like “angry” or “wasteful.” Especially if you asked around April 15.

Though in some cases of spectacular and inexplicable ineptitude by government, you reach a stage where the answers might even be “preposterous” or “comical.”

Unfortunately, today we’re going to look at an example of bone-headed government behavior that can only be described as “deadly.”

That’s because the New York Times just revealed that there were very obvious red flags about one of the San Bernardino terrorists, yet federal bureaucrats apparently were too stupid, lazy, or incompetent to check sites such as Facebook and Twitter.

Tashfeen Malik, who with her husband carried out the massacre in San Bernardino, Calif., passed three background checks by American immigration officials as she moved to the United States from Pakistan. None uncovered what Ms. Malik had made little effort to hide — that she talked openly on social media about her views on violent jihad. She said she supported it. And she said she wanted to be a part of it. …The discovery of the old social media posts has exposed a significant — and perhaps inevitable — shortcoming in how foreigners are screened when they enter the United States, particularly as people everywhere disclose more about themselves online. …In an era when technology has given intelligence agencies seemingly limitless ability to collect information on people, it may seem surprising that a Facebook or Twitter post could go unnoticed in a background screening.

But you’ll be happy to know that the Keystone Cops in the bureaucracy are now contemplating whether to even look at the barn door now that we know the horses keep escaping.

…a debate is underway at United States Citizenship and Immigration Services, the agency that approves visas and green cards, over whether officers conducting interviews should be allowed to routinely use material gathered from social media for interviews where they assess whether foreigners are credible or pose any security risk.

What makes this story so aggravating is that national security is one of the few legitimate functions of the federal government.

Yet we get glaring examples of failure, perhaps because Washington has become so bloated that sensible management is increasingly difficult.

For another example of government incompetence in the area of national security, let’s go to the Middle East, where ABC News reported that a program to train supposedly moderate fighters in Syria achieved remarkable levels of inefficiency.

…only “four or five” of the first 54 U.S.trained moderate Syrian fighters remain in the fight against ISIS. …there are currently between 100 and 120 fighters in a program that was slated to have trained 5,400 fighters in its first 12 months. …So far, $42 million has been spent to develop the $500 million program which began training in April.

Wow. If my math is right, that’s about $10 million per fighter. I’m tempted to joke about getting fighters for a lot cheaper by placing an advertisement in Solider of Fortune.

But a more serious point is that  the fact that the program surely has been a huge success for the bureaucrats and contractors. After all, they got lots of taxpayer money, so who cares about actual results.

But the more serious point is why the US is involved in Syria in the first place? Writing for Reason, Steve Chapman argues for nonintervention and even makes the point that the U.S. should instead welcome Russia’s involvement.

Vladimir Putin…has sent Russian planes to bomb rebels in Syria. …he reaffirmed his commitment to Syrian President Bashar al-Assad. …Republicans regard this as a calamity. But what’s the downside? There are two main ways this gambit could go. …The first possibility is that he will inflict significant damage on Islamic State. In that case, one of our most vicious enemies would be weakened—at little cost or risk to Americans. The only thing better than defeating Islamic State is getting someone to do it for us. …The second possibility is that Putin will fail… He could find himself in a costly, bloody war. Or he might decide the prize is not worth the effort and pull back, which would dash his dreams of regional power and discredit him at home. Either way, he’s worse off, and we’re not.

Now let’s shift to a story that goes beyond routine government incompetence and deserves a special category.

Because when you read about military bureaucrats turning a blind eye to child rape in Afghanistan, words like “evil” and “soulless” are far more appropriate.

Rampant sexual abuse of children has long been a problem in Afghanistan, particularly among armed commanders who dominate much of the rural landscape and can bully the population. The practice is called bacha bazi, literally “boy play,” and American soldiers and Marines have been instructed not to intervene — in some cases, not even when their Afghan allies have abused boys on military bases, according to interviews and court records. …soldiers and Marines have been increasingly troubled that instead of weeding out pedophiles, the American military was arming them in some cases and placing them as the commanders of villages.

Unsurprisingly, as reported by the Washington Examiner, the Obama Administration is leading from behind.

The White House dodged questions…about allegations that U.S. military officials are ordering U.S. soldiers to ignore child abuse in Afghanistan committed by Afghan militia, military and police, and instead indicated that those orders reflect Defense Department policy.

Not exactly a proud moment for the United States.

To be sure, you have to make compromises with right and wrong during wartime. Heck, we were allies in World War II with one of the world’s most murderous and sinister regimes.

But surely we can disallow child rape on American military bases!

Let’s return to a more mundane example of bad policy, one that shows the U.S. government can waste money overseas just as effectively as it wastes money at home.

U.S. taxpayers footed the bill for a $43 million natural-gas filling station in Afghanistan, a boondoggle that should have cost $500,000 and has virtually no value to average Afghans… A Pentagon task force awarded a $3 million contract to build the station in Sheberghan, Afghanistan, but ended up spending $12 million in construction costs and $30 million in “overhead” between 2011 and 2014.

Wow. Reminds me of being in a meeting last decade and a representative of the Bush Administration was arguing that its nation-building exercise (I forget whether it was Iraq or Afghanistan) was going well because we had successfully built so many schools and sewer systems.

I was being a curmudgeonly libertarian and made myself unpopular by pointing out that I didn’t think it was the responsibility of the federal government to fund those projects in the United States, much less overseas.

Let’s end where we started, with an example of government incompetence that could have deadly consequences.

Hillary Clinton’s “reset” with Russia was a miserable failure and the United States increasingly is worried about Putin’s adventurism. Yet the federal government didn’t exercise sufficient oversight to make sure that citizens of a potential enemy didn’t get to work on classified computer code.

The Pentagon was tipped off in 2011 by a longtime Army contractor that Russian computer programmers were helping to write computer software for sensitive U.S. military communications systems…the software they wrote had made it possible for the Pentagon’s communications systems to be infected with viruses. …the work had been done in Moscow and elsewhere in Russia.

Doesn’t exactly leave one with a great feeling of confidence.

So there are two lessons from today.

First, politicians and bureaucrats and wasteful and incompetent, and that applies even in areas where there is a legitimate role for government.

Second, we’ll have a better chance of getting sensible and competent decisions if government is a lot smaller. After all, it will be a lot easier to have oversight when government is doing 100 things instead of 10,000 things.

Here’s what I wrote back in 2014.

There are some legitimate functions of government and I want those to be handled efficiently. But I worry that effective government is increasingly unlikely because politicians are so busy intervening in areas that should be left to families, civil society, and the private sector.

Mark Steyn made the same point in a much more amusing fashion.

Which is why these cartoons are such a good depiction of government.

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Should American Taxpayers Subsidize Israel’s Defense?

I rarely delve into foreign policy and defense issues. And when I do, such as my post about the conflict in Ukraine, it’s usually because it gives me an opportunity to draw attention to a topic that is in my bailiwick (in the case of Ukraine, it gave me an excuse to write about federalism).

With this caveat in mind, let’s turn our attention to the Middle East. Unless you’re a hermit living in a remote cave, you presumably know that Israel is locked in another fight with Hamas.

I’ve previously explained that I’m very sympathetic to the notion that Israel has a right to defend itself.

But supporting Israel’s right to self defense doesn’t mean I should foot the bill. Yet that’s what’s happening. According to Wikipedia, Washington sends about $3 billion per year to subsidize Israel’s military.

And now that amount will be even larger because Congress just approved another $225 million to help finance Israel’s missle-defense system.

Congress approved a $225 million package to replenish Israel’s missile defenses with its last order of business before a five-week recess… The House’s 395-8 vote in favor late Friday followed Senate adoption of the legislation by voice vote earlier in the day. The money is directed toward restocking Israel’s Iron Dome, which has been credited with shooting down dozens of incoming rockets fired by Palestinian militants over 3½ weeks of war. …Iron Dome has enjoyed strong U.S. technological and financial support. Throughout its history, the U.S. has provided more than $700 million to help Israel cover costs for batteries, interceptors, production costs and maintenance, the Congressional Research Service said. The total already appeared set to climb above $1 billion after Senate appropriators doubled the Obama administration’s request for Iron Dome funding for fiscal 2015. Now it seems likely to rise even further.

But this doesn’t mean everyone is happy about all this spending.

Some libertarian-leaning fiscal conservatives opposed the added subsidies, or at least wanted Congress to come up with offsetting cuts.

Despite almost universal support for Israel in Congress, the Iron Dome money appeared in doubt only a day ago as Senate efforts stalled after an effort by Republican Sen. Tom Coburn of Oklahoma to find cuts elsewhere in the budget to pay for the aid.  …Voting against the measure in the House were…Republicans Justin Amash of Michigan, Walter Jones of North Carolina, Thomas Massie of Kentucky and Mark Sanford of South Carolina.

For what it’s worth, I applaud those four House Republicans.

I’m motivated in part by a desire to limit the burden of government spending in America, but I also think that Israel easily could afford more military outlays if it pared back its overly generous welfare state.

If you look at the IMF data, government spending consumes about 43.8 percent of Israel’s economic output. And according to the CIA Factbook, Israel’s military budget amounts to about 5.7 percent of GDP.

I’m not a math genius, but that certainly suggests to me that Israel’s government is diverting about 38 percent of economic output for non-military spending.

If national defense is important and worthwhile (and it is), then Israel should prioritize and reduce domestic outlays.

Heck, that’s what Roosevelt did during World War II and what Truman did during the Korean War. If you don’t believe me, look at lines 31-34 of this OMB spreadsheet.

By the way, some people accuse these GOPers of being anti-Israel, but I think that charge is grossly unfair. I’m not personally close to any of the Republicans who voted against the Iron Dome funding, but I’ve met and talked to all of them and I’ve followed their careers. Suffice to say that I’ve never heard even the slightest hint that any of them harbor any anti-Israel or anti-Jewish sentiments.

Indeed, here’s some of what Justin Amash wrote back in 2012.

Israel is our closest friend in a very troubled region. Our national defense benefits from Israel’s ability to defend itself and to serve as a check against neighboring authoritarian regimes and extremists. Assisting with training and the development of Israel’s military capacity allows the U.S. to take a less interventionist role in the region. I am hopeful that American troops soon can leave the region and Israel and its neighbors can live in peace without U.S. aid or involvement.

The last sentence is a pretty good description of libertarian foreign policy: Be prepared to defend ourselves, but don’t look for trouble outside our borders.

P.S. The government of Israel pays for people who do nothing but pray. Which means that my tax dollars are picking up part of the tab. Prayer is presumably a good thing. Just don’t ask me to pay for it.

P.P.S. While Israel’s government does dumb things, the governments opposing Israel sometime engage in truly evil acts.

P.P.P.S. If you want to learn more about the libertarian approach to foreign policy, my Cato colleagues are the real experts. I also call your attention to these thoughts from Mark Steyn, George Will, and Steve Chapman.

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Obama’s Accidental Brush with Libertarian Foreign Policy

One of the many challenges of being libertarian is that people sometimes think you’re naive about foreign policy (sort of like the first entry in this 24-part satirical collage of libertarians).

In large part, I think that’s because they confuse non-interventionism with pacifism.

To elaborate on why they’re wrong, I’ve shared some thoughts from Mark Steyn, George Will, and Steve Chapman on the libertarian mindset on foreign policy. And to augment their analysis, here’s John Stossel’s very good synopsis of the clear-headed libertarian approach.

Most libertarians believe our attempts to create or support democracy around the world have made us new enemies, and done harm as well as good. …Some conservatives respond to that by calling us isolationists, but we’re not. I want to participate in the world; I just don’t want to run it. …it’s realistic to acknowledge that America has dangerous enemies, it’s also realistic to acknowledge that going to war is not always worth the loss of money and lives, and that it makes new enemies. War, like most government plans, tends not to work out as well as planners hoped.

And in a version of Mitchell’s Law, he points out that screwups become the excuse for further mistakes.

Occasionally government acknowledges mistakes in domestic policy — but that doesn’t mean it then becomes more efficient. It usually just spends more to try, and fail, to fix the problem. It’s the nature of government. Politicians don’t face the competitive incentives that force other people to make hard decisions. Candidate Obama garnered support by criticizing Bush for costing money and lives through a protracted stay in Iraq. But that didn’t stop Obama from putting more money and troops into Afghanistan. …Our military should be used for defense, not to police the world.

So where exactly does Obama fit? He’s obviously not a neo-con, but how should he be characterized?

My colleague at Cato, Gene Healy, writes that the President has stumbled upon a good guide for foreign policy.

…there’s something to be said for President Obama’s latest foreign-policy maxim: “don’t do stupid stuff.” …Yet “DDSS” has been greeted with contempt by the D.C. commentariat. “How far we have come from the audacity of hope, yes we can” moans David Rothkopf, publisher of Foreign Policy magazine. “DDSS” just isn’t an “elevating notion,” he complains. (Neither, I suppose, is the Hippocratic Oath.) …The concept of avoiding catastrophic error shouldn’t be hard to grasp.

But having a good guide doesn’t mean anything if you don’t live up to it (just like Bush didn’t live up to his pronouncement that he wanted America to have a “humble” approach to the world).

It’s true that Obama has never lived up to the cautious foreign policy maxim he’s coined: launching a destructive “dumb war” in Libya, doubling down on Afghanistan with precious little to show for it. But “DDSS” is a sound, even noble, foreign policy goal, one that can help us avoid further sacrifice of American blood and treasure — even as we try to extricate ourselves from past stupidities.

I add my two cents to this discussion, pointing out in this interview about Ukraine that Obama sometimes veers in the direction of libertarianism. Or at least non-interventionism.

Unfortunately, I suspect that Obama doesn’t genuinely believe in non-interventionism. Instead, he sometimes winds up doing the right thing because of passivity rather than some underlying and principled desire to avoid foreign entanglements.

Speaking of libertarian foreign policy, this Steve Breen cartoon is a pretty good summary of what we’ve been doing in Afghanistan for the past decade.

This reminds me of being in a coalition meeting last decade and somebody from the Bush Administration was saying the mission  was a success because tax dollars had been used to build a bunch of schools and sewer system in Afghanistan.

Being the disagreeable type, I pointed out that the federal government shouldn’t even build schools and sewers in America, so why on earth were we doing that overseas.

I thought it was a good point, but the silence in the room reminded me that libertarians aren’t always the most persuasive people.

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The VA Health Scandal Is about Government Incompetence, not Inadequate Funding

I’ve never been susceptible to the claim that you solve problems with taxpayer money.

Indeed, this amusing poster is a pretty good summary of my views on the effectiveness of government spending.

But what about the horrific stories about veterans dying because of secret waiting lists and bureaucratic skullduggery at the Veterans Administration?

I want to take care of former soldiers who need treatment because of their service, and national defense is one of the few legitimate functions of the federal government. So is this one of the rare cases where a budget needs to increase? That’s certainly the mentality in some quarters on Capitol Hill.

Here are some excerpts from Byron York’s column in the Washington Examiner.

Sanders and his fellow Democrats want to give the VA billions more. …What is striking about Sanders’ bill is not just its price tag but how irrelevant it is to the most serious problems besetting the VA health care system. It was like adding new chrome to a car that won’t run. When Republicans stopped the bill earlier this year, Democrats predictably accused them of being insensitive to veterans’ needs. …It’s unclear what Congress will do, but one certainty in the debate is that the Sanders bill won’t solve the problem.

But what do the actual budget numbers show?

You probably won’t be surprised to learn that the VA already has lots of money.

Here’s some of what has been reported by the Wall Street Journal.

The Department of Veterans Affairs, the agency caught in a political firestorm over its medical care for veterans, has seen its funding grow faster than any other government department in recent years. Since 2000, annual spending has tripled to $63 billion to meet a surge in health-care and other costs. That is on top of the more than $85 billion the VA is set to receive this year for automatic payments such as disability benefits and pensions, a tally that has more than tripled since 2000.

But some may argue that needs are rising even faster because so many soldiers were injured in Iraq and Afghanistan.

The Federalist addressed this issue, in an article by Sean Davis.

VA funding has more than kept up with both medical inflation and increased patient loads. An analysis of budget and cost data, as well as data on the total number of VA patients and the number of acute inpatients treated, shows that the VA’s budget has grown much faster than its workload. Even when you take medical inflation into account, the VA budget still grew faster than its patient base since 2000. …The VA has a whole bunch of problems, but a lack of funding ain’t one.

Here’s a chart from Sean’s article. Hard to argue with these numbers.

P.S. Since we’re on the topic of national defense and foreign affairs, let’s take a look at a very provocative column by Steve Chapman. He says that President Obama, whether by accident or design, actually has a reasonable foreign policy. As least if you think good foreign policy should be based on a prudent understanding of the limits of government.

Conservatives generally agree on a few propositions. The federal government should avoid spending money unnecessarily. It shouldn’t exceed its basic constitutional duties. It should encourage self-reliance rather than dependency. It should accept that some problems are beyond its ability to solve.  Barack Obama, they may be surprised to learn, agrees with much of this formula. He just applies it in a realm where conservatives often don’t: foreign relations and national security. The Obama doctrine, as outlined in his policies and his speech at West Point Wednesday, is one of comparatively limited government.

Chapman elaborates, drawing an interesting parallel to domestic issues.

A…sensible view is that the U.S. can indeed remain idle while alleged dangers gather, because most of them won’t materialize. The immortal philosopher Calvin Coolidge said, “If you see 10 troubles coming down the road, you can be sure that nine will run into the ditch before they reach you.” Many conservatives believe in hurrying out to meet all 10 just in case. …Critics charge that Obama’s foreign policy shows an unwillingness to lead, or weakness, or uncertain purposes. The same complaint, of course, could be made about conservative policies on poverty, health care, urban blight, access to housing and more. “Don’t you care?” indignant liberals ask. But sometimes ambitious government undertakings are too expensive to justify, sometimes they fail to solve problems, and sometimes they make things worse. In those instances, declining to act — and explaining why — is the most authentic form of leadership. That’s just as true in the international realm as it is in the domestic one.

I’m not a foreign policy expert, but I’m very sympathetic Chapman’s hypothesis because skepticism is always a good approach when analyzing government. And his piece on NATO is must reading for similar reasons.

That being said, I’m not going to put Obama on a pedestal or assume that he’s doing the right thing on foreign policy for the right reason. My guess is that his default position in foreign affairs is passivity.

That often coincides with the libertarian position of non-intervention. But as I wrote above, libertarians also believe that national defense is one of the few legitimate functions of government, which is why they generally were allied with conservatives during the Cold War, when we faced an aggressive and imperialistic Soviet Bloc.

My guess is that if we went into a time machine and it was 1980 instead of 2014, Obama would be more like Jimmy Carter and less like Ronald Reagan.

P.P.S. Mark Steyn also has written some very wise words about libertarian-ish foreign policy.

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Rand Paul: A Modern-Day Horatius in the Fight to Protect Private Financial Information from Corrupt and Evil Governments

Senator Rand Paul is being criticized and condemned by the Washington establishment.

That’s almost certainly a sign that he’s doing the right thing. And given the recent events in Russia and Ukraine, we should say he’s doing a great thing.

This is because Senator Paul is waging a lonely battle to stop the unthinking and risky move to a world where governments – including corrupt and evil regimes – collect and share our private financial information.

I’ve written about this topic many times and warned about the risks of letting unsavory governments have access to personal information, but the Obama Administration – with the support of some Republicans who think government power is more important than individual rights – is actively pushing this agenda.

The White House has even endorsed the idea of the United States being part of a so-called Convention on Mutual Administrative Assistance in Tax Matters, even though that would require the sharing of large amounts of personal financial data with thuggish and corrupt regimes such as Argentina, Azerbaijan, China, Greece, Mexico, Nigeria, Russia, and Saudi Arabia!

I’m sure Vladimir Putin very much appreciates this insider access so he can monitor dissidents and track political opponents. His government even signed onto a recent G-20 Communique that endorsed automatic information-sharing.

Heck, there’s even a Russian heading up the Financial Action Task Force, which is endlessly pushing to give governments untrammeled access to private information. FATF even wants banks and other financial institutions to spy on customers, regardless of whether there’s the slightest evidence of any wrongdoing.

The general mindset in Washington is that we should all bury our heads in the sand and blithely allow this massive accumulation of power and information by governments. After all, Putin and other thugs would never abuse this system, right?

Senator Paul battles the statists

Fortunately, at least one lawmaker is trying to throw sand in the gears. Like Horatius at the bridge, who single-handedly thwarted an invasion of Rome in 509 BC, Senator Paul is objecting to this massive invasion of privacy.

He has this old-fashioned appreciation for the Constitution and doesn’t think government should have carte blanche to access private financial data. He even – gasp! – thinks that government power should be restrained by the 4th Amendment and that there should be due process legal protections for individuals.

No wonder the DC establishment doesn’t like him.

One example of this phenomenon is that Senator Paul has placed a “hold” on some tax treaties. Here are some excerpts from a recent article in Politico.

Paul for years has single-handedly blocked an obscure U.S.-Swiss tax treaty that lawmakers, prosecutors, diplomats and banks say makes the difference between U.S. law enforcement rooting out the names of a few hundred fat-cat tax evaders — and many thousands more. …International tax experts for years have seethed over Paul’s block on the Swiss and several other tax treaties. These sorts of mundane tax protocols used to get approved by unanimous consent without anyone batting an eyelash — until Paul came to town.

These pacts are “mundane” to officials who think there shouldn’t be any restrictions on the power of governments.

Fortunately, Senator Paul has a different perspective.

Kentucky’s tea party darling says the treaty infringes on privacy rights. …Paul, a libertarian Republican widely believed to be eyeing a 2016 presidential run, says his hold stems from concerns about Fourth Amendment protections against “unreasonable search and seizure.” “These are people that are alleged, not convicted of doing anything wrong,” Paul said a few weeks ago. “I don’t think you should have everybody’s information from their bank. There should be some process: accusations and proof that you’ve committed a crime.”

The article also notes that Senator Paul is one of the few lawmakers to fight back against the egregious FATCA legislation.

Paul’s protest is also linked to his abhorrence of the soon-to-take-effect Foreign Account Tax Compliance Act, which will force foreign banks to disclose U.S. account information to the IRS, and domestic banks to reciprocate to other nations’ revenue departments. …the senator has legislation to repeal FATCA and hesitates to support a treaty that enables a law he views as U.S. government overreach.

I don’t know how long Senator Paul can withstand the pressure in his lonely fight for individual rights, but I’m glad he’s waging the battle.

Even the Swiss government and Swiss banks have thrown in the towel, having decided that they have no choice but to weaken their nation’s human rights laws on financial privacy because of threats of financial protectionism by the United States.

So let’s give three cheers to our modern-day Horatius, a very rare elected official who is doing the right thing for the right reason.

For more information on the importance of financial privacy, here’s my video on the moral case for tax havens.

P.S. I shared some good jokes about Keynesian economics a few weeks ago.

Now, via Cafe Hayek, I have a great cartoon showing the fancy equation that left-wing economists use when they tell us that the economy will grow faster if there’s a bigger burden of government spending.

Now you can see how the Congressional Budget Office puts together its silly estimates.

Indeed, Chuck Asay even produced a cartoon on CBO’s fancy methodology.

The next step is to find the secret equation that CBO uses when it publishes nonsensical analysis implying that growth is maximized when tax rates are 100 percent.

But to be fair, the politicians who pay their salaries want them to justify bigger government, so should we expect anything else?

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Ukraine’s Biggest Problem Isn’t Putin, It’s Putinonomics

With Crimea potentially breaking away from Ukraine and the ongoing risk of conflict, it’s time to revisit the topic.

I explained a few weeks ago that decentralization was one way of defusing the crisis.

Now Kevin Hassett of the American Enterprise Institute has a refreshing and important analysis explaining how bad economic policy has hindered Ukraine’s development.

He explains that Ukraine was one of the former Soviet Bloc nations that made the mistake of not copying the more market-oriented nations of Western Europe.

Prior to the breakup [of the Soviet Empire], Eastern Europe was underdeveloped relative to the West, mostly because of the failure created by central planning. When a market economy is unleashed in such a setting, “convergence” of the standard of living to that of the developed world can be quite rapid. …A large academic literature has emerged analyzing the impact of “going west.” The literature documents that those nations that assimilated into the EU saw dramatic economic growth. …The countries, like Ukraine, that failed to take that path have stagnated.

The impact is remarkable. Using EU membership as a proxy for nations that “went west,” Kevin put together a graph showing how the more market-oriented nations have dramatically out-performed the rest.

He notes that per-capita income has climbed far faster in the western-oriented nations.

Income per capita has grown sharply since the mid 1990s, more than doubling for the former Soviet countries, and increasing about 50 percent for the Eastern Bloc countries (such as the Czech Republic) that have joined the EU. …The three lines on the bottom of the chart depict what has happened to those nations that have not joined the EU. Each of these countries has stagnated, seeing a standard of living that has barely budged since the fall of the USSR.

So what’s the moral of the story? Kevin bluntly writes that people who want to affiliate with Putin are traitors because they are condemning their fellow citizens to economic misery.

Vladimir Putin’s desire to maintain a zone of influence has had a dramatically negative effect on the economic well-being of citizens of the affected countries. It is hard to imagine how anyone could look at such data and not conclude that Putin supporters outside Russia are traitors, if not to their nations at the very least to their compatriots’ prospects of economic security and prosperity.

Now I want to build on what Kevin wrote by stating that “going west” is important because it is a proxy for more economic freedom.

Let’s take another look at his chart, but augment it with some numbers from Economic Freedom of the World.

I collected both the absolute ranking and relative economic freedom scores for the former Soviet Bloc nations, and then put together averages for each of the categories in Kevin’s chart. The first number is the average ranking and the second number is the average score. As you can see, the nations that have enjoyed more growth are the ones that have the most economic liberty.

Time for some caveats. Because of data limitations, the EFW Index does not have numbers for nations such as Kosovo. Moreover, Kevin didn’t include the former Soviet states that are in Asia, and I confess I don’t know for sure whether that means nations such as Armenia and Georgia are excluded.

But those issues only influence the green and red lines, and adding or subtracting those nations doesn’t change the look of the graph.

That having been said, the real moral of the story is that Ukraine needs economic liberty. It doesn’t have that now, and it almost surely won’t have that if it falls more under Putin’s influence.

Why? Because Ukraine already has been practicing Putinonomics (which is a sordid mix of cronyism, regulation, corruption, and weak rule of law), so more Russian control presumably will mean jumping from one frying pan to another.

Simply stated, if you want more prosperity, there’s no substitute for free markets and small government. The more nations move in that direction, the richer they will become.

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Ukraine, Ethnic Division, Decentralization, and Secession

Ukraine is in the news and that’s not a good thing.

I’m not a foreign policy expert, to be sure, but it can’t be a positive sign when nations with nuclear weapons start squabbling with each other. And that’s what’s happening now that Russia is supposedly occupying Crimea and perhaps other parts of Ukraine and Western powers are complaining.

I’m going to add my two cents to this issue, but I’m going to approach it from an unusual angle.

Look at this linguistic map of Ukraine. The red parts of the country show where Russian is the primary language and most people presumably are ethnically Russian.

Now look at these maps (from here, here, here, and here) showing various election results in the country.

Like I said, I’m not overly literate on foreign policy, but isn’t it obvious that the Ukrainians and the Russians have fundamentally different preferences?

No wonder there’s conflict.

But is there a solution? And one that doesn’t involve Putin annexing – either de facto or de jure – the southern and eastern portions of the nation?

It seems there are two options.

1. Secession – The first possibility is to let the two parts of Ukraine have an amicable (or at least non-violent) divorce. That’s what happened to the former Soviet Union. It’s what happened with Czechoslovakia became Slovakia and the Czech Republic. And it’s what happened (albeit with lots of violence) when Yugoslavia broke up.

For what it’s worth, I’ve already suggested that Belgium should split into two nations because of linguistic and cultural differences. So why not the same in Ukraine?

Heck, Walter Williams has argued that the same thing should happen in America, with the pro-liberty parts of the nation seceding from the statist regions.

2. Decentralization – The second possibility is for Ukraine to copy the Swiss model of radical decentralization. In Switzerland, even though there are French cantons, German cantons, and an Italian canton, the various regions of the country don’t squabble with each other because the central government is relatively powerless.

This approach obviously is more attractive than secession for folks who think that existing national borders should be sacrosanct.

And since this post is motivated by the turmoil in Ukraine, it’s worth pointing out that this also seems to be a logical way of defusing tensions across regions.

I confess I have a policy reason for supporting weaker national governments. Simply stated, there’s very strong evidence that decentralization means more tax competition, and when governments are forced to compete for jobs and investment, the economy is less likely to be burdened with high tax rates and excessive redistribution.

Indeed, we also have very strong evidence that the western world became prosperous precisely because the proliferation of small nations and principalities restrained the natural tendencies of governments to oppress and restrain economic activity.

And since Ukraine (notwithstanding it’s flat tax) has a very statist economic system – ranking only 126th in the Economic Freedom of the World index, maybe a bit of internal competition would trigger some much-needed liberalization.

P.S. If you’re intrigued by the secession idea promoted by Walter Williams, you’ll definitely enjoy this bit of humor about a national divorce in the United States.

P.P.S. If you think decentralization and federalism is a better option than secession, the good news is that more and more Americans have unfavorable views of Washington.

P.P.P.S. The tiny nation of Liechtenstein is comprised of seven villages and they have an explicit right to secede if they become unhappy with the central government in Vaduz. And even the statist political crowd in the United Kingdom is considering a bit of federalism.

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Should American Taxpayers Pay a $1 Billion Bribe to Get Syria to Drop Chemical Weapons?

Maybe it’s because I have a bit of a old-fashioned moralistic streak to me, but I viscerally object to the notion that good people should pay bad people not to do bad things.

That’s why, a few years ago, I didn’t react favorably when the former dictator of Libya asked for several billion dollars per year to stop illegals from crossing the Mediterranean to Europe.

And this also explains why I don’t think American taxpayers should cough up $1 billion to bribe Syria’s dictator into giving up his chemical weapons.

In this interview with Neil Cavuto on Fox News, I make the basic libertarian argument that we shouldn’t be involved in Syria’s civil war, but I also make a practical argument that – if you accept that American tax dollars should be spent – it would be much cheaper to bribe a few high-level people in Assad’s government.

Since I’m not a foreign policy expert, I don’t think I said anything particularly memorable in the above segment.

But one line apparently did resonate. Here’s Senator Rand Paul, speaking later that day.

I have to admit that made my day. Sort of like when Chairman Brady mentioned Mitchell’s Golden Rule in his opening statement when I testified last week to the Joint Economic Committee.

Of course, I’d like it even better if some of the ideas I support (like the flat tax or smaller government) actually wound up being implemented, but at least it’s nice to be noticed.

Fighting for freedom is often a thankless task in DC

Being a libertarian in Washington, after all, is not the easiest job. To quote former Senator Phil Gramm, it’s like trying to do the Lord’s work in the Devil’s city.

P.S. Any time I begin to get cocky and think I’m some sort of hot shot, something happens to pull me back down to earth. In my Syria interview, you may have noticed that my mouth looked a bit red. That’s because I made the mistake of eating some red candies that were in the car that took me to the interview.

As the old saying goes, you can dress me up, but you can’t take me out. That’s why I’m glad Senator Paul picked up on my line (which I stole from somebody, so I can’t really take credit) about threatening Syria with Obamacare. Otherwise, I probably would have been reluctant to even post the interview.

P.P.S. As I intimated in the interview, the best way to learn more about foreign policy is to read the scholarly writings of my colleagues from the Cato Institute. You also can’t go wrong by perusing these columns by Mark Steyn, George Will, and Steve Chapman.

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Mark Steyn Correctly Worries about Obama’s Looming Syrian Adventure

I’ve already shared some analysis of Mark Steyn’s libertarian-leaning views on foreign policy, so it’s very timely to see what he just wrote about Syria.

Here’s some of his new article in National Review. His humor is sharp, but he makes a very important point.

The administration’s ingenious plan is to lose this war in far less time than we usually take. In the unimprovable formulation of an unnamed official speaking to the Los Angeles Times, the White House is carefully calibrating a military action “just muscular enough not to get mocked.” That would make a great caption for a Vanity Fair photo shoot of Obama gamboling in the surf at Martha’s Vineyard, but as a military strategy it’s not exactly Alexander the Great or the Duke of Wellington.  …From the New York Times: “A wide range of officials characterize the action under consideration as ‘limited,’ perhaps lasting no more than a day or two.” Yeah, I know, that’s what Edward III said about the Hundred Years’ War. But Obama seems to mean it

Steyn notes that British voters already have said no to “ineffectual warmongering.”

This week, David Cameron recalled Parliament from its summer recess to permit the people’s representatives to express their support for the impending attack. Instead, for the first time since the British defeat at Yorktown in 1782, the House of Commons voted to deny Her Majesty’s Government the use of force. Under the Obama “reset,” even the Coalition of the Willing is unwilling. …“This House will not fight for king and country”? Not exactly. What the British people are sick of, quite reasonably enough, is ineffectual warmongering.

For what it’s worth, Obama doesn’t think he should be bound by that silly little clause in the Constitution about only Congress having the power to declare war. Which at least makes him consistent, since he doesn’t feel bound by the fact that Article I, Section 8, doesn’t authorize the federal government to be involved in health care.

But I’m digressing. Let’s look at what Steyn identifies as the real problem. We account for a huge share of the globe’s military spending, yet we don’t get much bang for the buck.

The problem with the American way of war is that, technologically, it can’t lose, but, in every other sense, it can’t win. No one in his right mind wants to get into a tank battle or a naval bombardment with the guys responsible for over 40 percent of the planet’s military expenditures. Which is why these days there aren’t a lot of tank battles. The consummate interventionist Robert Kagan wrote in his recent book that the American military “remains unmatched.” It’s unmatched in the sense that the only guy in town with a tennis racket isn’t going to be playing a lot of tennis matches. …America’s inability to win ought to be a burning national question, but it’s not even being asked.

Particularly since there are no real friends competing to rule Syria.

For a quarter-century, from Kuwait to Kosovo to Kandahar, the civilized world has gone to war only in order to save or liberate Muslims. The Pentagon is little more than central dispatch for the U.S. military’s Muslim Fast Squad. And what do we have to show for it? Liberating Syria isn’t like liberating the Netherlands: In the Middle East, the enemy of our enemy is also our enemy.  …So we’ll get rid of Assad and install the local branch of al-Qaeda or the Muslim Brotherhood or whatever plucky neophyte democrat makes it to the presidential palace first — and then, instead of napalmed schoolyards, there will be, as in Egypt, burning Christian churches and women raped for going uncovered.

Steyn then summarizes what’s at stake.

…the hyperpower is going to war because Obama wandered off prompter and accidentally made a threat. So he has to make good on it, or America will lose its credibility. But he only wants to make good on it in a perfunctory and ineffectual way. So America will lose its credibility anyway.

It’s unfortunate that politicians misallocate military spending for parochial reasons, but it’s equally worrisome that they risk blood and treasure in ways that don’t make sense.

Syrian intervention, however, would take foolishness to an entire new level.

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Question of the Week: What’s the Libertarian Response to Terrorism?

I’ve received several variations of this question since starting my “Question of the Week” series. Having never studied the terrorism issue, I’ve been ignoring those queries.

But I got several new emails on the topic after what happened in Boston, so I’m answering simply to make one point. There’s no way to create a perfectly safe, risk-free society.

That being said – and with the caveat that I have no expertise in this field, here are some random thoughts on the topic.

Libertarians want less interventionism around the world, and perhaps that will reduce hostility against the United States, but some of these nutjobs hate us because of our freedoms. So even a perfect foreign policy (whatever that even is) provides no guarantee we won’t get attacked. That being said, I think Ron Paul has screwed up big time in some of his criticisms of U.S. actions. Being against nation building does not mean you have to be against killing terrorists.

If you want to cause trouble, find a bunch of young men with no purpose in their lives and lots of time on their hands. Combine that with religious extremists who tell those men that they will get a bunch of virgins* in paradise if they die while killing Westerners, and you have a nontrivial supply of future terrorists. I suspect part of the answer will have to come from within the Islamic community, though I confess that I’m puzzled by the inaction on that front even though one imagines that 99 percent of Muslims don’t support terrorism.

Terrorists and would-be terrorists get information from the Internet that fuels their hate and provides knowledge on how to conduct attacks. I’m rather sympathetic to drone attacks on the scum in the Middle East who are directly seeking to instigate/plan terrorism, but I don’t see any feasible or desirable way to control and/or regulate the Internet (just like I don’t see a feasible or desirable way to regulate video games, even if it was shown that violent games somehow inspired Newtown-type killers).

Close monitoring of pro-terrorist websites and chat rooms is a very legitimate and proper function of law enforcement and the intelligence community. Being a Muslim shouldn’t be a cause for investigation and harassment by the government. Being a Muslim who uses the Internet to visit such sites is a cause for investigation and harassment (and the same is true for members of any other group with a history of violence).

Monitoring of Mosques also is a proper function of government, just as I also have no objection of law enforcement monitoring militia groups, environmental groups, etc, etc. Obviously, the monitoring of any group should be selectively focused on those strains that are believed to espouse violence. I don’t know where you draw the line between freedom of religion and incitement of violence, but I have zero sympathy for radical Imams preaching hate inside the United States and would like to see them shut down/imprisoned/deported if they cross that line.

Yes, I’m disgusted by the leftists in the press who obviously hope for a “right wing” link any time there’s an attack. These are the same journalists, by the way, who weren’t even slightly bothered by Barack Obama’s association with Bill Ayers, a real-life terrorist who bombed the NYC police department, the U.S. Capitol, and the Pentagon.

I favor immigration, but I want people who believe in tolerance and hard work. There should be some sort of test, however imperfect, designed to weed out those who do not believe in assimilation. I’m still flabbergasted that the U.S. government is so bloody incompetent that it gave a green card to the so-called Blind Sheik. Such people should never be let in the country and there should be mechanisms for quick deportation (perhaps halfway across the Atlantic) if they do slip through the net.

*I hope these are the virgins they meet.

P.S. Like anybody with common sense, I want’ our anti-terrorism policies to be based on cost-benefit analysis, which is why I’m generally critical of the Transportation Security Administration.

Addendum: I’m getting lots of comments and emails about this post. In retrospect, I can’t claim to be speaking for libertarians, so perhaps I should have used a title such as “What Are Your Thoughts about How to Deal with Terrorism?” Though I don’t think there’s anything in my views that is inconsistent with libertarianism. Assuming, of course, you’re not an anarcho-capitalist. But even if I was in that camp, I would want to voluntarily contract with a private firm that would hunt down terrorists and kill them. Sort of like the group in the new Tom Clancy novels. By the way, I also like the Vince Flynn novels, so I probably am more bloodthirsty than the average libertarian.

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Question of the Week: Do I Support President Obama’s Policy of Drone Executions, Particularly for American Citizens?

This is probably the most difficult question that I’ve received. I’m not an expert on the legal issues, I’m not an expert on defense issues, and I don’t even have any strong gut instincts.

On the pro side, I suspect the world is a better place every time a drone wipes out a nest of terrorists. And that’s true even when the casualties include traitorous Americans.

I’m glad terrorists are nervously looking up, but…

On the anti side, every good libertarian worries about the slippery slope of government expansion. So even though I’m somewhat happy about terrorists getting zapped today, I don’t like to think about who might be targeted by politicians 30 years from now.

Remember, the income tax started as a relatively benign one-page form and it’s become a 72,000-page monstrosity with a thuggish IRS.

Part of the problem is that governments grab additional powers during wartime, and it’s very difficult to unwind those powers once hostilities cease.

And to make matters more challenging, we’re now fighting a war that presumably will never end.

Yes, we can probably ameliorate the problem by reducing American interventionism, but I strongly suspect that radical Islamists also hate us because of our tolerant values and secular system. So we’ll still face a serious threat of terrorist attacks even with a perfect libertarian foreign policy.

I guess the only answer I can provide is that I want plenty of independent judicial oversight. No, that’s not a panacea, but it’s at least some form of check and balance on the executive branch.

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How Do You Turn a Leftist into a Warmonger?

More than four years ago, as part of my efforts to promote and protect tax competition, fiscal sovereignty, and financial privacy, I narrated this video explaining the economic benefits of so-called tax havens.

Pay close attention at the 1:07 mark.

Yes, you heard right. A former bureaucrat from the European Bank for Reconstruction and Development actually called for the forcible annexation of low-tax jurisdictions, writing in the Financial Times that, “Jersey, Guernsey and the Isle of Man should simply be absorbed lock, stock and barrel into the UK…Andorra, Monaco and Liechtenstein should be given the choice of ending bank secrecy or facing annexation.”

He wasn’t quite so belligerent about Switzerland, perhaps because all able-bodied male citizens have fully automatic assault weapons in their homes. But he did urge financial protectionism against the land of chocolate, yodeling, and watches.

What a bizarre attitude. It’s apparently okay for certain countries to persecute – or even kill – ethnic minorities, religious minorities, political dissidents, homosexuals, and other segments of their populations. Very rarely do people like Mr. Buiter call for annexation or sanctions against such loathsome regimes.

But if a nation has low taxes and  a strong human rights policy on financial privacy, then cry havoc and let slip the dogs of war.

It turns out Buiter isn’t the only one to have strange militaristic impulses.

Here are excerpts from an article posted at The Street, written by a statist who says that “tax havens” don’t have enough military force to resist high-tax nations.

There is a relatively easy answer to the financial troubles of Europe, America and Asia. The answer lies in so-called “tax havens.” A consensus is emerging among the world’s major taxing powers that tax evasion may not be a good thing. …Jurisdictions specializing in the financial secrecy needed to avoid taxes exist in or near every major financial power. There’s Switzerland in Europe, the Cayman Islands off the U.S., Hong Kong in China, Bahrain in the Middle East and Jersey between the U.K. and France. But none has the military force to maintain secrecy against concerted outside pressure. The question has always been whether the pressure would be applied, and there is now some reason for hope.

The title is particularly revealing. She must be the fiscal version of a neo-con, urging that high-tax nations should “Invade the Cayman Islands!”

Not Iran. Not Syria. Not Cuba. Not North Korea.

You see, those nations are all guilty of causing misery and instability, but such behaviors apparently are far less important than the imagined dangers posed by a prosperous multi-racial society with a competitive tax regime.

I assume Ms. Blankenhorn doesn’t actually want to practice gunboat diplomacy against the Cayman Islands, but her attitude is quite revealing. Like other statists, I gather she despises low-tax jurisdictions because they attract jobs and investment from high-tax nations.

In the spirit of problem solving, here’s a suggestion for Blankenhorn, Buiter, and the rest of the fiscal chicken hawks. If you really want to undermine the so-called tax havens, propose a simple and fair flat tax.

But don’t hold your breath waiting for that to happen. The reason they want to squash tax havens is precisely because they want bad tax policy in America and other “onshore” nations.

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Somebody Should Tell Politicians that the Military Budget is for National Defense, not Pork and Political Correctness

I agree with George Will that it’s okay to reduce Pentagon spending. After all, the United States accounts for almost one-half of the world’s military outlays, about twice as much as the combined total of possible enemies.

But I also agree that national defense is one of the few legitimate functions of the federal government, so I want to make sure we get the most bang for the buck (no pun intended) from every penny.

That’s why I get especially irritated when I read horror stories about Pentagon waste.

But in many cases, it’s not the fault of the Generals and Admirals. America’s military is forced to waste money because the politicians in Washington are motivated by cronyism, corruption, pork, and political correctness.

For example, let’s look at an excerpt from a column in the Washington Examiner.

Imagine you’re a legislator in a country with a bloated budget of almost $4 trillion and a record level of spending that requires massive deficits and could mean job-killing tax increases. Now imagine you’ve got a weapons program that is billions over budget, a decade behind schedule and unwanted even by those for whom it is intended. What would you do? If you said, “Earmark the program another $380 million,” you’re apparently qualified to serve on the U.S. Senate Appropriations Committee. The weapons program is the Medium Extended Air Defense System, a joint venture with Germany and Italy that was zeroed out by three of four relevant congressional funding authorities. But the Senate Appropriations Subcommittee on Defense decided the program was worth a $380 million earmark, and the full committee passed the final bill along with a unanimous vote.

I’m not an expert on weapons systems. Heck, I know less about such matters than Obama’s cabinet knows about the economy. But it certainly seems foolish to throw good money after bad on a program that doesn’t work. Especially when the military doesn’t want it!

And here are a couple of sentences from a Forbes column about part of the military budget being diverted to subsidize solar power.

EPA regional headquarters?

The U.S. Army is looking for a few good renewable energy projects. Some $7 billion worth. On Tuesday the Army began accepting bids for green energy installations that will be deployed on military bases and facilities across the U.S. The Army will sign contracts to buy the electricity generated by solar, wind, geothermal and biomass projects for up to 30 years. …The program is part of a Department of Defense initiative to meet at least 25% of energy demand on its bases from renewable sources by 2025. The military is also aiming its bases to become “net zero” consumers of electricity – generating more power than they use by installing solar and other renewable energy systems.

Silly me. I thought the Pentagon was responsible for keeping the nation safe. I guess I missed the memo where it was tasked with being a tool for the green agenda.

These examples doubtlessly are just the tip of the iceberg. Politicians can’t resist turning anything they touch into a vehicle for graft, waste, and foolishness.

To be sure, there are also big picture issues of national security that have to be resolved. Is NATO now an anachronism, as Steve Chapman persuasively argues? Is overseas intervention a pointless exercise, as Mark Steyn explains?

But whatever the mission, the Pentagon’s ability to carry it out is compromised when politicians treat the military budget like a goodie bag.

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Is Pentagon Waste Even More Egregious than Welfare-State Waste?

I realize that national defense is one of the few legitimate functions of the federal government, but that doesn’t mean the Pentagon budget isn’t riddled with waste, fraud, and abuse.

Here’s a jaw-dropping example reported by Bloomberg.

A U.S. contractor in Iraq overbilled the Pentagon by at least $4.4 million for spare parts and equipment, including $900 for an electronic control switch valued at $7.05, according to a new audit. Based on the questionable costs identified in a $300 million contract with Dubai-based Anham LLC, the U.S. should review all its contracts with the company in Iraq and Afghanistan, which total about $3.9 billion, said Special Inspector General for Iraq Reconstruction Stuart Bowen. “The audit found weak oversight in multiple areas that left the government vulnerable to improper overcharges,” Bowen wrote in the forward to his 30th quarterly report, released today. The contract in question was funded with a combination of money earmarked for Iraqi Security Forces and Army operations and maintenance funds. Among the “egregious examples of overbilling” by Anham were $4,500 for a circuit breaker valued at $183.30, $3,000 for a $94.47 circuit breaker and $80 for a small segment of drain pipe valued at $1.41.

Those mark-ups are absurd, but I wonder whether this example from the story is even worse.

In other cases, Anham used subcontractors to purchase items that could have been bought directly from the manufacturer at lower prices, the report said. When Anham was asked to buy a loudspeaker system to alert warehouse employees of any danger, it chose not to buy the system directly from the manufacturer at the retail price of $44,615, the report said. Instead, Anham sought bids from subcontractors and paid a company called Knowlogy $90,908. That price included $20,000 for installation, even though the system setup meant little more than wheeling it into place and plugging it in.

I think I made a mistake becoming a policy wonk. I could have a great career as a loudspeaker installer.

On a more serious note, it would be nice if governments didn’t squander so much money. Maybe things wouldn’t be so bad if some people went to jail for these rip-offs of taxpayer money.

And let’s not forget that the bigger issue is whether the national security of the United States is advanced or undermined by nation building in the Middle East. Or remaining in alliances such as NATO that lost their raison d’être when the Warsaw Pact disappeared 20 years ago.

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“…maintaining NATO is like keeping forts in South Dakota to defend settlers against hostile Indians.”

That line is from a great column by Steve Chapman, who wonders why NATO still exists. If you read this column and Mark Steyn’s recent National Review article (which I blogged about here), you will have a good grasp of what makes libertarian foreign policy very compelling.

Defense Secretary Robert Gates went to Europe recently to announce that the North Atlantic Treaty Organization may have a “dismal future” and that before long, American leaders “may not consider the return on America’s investment in NATO worth the cost.” Why does he make that sound like a bad thing? “Watch out! We may have to stop spending so much money protecting countries that can protect themselves!” …Its entire purpose was to protect Western Europe from the Soviet and Warsaw Pact forces in Eastern Europe, which were a plausible threat to invade and conquer. But at this point, maintaining NATO is like keeping forts in South Dakota to defend settlers against hostile Indians. The Western alliance won the Cold War, and in the absence of some major, general threat, Gates would do better to ask why it needs to be preserved. …Ever since the end of the Cold War, NATO has been an answer in search of a question. It validates what Ronald Reagan is credited with saying: “Nothing is so permanent as a temporary government program.” Everyone understood why we kept huge forces in (West) Germany a generation ago. But today, it’s a puzzle. Who are they supposed to fight? The Finns? Missions like Libya are an attempt to justify an organization that has outlived the problem it was created to solve. …The defense secretary fumes that too many countries “enjoy the benefits of membership” but “don’t want to share the risks and costs.” Of course they do. If you let people join a nice club without paying dues, how many would turn it down? And if you later asked them to mop the floors, how many would grab a bucket? Our allies are behaving rationally, and we keep wondering why. Gates may enjoy continually pounding his head against a brick wall. But the rest of us might find it feels really good to stop.

I suppose it would be appropriate to acknowledge that the NATO example is very simple and straightforward. It’s much more challenging for libertarians (and everyone else) to figure out how to respond to something like Islamic terrorism. Ending the nation-building projects in Iraq and Afghanistan would be a good start, to be sure, but I strongly doubt whether that would have any significant effect on the threat of attacks. I don’t pretend to know the answer, but perhaps the drone attacks are the least-worst approach. Simply stated, keep cutting the heads off the snakes.

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Mark Steyn’s Case for Libertarian Foreign Policy

I don’t know if Mark Steyn would agree with my characterization, but his new National Review column presents a very powerful case for libertarian foreign policy.

As is so often the case with Steyn’s writing, it’s very clever and often funny, but it’s also a remarkable indictment of interventionism and international bureaucracies. It’s only available for subscribers, but here’s an excerpt.

Thanks to American defense welfare, NATO is a military alliance made up of allies that no longer have militaries. In the Cold War, that had a kind of logic: Europe was the designated battlefield, so, whether or not they had any tanks, they had, very literally, skin in the game. But the Cold War ended and NATO lingered on, evolving into a global Super Friends made up of folks who aren’t Super and don’t like each other terribly much. At the beginning of the Afghan campaign, Washington invested huge amounts of diplomatic effort trying to rouse its allies into the merest gestures of war-making: The 2004 NATO summit was hailed as a landmark success after the alliance’s 26 members agreed to commit an extra 600 troops and three helicopters. That averages out at 23.08 troops per country, plus almost a ninth of a helicopter apiece. Half a decade of quagmire later, Washington was investing even larger amounts of diplomatic effort failing to rouse its allies into the most perfunctory gestures of non-combat pantywaist transnationalism: We know that, under ever more refined rules of engagement, certain allies won’t go out at night, or in snow, or in provinces where there’s fighting going on, so, by the 2010 NATO confab, Robert Gates was reduced to complaining that the allies’ promised 450 “trainers” for the Afghan National Army had failed to materialize. Supposedly 46 nations are contributing to the allied effort in Afghanistan, so that would work out at ten “trainers” per country. Imagine if the energy expended in these ridiculous (and in some cases profoundly damaging) transnational fig leaves had been directed into more quaintly conventional channels — like, say, identifying America’s national interest and pursuing it. …Transnational do-gooding is political correctness on tour. It takes the relativist assumptions of the multiculti varsity and applies them geopolitically: The white man’s burden meets liberal guilt. No wealthy developed nation should have a national interest, because a national interest is a selfish interest. …in an era of Massively Applied Desultoriness, we spend a fortune going to war with one hand tied behind our back. The Forty-Three Percent Global Operating Industrial Military Complex isn’t too big to fail, but it is perhaps too big to win — as our enemies understand. So on we stagger, with Cold War institutions, transnational sensibilities, politically correct solicitousness, fraudulent preening pseudo–nation building, expensive gizmos, little will, and no war aims . . . but real American lives.

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