If the reader was unaware of that fact, we welcome him to Washington. The helicopter in question, the VH-71, is the government’s planned replacement for its current allegedly deficient presidential helicopter fleet. [1]
The requirement [2] and go-ahead decision for the VH-71 were established in 2003, coincidentally the year the United States invaded Iraq along with its coalition of the willing. Oddly enough, the procurement authorities decided that a modification of the European EH-101 helicopter would suit the requirement just fine. By pure coincidence, this decision would benefit the British firm Westland and the Italian company Augusta. If any glory accrued to Tony Blair and Silvio Berlusconi, that surely would have been fortuitous. The idea that the White House paid off these worthies for assisting the administration in the invasion of Iraq has not been proved by transcripts of phone conversations or secret memoranda of understanding that have come to light; we will leave to the reader the onus of the obvious interpretation of events.
Naturally, Congress got involved, because anything involving aerospace contracts means a rich harvest of PAC checks. Forthwith, the cry rang out from Capitol Hill that domestic content was needed. Riding to the rescue was Lockheed Martin, an aerospace mega-corporation with no known experience in helicopters since the abortive Cheyenne in the 1960s. They selflessly volunteered to be prime contractor. Bell, an outfit that ought to know something about rotorcraft, came in as a junior partner to Lock-Mart. Together with Augusta and Westland, the consortium marched bravely into the future of politically-guaranteed profits.
Of course, an off-the-shelf EH-101, reputedly a reasonably usable rotorcraft, was unsuitable either for the imperial pretensions of the presidency, or the needs of domestic porkbarrelling. Thus arose the metamorphosis of the EH-101 into the star-spangled US-101, the public-relations prototype that would ultimately become the military type designation VH-71.
This helicopter fit for a walking divinity (and/or his retinue) required nearly 2,000 requirements changes. Given the usual incompetence of the government procurement system, the cost increased apace with the change orders. The Pentagon’s Selected Acquisition Report (its most recent edition) from September 2007 lists the total program cost of VH-71 at $6.5 billion. [3] But the latest cost increases and schedule slips suggest that the total program cost may rise to $11 billion: nearly $500 million per aircraft. The cost overruns have become so egregious that the program has been frozen pending examination of alternatives. [4]
One may safely assume that, consonant with virtually every U.S. aerospace program ever heard of, the VH-71 will not be cancelled, but "restructured," or perhaps stretched out. Anything but cancelled. No other "platform," as the military argot would have it, will quite fill the bill. No doubt there are many necessarily expensive add-ons to the original EH-101 required to keep our elected Ozymandias out of harm as he soars above the rabble. But an unawed American might ask: aren’t there better, cheaper alternatives?
Let us stipulate that the shooting down of a U.S. president would be a bad thing. One might ask whether a distinctively appearing, distinctively marked leviathan flying about would create more risk than a standard, common helicopter that could be mistaken for any other rotorcraft in the military or civilian inventory. The UH-60 Blackhawk is as common a sight above metropolitan Washington as a Lexus on the Capitol Beltway: it is inconspicuous. The UH-60 is also in the current presidential fleet.
But the UH-60, or any other helicopter, would inevitably have an Achilles heel if presidential security were the paramount criterion. Unfortunately for the taxpayer, presidential vanity has long since trumped the need for pure physical survival at least cost. Hence presidential chariots must be gaudily decorated in the imperial livery of Marine One, making them unnecessarily conspicuous. Hence the perceived need to equip the new presidential fleet with every conceivable spoofer, jammer, and communications link that sole source IT contractors can push on the VH-71 program manager.
The army and navy have announced their intention to buy a large quantity of Blackhawks over the next 5 years. The price would come to around $14 million each. Fourteen million as opposed to half a billion. Wouldn’t a UH-60 — as we have said, a rotorcraft already in the current presidential fleet — be far more cost effective than a VH-71, as well as safer, particularly if it were painted in inconspicuous colors mimicking a standard military paint scheme? One could put every conceivable bell and whistle on a Special Operations UH-60, as well as an Aga Khan-level interior, and there is no way it could remotely approach the unit cost of the VH-71 boondoggle.
The alert reader might object that the Blackhawk is smaller and more cramped than the VH-71. But what is the typical mission of the presidential helicopter fleet? Generally, it hauls our anointed thunder god from the White House grounds to Andrews Air Force Base, or to his Berghof in the nearby Catoctin Mountains of Maryland, or, in extremis, to Site R on the Maryland-Pennsylvania border: none of them journeys of much more than half an hour. If the trip is longer, generally the helicopter portion is just the first, brief leg to the Lucullan comfort of Air Force One. Surely a Man of the People, as even George W. Bush affects to be (bred to the bone oligarch though he is), could tolerate a cabin no more confining than the interior space of a Bugatti Veyron. [5]
There is more. The Blackhawk is a thoroughly tested and reliable standard aircraft produced by the thousand, like an airborne Honda Civic. The VH-71, by contrast, will be a kluged-together modification of which only 23 copies will be built. Given the inevitable vagaries of engineering and testing, guess which helicopter is more likely to experience catastrophic mechanical failure while in flight?
The VH-71 is an example of the Potlatch syndrome, the tendency of overweening rulers to be extravagant for the sake of being extravagant. Potlatch was the practice of certain Indian tribes to demonstrate the wealth and power of their chief by piling up food, trade goods, and the like, and destroying them in a fire. Such a society, it goes without saying, are doomed. In less wantonly spectacular ways, many ancient states essentially practiced the same custom.
The American anthropologist Joseph Tainter wrote an intriguing work titled The Collapse of Complex Societies, wherein he posited that as a society matures and becomes more complex, its rulers (and beneficiaries) tend to evolve ritual behavior that does not benefit the survival of survival of the society as a whole. On the contrary, they become so dedicated to defending an ever more ostentatious and extravagant status quo that their behavior actually contributes to the collapse of the society over which they reign.
The Mayan big men exhausted so much of their subjects’ resources on ceremonial pyramids celebrating the greatness of the big men that the society could not sustain the expense. Pyramids, after all, cannot provide habitation, or defense.
Peasants toiling on a Latifundia at the borders of the late Roman Empire, should they have been overrun by the "barbarians," actually found the tribute exacted by the wild barbarian tribes lower than that mulcted by their erstwhile Roman imperial masters. The sustainment costs of the empire, its sybaritic court, and its hideously expensive military, were simply too high by that point. When enough peasants caught on, the Roman Empire was doomed, not by military invasion, but by the fact that its subjects no longer believed the whole imperial contraption benefited them.
When will the subjects of the American monarch catch on that projects like the VH-71 are simply expressions of a superfluous and ruinously expensive ruling class’s contempt for them?
Werther is the pen name of a Northern Virginia-based defense analyst.
[1] One might well ask why even an elected monarch like the U.S. president needs twenty-three helicopters. At most, he might require one helicopter, a backup or two, a couple of training machines, and a pair to act as operational decoys. Rational math cannot count beyond 6 or 7, but the president’s vast retinue of hangers-on, coat holders, and post-pubescent appointees (the U.S. attorney scandal revealed what a sorry lot of inferior religious seminary graduates they typically are) is always raptured, so to speak, by the experience of getting VIP treatment several cuts above that experienced by the common herd of U.S. taxpayers on a Carnival cruise. Thus we are stuck with 23 flying palaces to transport the courtiers of the American emperor.
[2] "Requirement" is a government euphemism for "this is a really neat idea that will help my post-government career with a contractor."
[3] http://www.acq.osd.mil/ara/am/sar/2007-SEP-SARSUMTAB.pdf
[4] "VH-71 Presidential Helicopter on Hold," Defense News, 3 December 2007.
[5] Priced at a mere 1.1 million Euro per automobile (or "platform"), the Bugatti is a veritable bargain by U.S. government contracting standards.
]]>Amid such a blur of perfidy, major events that portend disaster in the future can slip by with barely a notice by the media, by Congress, or by the public at large. For example, does one voter in a hundred know that the Department of Defense has quietly activated a new regional military command? Just type in the acronym "AFRICOM" into a search box, and the reader will find a DOD website that presents the new United States Africa Command, in the same boosterish manner thatMicrosoft rolls out a new operating platform.
According to the site, "U.S. Africa Command will better enable the Department of Defense and other elements of the U.S. government to work in concert and with partners to achieve a more stable environment in which political and economic growth can take place. U.S. Africa Command is consolidating the efforts of three existing headquarters commands into one that is focused solely on Africa and helping to coordinate US government contributions on the continent."
In other words, more meddling, more fishing in troubled waters, more displacement of traditional diplomacy with militarized "shaping of the environment," more armed, buzz-cut boy scouts playing roughly the same role Graham Greene’s "Quiet American" played in South East Asia. Oh, yes, and oil in the Gulf of Guinea.
The Center for Defense Information has posted a useful primer on AFRICOM, which discusses some of the misgivings that the intended host countries have about Uncle Sam’s gun-toting social work on the Dark Continent. There is no need to recapitulate its information and arguments; the reader should consult it for further enlightenment.
There remain only two issues to mention that the CDI piece does not cover: the domestic institutional angle and the domestic political angle.
All government bureaucracies, if allowed to fester, metastasize like a malignant cancer cell. DOD, having been given extraordinarily indulgent latitude by a somnolent Congress, has metastasized more than the norm. AFRICOM is yet another venue for general officer billets, staff jobs, and proconsular pretensions. Once created, the bureaucratic imperative becomes paramount. The collapse of the Warsaw Pact nearly two decades ago did not lead to the dissolution of NATO. AFRICOM, once created, will be immortal.
AFRICOM also represents a God-sent opportunity for both our major political parties to find new worlds to conquer. The GOP, being a subsidiary of Big Oil, is fairly licking its chops at West African oil, although how a bunch of armed social workers would "stabilize" a basket case like Nigeria is not clear, given the unfortunate precedent of Somalia.
As for the Democrats, this could be their big moment once again to preen as Wilsonian internationalists and hairy-chested liberals. Throughout the 1990s, any discussion about the Balkans was sure to include some cavil from advanced thinkers that we intervene only in white countries because we value their lives more—what about Rwanda?
Should the first Wednesday after the first Monday of November 2008 dawn with a Democratic President-elect, AFRICOM will be a ready-made vehicle for proving he or she is no wimp, and for mollifying important Democratic voting blocs as well. Should the President-elect be a Republican, there is always the oil.
Werther is the pen name of a Northern Virginia-based defense analyst.
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Spendthrifts and Hypocrites
The media takeaway from this stock “present at the creation” Washington saga is that Mr. Greenspan, the Chairman of the Federal Reserve Board between 1987 and 2006, is highly critical of President Bush, his former patron. “My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending,” he writes. How flinty-eyed and prudent of him, just like a Buick-driving Midwestern small town banker of yore.
Yet the former Fed chairman conveniently forgets his own record of tacitly endorsing such spending. The largest single portion of the increase in Federal discretionary spending since 2001 came from the huge boost in Pentagon expenditures, both in its war supplementals and in the regular DOD budget. If there is an example of Mr. Greenspan’s denouncing these increases in any of his statements to the Congressional banking and budget committees over the last several years, we have yet to see it.
As befitted the former Chairman of the 1982 commission to reform Social Security, Mr. Greenspan constantly fretted in his testimony and speeches about the long-term costs of Federal entitlement programs, at least when he was addressing entitlements as an abstraction rather than as specific programs. We are aware of no such jeremiad from him against the enactment of Medicare Part D (the prescription drug benefit) in 2003. This new entitlement added $1 trillion to Federal spending over the succeeding 10 years, and is now a massive unfunded liability over the next 50 years.
Perhaps Mr. Greenspan’s defense against hypocrisy is the obvious fact that the president would never have vetoed Medicare Part D just as he would never have vetoed the increases in Pentagon spending, because neither originated with what Mr. Greenspan condemns as a profligate Congress. Both were actually hobbyhorses of the president he served as a de facto appointee.[1]
Mr. Greenspan shows somewhat less hypocrisy regarding his advocacy of income tax cuts, although here, too, there are inconsistencies. While he acknowledges he advocated the 2001 tax cut that contributed mightily to the $5-trillion swing from surplus to deficit in the 10-year budget outlook, his explanation as to why it was not an economic panacea is unsatisfactory. He observes that when the surpluses dried up a mere nine months after passage of the cuts, the spending policies of the administration “were no longer entirely appropriate.” Well, then, why did he not say so plainly at the time, particularly in reference to Medicare Part D and the Pentagon spending binge? If just a handful of members of Congress, seeking cover to vote against Part D, would have heard publicly from Alan Greenspan, the bill would have failed in the House. [2]
Everything Mr. Greenspan has written in public life suggests he thinks tax cuts at the top marginal rate are a sovereign remedy for all that ails the economy. Yet he goes out of his way to praise President Clinton’s 1993 deficit reduction measure as an act of political courage. This measure included an increase in the top marginal rate. One could say in Mr. Greenspan’s defense that this law took effect in a period of high deficits, whereas the 2001 rate cuts were enacted at a time of surplus. But he did not change his tune as the surpluses swung to deficit.
One can conclude that this seeming inconsistency was trumped by a higher consistency: the need to serve the administration of the day. President Clinton favored the tax increase, therefore the oracular Fed chairman would too. Thus the Bush tax cuts found similar favor.
Free Money, and Other Republican Fairy Tales
The chief indictment against Mr. Greenspan lies not in fiscal policy, where he had no statutory responsibility (even though he could influence presidents and congressmen if he chose). In his own legal bailiwick, the setting of interest rates, we see the former Fed chairman at his worst.
Let us stipulate that every tangible and intangible thing has its cost, particularly money. “Conservatism,” if it means anything at all, means prudence, caution, planning for the worst case, building a nest egg. Mr. Greenspan, the self-described “libertarian conservative,” presided over the greatest binge of money creation in American history through his setting of the artificially low interest rates he knew would politically protect his boss at 1600 Pennsylvania Avenue. Just as free bread would be an impossible economic model for a baker, so would free money prove to be for a central banker.
One of the emerging stealth policies of the Republican Party has been the substitution of free money for social welfare policies. The constituencies benefitting from the two policies may be somewhat different, but the political intention is, at bottom, the same. Moreover, the distortionary effect of free money (that is, artificially low interests rates) may be greater, since it ripples through the entire economy as it gives false valuations to entire classes of assets, whether or not individual units of these assets were even purchased with free money to begin with.
One can see the free money ideology in full bloom simply by listening to any of the orthodox Republican political and economic commentators. Even Mr. Greenspan’s pegging of interest rates at an artificially low rate was not enough for these people. Robert Novak, when he is not too busy leaking the names of covert CIA agents, frequently inveighs against the Fed’s interest rate policies on the grounds that they are too high. One hears the same sort of diatribe from Larry Kudlow on CNBC: apparently, if real interest rates are not zero, it will be an intolerable burden on millions of ordinary, hardworking middle-class Americans (a coded phrase meaning Mr. Kudlow’s millionaire CEO pals and hedge fund manager buddies). The fact that Japan had what were effectively negative real interest rates for long stretches of the 1990s did not alleviate Japan’s economic stagnation; low interest rates cannot “fix” the economy if other fundamentals are unfavorable. But this experience makes no impression on the free-money GOP.
There may be an impression that profligacy in monetary policy is a relatively recent development for the Republican Party, and that the old Republicans were sound-money advocates. But Murray Rothbard, a classic hard-money libertarian economist, argues in his History of Money and Banking in the United States that the GOP provided the fuel for previous economic crises through its fondness for free money policies.
According to Rothbard’s telling, during the 1920s, Benjamin Strong, Governor of the New York Federal Reserve Bank, and Treasury Secretary Andrew Mellon colluded to keep interest rates unrealistically low in order to keep the stock market rising and benefit Republican electoral prospects. The 20s market boom, like the tech boom and real estate boom more recently, was a bubble whose volatility was fed by a politically-driven low interest rate policy. [3]
The difficulty with the administration’s strategy of dismantling Social Security was that it was not particularly popular, even among Republican members of Congress. One possible palliative for the electorate was President Bush’s notion of the “ownership society:” that the public could gradually be weaned off (Democratic) social insurance programs through Republican programs that would make them think they “owned” assets.
Thus it is plausible that the subprime mortgage bubble, however it started, was nurtured and sustained by a Republican administration that wanted increasing numbers of the voting public to think they were land-owning gentry. Given the obsessive secrecy of the administration, we may never know what the precise deliberations were at the Treasury, the Federal Home Loan Bank Board, the Comptroller of the Currency, the West Wing of the White House, and the Federal Reserve itself. But these institutions had, at minimum, abandoned the notion of due diligence in overseeing housing finance.
Now, it is complete bosh to think a new homeowner ensnared in a “no doc” loan, or an interest-only loan, or a no down payment loan, has a stake in anything. But for creating the illusion of ownership (as well as the illusion of a booming economy as reflected by housing sales), the artifice would suffice. President Bush – or at least his economic Svengalis – were counting on the psychology of the Wealth Effect to push a large segment of the voting public into the conservative column. These voters would, as the old saying about land-owners goes, “have a stake in the country.”
Seventy years ago George Orwell noted the political implications of this meretricious Wealth Effect. In Coming Up For Air, the fictional protagonist, George Bowling, a technical member of the English middle class who thinks like the proletarian of his origins, muses about his suburban London housing development:
Merely because of the illusion that we own our houses and have what’s called “a stake in the country,” we poor saps in the Hesperides, and all such places, are turned into Crum’s [the developer and mortgage holder’s] devoted slaves for ever. We’re all respectable householders – that’s to say Tories, yes-men, and bumsuckers. Daren’t kill the goose that lays the gilded eggs! And the fact that actually we aren’t householders, that we’re all in the middle of paying for our houses and eaten up with the ghastly fear that something might happen before we’ve made the last payment, merely increases the effect. . . . every one of those poor suckers would die on the field of battle to save his country from Bolshevism.
Such, in the calculation of the Bush administration, would be the blessings of the expansion of home ownership. And Alan Greenspan would provide the priming for the pump. Not only did he keep interest rates lower than true market forces would have dictated, but he talked up the novel types of loans the mortgage industry was offering. According to Business Week in 2004:
No less an expert than Federal Reserve Chairman Alan Greenspan has sung the praises of ARMs. In February, he told credit union executives that such loans could have saved many homeowners tens of thousands of dollars over the past decade. He noted that ARMs are much more common in other countries, and he encouraged the mortgage industry to create more options. “The traditional fixed-rate mortgage may be an expensive method of financing a home,” Greenspan said.[4]
The writers at Business Week noted the risks inherent in adjustable rate mortgages and other exotic financing packages more than three years ago. But Mr. Greenspan admits now that he “really didn’t get it” about the danger to the mortgage market.[5]
Mr. Greenspan’s talent for missing trends in the real estate market is particularly mystifying given his experience with an earlier crisis: his first appointment as Fed chairman in 1987 was immediately followed by the largest percentage drop in the stock market since the crash of 1929. The October 1987 meltdown was caused in part by the successive collapses of savings and loan institutions which financed their own real estate bubble, mainly in commercial real estate in the Oil Patch.
He also apparently didn’t “get it” about the tech bubble in the late 1990s. Indeed, one heard frequent suggestions from the then-Fed chairman – suitably hedged, of course – that the “new economy” of the 1990s was so fundamentally different from what had gone before that the business cycle may have been banished and that an era of perpetual growth was at hand.
Oil on Troubled Persian Gulf Waters
One feature of Mr. Greenspan’s memoirs that has caused Beltway politicos to contract a case of the vapors is his statement that the invasion of Iraq was “largely about oil.” In only one day, he issued one of Washington’s usual non-denial denials that trips itself up in its own contradictions. Through Bob Woodward, the imperial capital’s amanuensis of record, he now says that oil “was not the administration’s motive.” [5] So which is it? – if no less a figure than the then-chairman of the Federal Reserve board believed securing Middle East oil supplies against Saddam Hussein’s potential depredations was a legitimate and defensible motive, why was he so quick to issue an anxious dementi saying it was the furthest thing from the administration’s mind? One expects that Mr. Greenspan, now a private citizen, received a testy phone call from either President Bush or Vice President Cheney. Note that he did not see the need to issue a denial of his statements about overspending; its alleged fiscal conservatism to the contrary notwithstanding, the administration is truly sensitive about only one issue: its false justifications for igniting a war.
Even Mr. Greenspan’s corrected version of the oil quote shows an almost laughable amount of geopolitical ignorance from this supposedly brilliant polymath. Greenspan says that it was his own prediction at the time in his capacity as Fed chairman, that Saddam remaining in power would somehow cause oil to increase to over $100 per barrel. On what evidentiary basis did he believe that? Did he think that Saddam, under crushing sanctions, with a dilapidated army, and with half his country a no fly zone, could successfully invade Kuwait or Saudi Arabia? That is sheer fantasy.
He gives the game away by stating “My view is that Saddam, looking over his 30-year history, very clearly was giving evidence of moving towards controlling the Straits of Hormuz, where there are 17, 18, 19 million barrels a day passing through.” But Iraq’s narrow outlet to the Gulf is nowhere near the straits. Second, Iraq had no navy or other long-range systems capable of closing and/or controlling the straits. Third, the Persian Gulf was and is essentially an American lake.
But let us assume instead that Saddam did nothing; why would that cause oil to quadruple in price from its 2002 level? That would be the first time in history that a condition of peace would spike oil more than a condition of war – in this case, a US invasion of Iraq. And it is ironic that most competent analysts now believe a U.S. war against Iran would cause an increase the price of oil similar in size to what Mr. Greenspan says would have happened if we had done nothing about Iraq. It is odd indeed that the U.S. government seems blithely willing to strike Iran now even if it causes an oil price spike, whereas the administration rationalized attacking Iraq in order to avert an oil price spike. This is plainly irrational, and shows what sort of delusional and dishonest people are running the government.
As it is, the invasion and occupation of oil has contributed to the more than doubling of the average price of crude oil since 2002. Certainly there are other factors involved, such as China’s industrialization, but it is undeniable that present-day Iraq has not reached the average daily flow of oil achieved even by Saddam’s rickety pre-war infrastructure. Add to that the “war risk premium” of there being a shooting war in the Middle East, and it is evident that the U.S. invasion of Iraq has partially achieved what Mr. Greenspan alleges the invasion was intended to avert. Finally, it is strange that a self-described libertarian economist believed that oil, uniquely among all items, would not respond to market forces, and must be secured at bayonet point. After all, Saddam could not drink the oil; he was desperate to sell it in order to get the revenue in order to keep his vast system of bribery and corruption intact.
Some antiwar writers have latched onto Mr. Greenspan’s statement about oil and said in effect, “aha! I knew it! It really was all about oil!” But this overstates the matter and in so doing, lets other factors off the hook. We have always been critical of exclusively monocausal explanations of huge historical events like the invasion and occupation of Iraq, and this explanation is no exception.
Of course, it was about oil. But it was equally about Israel and its disproportionate influence on U.S. Middle Eastern policy. At the same time, Karen Kwiatkowski (Col., USAF, Ret.) has eloquently written about DOD’s parochial desire to have permanent megabases in Mesopotamia from which it could militarily dominate the region as well as threaten Iran. This view also has merit. And what about the alleged Bush/Rovian desire to become a “war president” and intimidate the Democrats so effectively that it would be electorally beneficial to Republicans? We see no way to refute that. And finally, is there any truth in believing that the Vice President’s relentless desire to expand executive power and secrecy via the avenue of war may have played a role? To borrow a phrase from George Tenet, that thesis is a “slam dunk.” It appears that just as success has a hundred fathers, so does a fiasco.
Alan Shrugged
For all Mr. Greenspan’s supposed empirical expertise, he has shown a surprising inability to learn from experience. Perhaps the reason is that, far from being a seasoned Washington pragmatist, he is attracted to abstract ideological statements about libertarian conceptions of the so-called “free market,” and a mechanistic understanding of “how the world works.”
Libertarianism, properly understood, is less a mechanistic ideology than an elaboration of the phrase, “live and let live.” If you will, it is the Sermon on the Mount with the pious interpellations left out. But in the minds of dogmatic adherents, libertarian economics is a scientifically proven truth that they believe with the same certitude as the Marxist believes in the labor theory of value.
It is probably no accident that during his early years, Mr. Greenspan was an acolyte of Ayn Rand, one of the most dogmatic and personally unpleasant individuals ever to have infested the American political scene. She bequeathed libertarianism a legacy of sectarian schism and personality cults rivaling Trotskyism. It is highly indicative of the drift of these types of movements that Rand’s current official heirs have out-neoconned even the neocons in their love of military aggression.
To be fair to Mr. Greenspan, it is unlikely that he holds all or even most of the tenets of Randianism to this day. But a residue of that thinking is detectable in his preference for abstract theory over historical experience. Garn-St. Germain deregulated the savings and loan sector, requiring in only a few years the largest government bailout in history. The Securities Litigation Reform Act of 1996 reduced the duty of due diligence and honest disclosure by executives of public companies. It also, not coincidentally, greatly limited legal recourse by aggrieved shareholders. Overvaluation of stocks resulted, contributing at least in part to the bubble bursting in 2001, not to mention the outright fraud committed by Enron, Tyco, and MCI Worldcom.
It is possible to see the same problems in hedge funds, many of which through financial alchemy transform debt into asset. It is telling that Mr. Greenspan “didn’t get” the subprime mortgage risk; these subprime mortgages are invariably sold, ending up in many cases in the form of highly leveraged hedge funds. Yet he adamantly maintains to this day that hedge funds must not be regulated. The deregulations of the 1980s and 1990s should have taught us that government regulation is not merely some namby-pamby stuff about protecting ignoramuses from themselves that ends up making markets “inefficient” (a favorite pejorative of the Greenspan crowd). Sometimes, it is about protecting the economy itself. What is crucial is having elected and appointed officials with the sound judgment necessary to distinguish when regulation is prudent, and when it is overkill. The former Fed chairman was so enamored of theory that he often lacked that judgment.
The Age of Turbulence reminds one in some ways of those tedious memoirs by German generals after the Second World War. Our overall military theory was sound, they would imply, it’s just that the idiot at the top executed it so badly that the whole affair came a cropper. But we are unable to recount an instance when they had rejected a field marshal’s baton or refused an East Prussian estate when these trinkets were proffered by the very same idiot. In the same vein, President Bush has subtly become a retrospective alibi for an entire political class that had once served him so eagerly.
* Werther is a Northern Virginia-based defense analyst.
[1] We are well aware of the rhetorical flummery to the effect that the Federal Reserve Board is “independent.” But this is like saying that Congress is independent of lobbyists, simply because there happen to be ethics statutes in effect. In reality, Mr. Greenspan was the culmination of a long line of Fed chairmen who essentially served as executors of the monetary policies of the administration of the day. There is a tradition in Washington almost as hallowed as the springtime blossoming of cherry trees at the Tidal Basin, whereby interest rates begin to fall six months before a presidential election.
[2] One of the persistent falsehoods of Republican propaganda is the insistence that “9/11 caused the deficits,” thus placing the onus on Osama rather than Republicans’ own fiscal imbecility. In terms of the effect on the economy, 9/11 was minor and transitory: the stock market had already fallen further between January 2001 and September 11, 2001 than it would fall subsequently. As for the military spending spree after 9/11, the vast majority of the war spending was devoted to invading and occupying Iraq, a country that had nothing whatsoever to do with 9/11. The increases in the Pentagon’s regular budget were simply crass political opportunism occasioned by the war. The ballooning budgets bought things like Littoral Combat Ships, which have about as much utility in warfare against al Qaeda as Spanish galleons.
[3] Rothbard points out that this was not the only reason for the Strong’s and Mellon’s policy. Both men, being early-20th century American financiers in good standing, were Anglomaniacs dedicated to doing Perdifious Albion’s bidding in the manner established by J.P. Morgan. When the United Kingdom decided it would reestablish the pound on the gold standard at the old pre-World War I parity, Strong and Mellon did everything they could to assist. The problem was that the war had destroyed Britain’s pre-war position as the preeminent financial power in the world. Achieving the old parity was completely unrealistic, but once H.M. Government decided to do it (another disastrous decision in which Winston Churchill played a significant role), the American banking establishment fell all over itself to help by agitating for a cheap money policy which would depress the dollar in world exchange markets relative to the pound. As a result, Britain got an overvalued pound leading to massive unemployment, and America got a stock market bubble – leading a few years later to massive unemployment.
[4] http://www.businessweek.com/magazine/content/04_15/b3878093_mz020.htm
[5] 60 Minutes. Interview with Leslie Stahl, 16 September 2007.
[6] http://www.washingtonpost.com/wp-dyn/content/article/2007/09/16/AR2007091601287.html?hpid=topnews
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In the Aug. 16, 2007, edition of the New York Times, Anthony Cordesman of Washington’s Center for Strategic and International Studies (CSIS) tells us why it is a terrific idea for the United States to variously sell and give away more than $50 billion in weaponry to several Middle Eastern states.
His argument boils down to this: the Middle East is a rough neighborhood, and the only way to buy influence is with authentic coin of the realm in the form of arms. If we don’t, others, like the Rugged Russian Bear, the Heathen Chinee, or even the effete Europeans, would be more than happy to peddle their wares.
There is some merit in his argument – unlike President Bush and his neoconservative ventriloquists, Mr. Cordesman is at least grown up enough to dispense with the childish nonsense that the United States government is attempting to spread democracy in the region as a philanthropic exercise. What we are engaging in, according to Mr. Cordesman, is a realist’s game of power-balancing.
Having established that premise, it is the author’s task to demonstrate its validity with plausible evidence. That is where he falls short.
Mr. Cordesman’s first gambit is to play the "jobs, jobs, jobs" card:
"America has vital long-term strategic interests in the Middle East. The gulf has well over 60 percent of the world’s proven conventional oil reserves and nearly 40 percent of its natural gas. The global economy, and part of every job in America, is dependent on trying to preserve the stability of the region and the flow of energy exports."
There is no empirical evidence that U.S. military meddling in the Persian Gulf region (to include arming the various contending factions) has done anything to assure a steady flow of oil at an affordable price. Indeed, the two most memorable examples of a cutoff of oil – in 1973 and 1980 – were the result of U.S. intervention. The latter incident is particularly striking, in that the U.S. government had for years armed the shah’s Iran to the teeth with advanced weaponry, and then watched helplessly as the mullahs came to power.
More recently, the U.S. invasion of Iraq has resulted in not more, but less oil on the international market. At the same time, the instability flowing from the invasion and occupation has added a risk premium to every barrel of oil that is pumped out of the Middle East.
But there is a more fundamental objection to Mr. Cordesman’s line of argument: no regime, no matter how theoretically hostile, can afford to drink its oil. One cannot emphasize too many times the hypocrisy of the "protecting-the-flow-of-oil" cant coming from the mouths of theoretical conservatives. On the one hand, we must endure their panegyrics about the limitless blessings of the free market, where a buyer will always find a seller and vice-versa. Yet mysteriously, this mechanism will not work where oil is concerned. (It is fascinating that one other area where "conservatives" cease their hosannas to the free market is drug reimportation in the context of Medicare Part D. This trillion-dollar boondoggle essentially created a closed domestic market for Big Pharma, courtesy of George W. Bush, Karl Rove, Tom DeLay, Bill Frist, and other raging free-marketeers.)
Mr. Cordesman then proceeds to argue that the only way to contain Iran is by arming Saudi Arabia and the Gulf Cooperation Council countries.
But how is Iran going to launch a conventional military attack against Saudi Arabia without crossing the Persian Gulf, which is essentially an American lake, thereby coming into direct military conflict with the United States before it even reaches Saudi soil?
To be sure, the Saudi government could be taken down, but the odds of this happening by external invasion are very small compared to the likelihood of its falling to internal unrest – exactly as Iran, our erstwhile heavily armed ally, fell to an internal insurgency.
Mr. Cordesman is undoubtedly correct in cautioning against blanket demonization of the Saudis as if they were some species of insect. As individuals, they are probably no better and no worse than anyone else in the neighborhood. But common prudence requires us to be mindful that the vast majority of the 9/11 hijackers were Saudi nationals, and even Mr. Cordesman admits that 10-25 Saudi nationals per month join the insurgency in Iraq – although, incredibly, he maintains that this is no big deal.
Given that the administration has been threatening war with Iran based on alleged Iranian support to the Iraqi insurgency, one would think that is a very big deal. Should any of the Gulf regimes be threatened by an internal fundamentalist insurgency, the shiny weapons we wish to sell them would be about as much use as the shah’s F-14s were in preventing the mullahs’ uprising. On the other hand, is it really a good idea to load up unstable and tyrannical regimes with sophisticated arms like the joint direct attack munition (JDAM), precisely given the risk of who might come to power?
The rest of his op-ed consists of rationales for the granting of $30 billion in arms to Israel. Like most commentators, Mr. Cordesman obscures the nature of the transaction, never coming out and saying that unlike the sales to the Gulf states, the $30 billion is an outright gift of the U.S. taxpayer to the government of Israel. The shorthand employed in most news articles about "a Middle East arms deal" practices the same obfuscation.
While this is merely a minor example of double talk, it is part and parcel of what Messrs. Mearsheimer and Walt have been talking about when they complain of the bias inherent in any discussion about Israel in the U.S. media. Most of the elites in government, journalism, and the think tanks know that the public is viscerally opposed to foreign aid (whereby the elites no doubt believe this is another sign of the dumb provincialism of the American people). Nevertheless, the elites are careful not to run afoul of the public mood – too much discussion about foreign aid in the context of Israel might cast that country in a more negative light to the voters.
Mr. Cordesman’s justification for weaponry to Israel is as defective as his rational for weaponry to the Gulf states. As we are seeing in Iraq, and as we saw last summer in Lebanon, advanced conventional weapons against Fourth Generation Warfare are becoming increasingly obsolete. And piling weaponry on Israel, far from giving the Israelis the reassurance they need to avoid war, is more likely to drive them to the opposite course. The Israeli government did not undertake the disastrous decision to invade Lebanon because it assumed its military was weak; rather, it did so because it was foolishly overconfident of its military superiority.
Thus has it always been: countries engage in catastrophic military adventures because their leaders think that at that particular moment they have a decisive military superiority over their intended target. Ratcheting up the level of weaponry all around the Middle East, to Israel and its potential foes, runs the same risk as the arms race prior to World War I: that of simply pouring gasoline on a volatile situation.
As our previous piece sought to show, think-tank intellectuals exist to validate the militaristic inclinations of our governing class, and they are amply rewarded for the effort. Mr. Cordesman hastens to say, however, that he is no mere hireling: no government, foreign or domestic, asked him to write it. Of course not; think-tank experts know what is expected of them, and they act accordingly. They also, we are sure, do so of their own volition, consonant with their own beliefs. The Beltway is a great shaper of convictions. It reminds us of Humbert Wolfe’s clever doggerel of a bygone era:
"You cannot hope to bribe or twist Thank God! The British journalist But seeing what the man will do Unbribed, there’s no occasion to."
Mr. Cordesman’s disclaimer, though, is curious: "Disclosure: the nonprofit organization I work for receives financing from many sources, including the United States government, Saudi Arabia, and Israel. No one from any of those sources has asked me to write this article." We can take it as a given that that is true. But can employees of a Washington think tank write disinterestedly about foreign policy when their employer is on the take from a foreign government – or for that matter, the U.S. government? (One of the most notorious think tanks in this regard is the Heritage Foundation, which churns out countless sophomoric "studies" on behalf of East Asian donors such as Taiwan and South Korea.)
It is no surprise that the Saudis would be lavishly funding every foreign policy bucket shop in Washington. Curiouser is Mr. Cordesman’s revelation that Israel is buying influence in the same quarters. One would think a country that can’t get by without billions in foreign aid would have better things to do with its money. More cynically, one wonders why it is even necessary: the Washington establishment will typically fall all over itself to do Israel favors for free. At least we have some comfort in knowing our foreign aid money is being recycled in this country.
Perhaps curiouser still is his statement that the richly endowed CSIS is a recipient of U.S. government money. When the supposedly fiscally conservative Bush administration starts funneling our money to a think tank, it’s plain that the fix is in. Unmentioned in Mr. Cordesman’s disclaimer is the admission that think tanks also receive donations from the likes of Lockheed Martin and Northrop Grumman – the direct pecuniary beneficiaries of Middle East arms deals.
Nonprofits typically obtain their 501(c)3 tax status by virtue of performing some charitable or other public benefit. Accordingly, should we rank think tanks with hospitals for the public service they perform? Only if we think war is good for us.
]]>But as edifying as it might be for us to wallow in the discrediting of Messrs. O”Hanlon and Pollack, the piece is rather unimportant in itself “ merely one of a thousand bits of semi-official war propaganda, essentially backward-looking as it attempts to vindicate the disastrous decision to invade and occupy Iraq. Our eyes alighted upon a more fruitful field for analysis in the form of a column by two other think tank hacks, Ivo Daalder of the Brookings Institution (not coincidentally, the place of employment for Mr. O”Hanlon as well), and Robert Kagan of the catastrophically misnamed Carnegie Endowment for International Peace.
The piece is ominously titled “The Next Intervention.” Just when we thought two cloddishly mismanaged wars at the same time in Iraq and Afghanistan might chill the American appetite for military intervention, the authors rush to assure us that the dreadful prospect of a few years of peace can be safely ruled out. Why? “Despite the problems and setbacks in Iraq and Afghanistan, America remains the world’s dominant military power, spends half a trillion dollars a year on defense and faces no peer strong enough to deter it if it chooses to act.” Might makes right apparently. Rather than fighting on behalf of some morally unimpeachable cause, the principal reason the authors advance for going to war is because we can do it. This is, in fact, the opposite of “peace through strength,” and suggests that critics of Pentagon spending were right all along in their assertion that more spending equals more war.
Mindful of the idiotic way in which the Bush administration handled diplomacy in the run-up to their Mesopotamian Blitzkrieg, the authors concede that getting other countries to sign off on our wars is a good thing. For one thing, it sells war to the Better Sort of People in America (the ones who shop at Whole Foods, watch PBS, can find foreign countries on a map, and are likely to be reading one’s op-ed in the Washington Post): “It matters to Americans, who want to believe they are acting justly and are troubled if others accuse them of selfish, immoral or otherwise illegitimate behavior.” Horrors, the mortification of being accused, as a right-thinking American, of such low-class behavior! As well to receive a nasty letter from one’s homeowner’s association berating one for not cutting the lawn. After all, if the Frogs are on board as well as the Brits, it makes the war more Atlanticist and gives everyone a dose of righteous nostalgia for the Euro-American solidarity of the cold war.
But the problem, as Messrs. Daalder and Kagan see it, is that damned United Nations. We aren”t ever likely again to be in a situation like 1950, when the Russians boycotted the Security Council, so there will always be a permanent member able and willing to veto a U.S. military intervention. We need to overcome this problem because, as the authors pompously remind us, “Toppling Saddam Hussein was a just act and therefore was inherently legitimate.” That is no doubt a great comfort to the next of kin of the 600,000 or so “excess mortalities” that the British medical journal Lancet estimates have occurred pursuant to the U.S. invasion.
The solution? “ a “Concert of the Democracies” to replace the United Nations. One can almost hear the director cuing the inspirational music, Ã la the “Why We Fight” series. Nowhere, of course, do the authors define what a democracy is. If it means majoritarianism via one-man-one-vote, then the U.S. Senate and the Electoral College would have difficulty passing muster. If it means the rule of law maintained by such bedrock principles as habeas corpus, there will be a lot of embarrassed coughing behind the hand in Washington’s think tanks.
Even on more practical grounds, one can find insuperable problems with this scheme. One could point to any number of indubitable democracies in Latin America that, from bitter experience, would hesitate a long time before giving a blank check to Washington to intervene wherever it liked. In all likelihood, the authors” vision, were it ever realized, would amount to no more that the same “coalition of the willing” we have in Iraq, i.e., a smallish group of subservient and/or well-bribed countries. It has, in fact, always been the administration’s preference to act as the capo among a group of clients, rather than as one sovereign country dealing with others of the same status. The op-ed piece so neatly fits the administration’s line, in fact, that it might as well have been drafted in the White House basement.
Much has been written about the military industrial complex: its obscene cost overruns; the corrupt relations between the uniformed military, the contractors, and Congress; the wild threat inflation. Too little studied has been the role of ostensibly non-partisan think tanks as the semi-official propaganda arm of the complex, and as the transmission belt of propaganda themes between the government and the prestige press. While the activity of the American Enterprise Institute as a propaganda organ is widely known because of its tub-thumping for the Iraq war and its championing of Iranian spy Achmed Chalibi, the same charge applies, to a greater or lesser degree, to most of the “prestige” think tanks: Brookings, Carnegie, CSIS, the Hudson Institute, etc.
They are an integral part of the government’s two-track propaganda machine for selling war. For the downscale end of the market, Rush Limbaugh, Sean Hannity, or Michael Savage will do nicely. Their braying voices and crude arguments are finely calibrated to reach every low-status white male out in satellite dish country. The notion that it’s even theoretically a good idea to have world opinion on America’s side before it embarks on war would be derided as sissy stuff in such precincts. One recalls the eve of the Iraq war, when the visceral hatred of the French in the Murdoch gutter press actually exceeded the vituperation against Saddam Hussein.
But to convince the professionals, the academics, the people who show up at the various world affairs councils which dot the provinces, it is critically useful to have mediators like Messrs. Daalder and Kagan. The Better Sort roughly corresponds to the National Bourgeoisie in Wilhelmine Germany or the outer Nomenklatura in the Soviet Union. They may not send their kids to war in any appreciable numbers, but their support for war is crucial to any administration. The more tender-minded of the Better Sort, in particular, lust in a most alarming way for some sort of “humanitarian” intervention they could support. It is the task of the Daalders and Kagans to toss around terms like “genocide” to provide a humanitarian gloss to whichever invasion advocacy project they are promoting at the moment. (One rather doubts a bunch of fuzzy-minded do-gooders was able to finance the recent campaign to intervene in Darfur that included full-page advertisements in the prestige papers and 60-second spots on television; there must have been more substantial interests involved. Although the “invade Sudan” lobby has thus far failed in its aim, it must be admitted that the target country of Sudan was a poor prospect: with a head of government not one person in ten thousand could name, it lacked an identifiable Hitler; and with a technology base more suited to the stone age than the space age, the fearmongers and threat inflators could hardly suggest WMD without eliciting laughter. When President Clinton dispatched cruise missiles against a Khartoum aspirin factory, the operation was not wildly popular, even among normally bellicose Republicans. One suspects the latter regarded it as an unwelcome distraction from their relentless drive to impeach him. If so, it was a rare case of domestic concerns trumping national security issues.)
Note as well, that in the division of propaganda labor between the roughneck demagogues and the think tank chin-scratchers, the propaganda themes to promote a given policy are disparate or even contradictory. The Limbaughs and the O’Reillys sell a frank brand of gutter patriotism emphasizing the joys of killing foreigners. If there is any policy reason that appeals to the target audience, it is likely to be something direct and tangible, like the acquisition of valuable resources such as oil. On the flip side, the fear used to motivate Limbaugh Nation is some comic book level bugaboo, such as the notion that an Islamic army will physically invade and conquer America. (Lest the reader think we exaggerate here, internet columnist Glenn Greenwald has written about exactly how prevalent this fantasy is among the Right Wing.)
That sort of thing won’t sell with the Better Sort. Ideally, we are fighting, after a vigorous and probing national debate, and much searching of souls, for a better world, to prevent genocide, to stop female circumcision, or for credibility with our allies. If there is an overriding fear that motivates the Better Sort, it is that old nemesis of the MacNeil-Lehrer set, “regional instability.” While the lumpenproles seethe with apocalyptic visions of hand-to-hand combat with the minions of the Caliphate in downtown Paducah, the Better Sort’s fantasies parse like a graduate seminar from hell. Mr. Daalder and Mr. Kagan are only too happy to feed the conceits of the class that nurtured them on behalf of the government that employs them at one remove.
The day before yesterday it was Vietnam; yesterday it was Kosovo; today it is Iraq. Tomorrow it could be Iran, or Belarus, or Venezuela, or any one of a dozen prospects. The duty of the think tank hacks is to make war seem not only inevitable, but respectable in the eyes of the Better Sort.
Werther is the pen name of a Northern Virginia-based defense analyst.
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