Strategic Depth and Obama’s Rejuvenation of Global Arms Control

Steve Clemons in his summation of President Obama’s winning streak on nuclear issues invokes the notion of “strategic depth” (“Obama’s Nuclear Wizardry and the Iran Factor“, Politico, 13 April 2010). It’s not an uncommon term, but one rarely given much by way of explication. Fortunately Mr. Clemons isn’t just breaking it out to conceptually pad his article, in that he calls out an element of this week’s accomplishments that serves as an excellent illustration of the idea:

In a quick succession of deals focused on pre-empting a 21st-century nuclear nightmare, Obama has mended the foundation and infrastructure of a global nonproliferation regime that United Nations Ambassador John Bolton, Sen. Jon Kyl (R-Ariz.), Vice President Dick Cheney and others of the pugnacious nationalist wing of the last administration worked hard to tear down.

And, by bringing together 47 key leaders, Obama is signaling to all stakeholders that a nuclear crisis with Iran and other potential breakout states would undermine the global commons.

Yet he is not vilifying Iran or its leaders. He is not making the same “axis of evil” mistake President George W. Bush did.

Instead, Obama is showing the benign and constructive side of U.S. power to other great states like India, China, Brazil and Russia. He is also inviting Iran to get in compliance with the Nuclear Non-Proliferation Treaty and get back into a club that matters — where Iran could be respected for adopting a sensible course.

The Obama administration is restoring the non-proliferation norm to “a club that matters.” For the previous administration, either a state wanted to adopt a certain policy, or they didn’t; there was no context in which they may have preferred to do one thing over another, so there was no need to apply the nation’s diplomatic energies to construction any particular sort of international régime.

That was a strategically thin diplomacy. If it appears that the future of the international system is the gradual breakdown of the Nuclear Non-Proliferation Treaty, if the system is lowly regarded, treated with apathy and abandonment on the part of the great powers, if declining compliance and the emergence of a number of new nuclear powers seems the likely future, then there is little to recommend compliance or membership. What incentive is there to join a system one anticipates failing in the near future?

But if the NPT seems the way of the future, if great energies are devoted to shoring up and extending the non-proliferation framework, compliance is the norm among the respectable states, if the nuclear powers are making headway toward their Article VI obligations, if the possibility of new nuclear powers seems increasingly remote, then that’s a strategic context in which an entirely different set of decisions will seem the best means to a country’s objectives of security, prestige, diplomatic latitude and so on.

Further, broadening the circle of compliance and advocacy takes some of the lime light off of the United States. This makes it much more palatable to recalcitrant elements. In the case of Iran, if faced with knuckling under to the hated United States, the answer will certainly be no. If asked to cow to a group of flunkeys subordinate to the United States, the prospects won’t be much improved. But joining the global consensus among nations is something they might do. It allows them to save face among their citizens and their international constituents should they chose to back away from their nuclear program.

By imbuing the present architecture with a sense of a bright future, increasing compliance and broad support, the Obama administration is bringing the weight of a whole international system to bare on Iran. This seems like a program with more potential than just the usual carrots and sticks.

Strategic Principles of Arms Control

  1. Arms racing is the suboptimal outcome of a prisoner’s dilemma (all competitors feel compelled to over purchase security).

  2. The prisoner’s dilemma is created by absence of coordination among competitors with a shared interest (states are better off planning for national security according to real rather than systemic considerations [though I’m not sure that the real/systemic distinction is tenable — at some point the system is the real]).

  3. Arms control is the coordination among strategic competitors that allows an escape from the best-bad outcome reasoning of a prisoner’s dilemma.

Not the Virtuous Alone

Former Congressman Charlie Wilson died last week (Martin, Douglas, “Charlie Wilson, Texas Congressman Linked to Foreign Intrigue, Dies at 76,” The New York Times, 11 February 2010, p. B19). Rep. Wilson came to national attention through George Crile’s 2003 book, Charlie Wilson’s War and later the film of the same name. Mr. Crile’s book is one of the best books I’ve ever read. It’s full of stories that illustrate the hurly-burley of how international politics and foreign policy making really happens. But more to the point, it’s one of those “truth is stranger than fiction”-type stories.

My favorite story from the book is Rep. Wilson’s response to a reporter, incredulous at Speaker of the House Tip O’Neill’s appointment of Rep. Wilson to the House Ethics Committee. Rep. Wilson had already developed a considerable reputation in Washington for boozing and womanizing when he rolled from a minor scandal involving a weekend of jacuzzi hopping at Caesar’s Palace involving copious amounts of cocaine and a number of showgirls into his Congressional Ethics responsibilities. Mr. Crile reports thus:

From today’s perspective, the image of this philandering hedonist climbing out of his Las Vegas hot tub to render judgments on the conduct of his colleagues seems almost perverse. Even without knowing about the Fantasy Suite, a genuinely puzzled reporter had asked Wilson why he, of all people, had been selected for this sober assignment. Without missing a beat, Wilson had cheerfully replied, “It’s because I’m the only one of the committee who likes women and whiskey, and we need to be represented.” (p. 81)

In general it would seem that people’s personal moral conduct and public policy advocacy are inversely related. It would be good if more of us types demanded our representation.

Liberal Astonishment

Between the comments of Senators Webb and Bayh and Representative Frank, the left-wing partisans are shocked right now at how quickly the Democrats are leaping over one another to lie down and play dead.

Josh Marshall calls Representative Frank’s statement the,

embodiment of fecklessness, resignation, defeatism and just plan folly.

And concludes, “Amazing. Just amazing.” Kevin Drum tweets,

WTF? Has Barney Frank gone nuts? http://bit.ly/6554vK Was it really so pressing to say this? Do Dems *enjoy* rolling over and playing dead?

Even indefatigable partisan Ezra Klein is going Leninist on this, writing,

a Democratic Party that would abandon their central initiative this quickly isn’t a Democratic Party that deserves to hold power.

For my part I list Leninist: it would be worth losing some seats, both in the hope of reacquiring it with someone more reliable down the road (I wouldn’t mind seeing Harry Reid go one iota), but also to instill some fear in those that remain. And also with regard to healthcare: we won’t get the right reform so long as it remains the widespread belief among Americans that U.S. healthcare is the best in the world. Another decade of continued crumbling of the current system are apparently required.

The Fourth Generation Warfare Reason to Ditch the “War on Terrorism” Analogy

Gulliver and the Lilliputians

After the underwear bomber incident, all together too many people are talking about how Yemen is now the central front of the war on terrorism and preemptive action is necessary and if Yemen’s dysfunctional government can’t do what needs to be done then the U.S. should step in and do it for them (as usual, Senator Lieberman can be counted on as the go-to guy for idiotic pronouncements here). To me the events of recent days really show what’s wrong with the U.S. reaction being dominated by the notion of a “war on terrorism,” and the superiority of the strategy of treating terrorism as an issue of law enforcement as enunciated by, among others, John Kerry throughout 2004.

What we’re facing is the classic squeezing a balloon problem: the United States can deploy 112,000 solders to Iraq and another 98,000 to Afghanistan, and thousands more throughout Central and Southeast Asia and in the Pacific Islands and the terrorists just pick up their laptops, sell their Range Rovers and relocate their operation to the Horn of Africa, or the outer reaches of the Arabian Peninsula. Meanwhile the U.S. is stuck for the next decade in whatever country owing to the weight of tens of thousands of soldiers and hundreds of tones of heavy metal.

We are engaged in a fourth generation-type struggle with an opponent employing the classical tactics of asymmetric warfare. The object for the opponent on the presumptively disadvantaged side of the asymmetry is to adopt a strategy whereby the seeming advantages of the preponderant power are transformed into weaknesses. The war on terrorism is a contest of strategic dexterity and in this case the very weight, size and overwhelming capability of the U.S. military has become its greatest liability.

The game that has been played by al Qaeda et al. is that of miring the U.S. in regions of declining strategic importance. Terrorists are Lilliputians and the U.S. Gulliver. Only in this story Gulliver ties himself down. The Lilliputians only have to indicate where he should sink the stakes and he applies the lashes to himself.

While I am deeply skeptical of black ops, secret programs, plausible deniability, assassination, et cetera, I generally agree with the idea that the only time counter-terrorist actions should make the news is when something has gone wrong. The Predator drone and special forces operations that are being conducted along the Afghanistan-Pakistan border seems correct in conception, if still problematic in execution, to me. And of course this level of militarization is still awfully high. The FBI is the U.S. government agency with the largest presence abroad after the Pentagon and the State Department. Treasury is quickly following suite. Counter-terrorism should only become subject to special forces means under extreme circumstances. The rest of the time it should be dealt with by the various legal investigative agencies.

Whatever the case, our reaction to terrorism needs to be in kind: nimble, dynamic, human not territory oriented, multifaceted.

A strategic studies acquaintance commented the other day that he can’t wait for the reigning generation of the foreign policy establishment to retire, because they are a bunch of Cold War relics, mired in the mindset of a bygone era. The idea of stateless actors is beyond their comprehension. In this regard one of the most seminal moments in the U.S. reaction to mass-casualty terrorism was Paul Wolfowitz’s 13 September 2001 press conference, where he said the following (DoD News Briefing, The Pentagon, Arlington, VA):

I think one has to say it’s not just simply a matter of capturing people and holding them accountable, but removing the sanctuaries, removing the support systems, ending states who sponsor terrorism. And that’s why it has to be a broad and sustained campaign. It’s not going to stop if a few criminals are taken care of.

I believe that in some ultimate sense Paul Wolfowitz has been right about Islamic extremism: that it is not our war, that we cannot fight it, that it is not a war that can be won in the realm of strictly materialist forces, but that it is a struggle of ideology, that it can only be settled among those most immediately concerned, that the most the U.S. can do is indirectly effect this outcome through the opening of a space where moderate, modernist, liberal Islam can flourish. This was Secretary Wolfowitz’s idea for Iraq: that it would become the Islamic “city on the hill.” That he could simultaneously have been so wrong makes Paul Wolfowitz one of the tragic figures of the post-11 September period.

But this idea, that states and territory are what is important, this was the commanding idea of the early Bush administration. But the strategy of militarily occupying every square mile of lawless territory on the Earth and engaging in nation building in every failed state is beyond our capability. It is how the strength of a great power will be sapped.

Rolling Back the Twentieth Century Watch: Abolish the FDIC

Rortybomb, like most of blue America, originated in red America and maintains ties there that give him an occasional finger on the pulse. He reports on how many fathoms the fever swamp (Konczal, Mike, “Things I’m Reading, 12/22,” Rortybomb, 22 December 2009):

Visiting home for the holidays, it’s amazing to me how certain groups of friends, who I mostly considered in the generic Republicans/conservatives camp, have been wading deeper into the Ron Paul territory. “Abolish the Fed” is one thing, but what surprised me the most was when I was at a Christmas party several people mentioned, fairly out of nowhere, how bad FDIC is for the economy. I think they thought that regular depositors could have done a better job vetting financial institutions than major sophisticated shareholders. When I tried to point out how if there wasn’t FDIC and millions of savings accounts were getting wiped out in ordinary bank runs we’d almost certainly have a wave of turn-of-the-last-century style violence that is hard for us to even imagine now — think bomb throwing anarchist violence — they seemed to be ok with that.

President Obama Between Exceptionalism and Primacy in Afghanistan

I thought that President Obama’s speech last night was extremely diptych1 It was a continuation of his tendency to split the partisan difference on the substance of the matter, with no one getting all of what they wanted, and then throwing all parties concerned a rhetorical bone. For instance, this part of the speech was all paleoconservative, Andrew Bacevich, Christopher Preble, The American Conservative, Coalition for Realistic Foreign Policy. He even invokes the patron saint of the movement, Dwight Eisenhower:

As President, I refuse to set goals that go beyond our responsibility, our means, or our interests. And I must weigh all of the challenges that our nation faces. I don’t have the luxury of committing to just one. Indeed, I’m mindful of the words of President Eisenhower, who — in discussing our national security — said, “Each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs.”

Over the past several years, we have lost that balance. We’ve failed to appreciate the connection between our national security and our economy. In the wake of an economic crisis, too many of our neighbors and friends are out of work and struggle to pay the bills. Too many Americans are worried about the future facing our children. Meanwhile, competition within the global economy has grown more fierce. So we can’t simply afford to ignore the price of these wars.

But as we end the war in Iraq and transition to Afghan responsibility, we must rebuild our strength here at home. Our prosperity provides a foundation for our power. It pays for our military. It underwrites our diplomacy. It taps the potential of our people, and allows investment in new industry. And it will allow us to compete in this century as successfully as we did in the last. That’s why our troop commitment in Afghanistan cannot be open-ended — because the nation that I’m most interested in building is our own.

On display is a recognition of multifaceted national objectives that trade off, of the need for choice in the face of scarce national resources, of real limits to the exercise of power, that conserving ones strength is an important means of cultivating it.

But then President Obama goes on to say the following and I hear Paul Wolfowitz, William Kristol, perpetual U.S. primacy, the Bush Doctrine and the neoliberal agenda forever:

Since the days of Franklin Roosevelt, and the service and sacrifice of our grandparents and great-grandparents, our country has borne a special burden in global affairs. We have spilled American blood in many countries on multiple continents. We have spent our revenue to help others rebuild from rubble and develop their own economies. We have joined with others to develop an architecture of institutions — from the United Nations to NATO to the World Bank — that provide for the common security and prosperity of human beings.

We have not always been thanked for these efforts, and we have at times made mistakes. But more than any other nation, the United States of America has underwritten global security for over six decades — a time that, for all its problems, has seen walls come down, and markets open, and billions lifted from poverty, unparalleled scientific progress and advancing frontiers of human liberty.

For unlike the great powers of old, we have not sought world domination. Our union was founded in resistance to oppression. We do not seek to occupy other nations. We will not claim another nation’s resources or target other peoples because their faith or ethnicity is different from ours.

The trite rhetorical temptation here is to write something like “So which is it going to be, Mr. President?,” but there’s no reason it’s got to be one path or the other. An incremental, experimental approach is possible and 30,000 seems as good a number as any — this is on top of the additional 40,000 soldiers that President Obama already approved in March 20092 — a not insubstantial commitment. Ideologues argue that while it’s all fine in practice, does it work in theory? But pragmatists tend not to be ideologically pure. President Bush disappointed many of the most maximalist elements when he announced the numbers for the surge in Iraq. The right wanted more, but the surge seemed to work. I’m aware that there’s a dispute as to whether the surge worked on the substance of the matter, but even if it didn’t work on the merits, it at least succeeded politically.

Notes

  1. President Barack Obama, Remarks by the President in Address to the Nation on the Way Forward in Afghanistan and Pakistan, Eisenhower Hall Theatre, United States Military Academy at West Point, West Point, New York, 1 December 2009

  2. Cooper, Helene and Eric Schmitt, “White House Debate Led to Plan to Widen Afghan Effort,” The New York Times, 28 March 2009, p. A1

The Continuance of the Savings Glut

With President Obama in China and the issue of the dollar-renminbi exchange rate presumably on the agenda, there has been a great deal of commentary about the threatening peril of the Chinese savings glut1. Here was Paul Krugman late in October on how the savings glut — the condition and a leading cause of the 2007-2008 financial crisis — remains unabated, continuing to propagate its distortions throughout the world economy2:

Until around 2001, you could argue that [the target value of the yuan was reasonable]: China’s overall trade position wasn’t too far out of balance. From then onward, however, the policy of keeping the yuan-dollar rate fixed came to look increasingly bizarre. First of all, the dollar slid in value, especially against the euro, so that by keeping the yuan / dollar rate fixed, Chinese officials were, in effect, devaluing their currency against everyone else’s. Meanwhile, productivity in China’s export industries soared; combined with the de facto devaluation, this made Chinese goods extremely cheap on world markets.

The result was a huge Chinese trade surplus. If supply and demand had been allowed to prevail, the value of China’s currency would have risen sharply. But Chinese authorities didn’t let it rise. They kept it down by selling vast quantities of the currency, acquiring in return an enormous hoard of foreign assets, mostly in dollars, currently worth about $2.1 trillion.

Many economists, myself included, believe that China’s asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China’s insistence on keeping the yuan / dollar rate fixed, even when the dollar declines, may be doing even more harm now.

Although there has been a lot of doomsaying about the falling dollar, that decline is actually both natural and desirable. America needs a weaker dollar to help reduce its trade deficit, and it’s getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere.

But China has been keeping its currency pegged to the dollar — which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency should be rising in value, is in effect engineering a large devaluation instead.

And that’s a particularly bad thing to do at a time when the world economy remains deeply depressed due to inadequate overall demand. By pursuing a weak-currency policy, China is siphoning some of that inadequate demand away from other nations, which is hurting growth almost everywhere.

For thirty years now the prevailing grand social bargain in the United States has been that outsourcing and offshoring will be the means whereby capital will capture an increased portion of national income and the resultant consumer goods price deflation will substitute for the also resultant wage stagnation. In shorthand, this might be called the Reagan Revolution, though Reagan only brokered the deal. The conditions that gave rise to parties militating against the preceding post-war social bargain lay much deeper in the structure of the post-war international order. This social bargain is the basis of the financial problems of the U.S. as well as of the China problem.

The savings glut is not merely a problem with China, but in its Chinese component it is driven by two factors, neither of which is likely to be resolved by U.S. action. First, owing to population growth and the massive migration from rural farms to urban wage labor, China needs to create around 25 million new jobs per year. The memory of Tiananmen Square demonstrations of 1989 remains potent in the mind of Chinese Communist Party officials. It is widely believed among Chinese officials that preventing a repeat of the unrest of 1989 and hence the survival of the Party depends on the ability of the Chinese economy to provide jobs for these millions, preventing them from becoming a mass of disaffected urban unemployed. Second, the savings glut exists as a part of China’s long-term grand strategy of pursing peaceful development first and regional political realignment only once they have attained sufficient economic and military weight. For the U.S., the G-8, the IMF or whoever to ask China to abandon its policy of undervaluing the renminbi is to ask the Chinese government to commit suicide and to accept their second-tier world-political status; it is to ask them to run the highest order of political risk as an act of charity to the rest of the world. We cannot rely on China doing the U.S. any macroeconomic favors here. The only way to eliminate the macroeconomic conditions of the next financial crisis is to get our own house in order.

On the right and amidst the Lou Dobbs crowd you here these constant sidelong remarks about China holding the strings of America’s economic future. But this is not the result of some insidious plot on the part of China to acquire a financial WMD stuffed full of T-bills for deployment against the U.S. at some opportune occasion (like a WMD, to actually use it would result in mutually assured destruction). This is result of the Wal-Mart low-wage, low prices, long supply chain model of doing business (surprise: the day-to-day purchasing decisions of millions of people reach up to the commanding heights of world finance). We can try to brow-beat China to forego the opportunities of the system that we have created, but the origin of that system reaches down into what is now, under the midwifery of the right, claimed as the American way of life. And perhaps we have decided that getting off on a bad foot with the world’s next superpower is preferable to confronting our own economic culture.

Notes

  1. Dominique Strauss-Kahn, the Director of the IMF, made a speech on the subject in Beijing, The International Monetary System: Reforms to Enhance Stability and Governance, International Finance Forum, Beijing, 16 November 2009; Krugman, Paul, “World Out of Balance,” The New York Times, 16 November 2009, p. A25; Wolf, Martin, “Grim Truths Obama Should Have Told Hu,” Financial Times, 17 November 2009.

  2. Krugman, Paul, “The Chinese Disconnect,” The New York Times, 23 October 2009, p. A35

The Other Forgotten War

D.C. World War Memorial, Armistice Day, 11 November 2009

One could be forgiven for not knowing that there is a memorial to the First World War in Washington, D.C. (Wikipedia | Google Maps). The first time I stumbled across it, it was as an exploration of a curiosity. I wanted to figure out what that unknown building was, barely visible through the trees along Independence Avenue. To approach the memorial is to get a sense of what it must have been like for a Renaissance-era scholar on grand tour of the continent to come to Rome for the first time, when the ruins of Rome were still that: ruins — mysterious, forgotten, pillaged, unkempt, crumbling, ignored. The First World War Memorial is lost in a grove of trees on the south side of the Mall. It’s like coming across an abandoned temple in a forest. The flagstone paving stones of the walk up to the memorial are lose, scattered, broken and on their way to gravel. The memorial itself is blackened with mildew, its marble cracked and stained. It is like a mushroom that popped up in a forest clearing after a rain. Completed in 1931, its archaic inscription simply reads “The World War.”

Our wars aren’t merely matters of fact, narratives or parables from which we are to take the vaunted historical lesson. Our wars are tropes: they represent certain touchstones of the American consciousness. The Second World War was the good war: the forces of good arrayed against the forces of evil, proving the directionality of history. The Vietnam War is central figure in the right wing Dolchstoßlegende. They are all morality plays. The First World War is a forgotten war because it does not signify anything that fits easily into the American mythos. It is an amorality play. Its obvious meta-narratives of miscalculation, system effects, the amorality of state interest, the fleetingness of progress, the shabbiness of war, the divisions of class interest and the meaninglessness of our social conventions around war don’t figure in U.S. discourse on war. So the event is simply excised from the national consciousness, not a part of the pantheon of nostalgia writ in Neoclassical white marble in the nation’s capitol.

Political-Economy and Inflation

Paul Krugman devoted his column two weeks ago to the conduct of economic punditry as if the economy were a nineteenth century morality play: sermons about “debasing” the currency, longings for gold, fretting over inflation at the nadir of an economic crisis, a masochistic enthusiasm for “belt tightening” (“Misguided Monetary Mentalities,” The New York Times, 12 October 2009, p. A23). Taking off from this, Matthew Yglesias makes the point about the degree that class-parochial interests play in purportedly objective economic analysis (“The Monetary Hawks,” ThinkProgress, 12 October 2009):

… I would suggest that divergent analysis is in part driven by things that have relatively little to do with analysis. … if we have four or five years of near-zero inflation and 9-10 percent unemployment that will be fine for prosperous middle aged people and devastating to the interests of the poor and the young. Conversely, if we have four or five years of modest unemployment with four or five percent inflation, that will be fine for young people and poor people but potentially detrimental to the interests of wealthy people sitting on large piles of savings. Ultimately, I don’t think it helps the progressive cause to ignore the class / ideological elements to this dispute and just pretend to be engaging in a neutral technocratic dispute about the correct application of the Taylor Rule. What we’re talking about, after all, is decision-making under conditions of moderate uncertainty. What the hawks are proposing to do is to implement a policy that’s extremely attentive to minimizing downside risk to the currently wealthy whereas Krugman is proposing a policy that’s [attentive] to minimizing downside risk for people with below-average labor market prospects.

The problem is that we’ve adopted a manner of speaking about economic issues denuded of any mention of interest. The language of popular economics today is categorical: a strong dollar is good, a week dollar is bad; stable prices are good, inflation is bad; low unemployment is good, high unemployment is bad; rising house prices are good, stagnating or falling house prices are bad; et cetera. But none of these factors are categorically good or bad (few things in life are). What is omitted is the “for whom” of these characterizations of good and bad. Low employment may be good for job seekers, but high unemployment is good for employers: they have their pick of workers when hiring and they hold the majority of the bargaining power in wage negotiations. A strong dollar may be good for Wal Mart and their customers, but it’s bad for General Motors and their employees.

Real estate maintains some knowledge of contraposition with their talk of a buyers’ market versus a sellers’ market. We do not speak with a similar respect to the value of the dollar: of an investors’ dollar (strong) versus a producers’ dollar (weak) or an importers’ dollar (strong) versus an exporters’ dollar (weak). Or in employment, some people might think getting a raise or ease in finding a job are good, but these are what someone else might call labor price inflation (bad).

Economics isn’t free of the language of interest per se, so much as of one particular set of interests. The propaganda victory of the economic interests of Wall Street, the investing class, large business is so complete that their economic preferences have become de facto the whole language of economics. The awareness of the interests of all other economic actors has been totally expunged from the language of economics — well, not totally: there is the disciplinary ghetto referred to as heterodox economics, an exception that proves the rule.

To have asserted control over the linguistic territory is to have banished the political dispute; to have disappeared from the lexicon is to have ceded political legitimacy. Disputes over the political mixture of the interests of one economic class versus those of another are no longer about one set of economic relations versus another, but now take place in the frame of a rational economic order versus chaos, unreason and decline.

A firm separation between economics in its positivist, scientific role and economics in its normative, polemical and political role should be vigorously policed. Or perhaps economics is simply to value-laden, too embedded in the hurly-burley of human affairs for such a division to be tenable. Perhaps we should dispense with the notion of economics as a hard science in favor of a thoroughgoing political-economy. Even if we admit the possibility of a purely positivist economics, all that economics can do in our political deliberations is serve as a speculative tallyman of the opportunity costs of various policy options. The primacy of politics should come to the fore whenever economics crosses over from the academy to the public realm.

Target values for economic factors represent a political compromise between contending societal factions. The most well known of these is the NAIRU, the trade-off between inflation and unemployment codified in the statutory guidance of most of the world’s central banks. But inflation isn’t an unqualified evil. Its primary evils are that it has a tendency to run-away and, related, that it breeds uncertainty (a certain anticipatable regularity to the future is necessary to the function of capitalism). It used to be well known amidst the working (and indebted) classes that a certain amount of inflation served their interest and that “sound money” was merely the rallying cry of the investor class. The class conflict of easy versus sound money used to be a significant fault line separating progressive from conservative, populist from whig. Hence the advocacy of arch-populist William Jennings Bryan of an inflationary policy of bimetallism or “free silver” in the election of 1896.

There’s talk today about how vile it would be for the government to attempt to inflate away its debt (“debasing the currency” they call it), but the government doesn’t only inflate away its debt, it inflates away all dollar-denominated debts. A couple of years of higher than target inflation might be good for a country that has seen twenty years of galloping gains for the investor class, but racked up unsustainable amounts of debt among the middle and working classes. The investing class would scream bloody murder, but not because 3-5% inflation would be the end of economic reality as we know it, but because it would be a wealth transfer from creditor to debtor.