Hard-Line in a Smart Way?

In case you were in need of some sort of a litmus test on Thomas Barnett, here is what he says in response to Michael Ledeen’s new book on Iran (“An Interesting Book on Iran,” 8 September 2007):

Ledeen’s a hard-liner on Iran but in a smart way.

Yeah, kinda like Austria-Hungary was hard-line on Serbian separatists, but in a smart way.

And while we’re at it, hey, “some self-confidence, America, please!” I’m going to vote for less self-confidence and more circumspection.

State Resource Acquisition

As long as I am kicking Thomas Barnett, I should mention his article on the creation of AfriCom in the July issue of Esquire (“The Americans Have Landed,” Esquire, vol. 148, no. 1, July 2007, pp. 113-117, 134-137). It generated a bit of attention when it first came out (e.g. Plumer, Brad, “Surging Into Africa” and “More on Africa Command,” both 24 July 2007; Farley, Robert, “Africom,” TAPPED, The American Prospect, 24 July 2007; Yglesias, Matthew, “Africa Command,” The Atlantic.com, 24 July 2007).

Mr. Barnett pushes around a few theories about why AfriCom, but dismisses my own (“AfriCom: The New Scramble for Africa,” smarties, 1 May 2007) with some hand-waving:

There’s oil here, but the United States would get its share whether Africa burns or not, and it’s actually fairly quiet right now.

The Chinese are here en masse, typically embedded with regimes we can’t stand or can’t stand us, like Sudan and Zimbabwe. But the Chinese aren’t particularly liked in Africa and seem to have no designs for empire here. Beijing just wants its energy and minerals, and that penetration, such as it is, doesn’t warrant Africa Command, either.

The theory by which Mr. Barnett dismisses the idea that AfriCom is an economic-strategic countermove against China is that it’s unnecessary because we can all get access to the recourses we demand through the market. The problem with too facile a dismissal of this theory is that states have never wholly committed themselves to one theory of resource acquisition.

Throughout most of history governing institutions have been mercantilist and have lived by beggar-thy-neighbor. The way that a state and its clients acquired resources was by seizing them. It was only with the advent of modern liberalism that a firm division between the state and the economy emerged, but it was a slow process and up through the Second World War many a state pursued a policy of economic expansion through conquest. It was widely believed by many liberals that imperialist and economic competition was the cause of the First and Second World Wars. Hence at the end of the Second World War the United States decided to root out imperialism and replace it with a global system of open markets. Henceforth states would get out of the business of resource acquisition and it would be an entirely private activity conducted through the peaceful means of the market, not conquest. Roosevelt hated imperialism and sought to smash the European and Japanese colonial empires and made decolonization a central mission of the United Nations. Also GATT and the belated WTO were to be integral parts of this new liberal international system on par with the United Nations, the IMF and the World Bank, to prevent war and ensure smooth, open economic access — missions perceived as integral to one another by Roosevelt and his men.

But this liberal vision was a utopian fantasy of a sort in that states were never about to wholly abandon the economic foundation of their strength — and hence their survival — to the vagaries of the market. So states have wavered between theories of resource acquisition: open markets versus conquest.

The United States has been the most advanced liberal state and in the Twentieth Century became the guarantor of system of open markets. The majority of the military actions of the United States have been in support of this global system of markets. Nearly all of its interventions in Central America have been over worries that some critical resource was about to be removed from apolitical market access by a populist socialist. The U.S. intervened in Second World War Europe — among other reasons — to prevent Hitler from doing to the United States what Napoleon attempted to do to England with his continental system. The U.S. tempted Japan to war because it was unthinkable to the U.S. and other interested parties that Japan should monopolize the resources of half the Pacific rim and half of Asia. For nearly inverse reasons the United States went to war in Vietnam because it recognized — as demonstrated by Japan’s behavior leading up to the Second World War — that Japan’s economic interest in Southeast Asia was too significant for the resources of that region to fall behind the iron curtain (there were two contending world systems at that time). The First Gulf War was to prevent the emergence of too powerful an oil monopoly — sort of the Pentagon doing to greater Iraq what the FCC did to Ma Bell in 1982.

The United States is not about to trust its economic wellbeing to serendipity: it’s going to manage it — and that means a lot of things, but one thing that it means is the military. But the United States is acting — in part — on behalf of the liberal international order. That the U.S. is required to intervene as much as it does — or perceives that it has to — suggests that a lot of states the world over still want to lapse from the open market back to conquest as a means for laying hand on their necessities. On the other hand, perhaps the U.S. is a player, only posing as the referee the better to play (Calvinball?).

In Africa it may be the case that the liberal order can provide everyone what they want — or at least everyone doing the divvying up; whether the parceling of Africa’s resources will have any benefit for the Africans themselves remains to be seen. But no state — not even the primary advocate and guarantor of the liberal international order — is about to stake its future on the hope that unfettered market access is going to play out in a straightforward way (I’ve written about this before; see “China’s Strategy for Resource Competition,” smarties, 30 March 2005, bullet two). Even in this world of open markets — or especially in this world of open markets — sanctions and economic exclusion have always played a role. So states make nice and play the diplomatic game of tit-for-tat, preparing to clamp down should the time come. Favors are proffered and chits collected — for a rainy day. A few military bargains will be struck and maybe some men and hardware will be put in place so that everyone knows how things stand. No state is going to idle while a positive sum game plays out against its favor. In the event of a crisis, states are either the quick or the dead. In Africa what we are seeing is the laying out of the pieces on the board and the early maneuvers.

Public Financial Institutions

Thomas Barnett is conservative leaning and — ironically enough — is one of those intellectuals who is stupid in exactly the way that conservatives predict intellectuals to be: he tends to trip over his own intelligence. A perfect example is his completely incoherent take on the recent, sudden burst of the housing bubble (“Nice analysis of the sub-prime ‘crisis’,” 13 August 2007):

The only crisis I see coming out of the subprime shenanigans (such new tricks to fleece people will always be with us) would involve governments assuming they should bail out all those hedge funds that long dabbled in this stuff. O’Driscoll makes a great comparison to the S&L crisis of years ago: so long as financial institutions assumed the FDIC bailout was coming, they’d pawn off the risk to the government instead of effectively discounting it themselves.

Really? The only crisis he sees is moral hazard? So we’re courting moral hazard toward no specific end?

Government intervention isn’t bailing out “all those hedge funds”: it is protecting the rest of us — not necessary culpable in the “shenanigans,” but still subject to the consequences thereof — from spreading economic misery. To suggest that this same old moral hazard argument that economic conservatives have been making since 1913 is somehow penetrating analysis of our present day woes is completely retrograde. Moral hazard is real, but people with less pronounced agendas have a lot more interesting things to say about the subject than that in the face of it we should do nothing.

The FDIC, the Federal Reserve, the SEC, punitive, but stabilizing taxes, transparency laws, etc. were created specifically because “foolish” investors engaging in “shenanigans” could be found well before any of these public sector economic institutions ever existed; and further, to protect non-privileged investors who did everything by the book from said “shenanigans” — in other words, to prevent the spread of irrationality. Once a critical mass of people begin to act irrationally — e.g. in a financial panic — rationality flips and the irrational becomes the rational thing to do.

And as if this wasn’t disconnected enough, then there’s this parenthetical aside:

(since finance is–to a large part–a young man’s game, the bulk of the front-line players tends to age out every dozen years or so, which pretty much guarantees you new forms of shenanigans with the same regular frequency)

It’s all fine and good to use pejoratives such as “shenanigans” and “foolish” — as Mr. Barnett does — to describe less than perfectly rational market actors who continue to fall for plaid-out investment schemes such as the housing bubble long after their true nature has become more than apparent, but if less than perfectly rational behavior is in fact systematic, as Mr. Barnette suggests with this theory, then what’s the point of moralizing about it? Systematic problems should be dealt with through systematic solutions — and not systematic solutions that entail mass suffering for all of society.