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26 Responses to “Why fairness?”

1. J Murray Says:
   June 1st, 2008 at 7:54 pm

   This is not a new finding. It may be the first time it’s phrased as “neuroethics,” but the basic information in this article has been known for some time. A good summary of it can be found in the book Before the Dawn, by NY Time science reporter Nicholas Wade. It would seem that a concept of fairness developed in tribal times to enable people to live together in groups without murdering each other.

   I wouldn’t extrapolate this to “making policy decisions about distributing resources, however.” That sounds suspiciously like the heavy hand of government limiting personal freedom.

2. Ed Morrison Says:
   June 2nd, 2008 at 7:17 am

   J:

   I think you missed the point of the research.

   The focus here is on how this tradeoff between equity and fairness takes place at a neural level.

   (Psst…Your hyper-sensitivity to the misdeeds of government is showing again.)

3. J Murray Says:
   June 2nd, 2008 at 11:01 am

   Ed, no, I understood the point of the research in this article, and in my prior readings. In order to live together without murdering each other, humans developed a number of behaviors that are the difference between warring tribes and cooperative societies. These behaviors either evolved as or became hard wired and automatic and we don’t, for the most part, distinguish them in our everyday observations of our own and other’s behavior.

   The research shows that we can observe and distinguish the behavior and experiment with it, and that cultural context influences the behavior.

   As to my “hyper-sensitivity about the misdeeds of government,” I was just responding to your own choice of words, which was “policy decisions about distributing resources.” In my view, to quote Thomas Jefferson, “that government is best which governs least.” Ergo, the best policy decisions about distributing resources are those in which resources are allocated by the most efficient mechanism–market forces. The best policy decision is that which recognizes that the Founder’s intent was to limit, not expand, government’s role in resource distribution. Powers not enumerated in the Constitution are reserved for the people, which is where they belong. It’s when government becomes involved in resource allocation, as with mortgage financing, that crises develop.

4. Ed Morrison Says:
   June 2nd, 2008 at 12:25 pm

   Jonathan:

   The research focuses on the integration of neuroscience with the social sciences. That’s I think, what is new here.

   On the quote about policy, please read more closely. The quote is from the article, not from me. I just do not know what this research says about how we should think about policy. It’s too early to tell.

   Finally, simple formulations, like the Jeffersonian quote you mention, provide a nice rhetorical feel, but they do not help much in balancing the competing interests of a complex economy. As a University of Virginia graduate, I very much admire Mr. Jefferson, but when it comes to Constitutional interpretation, I am not a follower of originalism. I’m much closer to Justice Breyer’s view that the meaning of the Constitution should evolve over time. See his new book, Active Liberty.

   Finally, one can (as many have) argue that the mortgage mess is the product of too little government oversight, not too much. Financial markets, without adequate supervision, tend toward bubbles, it seems. The Fed probably should do more to restrain these bubbles in the future.

5. J Murray Says:
   June 2nd, 2008 at 7:27 pm

   Ed, sorry about attributing to you what was in the article. Since you didn’t put it in quotation marks, I assumed it was yours, rather than looking for it in the article.

   Nevertheless, the point still stands: less policy is better policy. The subprime mortgage mess, for instance, was instigated by Congress urging banks to increase home ownership by lending to the “working poor” (wink, wink, that’s non-creditworthy) so that they could buy homes.

   The people’s friend Comrade Barney Frank delighted in hauling banking executives before banks of lights and television cameras so that he could rake them over the coals for not using shareholder money to subsidize his preferred social policy goals. He then bought them off with a tremendous expansion of Freddie Mac and Fannie Mae to backstop market losses (and pass the buck to the taxpayer, while creating moral hazard, a neat twofer).

   The same act was reprised at the local level; ask any Key or National City executives who pitched the city of Cleveland for their depository or transfer business, only to be harangued for not lending enough to people who were not credit-worthy.

   No, it’s not more regulation that was needed, but less demagogic legislator intervention.

6. Ed Morrison Says:
   June 2nd, 2008 at 10:50 pm

   Well, Jonathan, I think there is more to the story than you are suggesting.

   Financial markets naturally tend to generate bubbles, and this tendency argues for more careful oversight to restrain them.

   Your maxim: “Less policy is better policy” is a bumper sticker and little more.

   A recent WSJ article explores the issue well. Read more.

7. J Murray Says:
   June 3rd, 2008 at 4:14 pm

   Ed, I did read this article about the three Federal Reserve wunderkinds and their research on bubbles. Reining in Congress is likely to be better policy than more careful oversight. How can you expect a bank CEO who is being publicly humiliated by Barney Frank and beaten on by his board to avoid paying homage to the ways of Frank? More oversight isn’t going to do it.

8. Ed Morrison Says:
   June 4th, 2008 at 7:32 am

   “Reining in Congress is likely to be better policy than more careful oversight.”

   What’s the basis for your proposition?

   With your comments on Rep Frank, sounds like you are on a mission to muzzle a Congressman with whom you do not agree. If you feel so passionately about Rep. Frank, there’s an clear way to get rid of him in November.

   You may have read the WSJ article, but you are not addressing the core issue of bubbles in financial markets. Instead, you are off on a tangent about Rep. Frank.

9. Tom Z(ych) Says:
   June 4th, 2008 at 8:03 am

   J:

   Less sloganeering, more empiricism is in order. Here’s a question: were financial markets more or less transparent, reliable, stable and efficient before or after the post-Depression, New Deal reforms and institutions. Less ploicy, I submit, led to more frequent chaos. And nice cheap shot on the “Comrade” thing. It’s exactly that type of attack that takes away from the credibility of your commentary.

10. J Murray Says:
    June 4th, 2008 at 10:28 am

    Tom, it’s tired to keep bringing up the New Deal. I know you and yours like to hang your hats on the leftist interpretation of the New Deal as if it somehow saved capitalism from itself, but recent research shows that the New Deal prolonged the Depression greatly beyond what was necessary. It dramatically increased the government role in the economy, and the burden of the costs of that role on the productive members of society. If people in government understood how economies functioned, that would be one thing, but they often don’t and their meddling causes more problems than it solves. I don’t want to muzzle him; he’s entitled to his own stupid opinions. I just want to limit the damage that people like him can do to the economy.

    Like Barney Frank, Ed. He has single-handedly brow beat Congress, regulatory agencies, and the executive branch into supporting dramatic expansions in Fannie Mae and Freddie Mac, offloading market risk onto taxpayers and creating moral hazard. This is not a tangent at all, but an example of what happens when government–particularly legislators–falsely believes that it knows better how to run an economy than people engaged in commerce in markets.

11. Tom Z(ych) Says:
    June 4th, 2008 at 12:21 pm

    J:

    How clever of you to have completely avoided the question about securities market policies. Proves my point about your using ideology instead of facts in this instance.

12. J Murray Says:
    June 4th, 2008 at 6:07 pm

    Tom, let’s de-link the issue of market transparency from the New Deal. The ideological baggage is brought in by your insistence on bringing the New Deal into the discussion.

    I’ll rephrase your question as: what alterations have occurred in the rules by which financial markets are governed; when did those alterations occur; what was the impetus behind them; and what was the result?

    My answer is: I know some of the information, but not all.

    I know that following the Wall Street crash of 1929, Treasury Secretary Andrew Mellon believed that the markets would recover on their own, but that he was dismissed by the “do something, anything” crowd. I know that Congress responded to the market crash with exactly the opposite of how they should have, by enacting protectionist measures (was it Taft-Hartley, if memory serves me well?) that deepened the Depression, spread it worldwide, caused other nations to enact protectionist measures, and contributed greatly to the grievances the oil-poor Germans and Japanese felt in embarking on WWII. Congress also raised taxes, thus penalizing capital and production, instead of incenting investment. Capital spending–the main creator of jobs–fell and the jobless rate increased, perpetuating the cycle. Yeah, interventionist Congress!

    I know that Glass-Steagall was one result of bank failures during and after the Depression, and that it was developed with the hope that it would prevent banks from taking risks that might cause them to fail. For many decades thereafter, the banking business was stable, if slow-growing. Capital wasn’t used very efficiently, though, and consumers and businesses paid higher rates and had fewer choices because of the conservatism of the heavily regulated business.

    Slow-growing, low-profit banks were pressured by shareholders to find faster-growing higher-margin businesses. The U.S. economy is driven by innovation, and as academic research in financial markets became more sophisticated, products like hedges were developed from them and brought to market, and even stodgy banks began to innovate.

    In the 1990’s, it became apparent that Glass-Steagall had outlived its original intent, and it was dismantled. This is one of the few instances in which Congress actually did away with old legislation. Oh, if they would only spend more time doing that, but that’s another thread….

    I know that Sarbanes-Oxley was hasty, ill-conceived and, like much legislation, a reaction to exceptional occurrences, rather than rules intended to govern normal market functioning.

    There’s lots more to this conversation, some of which I don’t know. Suffice it to say that my view is, where Congress is concerned, less is more.

13. Ed Morrison Says:
    June 4th, 2008 at 10:45 pm

    Jonathan:

    Maybe I can refocus this discussion a bit.

    The U.S. has the deepest and most efficient capital markets in the world, and a good part of the reason rests with sensible capital market regulation that has its roots in the New Deal.

    Legislation during this period created the foundation for our capital markets. The core principles of this regulation involved reducing excessive leverage, policing insider trading, and promoting transparency for investors.

    The foreclosure mess brings up some disturbing parallels to the 1920’s. As I outlined earlier, one of the parallels relates to the propensity of financial markets to generate asset bubbles.

    Financial instruments with uncertain value, intermediaries extracting very high fees for selling these securities, and no clear way to manage the risk of underlying collateral: These are all elements of the current mess.

    (Jim Rokakis has done a good job outlining some of these factors in his City Club speech that is available here.)

    A deeper issue here involves the securitization of credit. Banks originate and repackage highly speculative loans and sell these securities (of uncertain value).

    While proponents of these derivatives argue that this financial engineering improves the liquidity of credit markets, it’s now pretty clear that these practices have led to market instability.

    Financial regulation needs to keep up with financial innovation. It’s not a simple challenge, but the basic regulatory principles established during the New Deal still stand:reliability based on transparency, clear rules against conflicts and insider dealing.

    You seem, on the other hand, to believe that markets are self-regulating and that government’s main job is to protect property rights and get out of the way.

    The problem with your view, of course, is evidence. History stands in the way of your largely ideological interpretation of government’s responsibilities.

    Contrary to your view, the historical record is clear: financial regulation promotes market efficiency. Regulation sits at the core of efficient capital markets (Exhibit A: Our fractional reserve banking system.)

    The alternative of weak or ineffective regulation: excessive leverage, insider conflicts, exorbitant fees extracted by intermediaries, uncertain collateral, opaque financial instruments… These are the elements of financial collapse.

    Can Congress go too far in response? Of course.

    Sarbanes-Oxley is excessive in many respects, in my view. But recognize the political pressure giving rise to this legislation. The failure of corporate management, boards and intermediaries (accountants, lawyers, investment bankers) to meet their fiduciary obligations led Congress to spell out these obligations in more detail.

    Is self-regulation a better approach? Of course.

    But when that fails, it’s quite reasonable for Congress to step in to right the balance. The problem, of course, is that Congress is not particularly adept at this business of regulation. When Congress moves from the general to the specific, the resultant regulations tend to be both clumsy and onerous (Exhibit B: the tax code).

    In 1994, Congress gave the Federal Reserve the authority to regulate sub-prime mortgages, including non-regulated mortgage companies. Under its existing authorities, the SEC also had the power to regulate the intermediaries selling these securities.

    Both agencies assumed that markets were functioning smoothly and there was no need for intervention. In his confirmation hearings, Bernanke opined that there was no bubble in housing.

    These judgements turned out to be wrong, so its not surprising that Congress, led by Rep. Frank’s committee, is exercising more vigorous oversight.

    That’s how our system of government is supposed to work.

    (Sidebar: The political theater of Congressional hearings owes much to television. The first televised hearings conducted by the Senate Special Committee to Investigate Organized Crime — the Kefauver hearings — brought the faces and words of notorious mobsters into millions of living rooms with network television. For Cleveland history buffs, you can read about some of the colorful characters of Cleveland, including Sam Miller, through the testimony of Morris Dalitz, here.)

14. Gloria Ferris Says:
    June 5th, 2008 at 11:01 am

    Ethics-I think a lot of this comes down to the evolution or the regression of evolution of ethics today. You all probably really get tired of this statement from me but when societies, markets, or whatever become strictly transactional they start to deteriorate. They are not sustainable. Short term accounting and bottom lines have taken out long range planning. Recently, the Rockefeller family stood against EXXON’s CEO on how the company should be planning for the future. We should listen to this family.

15. J Murray Says:
    June 5th, 2008 at 11:42 am

    Ed, thanks. I generally agree with you, and also want to say that your characterization of my position is more extreme than my true position. Correct regulation does create efficient markets, but overreaching can mess them up.

    Starting from the top of your post, I no longer believe that the U.S. “has the deepest and most efficient capital markets in the world.” There is significantly increased competition from London, where financial firms operate under different regulatory schema, Dubai and Singapore, which have become the center of finance for South and East Asia and, particularly Muslim countries, and other parts of the world. In particular, the U.S. has lost its leadership position in IPOs.

    In my world, which is venture-backed early stage companies looking for exits that include IPOs, Sarbanes-Oxley has significantly increased the cost of doing business, and narrowed the IPO window. We routinely look abroad for IPO opportunities, including on the AIM market in London. But practically speaking, we now expect that most of our companies will be bought by another company; this is a pervasive view in the venture community, and its has a depressing effect on venture capital activity in multiple ways. This is an example of regulatory overreaching.

    I agree that insider trading is abhorrent, and see regularly that the SEC, using statistical modeling of securities purchases around the time of transactions, routinely identifies such activity and prosecutes culprits. This point isn’t really under discussion much today, and is working. This is an example of good regulation.

    Similarly, transparency is generally (but not always) good for investors, though it may compromise a company’s proprietary business models and technologies. There has to be balance. However, I think transparency can go too far, and the concept of transparency can be used for abusive purposes. As an example, unions that hold shares in companies are using transparency related rules to pressure companies to put on ballots measures that require a shareholder vote on whether or not the company supports universal healthcare. This a social policy issue, and an abuse of shareholder resources and management time to put it to a shareholder vote–particularly since the question being asked represents one particular political viewpoint favored by unions and some Democrats. The outcome of this is mixed; the SEC should not approved these ballot initiatives.

    Markets generally are self-regulating, though government needs to set up the rules for them. The problem with markets being self-regulating is that individuals and companies get hurt by market forces and go bankrupt or out of business. There ist hen political pressure to remove this risk from individuals and firms and their own incorrect decisions, which is where proper regulation to define the rules for the market can go awry and become government intervention that favors some individuals over others. Such as in the subprime mortgage mess.

    I read a wonderful letter from a man in upstate New York who described how he had saved and budgeted for the down payment on a house, purchased a mortgage that he read, understood, and entered into willingly, and made sacrifices in his personal life to be able to make his payments and pay his property tax. His question, in the face of the subprime mess, was simple: which government agency should he apply to for a reduction in the principal in his mortgage, and in his interest rate. Because that is what the government is providing to people who have defaulted on their mortgages.

    This is why I abhor the “do something, anything” approach that we typically see from Congress. A weepy person who represents an exception to normal market functioning testifies on the Hill in front of television cameras, and Congress then uses this as an excuse to dramatically increase the reach of government into our lives. That’s just wrong.

16. Ed Morrison Says:
    June 5th, 2008 at 4:37 pm

    The four exchanges in the U.S. have a total capitalization of about $22 trillion. The EU is at $15 trillion. The Asia market is about $11 trillion.

    On the growth of IPO markets outside the U.S., this fact reflects that the entrepreneurial and innovation-driven economy in other countries is growing steadily.

    Companies overwhelmingly list in their home markets, so it is no surprise that the U.S. is losing share in the worldwide IPO market. At the same time, according to Ernst & Young, the U.S. still lists more than 50% of the worldwide IPO’s “in play”.

    As the 2007 report from Ernst and Young notes:

    “For many of the top foreign companies, U.S. exchanges are still seen as ‘the gold standard’ of the global markets. With a U.S. standard corporate governance model in place, some researchers suggest that companies can expect up to a 30% valuation premium on their equity.

    “Furthermore, a listing on a U.S. exchange announces to the world that a company is prepared to meet the rigors of the highest standards in corporate governance anywhere in the world. This level of confidence often inspires institutional investors to sit up and take notice.”

    At another point the report states:

    “The decisions to list on home markets are driven less by concerns about the U.S. regulatory environment, and more by the strengthening of local market economies enjoying robust gains and stability. This true ‘globalization’ of capital has led to stronger, more liquid, competitive markets worldwide. A U.S. listing is still seen as the gold standard providing access to the deepest pool of capital, a valuation premium, and strategic advantages in the global markets.”

    My guess is that your concerns about U.S. regulation of our capital markets are still driven more by ideology than by evidence.

17. J Murray Says:
    June 5th, 2008 at 6:29 pm

    Ed, Ernst & Young is not a neutral commentator. They have benefitted tremendously from Sarbanes-Oxley, which both dramatically increased their business, and reduced their liability. As recently as a half-dozen years ago, E & Y routinely serviced early stage companies. They seldom do now, and have even fired clients who don’t generate sufficient fees. That’s because they have all the work they need, and more serving larger companies.

    My views about IPOs have been formed by being in the trenches every day–not by ideology. The data you report on is backward looking. I’m working in real-time and looking forward. The U.S. is losing IPO market share, and will continue to do so. It’s widely accepted that Sarbanes-Oxley is one reason.

    The National Venture Capital Association, among others, has gathered data and commentary on this subject. When I have the time, I’ll find some reports that are contrary to the self-serving E&Y report you have quoted above.

18. Ed Morrison Says:
    June 5th, 2008 at 8:19 pm

    Well, put out some new data so we can look at it.

    Sarbanes Oxley has imposed compliance burdens that logically have slowed IPO filings in the U.S. As I have said, based on conversations I’ve had with execs, SOX needs reform. But how much? That’s hard to say, I think.

    What I have been able to find, though, tells me the SOX story is mixed. I’d be interested in additional data.

19. Tom Z(ych) Says:
    June 6th, 2008 at 2:29 pm

    Great detail (Ed, you rock!) but are we losing sight of the original issue (and that’s at least partially my fault)? Jonathan’s original point is something to the effect of quoting the overused “that government is best that governs least.” Nice sound bite, but amost entirely uninstructive as anything more than a slogan. Here’s the test – which governmental system governs least? Anarchy. So, point out to me where in the real world of human experience anarch is the “best” government. Mow, which has “more” functioning government, Afghanistan or the United States? Which is better governed? So, slogans get us nowhere, at least in the real world. Which economy would do better – one with a functioning anti-corruption regime or one that sirts by and allows corruption to flourish? So, we’re arguing degree, if we’re going to be honest about it.

20. kyle julien Says:
    June 6th, 2008 at 5:58 pm

    No, TomZ. Jonathan began by *mis-attributing* the quotation to Jefferson, but Jefferson never said such a thing. Those words were actually Thoreau’s, from the opening of his essay “Civil Disobedience.”

    Thoreau’s sentence is not the bumper sticker of libertarianism suggested in this thread, but a call for citizens to disavow the unjust actions of its government and to reject the authority of the government when that authority becomes a tool for warmongering and injustice. The essay does not touch on questions of economics and the relationship between the market and the state.

    This week is a good time to re-read Thoreau’s essay, which aired his objections to the Mexican American War. The Senate Intelligence Committee released the long-delayed phase II of its assessment of the misuse of intelligence in the buildup to the Iraq war. The report details the ways intelligence was manipulated, ignored and invented in order to drag this country–under false pretenses–to war in Iraq.

    Quoting the essay: “In other words, when a sixth of the population of a nation which has undertaken to be the refuge of liberty are slaves, and a whole country is unjustly overrun and conquered by a foreign army, and subjected to military law, I think that it is not too soon for honest men to rebel and revolutionize. What makes this duty the more urgent is that fact that the country so overrun is not our own, but ours is the invading army.”

    I apologize for being off-topic, but that historical inaccuracy has left me banging my head against my monitor too much.

    kj

21. Ed Morrison Says:
    June 6th, 2008 at 8:04 pm

    KJ:

    Thanks for the context; it’s very helpful.

    Jonathan’s mistake is understandable (a common mis-quote to Mr. Jefferson, it appears).

    I’d like to stay with TJ for a minute. The agrarian republicanism of Jefferson may sound attractive, but I don’t think we should be using TJ for a guide to economic policy.

    (For one thing, I’m not sure how principled TJ was in economic matters. He opposed federal assumption of state debts from the war, for example. And he opposed many of Hamilton’s reforms to strengthen the federal government and the national economy. He relented to Hamilton on the debt issue only in the grand compromise that put the seat of government in Washington. Another example: Despite his arguments with Hamilton, he supported a very activist federal policy in the extraordinary Louisiana Purchase.)

    I will take your suggestion to re-read Thoreau. Although I have downloaded the Senate reports, I have not had a chance to read them. In that spirit, though, check out Leading to War.

    Tom: Your suggestion that we get back to this thread’s central discussion is a good one. (I’m not sure how many BFD readers care about microsurgery on Sarbanes Oxley.)

    This string touches on one of the core issues we face, in my view: The importance of rebuilding our civic spaces to engage in purposeful conversations. We have, generally, lost the ability to think together. We are not very good at translating civic insights into action, either. (Exhibit: Talking about the convention center for 10+ years.)

    I’m spending a lot of my time now redesigning civic spaces and processes within regions, so that we can address the complex challenges we face (school drop-outs, enhancing technical education, creating new entrepreneurial networks, for example). We are developing these new tools under the umbrella of “strategic doing”.

    At their core, these tools focusing civic conversations and converting ideas into action quickly (so we can learn what works).

    We have fallen into some bad civic habits. We’ll need to get past the bumper stickers to engage in the more complex group thinking we need to address our challenges.

    When it comes to policy matters, I find there are two basic approaches people take to think about what we should do: deductive and inductive.

    Deductive thinkers (like Jonathan, in my view) start with a relatively simple set of core principles and then derive policy prescriptions from these principles.

    Inductive thinkers — I put myself in this camp — do not start with fixed positions. Instead, we focus on strategic outcomes (what do we want?) and then devise logical policies to figure out what works. We generalize lessons from what we have learned (like government does not do a very good job solving horizontal problems with vertical solutions.)

    In my view, while deductive policy analysis is logical, even “elegant” at times, it can lead to simplistic thinking and a lot of unintended consequences. (Ballooning deficits with supply side economics in the 1980s or the idea that by planting democracy in Iraq, we will remake the Middle East.)

22. J Murray Says:
    June 7th, 2008 at 12:16 pm

    Okay, in reverse order: Ed, the values that I espouse were derived from much experience and observation in the real world–not just from staring at my navel or from ideological position. The experienced mind takes what it sees and creates patterns and general lessons from those. It keeps and espouses that which empirically works, and discards and is critical of that which doesn’t. Before the age of relativism, this was called wisdom, and it enabled cultures to remain true to themselves and pass their values from generation to generation. It also created a counter-balance against another tendency in humankind, to implement untried utopian policies under the umbrella of being “progressive,” at great risk and cost to society.

    Some fixed positions are useful: such as, that government should do the least that it needs to to provide citizens with what they need from government, without government becoming tyrannical. Sorry about mis-attributing the quote to Jefferson rather than Thoreau, but the point remains the same–and it doesn’t matter what Thoreau’s original essay was addressing: it is a generalization that has value across all functioning of government. I and many other don’t want to live in a Nanny State.

    Ed, it wasn’t supply side thinking that caused deficits, but legislative excess. The problem with government finances isn’t on the revenue side, but in expenditures. And the current evidence is that by planting a democracy in Iraq we will reshape the Mideast. Read “Did Scott McClellan Miss the Surge?” by William McGurn in this week’s OpinionJournal.com for the latest (I’m afraid inconvenient for you and Tom) about Iraq.

    Tom, anarchy is not government, but the absence of government. Nobody is espousing anarcy. You’re using exceptionalism as a line of argument.

23. Ed Morrison Says:
    June 7th, 2008 at 8:16 pm

    Jonathan:

    I marvel at how you think: “utopian “policies”, “Nanny State”, “legislative excess”.

    And you call this wisdom? Wow.

    On Iraq, William McGurn turns out to be a former chief speechwriter for Bush. He’s hardly a reliable expert on Middle East policy. You must do better to convince me of your position.

    Isn’t this really the problem with the Bush Administration? Confusing policy with publicity?

    It turns out you cannot make very sensible policy by treating policy matters as a political campaign.

    Far more impressive, the case put forth by the Senate Intelligence Committee this week outlines how “facts” were distorted:

    For example on page 82:

    “Statements by the President and the Vice President indicating that Saddam Hussein was prepared to give weapons of mass destruction to terrorist groups for attacks against the United States were contradicted by available intelligence information”.

    Note the verb: contradicted.

    The rationale for planting democracy in Iraq clearly emerged after the inappropriate promotion of the war and the fiasco in executing the war and the occupation.

    (See two excellent books by Washington Post correspondents. Fiasco: The American Military Adventure in Iraq, 2003 to 2005 covering the invasion and Imperial Life in the Emerald City: Inside Iraq’s Green Zone covering the occupation. The first book makes clear we launched a poorly planned pre-emptive war based on false premises. The second documents the terrible errors of our occupation brought about by arrogance, ignorance, incompetence, and bare-knuckled bureaucratic in-fighting.)

    Planting democracy in Iraq seems a far-fetched, somewhat unrealistic goal, as the Iraq Study Group report (the so-called Baker-Hamilton report) notes:

    “Most of the region’s countries are wary of U.S. efforts to promote democracy in Iraq and the Middle
    East.”

    “While the Gulf States are not proponents of democracy in Iraq, they worry about the direction of events: battle-hardened insurgents from Iraq could pose a threat to their own internal stability, and the growth of Iranian influence in the region is deeply troubling to them.”

    In sum, it’s not clear to me that spreading democracy in the Middle East is a practical goal for U.S. policy.

    And at what cost?

    As Joseph Stiglitz points out: “The cost of direct US military operations – not even including long-term costs such as taking care of wounded veterans – already exceeds the cost of the 12-year war in Vietnam and is more than double the cost of the Korean War.”

    We are heading for 3 $trillion. Read more. (Original 2003 estimate: $50 billion to $60 billlion.)

    And what about the proposition that democracy will bring stability? Well, even that idea has been called into question. Israel, a democracy, is not behaving in a way that brings stability to the region, according to some (at least like former President Carter). For an similar perspective that is also critical of our policy toward Israel, see The Israel Lobby and U.S. Foreign Policy.

    But let’s delve a little deeper. Here’s what Shibley Telhami of Saban Center for Middle East Pollicy at the Brookings Institution has written:

    “The assumption (of the Bush Administration policy) was that the terrorism that America faced was, in part, a function of the absence of democracy in the Middle East. That this notion had little factual support mattered little. Much of the literature shows that moving from authoritarianism to democracy is unpredictable and destabilizing. Thus, it should have been clear from the outset that neither the public in America nor the public in the Middle East would see benefits that justified the course. Even worse, the very terrorism that elevated the democracy policy in America’s priorities was likely to increase, as it thrives where central authority is weak and instability is widespread.”

    Some years ago, Sen. George Aiken, R-Vt., advised Presidents Lyndon B. Johnson and Richard M. Nixon when things were going from bad to worse in the Vietnam War, “Declare a victory and get out.” Finding a practical exit strategy (which admittedly may take years) makes sense to me. The Iraq Study Group provided a good framework to follow.

24. J Murray Says:
    June 8th, 2008 at 9:23 am

    Ed, it’s interesting to me that the Senate Intelligence Committee in a Republican Senate exonerated the Bush administration of distorting intelligence, twice, but that same committee, in a Democrat Senate, found the opposite. If that isn’t partisan politics beginning with the conclusion you want for electioneering publicity purposes, I don’t know what is.

    The facts are that the Western world–Europe as well as the U.S.–believed that Saddam Hussein had weapons of mass destruction and that, based on his actions in the Iran-Iraq War, expected that he would use them. The fact that this was a ruse doesn’t change the other facts.

    The facts are that the surge has routed Al Qaeda and its supporters in Iraq, first from Baghdad, then from Anbar, and now from Mosul and the north. Simultaneously, the Iraqi Army has routed Shiite insurgents, including those from the Al Sadr Militia, throughout southern Iraq and Baghdad. And, surprise, surprise, with the establishment of security, political advances are occurring. Sunnis are participating in the political process. Progress is being made on Iraq’s federalization structure and the laws needed to support it.

    With these gains, the other side–the view from Bush administration insiders–is beginning to be given space in the U.S. media and public dialogue that it has been denied under the overwhelming assault by war opponents. Douglas Feith’s recent book provided deep insight into what actually happened during the run-up to Iraq and thereafter, not some after-the-fact, third-party, begin-with-the-conclusion account by a journalist.

    The reason that other Arab and Gulf states are dubious about democracy in Iraq is because it threatens their own authoritarian regimes. Where are the battle-hardened veterans of Iraq (on the Al Qaeda side)? Dead, mostly, or in retreat to a dwindling safe haven along the Pakistan-Afghanistan border–not in Saudi Arabia, Dubai, or elsewhere across the Gulf.

    These facts are inconvenient to the closed minds that begin with the unalterable conclusion that the war in Iraq should be abandoned. Sorry.

25. Ed Morrison Says:
    June 8th, 2008 at 10:51 am

    Jonathan:

    The Senate Intelligence Committee report released last week received the endorsement of two committee Republicans. It was not a unanimous report, but it did receive bi-partisan support. Not so for the report issued in the last Congress.

    In the end, historians will sort this out.

    Your citation of Feith’s book as somehow an objective view of the war is odd. Feith agitated for the war and then became invisible when the deep problems of the occupation began to surface. (Source: Ricks, p. 167-168.)

    In my own view, professional Washington Post journalists (Ricks, Chandrasekaran) will offer us a more objective view of our situation than a political flak (McGurn) or — even worse — a chief architect of the policy (Feith).

    The Brookings commentary makes clear: the link between promoting democracy and reducing terrorism is largely unproven by objective observers. I invite you to refute the argument with some facts. But a word of caution…

    As Senator Daniel Patrick Moynihan commented: “You are entitled to your opinion. But you are not entitled to your own facts.”

26. kyle julien Says:
    June 8th, 2008 at 12:49 pm

    You are again on the wrong side of the facts. The Senate Select Intelligence Committee did not ‘exonerate’ the Bush administration in Phase I of the report (July 2004); it specifically delayed consideration of the administration’s manipulation of intelligence until Phase II, which has just now been released. The 2 sets of findings are 2 parts of the same investigation.

    The following 4 paragraphs are quoted directly from the July 2004 Phase I (page 449), which can be accessed here: http://intelligence.senate.gov/108301.pdf

    start quote:
    Phase one of the Committee’s report on US pre-war intelligence on Iraq details the Central Intelligence Agency (CIA) and the Intelligence Community as a whole often failed to produce accurate intelligence analysis on alleged Iraqi weapons of mass destruction and links to terrorist organizations.

    Regrettably, the report paints an incomplete picture of what occurred during this period of time. The Committee set out to examine ten areas of investigation relating to pre-war intelligence on Iraq and we completed only five in this report. The scope of our investigation was divided in a way so as to complete examination of all matters within the Committee’s jurisdiction at one time.

    The central issue of how intelligence on Iraq was used or misused by Administration officials in public statements and reports was relegated to the second phase of the Committee’s investigation, along with other issues related to the intelligence activities of Pentagon policy officials, pre-war intelligence assessments about post-war Iraq, and the role played by the Iraqi National Congress, led by Ahmad Chalabi, which claims to have passed “raw intelligence” and defector information directly to the Pentagon and the Office of the Vice President.

    As a result, the Committee’s phase one report fails to fully explain the environment of intense pressure in which Intelligence Community officials were asked to render judgments on matters relating to Iraq when policy officials had already forcefully stated their own conclusions in public.
    /end quote

    The Committee could not have previously ‘exonerated’ the Bush administration because they have only now released their conclusions on the manipulation of intelligence, the overstatements and deceptions leading to the war in Iraq.

    kj