Occupation Hazards

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The U.S., having forcefully occupied Iraq, is running into severe occupation hazards. Why? One reason: The U.S. does not know why it is there in the first place. Its goals are a moving target. There were no WMD, so we decided to hang around and create a democracy. Who knows for sure why we are in Iraq? Compare Colgate-Palmolive, the toothpaste and soap company that operates in over 200 countries and territories. Colgate occupies a good deal of foreign space and deals with a good many foreign peoples. Its occupation hazards, if we can call them that, are nil in comparison with those of the U.S.

Why does the U.S. state face hazards that companies operating in foreign lands do not? One obvious difference: The U.S. state invades countries or makes cozy deals with their rulers, while companies with overseas operations generally enter foreign markets peaceably. Why does the U.S. operate by invasion and state-run deal-making anyway? What does it have to offer that’s so special? Companies clearly do good when they produce and sell their products overseas. Why it is that the great forces and power of the U.S. state seem not to do good? Why does the U.S. in fact so often seem to do bad? Why does the U.S. run into occupation hazards when it expands with its imperialistic ventures while Wal-Mart is welcomed with open arms in China?

Imperialism in brief

U.S. imperialism came of age with the Spanish-American War in 1898. Iraq is the latest episode. After 108 years, Americans by and large have not yet learned that imperialism is unjust and wrong. Nor have they learned that it is bad for them; and that they shouldn’t support it with flags, parades, patriotism, loyalty, or yellow ribbons. Heavy costs fall upon the citizens of imperialist countries, diminishing and sometimes ruining their lives. Most Americans don’t recognize this yet.

Imperialism is a government program. Government programs fall into two categories: domestic imperialism and foreign imperialism. Domestic imperialism includes programs that dominate us. Foreign imperialism consists of programs that dominate others and us. All government programs diminish the general welfare. Because (foreign) imperialism is a government program, it too harms the general population.

In the short run, imperialism may pay for some special interest groups within the imperialist country; but imperialism is not a paying proposition for them unless it is imposed with draconian measures that extract wealth from the subject country. Eighteenth century France tightly controlled the colony of Haiti, employed slavery, and is said to have made the project pay off handsomely. Eventually, the slaves rebelled and made France leave.

Due to the state’s built-in socialist inefficiencies, however, imperialism does not generally pay in money terms for the typical citizen. It benefits the state, by building up the state’s power and importance.

If citizens can be enlisted to believe in either domestic or foreign imperialism, which means they gain psychic benefits from state programs, then a dangerous situation emerges. Society becomes increasingly martial and partial to war. Naturally, the state prefers this outcome and encourages it because the citizens then support their own slavery while the state’s power grows. The recruitment of citizens to imperialist causes, domestic and foreign, is the single greatest means by which liberty is destroyed. The state’s two methods of enlisting the population in its causes are the scare tactic and the appeal to morality. Whenever the ruling powers call for more power to battle enemies or to achieve moral goals, the first response in defense of liberty must be a firm "No!"

Haitian occupation

Haiti has been one of several countries that the U.S. has controlled from time to time. There are therefore lessons to be learned by examining it. We will find strong parallels to Iraq.

Haiti, the size of Maryland, has 8.3 million people. It occupies the western one-third of a Caribbean island near Cuba (now called Hispaniola), the other two-thirds being occupied by the Dominican Republic. (The U.S. has intervened there too.) No short article can do justice to the rich history of Haiti or to the plight of its poor people whose estimated income is $1,700 a year, but even a brief and partial look at its relations with the U.S. has much to teach us about occupation hazards.

As part of its growing imperialism, the U.S. state occupied and ran Haiti from 1915 to 1934. The apparent causes were that Haiti was undergoing bloody civil strife (167 political prisoners had been executed); and Haiti lacked a stable government friendly to the U.S. The U.S. occupation was both bloody and racist, not unlike the earlier Philippine-American War but not as severe. Anywhere from 3,250 to 15,000 Haitian deaths resulted from the occupation. Atrocities even brought Congressional attention.

The U.S. left behind a system of unstable military rule. Haitian rulers rose and fell, took power and lost power, came and went very frequently until the brutal François "Papa Doc" Duvalier took over between 1957 and 1971, followed by his son, Baby Doc, who ruled until 1986. The turnover in rulers was not different from what had occurred prior to the U.S. occupation. Lately the turnover has increased even as the U.N. and the U.S. have increased their involvement. There have been 19 leadership changes since 1986, about one a year on average. Between 1806 and 1915, there were about 60 changes or about one every two years.

American occupation did not improve Haiti’s accumulation of wealth. Haiti was poor before the American occupation and remained poor afterwards.

Haiti did not long remain high on a list of American priorities, but the occupation dragged on. Although the U.S. had conceived of Haiti as a problem and gotten directly involved, it was basically a backwater to the power elite and easy to forget and ignore. Two decades of U.S. rule did not transform this small country into a success story, not that the U.S. really tried.

As above, it is useful to distinguish the state, whose objective is power; imperialist interest groups, whose objective is economic gain; the general citizens of the imperialist country who pay for the venture and receive little benefit; and the citizens of the occupied country who lose, apart from those who may ally themselves with the imperialists.

The ostensible objective of the U.S. state in such imperialistic ventures seems to be stable rule. This is an objective that binds together or homogenizes the disparate objectives of the state and the various interest groups. Stability means a situation without untoward violent events that jeopardize U.S. power or the balance of powers. It means a situation that provides American commercial and financial interests a decent chance of making some money. The imperialistic venture usually entails steady work for bureaucracies, be they military forces who have a chance to go into action and try out their latest war theories, or bankers, economists, diplomats, and others who find their services in demand. Such ventures often begin with some horror stories that capture the public fancy, mobilize public opinion behind the state, and allow it to confirm its self-appointed role as protector and savior of various values. In this way the state gains power and subjugates its citizenry who willingly help forge their own chains.

To sell imperialism, the state quite often suggests that it is making an occupied country into a success story on the American model, whether in terms of economic freedom (free markets) or political freedom (usually called democracy by our leaders). This mobilizes an appeal to achieve a moral goal, entrapping certain naïve citizens. But this is not really the objective that is sought after. As will be explained below, the U.S. does not know how to create such economic and political outcomes; and it cannot do so even if it tries. As a matter of fact, the U.S. occupation of Haiti failed on all idealistic criteria. Political instability, if anything, worsened. Economic progress remained anemic. The U.S. introduced problems that added to Haiti’s existing problems whose causes, many and varied, included, among others, U.S. and international actions that stretched back hundreds of years. It might be observed at this point that Iraq is a repeat performance in these respects.

Iraq parallel

The Haiti experience and others like it on a greater or lesser scale did not deter the Congress and the Executive from recently repeating the occupation experiment in Iraq: a country 16 times the size of Haiti with 3 times as many people, possessing various deep animosities, and speaking a language so unfamiliar to Americans that our intelligence agencies can’t even keep up with reading its press. Even today in its gigantic embassy in Baghdad costing $600 million, the U.S. has only 6 members fluent in Arabic.

In the case of Iraq, there was no immediate civil strife (as in Haiti) to speak of, but our leaders did their best to remind us that Saddam Hussein had been the author of previous civil blood-letting. As with Haiti, our leaders again conceived that Iraq lacked a friendly government. Although it was a stable government, they argued strenuously that it had nurtured past instability in Kuwait and elsewhere and intended to bring about more instability. Thus, although Iraq was far, far from Haiti in many respects, the rationales for American intervention were amazingly close. Like Hollywood, which retells the same 7 stories with variations, the state sells imperialism by varying the details. Haitian political executions were replaced with gassing Kurds. Unfriendly Haitian presidents became a dictator with an "arsenal of terror."

Three lessons

From several perspectives, such as improving the general welfare of Americans or Haitians and acting in the name of humanity, the Haiti intervention failed. In the same way the interventions in the Philippines and Vietnam failed. From these perspectives, the first lesson to be drawn is that our leaders, both the Bush administration and the entire Congress who supported his invasion of Iraq, have, in invading Iraq, acted stupidly and ignorantly. They not only made a mistake, they made a mistake that clearly could have been discerned before they invaded. (They may have acted even more stupidly and ignorantly than political leaders customarily act.) As a group (in how they voted and acted) they showed no grasp of pertinent history and no knowledge of what nation-building entails. They displayed less intelligence than a horse who knows enough not to step onto a treacherous piece of terrain. The consequences have been extraordinarily deadly and injurious.

Even if they knew no history, America’s leaders could have avoided such stupidity by acting morally. If they had conceived that invading Iraq was imperialistic and unjust and, for that reason, not to be done, they could have avoided causing the disaster Iraq has become both for Americans and Iraqis. Moral and just action is also right action.

It makes no difference if, in the case of Iraq, our leaders actually thought they were protecting the American people, which is one of their cover stories. In the same vein, it made no difference that soldiers in Haiti may have thought they were paternalistically bringing along a backward race of people, whom they referred to by a variety of derogatory epithets. Hypocrisy is hypocrisy, and stupidity is stupidity. Horse sense our leaders did not display. Their stupidity remains on display, inasmuch as the incoming chair of the House’s intelligence committee, Sylvestre Reyes, does not know what Hizbollah is.

Of course, from a different perspective, that of the imperialists or various military, defense, construction, and intellectual interests, matters do not look as bleak. They may yet view the episode as a net plus for themselves. The interests and bureaucracies, the tendons of the state’s Frankenstein body, have a life of their own.

The second lesson (again from the people’s perspective) is that stupidity in the behavior of elected officials (and rulers of all types) is par for the course. Having observed it in many and repeated instances over widely separated times and instances and across nations of all kinds, we should now expect it. It is built into our particular system of government and that of all similar oversized governments. While individually of normal intelligence, government officials cannot help but appear to behave stupidly (against our interests) when we place them into positions of enormous power, send them huge amounts of money to use as they please, and allow them free reign and latitude to act irresponsibly within a flawed political framework to make any laws they please. Our own stupidity and irresponsibility in endorsing, complying with, and maintaining such a system is surely reflected in the seemingly stupid behavior of those whom we choose to rule us.

Beyond stupidity, however, there is cupidity and self-interest. Some of the state’s players know the score, but they wilfully ignore and distort; and in so doing act in the most evil fashion.

A third more general lesson should be drawn, a negative lesson about what cannot be done, even if the state were to be conceived of as some sort of vehicle to carry out idealistic ventures. The state that is the United States of America cannot create mirror images of itself in other countries. The political and military institutions of the U.S. state, with all their taxing and banking powers, with all their powers to regulate and transfer wealth and tamper with economic activities, with all their powers to move men and material into other countries, with all their powers to install and depose rulers and rewrite constitutions, and with all their powers to police and kill, are entirely incapable of replicating America’s success story in other countries. The U.S. (meaning the U.S. state) cannot implant in other countries the root factors that have made America thrive. This does not mean it can’t be done. It can be done. It can be done by private means, such as by the Colgates of this world. But the U.S. can’t accomplish this feat, even if it were to try. I shall explain why, and in so doing, I shall explain several peculiar weaknesses of the state as an organization that I have not explained in earlier articles.

Why occupation hazards arise

If the U.S. could not stabilize the politics of a small country like Haiti after a hands-on occupation of 20 years, how can it accomplish the more difficult task of transforming that country or any other country’s society and economy into a mini-America? There are basic reasons why it cannot be done and why occupation hazards arise. The first six reasons have to do with the nature of any occupation. (1) The occupied or governed country has its own foreign and entrenched institutions of law, custom, habit, culture, education, history, and language standing in the way. (2) The governed country has its own factions and rivalries standing in the way. (3) The governed country has relations with surrounding countries who will not remain passive in the face of an occupying force. (4) The occupation by any power sets in motion opposition moves from other large powers. (5) The very fact that coercion is being used by an occupying force raises obstacles. Some portions of the native population are bound to be suspicious and resent intrusions. They may rebel. Some portions are bound to seek alliances with their occupying rulers and vice versa. Such alliances set political and military conflicts in motion. But economic progress and stability are incompatible with these conflicts. (6) The American success story came about because the state’s powers were limited for quite a long time and Americans stood for law that protected property rights. They knew how to implement such law. But an occupying U.S. is not a U.S. with or standing for limited state powers. And many peoples in the world neither are devotees of law that protects property rights nor know how to implement it of their own accord.

The next five reasons have to do with the fact that the state is a political organization whose principals, the voters, do not exercise a tight control over it; and the fact that it is an organization that can avoid financial market discipline by its powers of taxing and money-creation. These reasons can be viewed as extensions of von Mises’ idea that a socialist organization cannot calculate value and therefore cannot make rational choices.

If the state were like a business whose capital was controlled by owners and lenders and whose production was determined by customer demand, it would have a clear focus. Neither of these occur. (7) Instead, the state, as a political organization, lacks a clear focus. It aims for power, that much is clear; but to achieve power it needs to select specific means or immediate goals, and these are not clear. Having no profit or loss criterion to measure progress toward power, the state’s top officials have a wide degree of latitude in selecting its specific programs. While the rulers and their goals may be quite stable over time and often are, they are also fuzzy and changeable. They involve, for example, vague aims like "defeating Communism," "making the world safe for democracy," "warring on poverty," and "eliminating terrorism." In Iraq, we have seen a succession of ever-changing and vague goals. These goals also depend on who happens to be leading the state, various political exigencies and contingencies, and the strengths of the preferences of the current leaders. A business firm is unlikely suddenly to shift from selling toothpaste to selling hair cream when the CEO changes, but a state will display a higher degree of idiosyncratic change in its goals and in movement toward these goals when rulers change. A business firm has a clear criterion of wealth creation to employ in judging potential projects. The state has only a vague criterion of increasing its power.

(8) Having vague goals, the state cannot and does not measure its actions against a clear criterion like profit or loss. Therefore, the state lacks a clear-cut way of knowing whether it is succeeding or failing in gaining power. This implies that the state lacks a clear-cut way of knowing how to allocate its resources among programs. It does not know how much to allocate toward domestic imperialism as opposed to foreign imperialism. Among domestic programs, it does not know how much to allocate among each.

(9) A state has to administer a foreign occupation (or achieve any goal) through bureaucracies and human beings as its agents. As with all top managers, the state’s top managers run into incentive and agency problems in getting their lower-level agents to conform to their dictates. But these problems are worse in a state than in a business firm because the state lacks a clear objective function such as profit. Since the state can’t measure its success, it lacks clear ways to communicate its goals or criteria for attaining them to the subordinates who are asked to achieve these goals. This implies that the top managers lack efficient means to monitor what their subordinates are doing, which means they can’t measure efficiency and productivity well and relate them back to a clear goal. They don’t have budgets and accounting systems that measure profits or proxies for profit, so they resort to crude measures of effectiveness like number of patrols and number of bombs dropped. The subordinates look upon these measures as measures of success and attempt to maximize them, often leading to counterproductive actions. These monitoring and measurement problems explain why states are inefficient at whatever they attempt to do.

(10) Information is supposed to flow from lower levels to higher levels in an organization. All top-level managers run into information problems about what is occurring at lower levels or "on the ground." These problems are worse in state-run bureaucracies because the subordinates, not knowing exactly what they are doing or why, do not know what information to transmit and often transmit irrelevant or misleading information. Since the top managers can’t provide clear criteria for action, they cannot receive clear signals about progress toward their goals. The state’s organizations then tend toward inefficiency.

(11) In all organizations, higher-level managers have to delegate decision-making power to lower-level managers because the latter may often possess more specific, timely, and relevant information to act upon. Obviously the president can’t be deciding what towns or houses to search for rebels. The problems of whom to delegate to, how much and what type of power to delegate, and how to monitor the resulting activities are very ticklish. It’s easy for a parent to order one child to clear the table, another to wash the dishes, and another to dry them. When a state is not even sure what its mission is in a foreign country, it is much harder to delegate responsibility. Viewed against various single-minded and clear objectives that outsiders might have, the state’s results will invariably look foolish.

In sum, for basic reasons, an occupying state, as the U.S. is in Iraq, is singularly ill-equipped to transform an occupied country into a model society and state. The same analysis applies to the transformation of a state’s domestic society by means of domestic programs. Government failure is endemic to all government activities because the organizational model of government is inherently defective.


The U.S. state clearly cannot remake other countries peacefully. If it tries to change a foreign society or nation, it must use force since it, as a state, has no other resource at its disposal except power. And when it does use force, it cannot succeed in imposing an American blueprint on another society. With overwhelming force and at very high cost, it might succeed for a time if it completely conquered a nation and ruthlessly implemented its agenda. The costs are so high that countries don’t ordinarily do this.

In proportion as the U.S. imposes force on others, it gives up being a free republic at home. In proportion as the U.S. imposes force on its own citizens, it also gives up being a free republic. The Hamiltonian idea or hope that the U.S. can be designed to be a republican empire is faulty. To transfer resources to the state and to augment its power so that it could become an empire, the country has sacrificed its freedoms at home. The country changed its Constitution so as to make empire possible. As the empire waxes, the republic wanes. Republican empire can’t be attained. If the U.S. should attempt to impose a draconian solution on Iraq, it would have to mobilize resources at home. This would have to be done coercively and with war measures. The republic would decline still further.

In passing I pointed out that the state really does not try to achieve the grand aims that proponents of empire sermonize about. It does not really try to spread the institutions of freedom. The goals of empire are stability, power, and the opportunity for some interests to profit. But this observation is secondary. Even if the state tried to achieve grand goals, it could not possibly achieve them. It cannot achieve even the limited goals that it has actually sought, not without turning the occupiers into despots at home and abroad. The state as an organization has too many built-in defects for it to be able to achieve its goals efficiently for long. Its drive for power is fortunately restrained in its forward motion by the inefficiencies of the state as a socialist enterprise.

In 1803 Haitians routed Napoleon’s forces in Haiti, which were very substantial, and declared a republic, one that has had a rocky history. Disease afflicting the French assisted the Haitian victory, and so did Napoleon’s preoccupation with the European theatre. There are always these auxiliary reasons why seemingly strong empires, such as Napoleonic France and the modern U.S. state, cannot sustain their empires. The deeper reasons are that the state as an organization is socialist. Its goals are vague and changing, it cannot articulate clear measures of success, it cannot allocate resources properly, it cannot motivate its employees properly, it cannot measure success properly, it cannot develop or communicate vital information properly, and it cannot delegate responsibility properly.

When states run up against the opposition of forces that are more market-driven, that have clear aims such as driving out the invaders, that allocate their limited forces flexibly, that develop sound on-the-ground communications, that have motivated personnel, that develop effective dispersed decision-making, and that know what constitutes success, the states can be beaten, even if they possess greater resources. The colonists beat the superior British forces.

Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York.

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