Foreign Policy: The Production of Folly

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There are simply too many instances of absurd foreign policy produced by our government (and others) not too conclude that the production process itself produces continuing debacle. Any history book witnesses the senseless results. A centenarian can look back at two massively engulfing world wars and such other large-scale conflicts as the Korean War, the Vietnam War, the Iran-Iraq War, the French Indochina War, the French-Algerian War, the Russian-Afghanistan War, the Franco-Spanish-Moroccan (Riffian) War, and now the Iraq War.

The unreasonableness of foreign policy is evidenced by the immense squandering of human life and wealth, by devastating wars, interventions gone awry, development programs that hold back progress, and diplomatic ineptitude that creates enemies rather than friends. First the U.S. supports and arms Saddam Hussein. Then it becomes embroiled in a long struggle to undo him and the Baathist Party. First the U.S. supports, trains, and arms Osama bin Laden in Afghanistan, only to find that he is an enemy whose designs do not exclude nuclear attack on the U.S.

Without too much exaggeration, we can say that we never get a reasonable foreign policy (the exceptions being so few that we may ignore them). This is as sure a fact as gravitational force.

Is it too far a stretch to infer that if foreign policy were eliminated altogether, we would be better off? If it is, then how about eliminating 95% of it? If we do, we cannot expect that the world will turn into a utopia, but it will almost surely become a better place to live in.

Why is that we are subjected to unreasonable foreign policies by our governments? Why are reasonable policies, which have been known for a long time and are continually recommended by reasonable people, ignored?

Some of the reasons for endemic foreign policy failures are known, if not well-known. We can come to them a little later. Right now, I want to propose something new, or if it is not new it is at least fresh, that gets at the heart of the problem.

Foreign policy is a kind of transaction that one people has with another people, mediated by their respective governments. If it were an entirely free transaction, such as occurs in free-market foreign exchange, there would also be mediating agents. For example, company A contracts with Thai workers to produce candied ginger. This is then shipped through various other intermediaries and ends up in the hands of American consumers who, in turn, might be shipping movies to Thailand. Each people hopes that something good will come out of this, and it usually does. If not, they stop trading.

We may begin, but only begin, by thinking of the foreign policy as the exchange of a good. This is how our government and sometimes both mediating governments (in the case of foreign aid) would like us to think of the transaction. They want to be thought of as public agents who are essential. We are to think that no one else but them can deliver the foreign policy "goods." Think of George Bush telling the broad sweep of Americans: "I have a good deal for you. I will get rid of Saddam Hussein who threatens us with weapons of mass destruction. He is creating an arsenal of terror." Then he turns to the Iraqis and says: "I have a good deal for you. I will enter your country and depose Saddam Hussein. I will free you so that you can make a democracy. Your prosperity will rise." Of course, he soft-pedals the rest of the message. "To do this, I will attack in force whether you like it or not." George Bush poses as a political entrepreneur who will improve the general welfare all around. We are to consider ourselves lucky to have him and not Al Gore as President.

Except that, as we have already noted, goods are not usually delivered. (Al Gore would not deliver them either.) The transactions actually will deliver "bads" to each side of the exchange. I have in mind what the General Populace gets out of it. No doubt some people will pull down some personal good out of these transactions, which will explain why they occur in the first place. Our focus here is the much larger folly that is produced as a by-product, and whose costs far outweigh the gains going to various private contractors, government officials, government bureaucrats, and so on. The latter individuals form the Exploiting Clique.

Now, the question is why we get these bads produced and delivered when we (the General Populace) know quite well how to produce goods, even in the arena of foreign policy and foreign transactions.

And the first half of the answer is that we, usually constitutionally, have replaced the possibility of perfectly satisfactory private goods with a pseudo-public good of our own (or the government’s) making. The government presents foreign policy to us as a collective consumption good (a public good). Each of us consumes it without diminishing the consumption of our neighbor, and none of us can exclude our neighbor from consuming the good. A public good has these two properties of non-rivalry and non-excludability.

From the perspective of the General Populace, American and foreign, there is no real need to socialize whatever transactions we may wish to have. We don’t need the foreign policy we get. We are quite capable of devising and carrying out our own exchanges. But now we are faced with a second uncomfortable fact that provides the other half of the explanation of our foreign policy troubles. We do not own or control foreign policy. The Exploiting Clique does.

Now these two problems, the legal creation of false public (or socialized collective) goods and the fact that the General Populace does not own or control them, but an Exploiting Clique does, also pervade the domestic arena. They also help explain why domestic policies also are rife with failures. The next few remarks apply equally well to both spheres of government action.

The tendency for a marked increase in the production of folly follows directly from the ownership and control by the Exploiting Clique. A long list of negatives are built into this institutional arrangement. Many members of the Exploiting Clique can remain hidden and out of the public eye. Government officials tax to finance their ventures. This means they do not pay for their mistakes or experience the costs of their mistakes. They therefore can spend other people’s money on their own ideas without regard to whom they are hurting and with sole regard to helping achieve their own private ends. They can bring about policies according to their whims and fanciful theories. By controlling foreign policy and by having power and ready financing, they can hazard or risk far bigger mistakes than any individual might otherwise do. They can control information. They can act in secret. They can be corrupted. Their time horizons can be and usually are much shorter than the time horizons over which their policies will be effected. They can be long gone before blowback occurs.

While I have given both halves of an answer as to why foreign policy continually produces folly, there is one more feature of foreign policy that alone, even without the preceding answer, provides another new insight. Getting back to the notion that foreign policy is sold to us as a kind of good, there is a fundamental problem with it that suggests why it fails. Foreign policy is not inherently an economic good. It has none of the features of a good, not even a public good if such a thing exists. Foreign policy actions are violent, vague, affect many individuals differently, and create counter-reactions.

Foreign policy actions are not like helping someone across the street, feeding someone who is hungry, or slipping someone some money. Here we help a known person directly or reasonably directly without violence. We know exactly what we are doing and whom it affects. If we trade with foreigners, the transactions are more complex. But each step of a chain has the same features of being non-violent and recognizable.

Foreign policy actions are in all ways the opposite of these transactions. They are typically violent and unethical at the root. At the very least their implementation involves extracting taxes from one people. They displace and replace private exchanges. And they interfere, often drastically, with the actions of others at the receiving end. The Bush Administration certainly did not consult the Iraqis before arriving with the favor of its company.

Foreign policies have vague goals, like promoting freedom, enhancing economic development, creating order, or creating a democracy. The members of the General Populace, at both ends of the transactions supposedly to achieve these goals, actually do not know what they mean for them. There is no way that they can even be evaluated. Everyone involved is buying or getting a pig in a poke.

Lastly, because foreign policies are not goods but bads and affect all sorts of people in unpredictable ways, they create all sorts of unintended consequences. Foreigners attempt to nullify actions they dislike that are being foisted on them by outsiders, often in conjunction with their own domestic members of their own Exploiting Clique. The range of potential groups and reactions is very large.

Government foreign policy continually produces major folly. Any resemblance to reasonableness is purely coincidental. It does this by creating a false public good owned and operated by an Exploiting Clique. The General Populace is the loser.

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

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