So Where's the Prospectus?

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The prospectus is a document in which an issuer of a security delivers information to the public in an effort to get them to subscribe to the issue. In the U.S., the content is controlled by law in an effort to limit fraud and apprise investors of the risks they face so that they do not get too carried away with the prospective returns.

It would appear that the prospectus has been around since the 1600s at least. Given the word’s origins and their other inventions, I would not be surprised if the Romans used them in some form.

The U.S. government committed new troops and resources to Afghanistan this year and it will probably commit even more. So where’s the prospectus? That’s what I want to know. Where was the prospectus in 2001? Now that there is a "new issue," where’s the new prospectus? Did I happen to throw it out with all the other junk mail? No, I think there never was a prospectus.

Why is it companies are forced to supply a prospectus, but the government isn’t? If I am to pay for this war, then I insist on acting like an investor in "Afghanistan." If the government wants my support, then let them issue a prospectus and let me decide on the merits or demerits of this project. Let me assess the risks, and let me see in writing what the returns are supposed to be. Let me see what this business of state-building is supposed to be about. I’d like to understand why we are in Afghanistan. What is it supposed to accomplish? How much will it cost? What is the strategy of the management?

That’s just for starters. I’d like to be able to control how much of my money goes into this investment. I’d even like to be able to sue the promoters for fraud if they make material misstatements or misrepresentations of facts.

A project like making a stable state in a place like Afghanistan has got to be very complex. The prospectus probably should run at least 100 pages even to have a remote chance of proving that such a feat is do-able. I am not satisfied with random verbal statements delivered over the mainstream media by an assortment of officials. They are incomplete and disorganized. They are not backed up by facts, and the people who make them are not held to any legal standard for making them. They can speak quite irresponsibly. I want a prospectus.

Let’s be fair to President Obama. Here is his substitute for a prospectus:

"We must never forget," he said. "This is not a war of choice. This is a war of necessity. Those who attacked America on 9/11 are plotting to do so again. If left unchecked, the Taliban insurgency will mean an even larger safe haven from which Al Qaeda would plot to kill more Americans.

"So this is not only a war worth fighting. This is fundamental to the defense of our people."

I question his statements, but I won’t go into that, because that is not my subject. Instead, I say: Show me the prospectus. Don’t We the People deserve more than rhetoric? We know that you want to invest in this project (and already have). We know that you want to persuade us to support taxpayer funds being voted for it. Are we to have nothing more to go on than a few words? After all, this project now has a history that goes with it. The government is responsible for that history. It has managed the Afghanistan project for decades now. It armed the mujahideen. It might be nice to hear the government take responsibility for its past deeds and be held to standards of objective evaluation of the results. Why should we be asked (actually forced) to invest without that? How about some audited statements that show the past revenues from this project and its costs, so that we can evaluate whether the fight is worth it? How about some explanation of how it has come about that the U.S. again faces a Taliban that it supposedly defeated in 2001? And why wasn’t bin Laden captured in Bora-Bora? What happened? Who was responsible for that fiasco?

Obviously, our government does not hold itself to standards that it thinks corporations should be held to. The corporations face all sorts of marketplace checks and balances — until they ally themselves with the government, that is. The government faces only the loosest of such constraints, but it literally gets away with murder. Obama chooses a friendly audience of veterans and then feeds them the story he wants us to hear.

I am not a believer in representative government. Of its flawed ways, one of them seems to be to withhold and misrepresent information from the people you represent. In other words, fraud. If the government did produce a prospectus, we would need heavy penalties for making false statements or omitting crucial details. We’d need a Sarbanes-Oxley for government.

Having spent hours reading articles on Afghanistan written by establishment figures, scholars, non-libertarians, and intelligence experts, I can only say that your worst nightmares about the situation in Afghanistan are all true. The West is losing the war. It is not clear that any strategy can win. People in the know say that it would take 500,000 troops. Hahahahaha, that’s haha-haha-ha. Richard Daughty sent me an e-mail in which he addressed me as "Junior Mogambo Ranger (JMR) Mike," so I hereby can say hahahahahahaha, that’s haha-haha-hahaha. Gold will be the most undervalued item on the planet when that happens.

And because the powers-that-be don’t want to lose credibility, and because creating a stable state there is impossible without a lot more money and troops being sent in, and because of any number of other reasons that can try your patience, it is safe to say that this war will be absorbing more and more resources and more and more troops, and I almost forgot, some huge number of "contractors," since the army no longer seems to feed its soldiers or give them haircuts, and some of the U.S. contractors seem to be involved in some awfully lewd behavior.

And, I repeat, because all wars are inflationary, this war might even begin to affect the price of gold.

One of these articles was written by Gilles Dorronsoro of the Carnegie Endowment for International Peace, who is an expert on Afghanistan. The title gives it away "The Taliban’s Winning Strategy in Afghanistan." If they have a winning strategy, then the U.S. and NATO have the losing strategy. Dr. Dorronsoro has given us what might be called an anti-prospectus. I would not invest after having read what he had to say and verified it with several other sources.

Articles by Barnett R. Rubin in Foreign Affairs paint a similar picture. In 2006, he visited Afghanistan 4 times. He says "The growing frustration was palpable." He quotes a Western diplomat: "I have never been so depressed. The insurgency is triumphant." A UN official told him "So many people have left the country recently that the government has run out of passports."

With all this going on, is it unfair to ask the government for a prospectus? What do they take us for? Complete fools? I shouldn’t have asked that.

But I’ll let you in on a secret. One of the real reasons that I am asking for a prospectus is that I’d like to know why the U.S. gets involved in these places. I am curious. Somewhere in the bowels of government, in the NSA or the CIA, someone has a prospectus, don’t they? Someone must have some geopolitical reasons for investing in Afghanistan, mustn’t they? Someone has thought this matter through, haven’t they? They’ve written it down somewhere in a report. I hesitate to think that the entire project is utterly irrational. I hesitate to think that the matter has not been given the most thorough consideration.

But if they really have thought this matter out, which is not an assumption I’m willing to make, then why don’t they share it with us peons out here? Well, that’s obvious. Why should they? Why should they want to constrain their freedom of action? Why should they want us second-guessing them?

I have a not-so-subtle agenda, which is to point up how poor and misleading the information system actually is that mediates between our government and the people. It is intentionally poor and misleading. And ours is supposed to be a democracy that is a light to the world. This is the kind of government that is supposed to be set up in Afghanistan. I suspect that the war lords provide a better government, and some of those articles report that the Taliban is providing better government in some areas than the Afghan government — although if they take over the whole country, I fully expect them to behave just as badly as they did before and at least as badly as any government ever behaves. But if they do, I still say leave Afghanistan alone. John Quincy Adams had the right idea:

"America goes not abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own. She will recommend the general cause by the countenance of her voice, and the benignant sympathy of her example. She well knows that by once enlisting under other banners than her own, she would involve herself beyond the power of extrication, in all the wars of interest and intrigue, of individual avarice, envy, and ambition, which assumed the colors and usurped the standards of freedom…She might become the dictatress of the world. She would be no longer the ruler of her own spirit."

If low cost and accurate information were widely disseminated about our government’s "investments," the government would not last five minutes. If people had clear ideas about the costs and benefits of government projects and a way to approve or disapprove them, most of them would never get off the ground. That’s why there’s no prospectus.

Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York. He is the author of the free e-book Essays on American Empire.

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