A Libertarian Perspective on Economic and Social Policy Lecture 18 National Defense ©2007 Jeffrey A. Miron.

A Libertarian Perspective on Economic and Social Policy

Lecture 18

National Defense

©2007 Jeffrey A. Miron

Introduction

• National Defense is the single most important component of government purchases of goods and services.– In recent years, national defense has accounted for about 3.5%

of GDP and 17.6% of total federal outlays (purchases of goods and services plus transfers).

– The relative importance has grown in the last five years, but expenditure on national defense is not especially high right now;

– For example, national defense accounted for 4.9% of GDP in 1980 and increased to 5.2% by 1990.

• Still, by any measure National Defense is a critical policy, both because of its size and its importance to the prosperity of the country.

Introduction, continued

• The standard libertarian perspective is that national defense is one of the few areas where government intervention make senses, since there is a substantial public goods problem with private provision.

• This lecture accepts that view overall.• But acceptance of some role does not validate an

arbitrarily large intervention, and it does not exempt the individual components of national defense and security from standard scrutiny.

• In fact, this lecture suggests that a non-trivial chunk of what the U.S. spends on national defense and security does not pass the cost/benefit test.– Thus, the right magnitude for this intervention is probably a good

deal smaller than it is now.

Outline

• National Defense

• The War on Terrorism

• Pre-Emptive Interventions: Iraq

• Helping Other Countries: Iraq

• Drugs and Terrorism

• Miscellaneous

National Defense

• One of the few government policies that libertarians endorse is national defense:– Raising sufficient taxes to fund a military, with an

appropriate number of soldiers, bases, weapons, …

• The argument is the standard public goods scenario:– No one individual in society captures anything like the

full benefit of raising an army and defending the country against attack;

– Only government can coordinate actions on the scale needed to defend the country.

National Defense, continued

• Assume for the moment that this argument is being made with respect to a national defense that does exactly two things:– Provides deterrence, i.e., discourages other countries

from initiating attacks us;– Or, responds to attacks that actually occur.– That is, leave aside pre-emptive actions or actions

designed to “help” other countries.• Subject to these caveats, it is hard to argue with

the standard view.– Every country that has ever survived has had a

national defense.

National Defense, continued

• The conclusion that governments should provide national defense, however, does not determine how much or what kind.

• There is plenty of evidence that politics leads to excessive expenditure on national defense:– Antiquated weapons systems that even the military wants to

cancel.– Unneeded bases that the military wants to close.

• A certain amount of this is probably inevitable, as is some degree of inefficiency because the military is huge.

• Set these issues aside. The question is whether there are specific, separable aspects of national defense and security that have questionable value.

The War on Terror

• As a result of 9/11, the U.S. has been waging a “global war on terror” for the past four years.

• The obvious reason to conduct such a “war” is to defend the country against future terrorist acts.

• There has been relatively little debate so far about whether this “war” makes sense.

• The perspective advanced here, however, is that these efforts are, at best, wasted effort, and more likely counter-productive.

The War on Terror:What Does the Phrase Mean?

• The essence of the problem with the war on terror is that the phrase itself, and the folks who are using it, hold a fundamentally flawed view of terrorism.

• The image conjured up by this phrase is of a madman whose hatred of the U.S. is so virulent he launches violent attacks on innocents, with no realistic expectation these attacks might produce a tangible benefit.

• In other words, terrorists are irrational people whose objective is merely to “terrorize,” rather than to achieve any specific military or political objective.

• In my view, this perspective is almost totally wrong.

The War on Terror, continued

• In fact, the vast majority of those who sponsor or commit “terrorism” have specific military or political objectives:– The rebels in Chechnya want their independence from Russia– The Basque Separatists want independence from Spain.– The Kashmiri fighters want to separate from India.– The drug lords in Colombia want to intimidate the government in

order to avoid extradition.– The Palestinians want “their” land back. – Islamic “fundamentalists” want the U.S. out of middle east and/or

want Israel to return Palestine.– IRA wants control of Northern Ireland.

• And there are many more examples. The most famous domestic terrorist – Timothy McVeigh – fits the stereo-type better than all but a handful of foreign terrorists.

The War on Terror, continued

• Thus, much of what is labeled terrorism is more usefully described as warfare:– The tactics are frightening because they target

civilians.– But rather than indicating “terrorists” are only

interested in terrorizing, the horrendous tactics employed by “terrorists” merely indicate that this approach is the only one available to groups that cannot wage conventional war because of limited size and resources.

The War on Terror, continued

• In addition to being the only means available to such groups, terrorism sometimes “works” in the sense of promoting the objectives of the terrorists:– For example, the Peace Now movement in Israel; the defeat of a

pro-Bush government in Spain.– These tactics often fail, of course, but the groups in question are

fighting uphill battles to begin with.– It is not obvious there are other tactics that would have had

better chances of success.

• Thus, from this perspective as well, terrorists acts are “rational.”

• None of this means the “terrorists” are “right;” but they may be acting rationally given their objectives.

The War on Terror, continued

• And, many terrorists objectives are reasonable, or at least arise out of reasonable concerns:

• The demands are basically a response to excessive government, such as centralized decisions about languages, schools, religions, and resources, or the imposition of government by an invader.

• Countries should not concede “unreasonable” demands simply to placate terrorists.– For example, Spain should not let Pays Basque secede.

• But, many countries should consider some terrorists demands since these are better government and would make sense even without terrorism– For example, less central government control of schools,

language, religion.

The War on Terror, continued

• One concern, of course, is that granting terrorist demands looks weak and might encourage more terrorism.

• But there are opportunities to make these changes that will not appear to be bowing to terrorist influence.– The U.S. can gradually adopt a tougher stance toward

Israel when it is mediating peace negotiations.– The U.S. can quietly remove military bases from

Saudi Arabia as part of “global reorganization.– Spain can grant more local control over schools as

part of a general decentralization of its educational system.

The War on Terrorism, continued

• The perspective proposed here has two implications: • First, a “global” war on terrorism makes little sense:

– The issues vary from country to country.• Second, the way to reduce terrorism, at least in some cases, might

be to give the terrorists what they want:– Russia might give Chechnya greater independence; India might cede

Kashmir to Pakistan; Turkey might allow Muslims greater religious freedom or Kurds greater autonomy.

• This approach does not make sense in all cases. But it at least deserves rational consideration.

• And even when this perspective does not provide an answer, it indicates that there is a supply of terrorism because there is a demand for terrorism.– So unless one eliminates the demand, it is going to be difficult to reduce

the supply.

The War on Terrorism, continued

• Given this perspective, a critical question is what would reduce the demand for terrorists acts against the U.S:

• My answer is– Reduced intervention and interference in the Middle East.

• The U.S. (and other major powers) have interfered for centuries, to a greater or lesser degree at different points in time.

• Part of this intervention consists of creating and supporting Israel, but it is much broader than that.

• It also includes selling weapons to one side or the other, stationing military bases in the Middle East, invading Iraq (twice), and much more.

• This intervention is a key reason for hatred of the U.S.

The Middle East and the War on Terrorism

• The implication is that a war on terrorism can never succeed as long as we continue to interfere in the Middle East, whether by supporting Israel, invading Iraq, or taking sides more generally.

• Relatedly, the U.S. approach is to attempt to restrict the supply of terrorism:– That appears about as effective as attempting to

restrict the supply of drugs (or immigrants);– Demand creates its own supply.

• The entire effort therefore faces an uphill battle:– Return later to whether supply-side tactics work.

What About “Purely Irrational Terrorists?”

• There is not that much any country can do against “irrational” terrorists:– But the number of these is small.

• And even some who might appear to fit this category are not, or at least not entirely.

• Osama Bin Laden is the key example.– No doubt, he hates the U.S. – But he hates the Saudis even more.

• In any case, policy should not focus on ultra rare events; it has to think about the whole picture.

Pre-Emptive Actions

• A critical question in the arena of national security is whether to take action against a “potential” threat to the U.S..

• This is a hard question, since many situations fall in a grey area: – No actual attack has occurred, yet there might

be good evidence an attack is imminent;– By moving first, a country might reduce the

loss of life to itself and even perhaps to innocents in the attacking country or group.

Pre-emptive Actions, continued

• It is likely there are situations where pre-emptive action makes sense and where reasonable observers would agree that such actions are legitimate self-defense.– An example is Israel’s pre-emptive strike

against the Arab countries that were poised to attack just before the Six-Day War in 1967.

• But this approach is also open to abuse, so such actions deserve careful scrutiny.

Pre-Emptive Actions: Iraq

• One example to consider is the U.S. invasion of Iraq in 2003.

• One argument made at the time was that Iraq possessed WMDs and that these posed a significant threat to U.S., Israel.

• Assume that Iraq had such weapons, and that the U.S. knew this beyond all doubt.

• Was an invasion justifiable as pre-emptive self-defense?

Pre-Emptive Actions: Iraq, continued

• My answer is no:– The threat was not imminent.– Iraq did not have an incentive to use WMDs.– There are large direct costs of an invasion.– There is the potential for large indirect costs:

• Generating hatred in the Arab world.• Destabilizing the politics in the region.

• And we were not in fact certain that Iraq had WMDs, so the case for intervention based on a pre-emptive, self-defense argument was flawed.

Pre-Emptive Actions, continued

• The Iraq situation is only one example, but the same issues arise more broadly:– Unless the danger is incontrovertible and imminent,

there is huge potential for actions that have greater costs than benefits.

– There is also huge potential for actions that reflect politics rather than true national defense.

• Thus, the scope for national defense is narrow, not broad.– This suggests reduced expenditure to some degree.

Helping Other Countries

• In some cases, the U.S. intervenes (allegedly) to help other countries.– Is this a valid rationale for intervention?

• Assume that the intervention is costly to the U.S. but benefits the other country.– Then it’s a tough question (cf. immigration).

• In practice, this combination of circumstances seems to be rare:– Rather, interventions that purport to help other

countries have large costs to the U.S. and tenuous benefits, if any, to the country in which we intervene.

– Consider, again, Iraq as an example.

Helping Other Countries: Iraq

• After the evidence suggested there were no WMDs (or significant connections between Iraq and Al Qaeda), the official justification became that invading Iraq and removing Saddam Hussein would benefit the Iraqi people:– Improved economic conditions– Democracy– Elimination of killing, torture conducted by Hussein.

• Relatedly, advocates of invasion suggested that installing democracy would promote peace and prosperity in the Middle East more generally.

Helping Other Countries: Iraq,continued

• It is perhaps hard to know whether there was ever any realistic possibility that the U.S. would install democracy and a functioning government.

• What should have been obvious, however, was the possibility of other outcomes:– Civil war, with substantial loss of life.– A repressive, sectarian state roughly like that in Iran.– Economic conditions even worse than under Hussein.

• Given any reasonable probability of these outcomes, the cost-benefit calculation becomes highly problematic:– Large and certain costs for the U.S.– Highly uncertain costs and benefits for Iraq and the Middle East.

Helping Other Countries: Iraq,continued

• Of course, Iraq was starting from an awful situation:– Thus, it seemed at the time that any change had to be

an improvement.• That now looks far less obvious, to say the least.• It is impossible to know what will be true in five,

ten or twenty years:– But so far there is no basis for optimism.

• And the history of “benevolent” interventions all over the world suggests pessimism: – It is difficult to find examples of successful nation

building, or installation of democracy, and the like.

Helping Other Countries, continued

• As with pre-emptive actions, therefore, the threshold for intervention should be incredibly high:– There should be incontrovertible evidence and a

compelling case that intervention will work.– In practice, this never happens.

• Again, therefore, the appropriate scope for national defense is smaller than current policy:– This again suggests reduced expenditure to some

degree.

Aside: What Should the U.S. Do About Iraq Now?

• Leave. • Today. • Period.• The view that underlies this position is as follows:

– Whether we leave in a day, week, year or decade, there will be civil war.

– The likely outcome is that a repressive, totalitarian regime will end up with control.

– If that is correct, then staying just incurs additional costs without any benefit.

– And US presence may even be making things worse.– Plus, if the major powers stay out, economic development and

freedom may gradually emerge.

What Should the U.S. Do About Iraq Now?, continued

• One main criticism of the view just enunciated is that it makes the US look weak if we “cut and run.”

• At some level, that is indisputable, but it’s not the full question.

• It makes us look even weaker and stupider to continue a policy everyone knows is disastrous.

• Making a huge mistake correctly lowers world opinion of the US:– Continuing that mistake lowers it even more.

The War on Terrorism and the War on Drugs

• Politicians and the media repeatedly discuss the connection between terrorism and drugs as though drugs cause terrorism, concluding that therefore policy can reduce terrorism by prohibiting drugs.– This is utter nonsense.

• There is a “connection,” but the causality goes in the opposite direction.

Drugs and Terrorism

• The connection is that drug traffickers earn income, terrorists do not.

• Drug traffickers need protection, which terrorists can provide assuming they have money to buy guns.

• So, traffickers hire terrorist groups to protect the drug trade from law enforcement.

Drugs and Terrorism, continued

• If drugs were legal, there would be no higher profit rate in this industry than in any other.

• Terrorists would have to find other sources of income, and this would be difficult.

• Law enforcement would have increased resources for fighting terrorists since they would not be spending their energy on anti-drug enforcement.

• Thus, the single best thing the U.S. can do to reduce terrorism in certain countries – Colombia, Peru, Afghanistan – is to legalize drugs.

Miscellaneous

• The Patriot Act

• Airport Security

• Military Aid to Other Countries

• The CIA

• Military Draft

• Detentions and Torture

The Patriot Act

• Passed in the wake of 9/11, this federal law expands federal investigative powers in various ways.– Library records, cell phones, etc.

• The left decried the Act as restricting civil liberties;• The right defended it as essential to the war on

terrorism.• The actual provisions are much less significant than one

might think given all the fuss.• But the key fact is that nothing in it will improve the US

ability to fight terrorism, so there is no reason to accept any possible diminution of civil liberties to obtain a non-existent improvement in the ability to fight terrorism.

Airport Security

• Again in the wake of 9/11, the federal government imposed substantial new restrictions on airport security.

• It also created a new government agency, TSA (thousands standing around)– And it made all airport security personnel

government employees

• The new measures, and many existing measures, are incredibly wasteful.

Airport Security, continued

• There are lots of targets for terrorists; making airplanes safer in not a plausible way to reduce terrorism.

• Airplanes are still easily targeted:– Most luggage is not screened;– Audits routinely circumvent existing security measures;– Security outside the US is much laxer.

• There are probably more effective methods than screening:– e.g., armed plain-clothes agents on board planes– Secure cockpit doors.

• The right approach is to leave security to each airline.– They have strong incentives to protect their planes / employees,

and to avoid liability; insurers would help assure compliance.

Military Aid to Other Countries

• The US provides various types of military aid to other countries:– Weapons– Technical Assistance

• This aid is a waste of money.• The allocation is governed by poorly motivated

arguments about who our friends are: – This is hard to determine and changes all the time;– For example, we supported Saddam and the Taliban

in the 1980s.

Intelligence: The CIA

• Given the desire to protect the country, there is presumably some role for intelligence as part of self-defense.

• But the military can (and does) do that for itself:– There is no reason for the CIA in addition.

• And the CIA’s track record is abysmal.– For example, the Bay of Pigs fiasco.

• It generates resentment around the world.• And covert actions work rarely, if at all.

Military Draft

• The libertarian view is that a draft causes politicians to underestimate the costs of a military and therefore choose one that is too big.

• The counterargument is that a draft makes people think hard about US involvement in other countries:– For example, some argue there would be more

pressure to exit Iraq if most middle class families faced the prospect of seeing their kids drafted and sent to serve there.

Military Draft, continued

• Both arguments have some merit.• In practice, having a draft does not seem to be a

major deterrent to excessive intervention:– Vietnam is the example.

• And even without a draft, pressure is building for the US to exit Iraq.

• And there was substantial support for this policy initially; a draft was unnecessary.

• Thus, my hunch is that the negatives of a draft outweigh any beneficial effects it might generate in limiting the number of interventions.

Detentions and Torture

• The US has detained substantial numbers of suspected terrorists;

• The US has used aggressive tactics to question these suspects.

• In the standard discussion, the question is over the tradeoff between the rights and civil liberties for the prisoners versus the benefits of reduced terrorism.

Detention and Torture, continued

• The first-order reaction to this issue should be that there is no value in holding or questioning these suspects, so the tradeoff is non-existent.– Little evidence these suspects were really terrorists.– Little evidence that torture “works”.

• Thus, it cannot make sense to “push the envelope” regarding detentions and torture, since these are not very useful anyway.

• Plus, it is unfathomable that anyone who claims to believe in freedom or liberty can be less than horrified that, to take the most extreme case, a US citizen arrested on US soil can be detained indefinitely without a trial or even access to counsel.

Conclusions

• National defense is a legitimate function of government, but there are limits to how much government should intervene.– Pre-emptive actions, and those allegedly designed to help

others, should face strict scrutiny.

• The two actions the U.S. can take to reduce terrorism are to stop interfering in the Middle East and to legalize drugs.– Possibly also increased immigration – And more support for free trade.

• Much of current effort – supply side interventions – is wasteful at best; more likely, it harms rather than helps American security interests.