Number 128 • Nov / D ec 2013 • $8.95
The NSA in Cyberspace
Amity Shlaes Dismantles Woodrow Wilson
Jacob Heilbrunn Debunks Isolationism
Christian Caryl Revises George W. Bush
Milton Ezrati Flailing in France
Keith B. Alexander www.nationalinterest.org
A LITTLE RED GUIDE
TO MODERN CHINA
by Ian Bremmer
Number 128
.
November/December 2013
The Realist
5
The Myth of the New Isolationism by Jacob Heilbrunn
Articles
9
Superpower or Superbust? by Ian Bremmer
18
Defending America in Cyberspace
by Keith B. Alexander, Emily Goldman and Michael Warner
A chorus of media and foreign-policy elites is decrying the return of isolationism. But it is
prudence about employing military force in Syria and elsewhere that will sustain, not undermine,
American leadership abroad.
China’s leaders have promoted far-reaching reforms and impressive growth, but new challenges
loom. Skeptics of Beijing’s ability to master them, however, are wrong. But cooperation, not
confrontation, between Washington and Beijing will be critical for both countries.
Cybersecurity threats represent a defining test for the United States. The National Security Agency
is pursuing a focused strategy to protect the nation in a domain where its adversaries’ capabilities
are growing rapidly.
25
Les Misérables by Milton Ezrati
Oppressive taxes and stultifying regulations are sapping France’s economic vitality. If Paris does
not reform, its influence in the European Union will be increasingly supplanted by Germany’s.
38
Give Corruption a Chance by Vivek S. Sharma
Two cheers for corruption. While Westerners are accustomed to viewing corruption as a pathology
or plague, it has been the long-standing practice of many societies throughout human history and
often produces beneficial outcomes.
46
The Next American Majority by William W. Chip
Many talk about America’s “demographic revolution” as if it were a law of nature. In fact, it’s a
result of conscious policy choices—ones that could end up having profound economic and social
effects.
55
Money Never Sleeps by Christopher Whalen
Three years after its passage, the Dodd-Frank financial-reform bill seems to resemble a new
Washington Monument—to folly and hubris. The law lacks powerful provisions that might help
prevent another financial crisis and might even trigger a fresh one.
Reviews & Essays
64
Misunderestimating Bush and Cheney by Christian Caryl
It’s common to think of George W. Bush as Dick Cheney’s puppet. In truth, it was Bush, more
than anyone else, who created the world we continue to live in. Peter Baker’s Days of Fire dispels
many of the myths that continue to enshroud his presidency.
72
A Frenzied Pedagogue by Amity Shlaes
Whether he was running Princeton University or the United States, Woodrow Wilson never
doubted he was right. He should have. His record of intervention—both overseas and in the
economy—was much more damaging than his biographers and historians have acknowledged.
86
Breach of Logic by James Joyner
Andrew Bacevich, the distinguished critic of U.S. foreign policy, now asserts that the chasm
between civilians and the military is undermining American democracy and driving us toward
perpetual war. Yet his argument is unpersuasive and his proposed solution unworkable.
Images AP Images: page 66; Corbis: pages 7, 10, 15, 17, 24, 26, 28, 31, 57, 58, 60, 71, 74, 77, 81, 84;
Getty: pages 40, 43; iStockPhoto: pages 20, 23, 48, 51, 87, 90, 95
Published by
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The Realist
The Myth of the
New Isolationism
By Jacob Heilbrunn
S
ince September 11, 2001, the United
States has damaged its reputation and
national security by lurching from
one war to the next. Afghanistan, which
began triumphantly for the Bush administration, has devolved into a protracted and
inconclusive war in which the Taliban is
making fresh inroads as American and allied forces hand over security to the Afghan
army. Then there is Iraq. It was purveyed by
the Bush administration to the American
public as a mission that could be accomplished swiftly and smoothly. Neither occurred. Since then, President Obama’s selfstyled humanitarian intervention in Libya
has led to instability, allowing local militias,
among other things, to pretty much bring
the oil industry to a standstill by disrupting major export terminals. Most recently,
it looked as though Syria might be Libya
all over again—an American president embarks on an uncertain crusade, and Britain
and France join to provide the necessary
diplomatic persiflage for justifying a bombing campaign.
But this time a funny thing happened
on the familiar path to war. The British
parliament, scarred by memories of Tony
Blair’s bogus campaign for war in Iraq, just
Jacob Heilbrunn is editor of The National Interest.
The Realist
said no. A similar development occurred
on Capitol Hill. Though Secretary of
State John Kerry declared that this was a
“Munich moment,” no conversion on the
road to Damascus took place in the House
and Senate. Instead, antiwar Democrats and
conservative Republicans made common
cause. Faced with a congressional vote in
the House and Senate that likely would
have been the most humiliating presidential
rebuff since Woodrow Wilson lost the
League of Nations vote in 1919, Obama
pivoted. He acceded to a Russian proposal
for a diplomatic solution that may have
preserved not only the peace, but also his
presidency.
So habituated have America’s media
and foreign-affairs elites become to
intervening abroad, however, that a chorus
of liberal hawks and neoconservatives is
decrying what it sees as a resurgence of
nasty isolationist sentiments. The New
York Times’ Bill Keller, who previously
championed the Iraq War, wrote, “America
is again in a deep isolationist mood.”
After Obama signed off on the agreement
with Russia, Richard Cohen fumed in
the Washington Post, “Because of Obama’s
fecklessness—abetted by a Congress that
has turned darkly isolationist—the world is
now a less safe place.” And in the Wall Street
Journal, the neoconservative columnist Bret
Stephens wrote: “The Syria debate is also
exposing the isolationist worm eating its
way through the gop apple.”
A c t u a l l y, i t i s n’t . Q u e s t i o n i n g
intervention in Syria is not tantamount to a
reversion to the most blinkered isolationist
sentiments that percolated on both the
November/December 2013 5
Questioning intervention in Syria is not tantamount to
a reversion to the most blinkered isolationist sentiments that
percolated on both the right and left before Pearl Harbor.
right and left before Pearl Harbor. Rather,
it represents something else—a healthy and
sensible and overdue embrace of prudent
foreign-policy principles that have, more
often than not, been scanted in recent
decades.
A
glance back at the history of isolationism helps to clarify what is not at
stake today. For likening the contemporary controversy over Syria to the one over
World War II obscures more than it reveals.
Though there were undoubtedly anti-Semitic conservatives on the isolationist side,
its adherents, as both Lynne Olson and
Susan Dunn show in recent books, ranged
across the political spectrum, with such future liberal stalwarts as Kingman Brewster
and Sargent Shriver joining the movement.
The debate over intervention was not always as irrational as it might seem in retrospect. The burden of proof, given America’s
long-standing detachment, was on those
who wanted to make the case for intervention. Nor is this all. Though it often tends
to be forgotten, the ferocious debate over
entering World War II did serve a valuable
purpose. Absent that debate Franklin Roosevelt would not have had a unified country
behind him as he battled the Germans and
Japanese.
The antipathy toward intervention was
largely rooted in bitter disappointment
with the outcome of World War I, when
the punitive Treaty of Versailles flouted the
idealistic principles that Woodrow Wilson
had enunciated in his Fourteen Points.
Instead of ending conflict, the Great War,
as it was known, only seemed to prepare
6 The National Interest
the ground for the next one. There was
thus vigorous opposition to entry on
both the left and right. Many worried
that U.S. participation in yet another war
would transform the country itself into
a dictatorship. As Sidney Hook observed
in his memoir Out of Step, Wilson’s own
draconian restrictions on civil liberties
during World War I, which included
the imprisonment of socialist leader
Norman Thomas and the passage of the
Espionage Act of 1917 that the Obama
administration is currently exploiting to
silence government whistle-blowers, left a
lasting mark:
The recollection of the reign of terror against
political dissenters and radical aliens . . . swept
the country in the wake of World War I. Members of the Socialist Party, which had heroically
resisted giving support to that war, had very
vivid memories of the mob action and official
lawlessness of those years. Thoroughly exposed
and denounced in the twenties and thirties, the
terror was fresh in everyone’s memory.
Perhaps the most powerful current
running through the isolationist movement
was the conviction that World War II
simply amounted to another Old World
balance-of-power struggle. This was wrong.
The realists—whose ranks included Herbert
Hoover and the Wall Street Journal editorial
page—were unrealistic. They failed to grasp
that Hitler was not simply a new version
of Kaiser Wilhelm. He was something far
more fearsome—a mad tyrant intent on
a global war for racial supremacy. After
World War II, the isolationist impulse
The Realist
briefly resurfaced in the gop as Ohio
senator Robert Taft—known as “Mr.
Republican”—opposed the Marshall Plan,
the establishment of nato and the Korean
War. But it became impotent and obsolete
once Dwight Eisenhower crushed Taft in
the 1952 Republican primaries and won
the presidency. Since then isolationism has
been a phenomenon confined to figures
such as former representative Ron Paul and
columnist Patrick J. Buchanan.
Which, in fact, is what it remains. Yes,
the Syria debate has created new blocs on
both the right and left that are warning
about the perils of attacking Syria. But the
concerns that they are raising—about the
extent of American commitments, about
possibly aiding jihadist factions, about a
slippery slope—are commonsense ones that
should be enunciated before the United
States enters any conflict abroad. To call
this a retreat from the world amounts to
defining isolationism down.
N
o doubt this territory appears more
virgin to the Republicans than to the
Democrats. The Democrats were faster off
the mark in reconstituting their antiwar faction during the Iraq War. By contrast, the
gop, goaded on by neoconservative think-
The Realist
ers and writers who defected to it en masse
during Ronald Reagan’s first run for the
Oval Office, successfully depicted many
Democrats, from Jimmy Carter onward, as
ninety-eight-pound foreign-policy weaklings. In his 1982 novel The Dean’s December, Saul Bellow acutely captured neoconservative disquiet with liberals: “We are
used to peace and plenty, we are for everything nice and against cruelty, wickedness,
craftiness, monstrousness. . . . Our outlook
requires the assumption that each of us is
at heart trustworthy, each of us is naturally
decent and wills the good.” After 9/11, the
neocons achieved suzerainty over Republican foreign-policy debate during the George
W. Bush administration, and it has not
been successfully dislodged since then. But
as the Republican Party reinvents itself, the
neocons may be the ones who find themselves in the minority. The Syria debate,
along with the brouhaha between leading
Republicans such as New Jersey governor
Chris Christie and Senator Rand Paul over
the National Security Agency’s spying efforts, indicates that the old consensus in the
gop isn’t just fraying. It’s cracking.
A new generation of leaders is emerging
in the Senate. Gone is neoconservative
stalwart former senator Joseph Lieberman,
November/December 2013 7
who is now huddled together with former
senator Jon Kyl at the American Enterprise
Institute, where the two issue regular
pronunciamentos lamenting America’s
purported retreat from the international
stage. Senators John McCain and Lindsey
Graham have been upstaged by the likes
of Senators Rand Paul and Ted Cruz,
both of whom opposed the Syria venture
(though the latter has adopted a very hard
line on Iran). Paul has distanced himself
from his father’s views—“there are definite
differences,” in his words—and hailed the
containment strategy and realist wisdom
of George F. Kennan in a February speech
at the Heritage Foundation. Among the
Democrats, liberal hawks such as Kerry,
Ambassador to the United Nations
Samantha Power and National Security
Adviser Susan Rice seem to have believed
that a second Obama term would permit
them to embark upon a new crusade for
international norms abroad.
They were mistaken. Public opinion does
not back such norms, and Americans will
not support going to war for the Kennedy
School. The proponents of war often act
as though military force is the only tool
that America can employ. “The inescapable
truth is that only the United States can play
cop,” says Richard Cohen. “We have the
wherewithal. A further inescapable truth
is that evil exists and needs to be fought.”
This is dangerously solipsistic, the kind
8 The National Interest
of thinking that imputes a unique moral
virtue to the United States. It rests on the
easy assumption that good intentions are
enough to effect even better results. Yet a
right to protect does not always mean that
the United States is protecting righteously.
Diplomacy, a thriving economy, a
vibrant culture—these, too, are powerful
(and neglected) tools for spreading
the American credo. The framework
agreement struck by Kerry and Russian
foreign minister Sergei Lavrov on verifying
and dismantling Syrian stockpiles of
chemical weapons could serve as the basis
for a broader rapprochement between
Moscow and Washington. Obama’s
support for talks with Iran also represents
engagement, not isolation. Republicans
would do well to recall that past presidents
such as George H. W. Bush and advisers
like Henry Kissinger united diplomacy
and force to exercise American leadership
abroad. By contrast, if the United States
were to apply the unilateralist prescription
of the hawks for remedying the world’s
ills consistently, then their fear of isolation
would become a self-fulfilling prophecy.
Which is another way of saying that it
isn’t those counseling restraint that are
imperiling America’s engagement with the
rest of the world, but, rather, those with a
proclivity for recommending a militarized
form of confrontation, whenever and
wherever possible. n
The Realist
Superpower or Superbust?
By Ian Bremmer
A
s if a global financial-market meltdown, the deepest U.S. recession in
seventy years, an existential crisis
in the euro zone and upheaval in the Middle East hadn’t already created enough trouble for one decade, now the unrest and anxiety have extended to some of the world’s
most attractive emerging markets. Just in
the past few months, we’ve seen a rough
ride for India’s currency, furious nationwide
protests in Turkey and Brazil, antigovernment demonstrations in Russia, strikes and
violence in South Africa, and an ominous
economic slowdown in all these countries.
Adding to the uncertainty, as the
carnage and confusion in Syria remind
us, is the fact that there is no longer
a single country or durable alliance
of countries both willing and able to
exercise consistent global leadership. The
Obama administration and congressional
Republicans don’t want to alienate a warweary U.S. public by spending blood in
the Middle East or treasure in Europe.
Europe’s leaders have their hands full
with the euro zone. And though the
governments of emerging markets want a
more prominent international voice, they
face far too many tests at home to welcome
new responsibilities abroad. Because no
one is providing predictable leadership,
Ian Bremmer is the president of the Eurasia
Group, global research professor at New York
University and a contributing editor at The
National Interest.
Superpower or Superbust?
international problems are more likely to
become crises in the years to come, and the
world’s wildfires will burn longer and hotter.
W
ith this in mind, it is all the more
remarkable that there’s been so little
noise from China, especially since the rising
giant has experienced a once-in-a-decade
leadership transition, slowing growth and
a show trial involving one of the country’s best-known political personalities—all
in just the past few months. Given that
Europe and America, China’s largest trade
partners, are still struggling to recover their
footing, growth is slowing across much of
the once-dynamic developing world, and
the pace of economic and social change
within China itself is gathering speed, it’s
easy to wonder if this moment is merely the
calm before China’s storm.
Don’t bet on it. For the moment, China
is more stable and resilient than many
realize, and its political leaders have the
tools and resources they need to manage a
cooling economy and contain the unrest
it might provoke. This is a country that
has come a long way in a remarkably
short time. It is now home to the world’s
second-largest economy, one bigger than
those of its fellow brics countries (India,
Russia, Brazil and South Africa) combined.
In 1977, China accounted for just 0.6
percent of global trade; in 2012, it became
the world’s largest trading nation. Today,
124 countries count China as their largest
trade partner, compared to just seventy-six
November/December 2013 9
for the United States. China is expected to
become the world’s largest energy importer
later this year, and it’s already the leading
carbon emitter, automobile market and
smartphone market. Roughly six hundred
million of its citizens are now online.
All this success has earned the leadership
considerable credit with China’s people.
The fact that China has so far avoided the
unrest and uncertainty plaguing so many
other countries these days is good news for
those who depend on China’s strength for
the stability of their own economies, but it
is bad news for those who hope that China’s
leaders will soon begin to adopt new
attitudes toward global politics and marketdriven capitalism. Outsiders, particularly
Americans, have called on China to
become a “responsible stakeholder” in the
international system and have wished aloud
that as its economy depends more heavily
on investment in countries and companies
in every region of the world, it would begin
to behave as a global partner, one that
10 The National Interest
privileges peace and predictability above
all else. There is little evidence that this is
happening. Beijing continues to limit its
involvement in most international disputes
to calculated moves to protect its various
commercial interests and to diplomatic
efforts to blunt U.S. influence and extend
its own.
Some have also expressed the hope that
a new generation of Chinese leaders will
launch a Gorbachev-style drive for political
opening at home. But that, too, is unlikely.
Though some elite-level Chinese officials
are too young to remember the violent
chaos of China’s Cultural Revolution of the
1960s and 1970s, they remember well what
Gorbachev’s reforms meant for the Soviet
Union in the 1980s and early 1990s—and
for Gorbachev himself.
Nor should we expect a near-term
push to fully dismantle China’s system of
state capitalism, though there are plans
to try to make it work more efficiently.
China’s leaders know they must gradually
reduce the role of the state in the
economy as they seek to transition
away from an economic model that
is too dependent on corporate and
government investment. The country
must also shift from a twentiethcentury manufacturing-based economy
to a digital-age model that relies on the
power of Chinese innovation.
Both these transitions will require
a significant transfer of wealth and
decision-making power from public to
private hands, and although China’s
leaders recognize that these changes
must come, they have adopted a
gradualist approach. The leadership has
demonstrated considerable urgency in
making changes to China’s banking
system and in opening new areas of
the economy to foreign investment,
but for now, it is working mainly to
improve the country’s state-led growth
Superpower or Superbust?
model, not to bury it. State capitalism—a
system in which political officials use staterun companies, privately owned national
champion firms, state-owned banks and
sovereign wealth funds to ensure that
China can generate growth, jobs and wealth
without empowering potential domestic
political rivals or losing control of the pace
of development—has been at the heart of
China’s success for many years, and it will
be central to China’s development for some
time to come. State-owned enterprises and
the companies affiliated with them now
account for more than half of China’s
output and more than half of its jobs.
Their dominance is easy to document: in
2012, there were seventy mainland Chinese
companies on the Fortune Global 500 list,
and China’s government owned sixty-five of
them.
Nor are we likely to see a pause in
China’s military buildup—even if its
political leaders have lately adopted a less
confrontational approach with the country’s
neighbors. In 2012, territorial conflicts
with Japan in the East China Sea and with
Vietnam, the Philippines and others in the
South China Sea sharply intensified. Then,
with the elevation of President Xi Jinping
and Premier Li Keqiang earlier this year, the
new leadership has made a concerted effort
to ease tensions in the region and with the
United States.
But the military and other security voices
are likely to push back against this shift
over time. The People’s Liberation Army
(pla) is home to more hawks than any other
area of China’s government, and beyond
ideological or strategic differences with
civilian leaders, future funding levels for the
pla will depend on the military’s ability to
maintain the public perception that it is of
central importance for China’s security.
Even when its economy has surpassed
that of the United States to become the
world’s largest, China will still be a relatively
Superpower or Superbust?
poor country with many unanswered
fundamental questions about its future. Its
single-party politics and its relative social
stability have defied apocalyptic predictions
for more than two decades, yet its ability to
power forward over the near term should
not lead us to underestimate the longer-term
questions to come.
Not all of its tests will come at home.
As China’s growth depends increasingly
on expanding and deepening trade and
investment ties in every region of the world,
the country’s leaders will find themselves
involved in many forms of international
conflict with which they have little direct
experience, particularly in the Middle East,
and they are likely to discover that its global
economic presence does not imply global
power.
Though the restoration of America’s
economic dynamism, the redesign of
the euro zone, Middle East turmoil and
the diverging fortunes of other emerging
markets are vitally important stories,
China, its challenges and their implications
for everyone else will be the world’s
most important wild card over the next
generation. Given the growing stakes that
the rest of us have in its stability, China’s
problems will be our problems too.
P
eople have been predicting a hard landing for China’s economy and a direct
challenge to the Chinese Communist Party
for at least twenty-five years. Hedge-fund
manager Jim Chanos began warning in
2009 that the country’s real-estate market
had moved China’s economy onto a “treadmill to hell.” Wei Yao, an analyst at French
bank Société Générale, warned earlier this
year that China might soon face a “Minsky
moment,” the point at which China collapses under the weight of the debts accrued
by Chinese companies. Gordon Chang, author of the 2001 book The Coming Collapse
of China, argues that its current slowdown
November/December 2013 11
China, its challenges and their implications for everyone else will be
the world’s most important wild card over the next generation.
is nothing less than China’s “Lehman moment,” a reference to the largest bankruptcy
in U.S. history. Chanos, Wei and Chang
have plenty of company, and their warnings
may one day be proven right. Whatever the
imbalances in China’s economy, however,
they are unlikely to stoke regime-threatening levels of unrest in the near future
because three decades of go-go growth and
swelling national pride provide leaders with
considerable political capital.
Give China’s planners their due: they
have enacted substantive, far-reaching
economic reforms more consistently and
for longer than policy makers in any other
emerging-market country. In a country
long plagued by peasant rebellions, they
created movement in a once-static society
by enabling hundreds of millions of workers
to shuttle between the countryside and fastgrowing cities. They invested heavily in the
roads, bridges and ports that move products
and in the communications networks that
move information. In 2001, they defied
skeptics by committing the country to
the World Trade Organization—and have
generally abided by the institution’s rules
and rulings. They moved quickly following
the onset of the financial crisis in 2008
to stimulate growth and job creation
through more spending on the country’s
infrastructure. As important, they are
resisting further such moves during the
current slowdown in order to begin the
next phase of reform, one which requires
a step away from reliance on state-driven
investment and spending.
Changes are also under way in the
governance of China’s much-criticized
12 The National Interest
banking sector. Enormous levels of
speculative lending have to be better
regulated, though as with the European
Central Bank the funds are there to
recapitalize failing institutions wherever
necessary as changes in financial-market
governance are made. That is not a longterm solution, but Beijing will likely be
able to balance between addressing
these concerns and sustaining growth—
preventing the near-term hard landing that
some analysts expect.
The worrying news for outsiders hoping
to profit from China’s growth is that its
state-capitalist growth model remains
strong. Plenty of foreign companies,
including American firms, will continue
to profit mightily from their commercial
relationships with state-owned companies.
But state capitalism hurts foreign firms
in two ways. It undermines the foreign
multinationals that must compete with
Chinese state-owned rivals that are armed
with substantial financial and political
backing from their government, and
it creates all kinds of obstacles and risks
for foreign firms investing and operating
inside China. Years ago, anxious to gain
access to foreign investment, technology
and managerial expertise, China opened
its markets to welcome all three. Yet, as
exposure to these resources began to
empower Chinese companies to see foreign
firms more often as commercial rivals than
potential partners, they began using their
connections with Chinese political officials
at both the state and local levels to tilt the
playing field in their favor. Some Chinese
local and corporate decision makers have
Superpower or Superbust?
always opposed the introduction of foreign
competition onto their turf.
The latest example of direct state
involvement in China’s domestic economy
takes the form of China’s creation in
2011 of “strategic emerging industries,”
sectors designated as of special interest to
the Chinese government, which wants to
develop a system of “indigenous innovation”
to help Chinese companies climb the value
chain. Foreign investment in these sectors
is welcome, and some will continue to earn
healthy profits for some time to come, but
the foreign companies that enter often
are forced to share advanced technology
with Chinese partners or have it stolen by
Chinese competitors, and this problem is
likely to intensify over time.
In addition, across a variety of consumer
sectors, Western firms now face an
increasingly unpredictable operating
environment. Beyond familiar stories about
information heavyweights Apple, Google
and Yahoo and their struggles with the
Chinese government, other episodes are less
well known. In December 2012, China’s
state-run broadcast network produced an
investigative report charging that U.S. fastfood retailer Kentucky Fried Chicken was
pumping antibiotics into the chicken it
sold in China. A month later, kfc sales
in China fell by more than 40 percent.
Volkswagen, McDonald’s and the French
firm Carrefour have received similar
treatment in China’s official media. Recent
corruption investigations have also focused
on the pharmaceutical industry, while
antitrust probes have targeted other food
companies. Both will probably expand to
more sectors in the months to come. Some
of these moves are probably intended to
deflect public anger at corruption within
the ruling party and to blunt foreign
criticism of Chinese companies, but as is
often the case in China, foreign firms will
face increasing regulatory pressure.
Superpower or Superbust?
B
ut it is the uncertainty over China’s
future rather than the country’s current
strength that should worry us most. In fact,
though it has so far avoided the volatility
we’ve seen this year in Turkey and Brazil
and the violence of the Middle East, China
is the major emerging-market country least
likely to develop along a predictable path.
First, there is the question of China’s
aging population, a product in part of
the country’s one-child policy. In 1980,
China’s median age was twenty-two. That
number is expected to surge to thirty-eight
by 2020 and forty-seven by 2040. There are
already nearly two hundred million Chinese
citizens over the age of sixty, and by 2025,
that number will top three hundred million.
As the total number of workers begins to
fall, the economy cannot expand without
a significant increase in the productivity
of each worker. Without the kind of
innovation that creates the technological
change that expands production capacity,
China’s economy will slow much more
quickly than its leaders are hoping—and
at a moment when China’s social safety
net, still under construction, will meet its
ultimate test. Can the reform process help
China meet these challenges? That remains
to be seen.
Complicating the effort to keep the
peace as China rises is the gap inside the
country between rich and poor. In 2012,
China’s Gini coefficient—a measure of
income inequality from 0 to 1, with higher
numbers meaning increasing inequality—
reached 0.47. Some analysts consider any
number higher than 0.4 as a warning sign
of potential unrest. Consider, too, that
this is the figure published by China’s
government and may not be accurate. What
do China’s own business elite think of their
country’s future? In July 2012, a study
published by the Hurun Report, which
documents the behavior and attitudes of
China’s wealthiest citizens, reported that
November/December 2013 13
more than 60 percent of those surveyed had
either filed paperwork to leave the country
or had already emigrated. More than 85
percent said they send their children to
schools in other countries.
The greatest domestic test will come
from the endemic weakness at the heart of
China’s current strength: state capitalism.
Social unrest may challenge the leadership,
but state capitalism, the basis of China’s
ability to grow its economy and create jobs,
will play an enormous role in determining
how severe that unrest is likely to be.
Though many of China’s largest stateowned enterprises are professionally
and competently managed, the statecapitalist system is subject to all the same
inefficiencies and corruption risks of any
system directed by government, particularly
an authoritarian one. Its primary purpose
is to create and maintain jobs, achieve
investment objectives designed to bolster
state stability and generate wealth for
the well-connected few, not to unleash
creativity that responds to public demand
for new and better products and services.
That’s why state capitalism is not equipped
to create the lasting and broadly shared
prosperity on which construction of an
innovative digital-age economy will depend.
Further, once you build it, it’s a hard
thing to take apart, because those who
profit from the system have enough
influence within the ruling elite to resist
efforts to reform it. Innovation-based, selfregenerating economic success depends
on “creative destruction,” a process by
which the workers, resources and ideas
that once sustained one company or sector
are freed to recombine in new forms that
then produce new goods and services
that meet the evolving wants and needs
of consumers. Those who administer
China’s state-capitalist system fear creative
destruction because they cannot control
the ways in which it creates winners and
14 The National Interest
losers or the pace at which it moves. When
old industries die, workers lose jobs and
wages, and the risk of unrest grows. Even
in a free-market system, politicians are
blamed for lost jobs and wages, but when
the government owns the company that
owns the factory, its responsibility for job
creation and protection is more direct and
more obvious.
State capitalism cannot be maintained
indefinitely because China is already
losing some of the advantages on which
its state-directed, export-driven economy
has been based. When then premier
Wen Jiabao declared several years ago
that China’s development model was
“unstable, unbalanced, uncoordinated,
and unsustainable,” it was in part because
he understood that growth in China had
already produced demand for higher
wages among Chinese factory workers, a
process that will inevitably erode the cost
advantages that drew so many foreign
firms to outsource manufacturing to China
years ago. Today, a growing number of
Chinese companies are working to keep
their competitive edge by outsourcing their
own operations to cheaper labor markets in
Southeast Asia.
Other Asian states have been here before.
Export-driven growth once lifted postwar
Japan out of poverty. Taiwan and South
Korea followed Japan along this path.
Japan in the 1970s, Taiwan in the 1980s
and South Korea in the 1990s made the
transition now facing China from highgrowth, export-driven economies toward a
more moderately paced model driven and
stabilized by middle-class purchasing power.
Yet, all three were either democracies or had
begun to undertake substantive political
liberalization during these transitions. Can
China’s authoritarian system absorb the
shocks this transition is sure to produce?
That too remains to be seen.
Then there are the unprecedented tests
Superpower or Superbust?
awaiting China’s leaders on the global
stage. The nation’s economic interests are
taking China’s government and state-owned
companies into politically riskier countries.
Meanwhile, a revolution in oil production
and drilling techniques is attenuating U.S.
dependence on oil from the Middle East.
In fact, the United States has reduced its
Council obstruction, is unlikely to deepen
its military ties with Beijing. The two sides
continue to compete for influence in the
Central Asian states that lie between them,
and deep distrust of the other’s intentions
remains the dominant sentiment in both
militaries. Cooperating to thwart U.S. plans
is easy. Working to change the international
imports from opec countries by more
than 20 percent just in the past three years
and could become the world’s largest oil
producer by 2020 and energy self-sufficient
by 2035. China, on the other hand, is
becoming more dependent on imports
from countries like Saudi Arabia, Iran,
Iraq, Libya, Sudan and Venezuela. Beijing
has so far managed to maintain a policy
of “noninterference” in the affairs of other
countries, but as Washington becomes less
willing to engage in the Middle East, China
will find itself forced by its thirst for energy
to take up the slack, involving Beijing in
conflicts it has little experience managing.
Complicating matters further, although
China has investment partners, it has no
powerful allies—that is, governments that
share Beijing’s political values and have the
capacity to make a meaningful contribution
to China’s security challenges. Even Russia,
China’s frequent partner in un Security
status quo is much more difficult. Nor
can China count on an increase in its soft
power to extend its influence. Mandarin
Chinese is unlikely to replace English as
the language of global popular culture, and
China lacks the ideological appeal that once
drew a large segment of the developing
world toward the Soviet Union.
In a world where governments can’t
afford to go it alone to protect their
interests, China will struggle to build
durable partnerships that extend its power.
Superpower or Superbust?
W
ashington has settled on a smart approach to the unpredictability of
China’s future, one that combines direct
engagement of China’s leaders with a hedging strategy that deepens U.S. political,
trade, investment and security ties with
many of China’s neighbors. This is the aim
of the “rebalancing” to Asia, a plan which
explicitly recognizes the U.S. commitment
November/December 2013 15
Cooperating to thwart U.S. plans is easy. Working to change
the international status quo is much more difficult.
to play a comprehensive long-term role in
a region that can drive global growth over
the next generation, but which will also face
a number of developing security challenges
without the institutional framework—no
Asian Union, no Asian nato—to effectively
manage them. East Asia, in particular, is
home to China, the emerging powerhouse,
South Korea, a dynamic, developed country, and Japan, still a leader among industrialized nations. Yet, it is also the arena in
which China’s rivalries with Japan, India
and a number of Southeast Asian nations
will play out—and where the North Korean
wild card will continue to generate uncertainty and risk.
The rebalancing will continue the process
of shifting a significant percentage of U.S.
naval assets toward Asia, but a central
component of this strategy is completion
of the Trans-Pacific Partnership (tpp),
an enormous trade deal involving more
than a dozen Pacific Rim countries.
Crucially, Japan’s new government,
led by Prime Minister Shinzo Abe, has
overcome traditional Japanese resistance
to multinational agreements that pry
open sensitive economic sectors to begin
to negotiate membership. The U.S.-South
Korean free-trade agreement entered into
force last year.
Some in China see the tpp as an attempt
to contain China’s expansion, and there
is little chance that Beijing will push for
early membership since the agreement
would open areas of its economy that are
not yet strong enough to withstand foreign
competition. Even if President Xi does lead
China toward the tpp faster than expected,
16 The National Interest
the complexities of the multilateral
negotiating process ensure that China won’t
be able to join for some time to come.
There is nothing in the tpp, however, that
prevents members from forging trade and
investment agreements with China or any
other nonmember, allowing the United
States to use it as a hedge against China’s
growing regional power while leaving the
door open for deeper engagement in the
future. That’s the right balance.
Though the Obama administration has
the right strategy, it has not given it the
priority it deserves and is far too easily
distracted by other issues, particularly in the
Middle East. Washington can hardly afford
to ignore developments in Syria, Egypt and
other hot spots. The future of the euro zone
will have far-reaching effects on the U.S.
economy. Developments in Latin America
are vitally important for U.S. security and
prosperity. Yet, work on the rebalancing has
barely begun, and opportunities to engage
China directly have not received the energy
and care they deserve.
America and China are the two largest
economies, two leading trading nations and
two biggest polluters. America is the world’s
largest debtor nation, China the largest
creditor. It is impossible to rebalance the
global economy, slow climate change, meet
emerging security threats, and promote
peace and prosperity in Asia without as
much cooperation as possible between the
leading established and emerging powers.
This work is in the interests of both
countries and both governments.
Presidents Barack Obama and Xi Jinping
have a lot to talk about. The future of the
Superpower or Superbust?
largest bilateral trade relationship in history,
the potential for security cooperation for
mutual benefit, the future of the Korean
Peninsula, containment of conflicts in
cyberspace, opportunities for
joint development of energyefficient technologies as
a means to stoke economic
growth and combat climate
change, and a hundred
other subjects should fill the
early agenda. And make no
mistake: it is the presidents
themselves who should lead
this effort to give it the urgent
attention it deserves.
It is easy enough to list
the ways in which U.S. and
Chinese interests differ.
China’s leaders will not accept
international responsibilities
that compromise their ability to maintain
stability at home. They will continue to
allow the Chinese currency to appreciate
at a pace designed to protect China’s
development, not one intended to help
Washington balance its books. They will
not accept criticism of their human-rights
policies or of their approach to Taiwan or
Tibet.
For their part, U.S. leaders will continue
to press China to accept more responsibility
for helping to manage security threats
that weigh on both the U.S. and Chinese
economies. They will continue to insist
Superpower or Superbust?
that China protect intellectual-property
rights, abide by trade and investment rules,
and work to resolve territorial disputes
with its neighbors that might flare out of
control. And U.S. officials will continue to
insist that China grant its citizens greater
freedoms, even if they know that Beijing
will resist.
These sources of disagreement are
obvious, but they should not prevent the
two governments from improving their
relations wherever possible. Failure to
make progress in one area should not slow
work on another. In today’s world, much
will depend on the willingness and ability
of America and China to work together
wherever they can—for their own benefit
and for the world’s. n
November/December 2013 17
Defending America
in Cyberspace
By Keith B. Alexander, Emily Goldman and Michael Warner
P
resident Barack Obama has identified cybersecurity threats as among
the most serious challenges facing
our nation. Secretary of Defense Chuck
Hagel noted in April that cyberattacks
“have grown into a defining security challenge.” And former secretary of defense
Leon Panetta told an audience in 2012 that
distributed denial-of-service attacks have
already hit U.S. financial institutions. Describing this as “a pre-9/11 moment,” he
explained that “the threat we face is already
here.” The president and two defense secretaries have thus acknowledged publicly
that we as a society are extraordinarily vulnerable. We rely on highly interdependent
networks that are insecure, sensitive to interruption and lacking in resiliency. Our
nation’s government, military, scientific,
commercial and entertainment sectors all
operate on the same networks as our adversaries. America is continually under siege
in cyberspace, and the volume, complexity
and
potential impact of these assaults are
­
steadily increasing.
Yet even as it confronts mounting
threats, the United States also possesses
a significant historical opportunity to
deter them. America has built something
unique in cyberspace—an evolving set
Keith B. Alexander is the director of the National
Security Agency and commander of U.S. Cyber
Command. Emily Goldman serves as strategic
adviser to the commander. Michael Warner is
command historian.
18 The National Interest
of capabilities and activities that have
not yet reached their collective potential.
We have learned through two decades
of trial and error that operationalizing
our cyberdefenses by linking them to
intelligence and information-assurance
capabilities is not only the best but also
the only viable response to growing threats.
Our capabilities give us the power to change
the narrative by making our networks
more secure—and ensuring that cyberspace
itself becomes a safer place for commerce,
social interaction and the provision
of public services. We want to take this
opportunity to put these developments in
historical context, and then explain why
we as a nation must continue to build a
cyberenterprise capable of guarding our
critical infrastructure and population.
We can and must do this while always
protecting civil liberties, personal privacy
and American values.
W
e now rely on social structures that
barely existed 150 years ago. The
order and functioning of modern societies,
economies and militaries depend upon tight
coordination of logistics and operations.
Reliability of timing and flow has become
indispensable for modern nations and their
armed forces. This synchronization rests
upon an infrastructure that allows communication, transport, finance, commerce,
power and utilities to serve policy makers,
managers, commanders and ordinary citizens in an efficient and reliable (i.e., unbro-
Defending America in Cyberspace
ken) manner. Efficiency and dependability
make realistic planning and effective operations possible across a whole society. Such
intricate ties in the mesh of infrastructure
systems also constitute a lucrative target for
an attacker and a significant vulnerability
for modern societies. Disrupt the synchronization, and the whole system of systems
becomes unreliable—thus diminishing the
nation’s power and influence.
This unprecedented degree of exposure
to systemic dislocation was first anticipated
over a century ago when British cabinet
ministers and business leaders contemplated
the potential for disruption to their entire
economy if French armored cruisers even
temporarily interrupted the empire’s
overseas trade. The perceived peril to
British society prompted the Royal Navy’s
intelligence office to begin gathering data
for the strategic assessment of risk and
vulnerability. That effort convinced decision
makers that Britain was vulnerable to
disruption of its commerce and to sabotage
of its war-fighting capabilities. At the same
time, Royal Navy planners recognized
opportunities to exploit Germany’s systemic
vulnerability to economic disruption. This
would require the coordination of a range
of institutions and capabilities: financial
services, international communications,
shipping, energy, diplomacy, and naval and
intelligence activities meshed into what
historian Nicholas Lambert aptly describes
as an “Armageddon” strategy.
London approved use of this collection
of levers as a weapon against Germany
in 1912, but when war came soon
afterward British leaders quickly recoiled
from the plan under economic and
diplomatic pressure. Britain’s economicwarfare measures were proving to be
shockingly effective. At the outset of war
in 1914 a global financial panic affected
world trade on a scale like that of 1929.
Britain’s strategy swiftly exacerbated the
Defending America in Cyberspace
crisis. Citizen and business confidence in
economic institutions collapsed. Traders
withdrew from markets. World trade ebbed.
Commodity exchanges closed their doors.
Banks recalled loans, and global liquidity
dried up. In an increasingly globalized and
interconnected world, moreover, many of
the unintended victims of economic warfare
were British.
While the British never fully implemented
their 1912 vision of coordinated levers
of power to defeat an enemy, the notion
of employing strategic technological and
economic power indirectly helped bring
about a new capability in the United
States. One of the most important pillars
of Britain’s strategy, which was bequeathed
to the United States, was a strategic
signals-intelligence capability that served
both national and battlefield users. By
1952, the United States had established
the National Security Agency (nsa) as the
capstone of a signals-intelligence enterprise.
That capability became computerized
over time, and the resulting “cryptologic
platform” emerged as one of the bases of
expertise and infrastructure for cyberspace
and cyberoperations. From this emerged
America’s military cyberspace architecture
and capabilities. In 1981, the Pentagon
gave the nsa the mission to help secure
data in Department of Defense computers.
In 1990, that role expanded to the
government’s “national-security information
systems.” The nsa also played a role in
helping the government and military to
understand the vulnerability of the nation’s
critical infrastructure. When planning
accelerated for military cyberoperations
after 2001, the nsa provided expertise
to the Pentagon’s new “network warfare”
capabilities.
Since then, cyberspace has become
vital for the functioning of our nation
in the digital age. Our national digital
infrastructure facilitates the movement of
November/December 2013 19
commodities and information, and stores
them in virtual form as well. We now use
cyberspace to synchronize those critical
infrastructure systems that coordinated
economies and militaries a century ago.
Many of the same vulnerabilities that
Royal Navy planners noted in 1905 apply
in cyberspace and are magnified by our
dependence on the information sector. The
features that allow all these infrastructure
sectors to link together in cyberspace,
however, also make them accessible
to intruders from almost anywhere at a
comparative minimum of cost and risk.
The cyberdimension, therefore, adds an
unprecedented degree of complexity and
vulnerability to the task of defending
ourselves against a modern-day
“Armageddon” strategy.
The century-old dream and nightmare
of crippling a modern society by wrecking
its infrastructure—or just by disturbing
its synchronization of functions—is now
a reality others are dreaming of employing
against the United States. We do not
know how effective such a strategy would
be against the United States in practice,
but glimpses of global financial panics in
recent years should raise concern about even
20 The National Interest
partial “success” for an adversary attempting
such an attack.
M
ilitary cybercapabilities are now
being “normalized,” following a traditional path from commercial innovations
to war-fighting systems (much like that of
aviation in the last century). Several nations
have pondered cyberdoctrine for years at
senior military schools and think tanks. Cyberattacks against Georgia in 2008 demonstrated how network warfare could be employed alongside conventional military forces to produce operational effects. Lessons
learned from such operations are now being
turned into tactics and planning by future
adversaries. This normalization of cybereffects and their integration with conventional forces will not diminish their power—on
the contrary, it will magnify it. Decision
makers like former secretary Panetta have
mentioned the possibility of a
“cyber Pearl Harbor” to evoke
our current predicament. We
may have already witnessed the
cyberequivalents of the sinking
of a battleship at Taranto and
practice runs with shallow-water
torpedoes (the inspiration and
preparation, respectively, for Japan’s Pearl Harbor attack).
Cyberconflict occurs on a
second level as well. Three times
over the previous millennium,
military revolutions allowed
forces to conquer huge territories
and forcibly transfer riches from
losers to winners (namely, in
the Mongol conquests of China, Russia
and Baghdad; the Spanish conquests of
the Americas; and the European empires
in the nineteenth century). Remote
cyberexploitation now facilitates the
systematic pillaging of a rival state without
military conquest and the ruin of the losing
power. We have seen a staggering list of
Defending America in Cyberspace
Every nation has significant vulnerabilities that can be
exploited in and through cyberspace; almost alone among
nations, we have the ability to lessen ours dramatically.
intrusions into major corporations in our
communications, financial, informationtechnology, defense and natural-resource
sectors. The intellectual property exfiltrated
to date can be counted in the tens to
hundreds of thousands of terabytes. We
are witnessing another great shift of wealth
by means of cybertheft, and this blunts
our technological and innovative edge. Yet
we can neither prevent major attacks nor
stop wholesale theft of intellectual capital
because we rely on architecture built for
availability, functionality and ease of use—
with security bolted on as an afterthought.
The United States has not sat idle,
however, in the face of diverse and persistent
threats in cyberspace that no one federal
department or agency alone can defeat.
There is clear recognition that the nation’s
cybersecurity requires a collaborative
approach and that each department brings
unique authorities, resources and capabilities
to the table. The Department of Homeland
Security is the lead federal department
responsible for national protection against
domestic cybersecurity incidents. The
Department of Justice, through the Federal
Bureau of Investigation, is the lead federal
department responsible for the investigation,
attribution, disruption and prosecution of
cybersecurity incidents. The Department of
Defense has the lead for national defense,
with the responsibility for defending the
nation from foreign cyberattack. This team
approach helps us protect U.S. infrastructure
and information, detect attacks and deter
adversaries in cyberspace. Relationships also
have been forged with private enterprises
that carry the data (or create or study the
Defending America in Cyberspace
hardware and software that manage the
data). Working together, we are improving
our knowledge about what is happening
across the cyberdomain, enhancing
shared situational awareness for the whole
U.S. government while ensuring robust
protection for privacy and civil liberties.
At the heart of our national-scale
capability for defending the nation in
cyberspace is the set of relationships for
intelligence, analysis, and information
security and assurance. The nsa makes
that team work. The agency’s importance
was reflected in then secretary of defense
Robert Gates’s 2009 decision to designate
the director of the nsa as commander of
U.S. Cyber Command (uscybercom) as
well, and to locate the new command’s
headquarters at Fort Meade, Maryland,
alongside the nsa. Through these decisions,
the department leveraged the similarities
and overlaps between the capabilities needed
for the conduct of the nsa’s core missions—
signals intelligence and information
assurance—and those of uscybercom: to
provide for the defense and secure operation
of Defense Department networks and, upon
order by appropriate authority, to operate in
cyberspace in defense of the nation.
The nsa and uscybercom operate under
multiple layers of institutional oversight
that reinforce our commitment to privacy
and civil liberties. These include processes
internal to both organizations, executivebranch oversight accountability mechanisms,
congressional oversight and judicial
scrutiny. Physical, managerial and technical
safeguards serve to prevent, correct and
report violations of procedures. There is a
November/December 2013 21
culture of accountability and compliance,
rigorous training and competency testing,
auditable nsa practices and self-reporting of
incidents. The nsa and uscybercom do not
set these procedures but comply with very
specific provisions approved by our nation’s
lawmakers. Far from imperiling civil liberties
and privacy, the tight links between the nsa
and our growing cybercapabilities help to
ensure professional, sober and accountable
consideration of potential impacts from our
operations.
The evolution of uscybercom has
reinforced the imperative for a close and
unique connection with the nsa. The
command’s creation in 2010 reorganized the
department’s Title 10 “war fighting” segment
of our cyberteam and represented a major
organizational step toward developing and
refining the Department of Defense’s role
in strengthening the nation’s cybersecurity.
Events since the formation of uscybercom
have taught us a great deal about the
gravity of the cybersecurity threat, the
development of the Department of Defense’s
operational capabilities, the department’s
role in a whole-of-government approach
to cybersecurity, and structural, policy and
doctrinal changes that are needed. Some of
these changes can be implemented as part
of the natural evolution of the command.
Others require activity outside uscybercom
itself—within the Department of Defense,
by the executive branch more broadly, by
Congress and by the private sector.
The synergy between the nsa and
uscybercom is evident every day even if
it is not visible. The cryptologic platform
constitutes the collection of signalsintelligence and communications-security
capabilities that since 1952 have served
users ranging from national customers
to departmental analysts to battlefield
commanders. To the extent permissible
by law, uscybercom and the nsa have
integrated operations, people and capabilities
22 The National Interest
to help the nation and its allies respond to
threats in cyberspace. uscybercom’s defense
of U.S. military networks depends on
knowing what is happening in cyberspace,
which in turn depends on intelligence
produced by the nsa and other members of
the intelligence community on adversary
intentions and capabilities. uscybercom’s
planning and operations also rely on the
nsa’s cybercapabilities. No one entity in the
United States manages or coordinates all
this activity on a strategic scale. It requires
cooperation across government agencies and
with industry.
The cyberteam works for strategic,
operational and tactical ends, and it does
so because we cannot afford (in terms of
resources, security or missed opportunities)
to maintain distinct capabilities for strategic,
operational and tactical decision makers.
This approach makes it possible for the
United States to operate national-security
information systems with some assurance
of security; to understand the dimensions
of the threats that we face; and to know
which threats are exaggerated. It also gives
us a measure of warning and situational
awareness and is the basis on which
those vital attributes will be improved in
the future. What are the possibilities for
maximizing its potential?
A
t the dawn of the “cyberage” in the
1980s, the United States was positioned
to take a commanding military lead in this
new domain. Much of the world’s cyberinfrastructure, capacity and computer-security
expertise resided in America, and the U.S.
government debated policies that might have
made federal and critical infrastructure networks much more secure than contemporary external threats could have surmounted.
The U.S. military and intelligence community held strong advantages in cybercapabilities that might have been mobilized in
the 1990s. Although potential threats were
Defending America in Cyberspace
recognized early, there was little urgency to
reorganize and change established processes.
By the time the United States started losing
intellectual property on a massive scale in the
middle of the last decade, the opportunity to
capitalize on commanding advantages had
been lost.
Today the United States is striving to
maintain the edge it holds over potential
adversaries in cyberspace. This advantage
is preserved in part by the large U.S.
government capacity in this domain. Our
lead is also maintained by our adversaries’
own difficulties in crafting new policies,
doctrines and organizations to operate in
the new cyberdomain; in some cases their
social and political contexts are even more
challenging than ours. This American
advantage might not last long. We still,
however, would not trade our predicament
for that of any other nation on earth. Every
nation has significant vulnerabilities that
can be exploited in and through cyberspace;
almost alone among nations, we have the
ability to lessen ours dramatically.
As then deputy secretary of defense
William Lynn explained in Foreign Affairs
in 2010, global circumstances continue
to require an agile and technologically
advanced cybercapability. We have made
progress but still must
do more to ensure that
we have: the situational
awareness needed to defend
our networks; the authority
to respond to threats to the
United States, even beyond
the boundaries of military
systems; legislation that
facilitates information sharing
with the private sector;
established security standards
for critical infrastructure;
trained and ready cyberforces
certified to common, baseline
standards; doctrine along
Defending America in Cyberspace
with tactics, techniques and procedures for
educating our armed forces on the conduct
of military operations in cyberspace; a
defensible cyberarchitecture enabled by the
new Joint Information Environment (jie);
and clear lines of command and control
to ensure network-speed decision making
and action. The Department of Defense
is making progress on an array of efforts
to address these challenges, all the while
protecting the privacy of our citizens and
the civil liberties that are at the foundation
of our political system.
The Pentagon is moving to reduce
significantly the number of its networks
and limit the points where those networks
touch the Internet. Its new joint network—
the jie—is inherently more defensible than
the fifteen thousand disparate enclaves
that currently exist in the Department of
Defense. uscybercom is involved in efforts
to leverage cloud-computing technology to
dramatically increase the ability to safely and
securely store and access data.
We continue to improve our ability to
understand the vulnerabilities of our
networks, the cyberenvironment and
the capabilities of adversaries. Doing so
improves situational awareness of what is
happening in cyberspace for the benefit of
November/December 2013 23
government organizations, private industry
and foreign partners.
We are aware that as we increase our
dependence on networks in cyberspace, we
must have a codified and logical manner
by which to provide structure, command
and control to our forces—and to allow
the coordination and synchronization of
U.S. military operations with those of our
military allies and our partners.
We are developing a force capable
of defending the nation in cyberspace,
operating and defending Department
of Defense information networks, and
providing direct support to Unified
Combatant Command plans and operations.
These forces must be able to defend our
national-security networks, providing a vital
sanctuary from which we can operate even
while under attack. Having such an assured
capability will not only defend Department
of Defense and national-security functions,
but also help government and civilian
networks by convincing adversaries that
an “Armageddon” strategy will not succeed
against America.
We are working to understand how
existing international and domestic laws and
norms apply in the new cyberenvironment.
We are also developing processes and
policies to manage cyberemergencies and to
defeat cyberattacks.
O
ur reliance on cyberspace yields significant strategic benefits but also poses
grave risks to our nation. The very nature of
cyberspace is one of convergence—of networks, devices and people combining and
interacting in new and increasingly complex ways. Communications that previously
moved in separate channels now travel in
one, global network—the Internet. We must
be able to operate securely in this convergent space and to protect the broader social,
political and economic developments that
the digital age has brought us. The things
24 The National Interest
we value—personal wealth, national economic prosperity, intellectual property, our
nation’s defense secrets and even our way of
life—are all targets for our adversaries. More
and more, those treasures reside in cyberspace, and that is the battleground where
adversaries can threaten us. The potential
for strategic-level theft and disruption is
growing as adversaries probe our critical infrastructure networks and take our data. We
do not know how economically and physically damaging coordinated cyberattacks
could be if mounted on a national scale—or
if a “limited” attack could get out of hand
and cause cascading destruction. But the
vulnerability of critical infrastructure and
the power of cyberweapons together represent serious cause for concern about the
resiliency of modern, networked economies
and societies.
Defending the nation in cyberspace,
preventing strategic surprise and
maintaining technological advantage
all depend on collaboration, information
sharing and a world-class workforce. This
requires teamwork across the military,
intelligence community, the federal
agencies, industry, academia and our
international partners. Leadership is vitally
important as well. The U.S. government
has made significant strides in defining
cyberdoctrine, organizing cybercapabilities
and building cybercapacity. We must do
much more to sustain our momentum
in a domain where adversary capabilities
continue to evolve as fast as or faster than
ours do. Our cyberteam can be the core
of whatever national capability we build,
but that capability must also extend well
beyond the confines and authorities of
the Department of Defense and even the
federal government. Building that extended
cyberenterprise now is indispensable to
our ability to deter and defeat enemies in
cyberspace so that they do not threaten our
security, prosperity and way of life. n
Defending America in Cyberspace
Les Misérables
By Milton Ezrati
F
rance’s economy is not just doing
badly. It is in profound decline. The
slide has proceeded far enough now
that businesspeople and politicians across
the Continent increasingly refer to France
as the “sick man of Europe”—quite a distinction at a moment when Greece, Portugal, Spain and Italy share the hospital ward.
For decades, European Union structures
were strong enough to allow Paris to ignore
the country’s economic shortcomings. No
longer. Unless Paris reforms its economic
policies and practices, it could have a disastrous effect. Further economic woes may
undermine the Franco-German cooperation
on which the eu has relied, confronting
the union with either dissolution or, more
likely, an increasingly Germanic future.
Though recent economic reports show
some slight improvement in the French
economy, the underlying picture is nothing
if not bleak. A monthly uptick in industrial
production this spring prompted President
François Hollande to declare the recession
over. He was wrong. To be sure, he can
now point, if he wishes, to a modest spring
expansion in France’s gross domestic product
(gdp). He would do well, however, to resist
declaring victory over a few data points. His
optimistic response to seeming industrial
strength was quickly rebutted by subsequent
Milton Ezrati is senior economist and market
strategist for Lord, Abbett & Co. His forthcoming
book, Thirty Tomorrows (Saint Martin’s Press,
2014), links globalization to aging demographics.
Les Misérables
indicators of renewed decline. He should
have known that the preponderance of
economic evidence remains grim and is
unlikely to change anytime soon.
More than one thousand factories
have closed in France since 2009. And
not a week goes by without another
announcement of relocations to Eastern
Europe or Asia. Rates of new business
formation today remain 13.3 percent
lower than at the end of 2009, while
business failures are 7 percent higher.
The pace of home sales, though it seems
to have stopped declining, shows no sign
of improvement and remains 16 percent
below 2008 levels. Residential real-estate
prices continue to decline. Unemployment
rolls have grown without interruption,
recently averaging some 10.5 percent of the
nation’s workforce. Youth unemployment
averages over 26 percent. Real wages in
France, having stagnated for some time,
have declined for the last four consecutive
quarters. The countr y’s balance of
international payments continues to sink
deeper into the red, with the shortfall of
exports to imports almost doubling in just
the past year to almost 3 percent of gdp.
Government finances, too, continue in
deficit, far exceeding the eu’s mandated
maximum of 3 percent of the economy.
Budget shortfalls over the years have
brought public debt outstanding to fully 90
percent of France’s gdp.
French authorities mostly have either
denied the situation’s severity or blamed
November/December 2013 25
it on Germany’s push for budget austerity
throughout the euro zone. There is no
shortage of critical remarks to make about
the German approach, but it can hardly
explain France’s economic problems.
France, after all, hardly has imposed much
austerity. It has promised to do so but
otherwise has asked of itself none of the
sharp government spending cuts evident
elsewhere in Europe’s periphery. On the
contrary, French government spending has
continued to grow, rising almost 4 percent
during the last two years. Government in
France now constitutes some 57 percent
of the entire economy, well above the
euro zone’s average. Meanwhile, Paris
recently sidestepped the need for more
strictures, receiving permission from the
eu bureaucracy to continue wider budget
deficits than eu rules allow until 2015
at the earliest. Nor can French officials
honestly blame German austerity when
their nation’s economic slide has beginnings
long before the current crisis or Berlin’s
response to it. France, quite simply, has
been underperforming the rest of Europe
for over a decade.
It is this longer-term erosion that speaks
to France’s economic failure. Germany
offers a useful counterpoint. Whereas ten
26 The National Interest
years ago the French economy rivaled
Germany’s, today France produces only half
the value added. French exports, having
fallen more than 20 percent since 2005,
are lower today than anytime during the
last twenty years. In contrast, Germany
has enjoyed an export surge in the past
few years, pushing the country up from
recession lows to its all-time high. France
has even begun to trail Europe’s troubled
periphery. While it has 10 percent fewer
exporting firms than it had thirteen years
ago, troubled Italy has 8.7 percent more.
France’s share of global exports has fallen
from 7 percent in 1999 to only 3 percent
today. During this time, its share of the
euro zone’s exports has fallen from 17
percent to merely 12 percent. Real per
capita incomes in France have grown at
barely half Germany’s rate, while profits
in French industry have fallen
from highs approaching 9
percent of gdp to barely over
6 percent today, only half the
euro zone’s average and hardly
sufficient for French industry
to finance itself.
This daunting record
has accordingly sapped any
enthusiasm about France’s
economic prospects. Major
rating agencies—Standard &
Poor’s, Moody’s and Fitch—
have all downgraded the
country and characterized
its economy and its credit
as having a “negative outlook.” The
government’s own official forecast looks
for tepid growth at best going forward
into 2014 and 2015. The International
Monetary Fund (imf ) expects negligible
real growth of less than 1 percent in 2014
and not much better over the longer run.
This modest projected growth is, in the
grand sweep of economic history, little
more than a technical difference from
Les Misérables
recession. Indeed, the basic picture is so bad
that Fitch, the last agency to downgrade
France, felt obliged to explain why it had
not gone further, weakly citing France’s
agricultural and demographic strengths.
Unsurprisingly, business and consumer
confidence in France have fallen to their
lowest levels in years.
Rather than Berlin-imposed austerity,
something clearly more fundamental is at
work. As is usually the case with economic
fundamentals, good or bad, the root
is domestic. In France’s case, the trouble
is largely of Paris’s making. Successive
governments, socialist and conservative,
have layered onto the economy a complex
of ill-conceived policies that have
hamstrung business with oppressive taxes,
stultifying labor regulations, and a raft of
product and production controls. These
have fed on each other to sap the nation’s
economic vitality, thwart efficiency, depress
productivity and effort, and generally
destroy the economy’s ability to compete.
Compounding these problems, the
country’s lavish social services seem to serve
neither the taxpayers who support them nor
labor’s interests—wasting a significant part
of the country’s human resources.
Taxes are the most straightforward and
immediate economic burden. Payroll
levies in France amount to 38.8 percent,
and with the added burden of business
income taxes and the value-added tax (vat),
employers in France pay the government
the equivalent of almost 64 percent of their
payrolls. This is a much heavier weight
than firms in other countries must bear.
Germany, for instance, imposes a tax wedge
on its business of about 53 percent, high
compared to the 38.5 percent imposed
by the United States, but still more than
10 full percentage points less than France.
Harder to quantify but no less a burden on
French business is the notorious complexity
of the French tax code, which, business
Les Misérables
surveys indicate, rivals even that of the
United States. Its myriad loopholes, set
against the high statutory tax rates, tempt
managers to divert time to tax planning
that they might better dedicate to
production and sales.
High individual taxes sap France’s
economic dynamism in their own, less
direct way. Hollande lost on his plan to
tax high incomes (over €1 million a year)
at an astronomical rate of 75 percent,
but he still managed to drive a number
of extremely productive people out of the
country and sour many more. Meanwhile,
Paris still imposes a 1 percent tax on certain
assets, in addition to especially high taxes
on dividend, interest and rent income.
For those who cannot navigate the code’s
complexities to find a way through one of
its many loopholes, the combination of
high statutory income taxes and the asset
tax creates a remarkably heavy burden. The
Center for Economic and Policy Research
calculates that these levies rise to almost 200
percent on interest and rent income and
close to 223 percent on dividend income.
This is hardly a way to encourage the
investment and innovation so critical to a
developed economy’s competitive edge.
I
f this tax regime were not destructive
enough, France has long-standing labor
rules that seem almost designed to destroy
economic dynamism and efficiency. These
complex regulations, itemized in the government’s 3,200-page Code du Travail,
apply to any company with fifty or more
workers. It speaks to the burden they impose that France today has 2.4 times the
number of firms with forty-nine employees
than with fifty.
The most well known of these rules is the
thirty-five-hour workweek, imposed on all,
however much they may want to produce.
The code also imposes a minimum of five
weeks paid leave, compared with three in
November/December 2013 27
Germany and no minimum in the United
States. It requires 156 weeks parental leave,
about the same as in Germany but huge
compared with twelve in the United States.
It limits management’s ability to alter
wages and hours, and obligates companies
trained workers that in other nations still
contribute actively to their economies.
Government statistics show less than 20
percent of those aged sixty to sixty-four
work in France, compared with more than
twice that percentage in the United States
of one thousand or more employees to
place laid-off workers in new positions and
train them, at the firm’s expense, for the
transition, which can last between four and
nine months. Until recently, employees had
the right to challenge dismissal for up to
five years. On average, one in four laid-off
workers has done so—not a small burden
on businesses. The code also imposes
a mandatory retirement at age sixty—
compared to an average of sixty-four in
developed nations generally, according
to the Organisation for Economic Cooperation and Development (oecd)—
and mandates a minimum wage set at 60
percent of the median wage nationwide,
high even by generous European standards.
Such regulations not only limit the
flexibility and efficiency of French
business, they also waste the nation’s
labor resources. While mandatory early
retirements strain state and private pension
plans, they also deny France a pool of
and elsewhere, even in Europe. France’s
shortened workweek denies the economy
still more valuable labor talent, while the
country’s generous unemployment benefits
encourage still more to stay out of active
production. Little wonder, then, that in
France some 54 percent of the workingage population holds themselves outside
the workforce, compared with 42 percent
in Germany and 32 percent in the United
States. A popular index to combine all
these effects shows that France, in terms of
people working and the hours each works,
uses 47.4 percent of its full potential. In
Germany, the figure is 50 percent; in the
United States, it is 68.2 percent.
This code further burdens business
by interfering with its ability to manage
its own production. The expense and
difficulties involved in laying off workers,
adjusting wages and setting work schedules
often convinces French businesses simply to
forgo responses to business fluctuations that
28 The National Interest
Les Misérables
Successive governments have layered onto the economy a complex of
ill-conceived policies that have hamstrung business with oppressive
taxes, stultifying labor regulations and a raft of product controls.
would otherwise give them a competitive
edge. Worse, they prompt French industry
to deny itself talent. In order to avoid the
potential cost of firing, managers resist
hiring despite potential business advantages.
Many firms try to sidestep this problem
with short-term employment contracts,
some only for a period of months, so much
so that fully 82 percent of new hires in
2012 involved such contracts. But this
management “solution” comes with its
own cost. The uncertainties of short-term
employment undermine employee effort.
The lack of commitment involved also
dissuades firms from training. On both
counts, the French economy fails to develop
the pool of skilled labor that has become
the hallmark of developed and modern
knowledge-based economies.
Seemingly not content with these
anticompetitive measures, the government
has also contrived to encumber business
with onerous product and production
rules. Through licensing, zoning and other
administrative barriers in numbers that defy
cataloging here, France has discouraged
economic activity across a broad front.
The Heritage Foundation, taking such
regulations into account, characterizes
France’s business environment as only
“modestly free” in its scoring of countries
across the world. Nor is this all. A recent
oecd study found France’s regulatory
structure to be more restrictive than those
of most of the developed economies that
constitute the organization’s membership.
France’s failings, it noted, occur in almost
every major category: economic regulation,
product regulation, impositions by
Les Misérables
local policies, state control of the details
of business operations and barriers to
entrepreneurship. The best France did was
in the area of administrative regulation, and
there it only matched the oecd median.
Part of the problem lies in the sheer
number of governmental units that have
control in France. The country’s smallest
governmental unit, the commune, represents
only 1,800 people on average. That
compares with an eu average of 5,500
people in the smallest unit of government.
This arrangement leaves France with thirtysix thousand governing entities, each setting
rules and regulations, usually to suit the
preferences of local business and labor
interests. Thus, local shopkeepers were
more successful in France than elsewhere in
blocking large-scale retailers. That may have
preserved a more attractive, certainly a more
quaint, look to French towns and cities,
but it also has denied France a trend that
has become a major force for employment
elsewhere in the world. It was Paris’s
cooperation with such local pressure that
also blocked Amazon’s effort to introduce
online delivery service into the country
and that thwarted attempts to allow
supermarkets, as well as pharmacies, to sell
over-the-counter drugs. The same sorts of
interests have also steadfastly blocked efforts
to increase the number of taxis in Paris,
which to this day remains at the original
1924 quota.
Making matters even worse, the French
government, for all the revenue it collects,
seems to do less for its citizens than other
countries do. The unemployed, though
generously provided for, get much less help
November/December 2013 29
from the state finding new jobs or needed
training. Paris spends only a third as much
as Berlin on such direct help. In France, the
average government employee assisting the
unemployed with retraining and in their
job search covers seventy-nine people. That
compares with thirty-nine in Germany.
Likewise, French schools do not prepare
their charges for the job market as well
as those of other countries. Recent oecd
comparisons of high-school test scores show
French students trailing their European
and American counterparts in reading and
science. The only place where the French
students outscored many competitors was
in math, and they still trailed the Germans.
France, it would seem, is more inclined to
warehouse people than help them apply
themselves to economic effort.
This entire and varied weight of
dysfunction has created a vicious cycle.
Taxes, regulations and the loss of labor
talent have so eroded profitability in French
business that it has neglected its own
upkeep. Again, Germany provides a handy
counterpoint. During the last three years
French industry has installed just over three
thousand industrial robots, compared with
the twenty thousand installed by German
industry. Germany has spent almost 70
percent more on research and development
than has France. The 2 percent of its
gdp that France spends on technology
investments is barely over half of the rate
in Germany. This investment shortfall
has interacted with France’s waste of labor
talent to erode worker productivity so that
even though French and German wages
have moved up in tandem, the labor cost
per unit of output in France has risen by 28
percent over the past ten years, compared
with only 8 percent in Germany.
This destructive interaction has not
just thwarted growth, but it has also
begun France’s deindustrialization. Cost
disadvantages have reduced industrial
30 The National Interest
value added from 18 percent of the French
economy in 2000 to only 12.5 percent
recently, the lowest in the euro zone.
French employment in manufacturing
has dropped 20 percent since 2000.
Meanwhile, the investment and talent
shortfall has pushed what remains of the
French industry increasingly toward less
sophisticated products and processes.
While overall manufacturing employment
has dropped, employment in firms that
produce unsophisticated goods and services
has actually risen by 18 percent. The oecd
notes that more than one-third of French
manufacturing is medium- or low-tech,
compared with only about one-quarter in
Germany and slightly less than 25 percent
in the United States. France, quite simply,
is beginning to resemble a less developed
economy.
F
rance probably would have taken remedial action long ago were it not for
the implicit support of the eu, the common
currency and Germany. Surely it is not a
coincidence that France’s greatest deterioration has occurred in the thirteen years since
the adoption of the euro and the formation
of the euro zone. The country’s balance
of exports over imports, for instance, remained strongly positive through much of
the 1990s and only began to slip into deficit
in this new century. The decline in the profitability of French business also has become
most evident since the inauguration of the
euro, as have the slide in France’s share of
global and European exports, the deterioration in French productivity and the country’s turn to less sophisticated products and
processes. It is not that the currency union
caused the problem. Rather, it blunted the
pain France would otherwise have felt and
so let matters go further than they might
have otherwise.
Certainly, the eu’s common agricultural
policy (cap) has helped France otherwise
Les Misérables
live well despite its economic failings.
Under this scheme, the eu budgets
substantial funds to sustain food prices
and ensure the profitability of agriculture.
Because France’s economy has an especially
large agricultural sector, the program
effectively transfers funds to France from
the more industrial
members of the union,
such as Germany. It
is a major flow too.
The cap constitutes
about 40 percent of
the eu’s budget and
is scheduled to rise
to some €100 billion
over the next five
years. The amount
that accrues to France
varies from year to
year, depending on
which crops require
the greatest price
support, but eu figures
show that France gets
about one-fifth of
the total on average,
the biggest share by
far. The €8 billion
that would accrue, according to the eu’s
latest long-term budgeting, would alone
constitute almost a 0.5 percent injection
into France’s economy, and it would return
to France a large portion of its entire
contribution to the eu budget. It is hardly
surprising, then, that Hollande so violently
resisted calls by British prime minister
David Cameron to cut the eu budget and,
by implication, the cap as well.
The euro has allowed France to continue
its competitive failings in a different way. If
there were no common currency and France
operated under its old franc, the declines in
exports and investment flows that would
accompany its economy’s competitive
losses would quickly have undermined the
Les Misérables
currency’s value. The falling franc would
ultimately have helped French industry
compete by reducing the prices of its
product in other currencies. It also would
have eroded the global purchasing power
of French consumers, government and
business, imposing a spending discipline
throughout the
economy. Further, the
currency losses would
have increased the cost
of credit, as lenders,
wary of losing still
more on the falling
franc, would have
demanded a higher
rate on any loan that
paid them in francs.
The unavoidable
b u rd e n o f h i g h e r
credit costs would
have constrained
government budgets
and forced Paris to
reconsider the lavish
benefits it provides.
Meanwhile, the pain
emerging from all
these strains would
surely have created a strong constituency to
reform the practices that led to them, one
Paris could not easily defy.
But under the common currency and
the euro zone, France has felt none of
these pressures. Even as policy there has
destroyed the economy’s competitiveness,
the currency has stayed stable, supported
by the greater economic prowess of
Germany and other members. French
industry has, consequently, received none
of the pricing relief it would have from a
falling franc. Because at the same time the
euro’s constancy has sustained the wealth
and buying power of the French people
and the French government, neither has
the country felt any restraint. Instead, the
November/December 2013 31
France uses the union and Germany to punch geopolitically above
its economic weight, to live beyond its means, and to carry on with
policies and practices that it otherwise could not have sustained.
balance of payments and budget have just
gone deeper into deficit, as France and
its government have drawn in goods and
services from elsewhere in the euro zone
that its own economy no longer produces.
With no pain, no constituency for reform
has developed, as it would have under the
franc.
So, too, the euro zone has shielded Paris
from the increased credit costs. Currently,
longer-term French government bonds pay
a low rate of near 2.5 percent, barely over
inflation. Failing economies, like France,
usually pay more. Clearly lenders today
feel secure that the European Central Bank
will protect the euro’s value more effectively
than the Bank of France would have
the franc and that France, as a founding
member of the eu and still its second-largest
economy, is too big to fail. They believe
that the rest of the union, most notably
Germany, would see that its obligations are
met. With lower debt-servicing costs than
it would have under the franc, Paris has felt
less competition within the budget for its
other spending priorities, and so there is no
pressure for change from this front either.
E
ven in this latest crisis, the structure of
the union has helped disguise the country’s economic failings. France’s contributions to the stability funds for the rescue of
Europe’s beleaguered periphery are second
only to Germany’s. But in reality, France
bears disproportionately less of the cost.
For one, there is the ongoing inflow France
gets from the cap. But France also benefits
more than Germany and others from the
relief the euro zone gives Greece, Spain,
32 The National Interest
Italy and the rest of Europe’s periphery. As a
proportion of total exports, France is more
than twice as exposed as Germany to these
countries. To the extent that eu aid supports these beleaguered economies, more
of the funds loop back to France than to
Germany. Meanwhile, because Germany
sells almost 40 percent of its exports outside
Europe altogether, it effectively provides the
bulk of the outside funding for the rescue
effort.
Germany’s leadership is well aware of
the situation. It can surely see how France
has benefited disproportionately from
the union. It can also see how France
has leveraged its advantages within the
union and its influence there to direct
more economic power than it could
produce for itself. Indeed, former French
president François Mitterrand, when first
moving for the common currency in the
1990s, made explicit his goal to bolster
French influence globally by giving
France an element of political control
over economic power beyond its borders.
Then, of course, France’s economy stood
on a par with the economy of the newly
reunited Germany. As German economic
power has increased and France’s has
ebbed, subsequent presidents and prime
ministers have refrained from such explicit
renderings of French objectives. But,
as should be clear, France uses the union
in general and Germany in particular to
punch geopolitically above its economic
weight, to live beyond its means, and to
carry on with policies and practices that it
otherwise could not have sustained. It is
inevitable that Berlin will ultimately want
Les Misérables
to free itself from such a situation and assert
an influence consistent with its relative
economic power, something that can only
happen at Paris’s expense.
For much of the long time spent
building the eu and under the euro,
Berlin has resisted such an assertion. A
lingering guilt from the Second World
War has exerted an influence. But more
fundamentally, Germany also gains from
the currency union, differently than France,
but significantly enough to prompt Berlin
to avoid actions that might increase any
centrifugal forces pulling the eu apart.
There are at least two such considerations
weighing on Berlin.
First, the euro has helped German
industry compete globally. If the euro had
never existed and Germany had continued
with its deutsche mark, the huge flows of
funds into Germany today would have
pushed that currency’s foreign exchange
value to astronomical levels, effectively
pricing much German product off global
markets. But because the euro encompasses
other, weaker economies, its value has
stayed lower than a separate deutsche
mark would have, leaving Germany with
an outright global pricing edge. Second,
the euro’s structure has enshrined a special
advantage for German business within
Europe. Because Germany entered the
union when its separate deutsche mark was
weak relative to the country’s impressive
economic fundamentals, it gave German
product a distinct pricing edge, especially
compared to countries in Europe’s
periphery, which happened to enter the
euro when their separate currencies were
momentarily strong. imf data indicate that
this German pricing edge amounted to
6.0 percent when the euro was launched.
Because Germany has since improved
its economic fundamentals while these
other countries (France and the shattered
economies in Europe’s periphery) have
Les Misérables
lagged in their improvements, that pricing
edge has widened to double-digit levels.
However much such considerations
have restrained Berlin to date, they will
not do so indefinitely. Especially as French
weakness forces Germany to shoulder an
increasing portion of the union’s support,
Berlin should sense that it can retain the
advantages of the union without having
to make concessions to Paris. Indeed,
the negotiations surrounding Europe’s
current crisis indicate that the change
is already occurring. While German
chancellor Angela Merkel has tried hard
to accommodate Europe in its crisis, she,
unlike past German leaders, has effectively
vetoed French efforts to push measures that
run counter to Berlin’s interests. Germany,
for instance, has steadfastly resisted French
proposals for the euro zone to issue bonds
jointly to finance its rescue of the periphery.
Not only can Berlin see that the rescue
itself benefits France disproportionately,
but it also realizes that only its economic
power could guarantee such pools of debt,
making the bonds effectively a blank check
written on Germany for common use
within the euro zone. Similarly, Germany
has insisted on strict euro zone–wide
banking regulations before even considering
plans for zone-wide relief for banks outside
Germany.
Evidence of the power shift has
emerged in other matters as well. Officials
in Berlin, unlike in the past, refused to
ignore the Germanophobic rhetoric
used in a French Socialist Party working
paper. German finance minister Wolfgang
Schäuble angrily refuted the paper’s crass
characterization of his countrymen,
while Andreas Schockenhoff, a member
of Germany’s socialist opposition, took
his French counterparts to task for their
“inappropriate” behavior. Polish foreign
minister Radek Sikorski acknowledged the
power shift in 2011 by calling for German
November/December 2013 33
leadership. That Poland, of all nations,
should make such a call speaks loudly to
how far the change has already progressed.
A recent strategy paper produced by the
Polish Institute of International Affairs has
reinforced this message, explicitly citing
the need for Warsaw to court Berlin
because of France’s diminished ability to
impact eu policies. Even Paris has all but
admitted its ebbing power. By billing itself
as spokesnation for the Mediterranean, it
has all but admitted that acting on its own
carries less weight than it once did.
Perhaps it is the recognition of this
impending shift that has at last impelled
France, even under the socialist Hollande,
to consider policy reforms. Paris has no
lack of blueprints for how to revitalize its
industry and redress the political-economic
balance with Germany. The most recent
government-commissioned outline,
authored by French business leader Louis
Gallois, arrived in 2012. Last year the
imf also made explicit recommendations
for French economic reform. As a sign of
France’s lost stature within the eu, even
the bureaucracy in Brussels has made
recommendations. Paris was outraged.
The various proposals all say pretty much
the same things, advocating tax relief for
businesses and streamlining regulations
34 The National Interest
to allow more flexibility in product and
especially labor markets. Gallois, speaking
in terms of a “competitiveness shock,”
claimed that only such measures would
allow firms to adjust more effectively to
market fluctuations, introduce new
products and invest in new technologies to
improve productivity, profitability and their
competitive ability.
Remarkably, the socialist government
appears to have begun to act on many
of these recommendations, though
matters remain horribly muddled.
Under its “National Pact for Growth,
Competitiveness and Employment,”
Paris has introduced several initiatives. A
Competitiveness and Employment Tax
Credit (cice in the French) would offer €20
billion in tax relief to companies, financed
by €10 billion in general spending cuts and
an increase in the vat. An Accord National
Interprofessionel (ani) would discourage
fixed-term employment contracts by
placing a levy on them and help reduce
youth unemployment by offering an
exception to firms that hire people under
twenty-six years old. The ani would allow
firms more flexibility in setting wages
and hours, as well as make firing easier
by allowing firms to settle their dismissal
obligations with lump-sum payments and
allowing only two years
for employees to challenge
layoffs. In return, however,
it would demand that wage
adjustments and changes
in hours occur only to
avoid layoffs and that when
these occur firms help
finance job mobility and
training. To drive people
back to work, the measure
also would make extended
unemployment benefits
contingent on training and
an active job search—what
Les Misérables
There is scant evidence that France will rouse itself
from its socialist sickbed. Or that it even wants to.
the French and other European reformers
refer to as “flexicurity.” The government
has also established and funded three
financial vehicles to invest in research and
development, higher-technology firms and
what the government calls “sectors of the
future.”
I
f France were to build on such reform efforts, it could in time reestablish its own
economic viability and competitive prowess
and, consequently, reestablish something
like the original Franco-German politicaleconomic balance within the eu. This, obviously, is the more comfortable option for
France, but also more generally. It would
return the European scene to something familiar. If, however, France fails and its economy continues its relative slide—and especially if at the same time Italy, Spain and
other nations in Europe’s beleaguered periphery make effective economic reforms—
then the power balance will shift and the eu
could change into something very different,
something much more Germanic. It is too
early in the game to handicap with any assurance, but probabilities at this initial stage
would seem to favor the latter likelihood:
less than sufficient reform in France and the
more transformative future for Europe.
Certainly France cannot count on the
reforms recently put in place. They are
inadequate and leave many questions
about Paris’s direction. Positive as they
may appear, they have arrived amid
much contrary maneuvering. Paris,
having relieved one tax burden, has at the
same time raised others. The 75 percent
maximum rate failed, of course, but it has
Les Misérables
nonetheless sent a mixed message about
government emphasis. Paris, by financing
some corporate tax relief with a vat
hike, only burdens the economy and the
companies that operate in it in a different
way. Even small points muddle the message.
Former French president Nicolas Sarkozy
had cut the restaurant tax from 18 percent
to 5.5 percent. But Hollande raised it again
to 7 percent last year and has scheduled an
increase to 10 percent next year. Hollande’s
commitments to labor-market reform
and revitalization also sound hollow given
that he eagerly reversed his predecessor’s
small increase in the nation’s retirement
age, bringing it back from sixty-two years,
still lower than the average of developed
nations, to sixty years.
The reforms themselves carry a confused
message. Their complexity and heavy
conditions retain the heavy, top-down
control of the old regulations. All the new
financing vehicles set to modernize French
businesses and pick “sectors of the future”
are entirely controlled by the same Paris
bureaucracy that created the moribund
structure now in such need of reform.
Even as all these new financing vehicles
aim at higher technology and greater value
added, the cice gives companies tax relief
only on lower-paid employees, implicitly
encouraging firms to choose practices and
products that favor less skilled people, and
so necessarily continue the disappointing
trend toward less sophisticated products
and processes. In the ani, firms get tax relief
but only for some employees designated
by the state in some circumstances. In
order to manage their production, and so
November/December 2013 35
by necessity set hours and salaries, firms
must commit to government-mandated
employment objectives. The new rules
only take from workers their old ability
to question their wages because those
wages are now set by a state-devised
formula. Throughout, there seems to be no
recognition that only a company’s managers
can make it efficient and competitive.
If the French, even with their reforms,
cannot rid themselves of the compulsion
for state control and the root, it seems,
of their economic shortcomings, then the
eu’s future will have to accommodate the
decline of French influence. Some associate
a shrinking France with doom for the
eu. Such sentiments are understandable.
France, after all, was a founding member
of the whole project of European unity and
has been a leading light of the effort since.
But the union already has begun
adjusting to a diminished French
presence. Between the disproportionate
returns France gets on the cap and that
accrue to it from the aid given to Europe’s
periphery, it is not apparent how much
of a net contribution France actually
makes. Germany may already be managing
economically without France. Berlin’s
recent pursuit of trade agreements with
China on its own speaks to its willingness
to support the European experiment and,
in the words of a recent Washington Post oped, unilaterally set an agenda for the euro
zone as a whole. As indicated, Germany
already has begun to veto French initiatives
and write durable rules for dealing with the
current fiscal-financial crisis. Others within
Europe, it is evident, are accommodating
themselves to Berlin’s leadership. A simple
36 The National Interest
incident from earlier this year captures the
sense of what is already occurring. At a
meeting of finance ministers during the
Cyprus troubles, it was reported that French
finance minister Pierre Moscovici fell asleep
and that no one at the meeting noticed
until imf head Christine Lagarde woke
him. He has since denied that he actually
dozed off, but even if the story is inaccurate,
it nonetheless captures the developing
acceptance of France’s waning role.
The change will develop slowly, certainly
by the standards of the twenty-four-hour
news cycle. No wars will be fought and
no troops will march as in past European
power shifts. The new leadership and
emphasis will further avoid easy recognition
by occurring entirely within the old eu
forms and institutions. The greatest official
violence will come from the occasional
snub, as Sarkozy gave to Cameron when
he refused to follow the French lead as he
might have in the past and voted against
Sarkozy’s proposals for Europe. Within
these structures, the reality of power within
the union, and certainly the euro zone, has
already moved in a distinctly Germanic
direction. Jacob Heilbrunn surely overstated
when he wrote recently in these pages:
“The past view that what was good for
Germany was bad for the European Union
is being supplanted by a new attitude that
what is good for Germany is even better
for its neighbors.” Still, he did capture the
direction in which things will continue
unless France can get its act together and
offer a viable counterbalance. So far, there
is scant evidence that France will rouse itself
from its socialist sickbed. Or that it even
wants to. n
Les Misérables
Give Corruption a Chance
By Vivek S. Sharma
C
orruption, more often than not,
seems to resemble a plague. Afghanistan, where the cia and British intelligence (in competition with the
Iranians) have quite literally been handing over duffel bags stuffed full with taxpayer money to Prime Minister Hamid
Karzai and his associates, is perhaps the
most prominent example of its invasiveness
and hardiness. Nothing seems to be able
to eradicate it. Immunization efforts fail.
Mutations occur. The only course seems to
be to attempt to adapt to it. For despite the
efforts expended by several American presidents on behalf of Karzai’s administration,
the United States has no surer way of ensuring influence and access to Karzai and his
advisers than through direct cash payments
into a slush fund designed to purchase the
loyalty of important and powerful personages within the Afghan government. The
bankruptcy of the Western strategy in Afghanistan could hardly be expressed in more
vivid terms. Such failures in Afghanistan,
not to mention Iraq, have occurred while
the broader (and noncoercive) dimensions
of “state building” or more generally “development” have also paid less-than-stellar returns. It is difficult to avoid the conclusion
that the project of implanting “good” institutions in non-Western societies, whether
through conquest (as in Iraq and Afghanistan) or through consensual, noncoercive
Vivek S. Sharma is a visiting associate professor of
political science at the University of Copenhagen.
38 The National Interest
means (as in Cambodia), has turned out to
be a thankless task.
But is corruption really the source
of the problem? Rather than viewing it
as a pathology, as most Westerners seem
to do, it is better to understand it as
a type of currency used to establish and
manage power relationships under certain
systems of authority. As such, it is neither
inherently unstable nor illegitimate. If the
international community wants to eradicate
corruption in the developing world, it is
imperative to understand what it is, how
it works, and why it is a potentially stable
and legitimate system. Doing this requires
stepping back and viewing the evolution
of political order through a different set of
lenses than most people are accustomed to,
but the potential payoff for doing so is a
greater sensitivity to how foreign societies
actually work—and a deeper understanding
of why changing them is so very difficult.
F
or several millennia now human societies have created political structures that
can be termed “states.” What we call the
“modern state,” however, is a historically
unique phenomenon that emerged organically in Western Europe by the nineteenth
century and has been characteristic of Western political organization ever since. This
modern state is defined by several characteristics, each of which is necessary for an
entity to be properly termed a state. These
characteristics are a monopoly on legitimate violence over a defined territory and
Give Corruption a Chance
Rather than viewing corruption as a pathology, it is better
to understand it as a type of currency used to establish and
manage power relationships under certain systems of authority.
population over which no higher authority exists. Defined as such, it is clear that
what is being described is a type of political
authority and critically, not a type of administration. Having a monopoly on legitimate violence over a defined territory and
population does in fact require organization and administration. It does not, however, require a particular type of “administration” (specifically, it does not require
what Max Weber called a “rational-legal”
bureaucracy). It is, as is well understood,
entirely possible (and logically coherent)
to have a modern state operate according
to principles other than those that define
modern Western societies (that is, an administration or bureaucracy that functions
on the basis of meritocracy underpinned
by specific liberal notions of fairness and
ethical conduct). In other words, it is critical to bear in mind that the problem that
the development community is seeking to
confront is not primarily a problem of administration (although these too of course
exist): it is, instead, primarily a problem of
authority. Having a modern state (replete
with modern administrative forms) does
not imply anything about how power and
authority actually function within it. The
modern state does not create the emergence
of modern legal-rational forms of authority,
and so simply creating those administrative
structures will not do anything to guarantee
that they actually function internally in a
salutary way.
The World Bank has pithily described
the development project’s essence as
how to turn the Congo into Denmark.
The logical place to start answering this
Give Corruption a Chance
question is by examining how Denmark
became “Denmark.” When these policy
makers turn to the academic literature on
Western political development, what they
find is that it is principally a story of the
emergence of modern forms of governance
and above all those of the state. There is
an implicit and explicit assumption in the
European political-development literature
that the emergence of the modern West
is tied to the rise of administration. The
wonders of modern Western civilization
become the positive externalities of
the emergence of the formal structures
of the modern state. One important
implication of this is that much of the
academic literature on “state formation”
actually focuses on the wrong end of the
problem: it is focused on explaining how
the administrative structures of European
societies evolved and attained their
“modern” forms when the real problem is
not the existence of bureaucracy but rather
its internal logic. And this internal logic is
covered by the domain of the concept of
political authority. Another way of putting
this is that we need to distinguish between
the sources of administration (the concern
of the state-formation literature) and the
sources of the actual behavior within them.
I
t has been entirely normal in human history for one society to attempt to varying
extents and with varying degrees of consequence to alter the institutions of another
society. Such attempts can be and have been
made across several dimensions of social organization, including religion, property and
kinship, among others. The development
November/December 2013 39
project can be understood as being a part
of a very long history of societies trying to
change other ones to resemble themselves.
What the development community seeks
to do is establish self-sustaining institutions
that produce similar outcomes to those
obtained in the West in societies that do
not possess them. In its current garb, the
development project seeks to remodel the
social institutions of non-Western societies
in order to change their human-welfare
outcomes. The problem is that this, as is
well understood by now, cannot simply
be achieved by replicating administrative
forms. The outcomes produced by
Denmark are not merely the function of
possessing good administrative institutions;
rather, they are instead a consequence of
the emergence of particular configurations
of authority that are deeply rooted
in the society. The “efficient” and “fair”
functioning of Denmark’s administrative
institutions is a consequence of the fact
that these administrative organs are staffed
by Danes who take for granted certain
patterns of authority in general. Danes
did not become prosperous because of
the Danish state: they became prosperous
because of the way in which they organized
their lives in general. The Danish state
40 The National Interest
is a reflection and a consequence of this
deeper change in the way in which Danish
social organization evolved. Simply taking
Danish-style administrative organs and
transplanting them to Afghanistan cannot
work because the people who would
actually staff them would be Afghans,
and Afghan institutions are infused with a
different category of authority. The problem
is at the level of individual human behavior
and its aggregate consequences—not the
formal institutional settings in which they
are displayed.
The problem that the development
community faces is that in order for
much of its agenda to work it would
have to confront the deeper reality
that good administrative outcomes
(in a modern rational-legal sense)
require a particular kind of society: the
administrative efficiencies of the modern
West are underpinned by a specific
configuration of authority that flows
from the society into the state. It is the
normal expectation of certain behavioral
patterns and the punishment of deviance
that sustain authority structures in general
and specifically in the modern West.
Authority structures in all societies are
deeply rooted and ingrained in the very
Give Corruption a Chance
fabric of the daily lives of human beings.
They are by definition legitimate (usually
by tradition or something attempting to
masquerade as such) and therefore shape
the reasonable expectations that individuals
have with one another. In order for the
development project to succeed, it needs
to overcome both the sheer inert force
of tradition as well as the resistance of
societies in which authority structures
depend on certain patterns of power
relations. Persuading bureaucrats that the
real pattern of authority that governs their
lives—and which they may have varying
degrees of stakes in—is illegitimate requires
demonstrating to them that it is in their
best interest to engage in new types of
behavior underpinned by new patterns of
legitimate authority. And such change in
authority structures is never easy even when
there is legitimate demand for different
configurations.
In order for the development project to
succeed beyond the actual alleviation of
human suffering it will have to find ways
in which to incentivize individuals—and
especially elites (unless we propose to
decapitate them, elites are crucial)—to
adhere to different standards of public and
private conduct. Otherwise, all that will
happen is the creation of administrative
structures that will be penetrated and
permeated by the natural incentive
structures organic to the existing society.
The key point of the recent history of the
development project has been the failure
of liberal mechanisms to prompt other
societies to alter their institutional profiles,
irrespective of the extent to which they
possess the formal administrative organs
of the modern state. Even in those cases
where tremendous force and violence have
been used, as in Iraq and Afghanistan, this
project has failed to change the nature
of authority in the broader society: the
identity of the winners and the losers
Give Corruption a Chance
changes constantly but the fundamental
dynamics are the same. And so we are back
to the problem of corruption and authority.
H
istorically, most societies that have
possessed a sufficient amount of permanent public authority to be deemed a
state have also been governed by other principles of authority based on patronage and
clientage systems that were, of course, also
closely intertwined with kinship. Societies
such as these intertwine the “private” interests of particular individuals and their networks of kin, clients and patrons into the
formal administrative organs of the “state.”
This, of course, had been the case in Western societies until relatively recently. The
notion that someone ought not to profit
from an office in an individual sense would
have been unintelligible to most people
who have ever lived in a state. The issue of
profit here must be understood carefully. To
say that an individual profits from his office
by rent seeking is not a “corruption” of an
individual or an entire system. The fundamental functioning of the system depends
on systems of patrons and clients because
it is through these networks that power is
expressed and exercised. It is the grease that
keeps the gears of the system running.
To take the ancient Roman example:
from the beginning to the end of the
empire, the political system—both
administrative and military—was based
on intertwining networks of kinship and
clientage. Indeed, the Roman Empire
itself was a consequence of the extension
via many different mechanisms of Roman
senatorial clientage networks over the
entirety of the Mediterranean world and
then some. When we speak of the Roman
provincial administration, what we are
referring to are the great Roman families
governing provinces through local elites
who were tied into the broader system of
clientage. So while the Roman army may
November/December 2013 41
have created the empire in one sense, it
was only through the drawing of other
elites into the orbit of the great Roman
senatorial families that Roman rule was
actually conducted and sustained. When
Romans confronted barbarians, they
dealt with them in exactly the same way
because there was no other alternative:
Roman authority depended, ultimately, on
the networks of patronage and clientage
(occasioned with violence, of course) with
various barbarian groups and therefore
through relationships of dominance
and control that both sides instinctively
understood. In this context, to say that
Caesar or Pompey or Crassus or any of the
other Roman senators out to make a name
and fortune for themselves “profited” from
their office is to misunderstand what that
really means. What was actually going on
was that individuals and their networks
used their own resources gained through
long careers of office holding to enhance
the power and dignity of the Roman people
and their republic and later empire. The
public interests of the state were completely
dependent on the proper functioning of
“private” networks based on clientage.
Roman patrons had to profit from their
offices because if they did not they would
have been unable to carry out their duties
as Roman patrons and thus to be useful
agents of the Roman state. There cannot,
therefore, be “corruption” in a strict sense in
a society whose public and private authority
structures are infused with kinship and
clientage networks. It is quite simply the
way things are done.
A
further illustration of this point is
granted by taking another famously
“corrupt” place: India. Any attempt to understand corruption in India must begin
with the recognition that the fundamental
unit of analysis there is kinship, understood
in a broad sense. In India the language of
42 The National Interest
kinship infuses both public and private discourse. It is the measure of ethical conduct
and propriety. It is the standard by which
an individual’s worth is adjudicated. All
aspects of Indian social organization are infused by kinship and its precious networks,
including the economic sphere (something
that has been very much noticed by the
Economist) and of course the public sphere.
Indian social organization is also
fundamentally defined by a variety of group
identities that have become increasingly
corporatist in nature and increasingly
embedded into the fundamental way in
which power is exercised. India, of course,
began independence with a deeper
experience of European institutions
(outside those of the settler colonies)
than any other society in the colonial
period. And it therefore emerged with
the best administrative inheritance in the
postcolonial world. While the generation
that led India to independence sought to
create a rational-legal bureaucratic state, its
leaders did not foresee the extent to which
the state that they inherited (including
its noncorrupt elite Indian Civil Service
administrative structures and personnel)
would become permeated by the authority
patterns of the society, including the
establishment of patrimonialism within
the administrative organs of the state itself.
And these patrimonial tendencies have
only grown stronger since independence.
Once the founding generation passed
away, much of the value system that had
underpinned the clean and relatively
efficient administration in the early years
gave way to increasingly strong dynastic
and clientage networks. The fact that Rahul
Gandhi is not the current prime minister
of India is simply one of the more amusing
puzzles of contemporary Indian politics: it
is positively odd that he is not. And so the
problem in India is not fundamentally a
problem of administration; it is a problem
Give Corruption a Chance
of authority. “Corruption” is what makes
the whole system work: without it the
Indian state would be unable to placate all
of the noisy constituencies demanding a
cut of the patronage pie. The Indian state is
the principal arena in which a vast network
of patron-client and kinship relations
mediates how the spoils of the system are
distributed. Being powerful in
India requires being able to deliver
goods to family, friends and
dependents: it is the very currency
of power. Not using your office
in this way means to deliberately
alienate the networks of power and
dependency upon which normal
life depends.
It is also important to emphasize
that the West tends to fixate on
the inefficiencies and oftentragic outcomes that this system
produces but fails to recognize the
significance of the phenomenon
as a whole. Indian political
conflicts are mediated through
patronage networks. The system
can, therefore, be viewed as a species of
conflict resolution. It is by offering rewards
to powerful individuals and constituencies
within the Indian body politic that the
Indian state navigates its treacherous
communal, regional, linguistic and, of
course, religious cleavages. The fact that
India has survived as a democratic state—
let alone a “united” state—is a testament
to the abilities of a system like this to
produce relative stability. One of the few
positive consequences of this system is
that the Indian state has always been able
to deploy its vast reservoir of patronage
powers and status to bind to it those who
would otherwise be potential opponents
of its existence. One way to understand
just how important this is for the overall
stability of the Indian state is to consider
what happens when these networks fail to
Give Corruption a Chance
function properly. The Sikh insurgency
in the state of Punjab in the 1980s was
in some sense (though not completely)
a consequence of a failure to come to an
agreement over the relative distribution
of spoils in the greater Punjab area. And
most of the violent regional conflicts that
have simmered and occasionally flared
since independence have a dimension of
failed patronage distribution. The Indian
state has to confront its problems with the
tools that it has and pay due attention to
established and legitimate mechanisms of
conflict resolution. It is a terrible and tragic
outcome of this logic that India cannot
produce a Western-style administrative
state. But this is a consequence of a deeper
problem of authority. The bureaucracy is
itself a mechanism used to solidify and tie
important constituencies to the state; given
that India is poor, there are never enough
resources to fully operate the system. As
a result, many populations are starved of
patronage, and these then become potential
and active opponents of the Indian state.
While India has indeed grown richer and
more powerful over the past two decades,
none of that progress is the product of a
November/December 2013 43
What we call “corruption” has been the normal and
legitimate practice of most human societies and can
actually produce certain categories of good outcomes.
change in authority structures. Quite the
contrary. The dynastic tendency in India
and the system of patronage have simply
grown larger and flashier, but the system
remains unchanged and many hundreds of
millions of people are the victims of this
fact. But it must be understood that the
patrimonial system that is India cannot
simply be seen in moral terms (although
it can, of course, also be viewed through
a normative lens). This system does not
exist because of “bad” people. Its existence
is the result of the numerous compromises
that the Indian state had to reach with the
many potential opponents of the Indian
experiment. And, more importantly, the
elite have had no incentive to change it
until recently. What is potentially
revolutionary in India is not the public
denunciation of corruption but rather
the fact that the society is simultaneously
shifting away from older patterns of kinship
and association. In other words, if India
is to become like the West in this respect
it will be because the authority structures
that sustain these practices have lost their
legitimacy in a constituency that can do
something about it. But it is very important
to understand that what sustains this
system is that it is in fact a legitimate and
accepted way in which to conduct social
relationships. The point is that it is a stable
system, which is not to say that it is a
“good” system.
What we call “corruption” has been the
normal and legitimate practice of most
human societies and can actually produce
certain categories of good outcomes. In
order to change a system like this (in the
44 The National Interest
absence of endogenous demand as in, just
perhaps, contemporary India) it is necessary
to change the incentive structures of the
society at a very micro and therefore
basic level. We are talking about what the
definition of ethical conduct is and the
extent to which it is internally policed.
Building formal institutions can in no way
substitute for the creation of incentive
structures that govern actual lives. And
whatever else is true about other systems
of social transformation that have existed
historically, it appears that in our modern
age there may be no way to use liberal
means to attain liberal ends in nonliberal
societies. Changing authority structures is
a very big deal and historically has always
been accompanied by violence and social
dislocation. We cannot anticipate that
individuals will alter their daily expectations
of normal human interactions without
causing an overall shift in the nature of the
system of power relations.
A
ll this brings us back to Hamid Karzai and those duffel bags stuffed with
American tax dollars. The United States
had a choice about intervention in Afghanistan. One option was a limited intervention along the lines of an imperial raid to
settle some frontier and then leave, but
done while working through the local authority structures to achieve those goals and
accepting the limitation on influence and
power that this implied. Or it could have
attempted to restructure Afghan society on
the grounds that the kind of threat that was
emanating from it could only be fundamentally resolved by a change in the basic social
Give Corruption a Chance
organization of that society. Either way,
the cooperation of elites would have had
to have been secured on the basis of their
legitimate interests. And in Afghanistan
that meant that the regime through which
the United States sought to achieve its goals
would have had to establish its authority
on the basis of the system that governed
the assumptions of most of the people it
was called to rule. Karzai had to have the
resources with which to create clientage
networks because there could be no other
way for him to ensure that the administration would actually heed his orders. He
had to place kin and trusted clients in key
positions and they had to use their positions
to further the overall network of influence
because that was essential to Karzai’s power
and perhaps his very life.
And where could these resources possibly
have come from? Well, the only significant
revenue streams in Afghanistan have been
drugs and aid, and both of these have
fueled the overall system. The United
States should not have been surprised.
Indeed, it seems that the cia, at the very
least, understood that there were no other
Give Corruption a Chance
alternatives but to deliver sacks full of
cash: Karzai could not rule Afghanistan
otherwise, and without funding his
patronage networks the United States
would have no leverage over him. What is
remarkable is not that the cia chose to bribe
Karzai; what is surprising is that it shocks
us (and, of course, there is an added level
of hypocrisy given the tremendous public
and private pressure put on the Afghans
to clean up their collective act). For we
are now a liberal society, and in a liberal
society it is very difficult to make the case
that bribery and corruption may be the
only tools we have at our disposal because
we do not have the power to coerce them
to become like us. It reeks and taps into
the residual historical anger that caused
Western administrations to become modern
rational-legal ones in the first place. And
yet, it is difficult not to conclude that,
in some instances, corruption must be
accepted as an undesirable but nonetheless
potentially legitimate mechanism for
engaging with societies organized along
different lines. Perhaps it is time to give
corruption a chance. n
November/December 2013 45
The Next American Majority
By William W. Chip
A
merica’s changing demographics,
long a delicate topic, have become
an increasingly prominent part
of national political debate. The subject’s
prominence was assured when President
Barack Obama won reelection with less
than 40 percent of the white vote in 2012.
It quickly became conventional wisdom
that Mitt Romney had antagonized Hispanic voters by proposing that illegal aliens engage in “self-deportation” and that the Republican Party was committing political suicide by catering to a shrinking white voter
base. Leading Republican strategists such as
Karl Rove urged the gop to change course.
Writing in the Wall Street Journal, Rove announced: “If the gop leaves nonwhite voters
to the Democrats, then its margins in safe
congressional districts and red states will
dwindle—not overnight, but over years and
decades.” Rove pointed to a Georgia county
where a 339 percent increase in the Hispanic population was accompanied by a drop
in the Republican share of the presidential
vote—from 66.4 percent in 2000 to 51.2
percent in 2012.
One result of Obama’s victory was to
rejuvenate the cause of reforming U.S.
immigration law. Within five months of
Obama’s second inauguration, the Senate
approved legislation that would place
William W. Chip is an international attorney
living in Washington, dc, and a member of the
board of directors of the Center for Immigration
Studies.
46 The National Interest
eleven million illegal aliens on a “path
to citizenship,” and, in order to dampen
demand for undocumented labor, would
greatly increase the flow of legal immigrants
and guest workers. The legislation would
also increase spending to secure the border.
The ensuing debate over immigration
reform, like the postmortem on the
presidential election, has been dominated
by the theme of changing demographics.
When Jorge Ramos, the news anchor for
the country’s largest Spanish-language
broadcast network, was interviewed about
the Senate bill on National Public Radio,
he said:
If Latinos perceive that Republicans are to
blame for the absence of immigration reform,
I think Republicans are going to pay the price
for that. . . . You know, the Hispanic population will triple to 150 million in less than 40
years. . . . Republicans better understand that
this is a different country, that we are in the
middle of a truly, truly demographic revolution. Latinos are changing the way we speak,
the way we dance, the way we do politics in
this country, the way we vote.
His partisan political analysis aside,
R a mo s w a s n o t w ron g ab o u t t h e
“demographic revolution.” In 1950,
European immigrants and their descendants
made up nearly 90 percent of the U.S.
population. Since then, “non-Hispanic
whites,” according to the 2010 census, have
fallen to 64 percent of the population. The
The Next American Majority
Census Bureau’s “2012 National Population
Projections” predicts that their share will
drop below 50 percent in the 2040s.
Rove and Ramos speak as though this
development were a law of nature. It is
not. Instead, the laws of Congress, and
their selective enforcement by the executive
branch, have driven the demographic
revolution. Though Hispanics certainly
enjoy a higher birthrate than nonHispanic whites—more than a third
higher, according to the “2010 National
Vital Statistics Report” of the Department
of Health and Human Services—the
demographic change has been propelled
most by unprecedented levels of legal and
illegal immigration in recent decades.
The Department of Homeland Security’s
“2011 Yearbook of Immigration Statistics”
reports that legal immigration increased
from 320,000 to 1,030,000 per annum
between the 1960s and the 2000s. Today,
small nations like Haiti, El Salvador and the
Dominican Republic send more immigrants
than any European nation.
Based on these immigration and fertility
trends, the “2012 National Population
Projections” estimates that the “Hispanicorigin” population will nearly double from
17 percent of the population in 2012 to 31
percent in 2060. Buried in the government’s
projections is an even more profound
observation, that “after 2020 the Hispanic
population is projected to add more people
to the United States every year than would
all other race/ethnic groups combined.”
In other words, if current immigration
and fertility trends continue, the United
States will eventually become a majorityHispanic nation, perhaps before the end
of this century. In California, our most
populous state, births to Hispanic mothers
already outnumber births to all other ethnic
groups combined. Texas, our second most
populous state, will shortly follow suit.
Ironically, while our current immigration
The Next American Majority
policies are thought to increase diversity, in
the long run they may simply replace one
ethnic majority with another.
I
mmigration is a complex subject, but
the history of U.S. immigration law can
be summarized in a single paragraph. From
independence until the end of World War
I, immigration was virtually unrestricted,
with the exception of limits on immigration from a few countries (notably China)
and on certain “undesirables” (e.g., prostitutes and mendicants). In the 1920s, immigration was harshly curtailed by imposing
“quotas” on Eastern Hemisphere countries
in proportion to the turn-of-the-century
ethnic composition of the United States.
The national quota system effectively discriminated against Asian immigration, and
largely for that reason it was replaced in
1965 with the current system, which assigns
the same numerical limit to every country
(with extra slots for Canada and Mexico).
The 1965 law reserved most immigrant
visas for aliens sponsored by a U.S. relative.
If the system limited sponsorship to
members of the family that produced the
sponsor (parents and siblings) or of the
family that the sponsor produced (spouse
and children), the amount of immigration
triggered by a single citizen would be
limited. However, because relations from
both families can be sponsored, a citizen
can initiate an unending chain of visa
eligibility: a naturalized immigrant might
sponsor his parents, his unmarried siblings
and a spouse; each of the siblings might
sponsor a spouse from the home country;
the spouses of the sponsor and his siblings
might sponsor their own parents and
unmarried siblings; and so on.
The 1965 legal-immigration reforms
occurred just as migration patterns of
illegal workers from Mexico began to shift,
with more bringing their families and
fewer returning home. In 1986, Congress
November/December 2013 47
enacted financial and criminal sanctions
against employers who failed to request
work-eligibility documents from new hires.
To win the support of immigrant-advocacy
groups and businesses with illegal aliens on
their payrolls, approximately 2.8 million
undocumented aliens were legalized.
In the meantime, the family-chain
migration system instituted by the 1965
reforms had generated long waiting lists
for visas. In 1990, Congress sought to
shorten the wait with a 40 percent increase
in the number of visas. Of course, as soon
as the recipients of these additional visas
became eligible to sponsor other relatives
left behind, waiting lists would begin
to grow again. As part of the 1990 law,
Congress also mandated the formation
of the bipartisan U.S. Commission on
Immigration Reform to recommend a
longer-term solution.
Most of the commission’s work was
carried out by the National Academy of
Sciences under the direction of Barbara
Jordan (the first African American woman
elected to Congress from the South), who
was appointed to chair the commission
by President Bill Clinton. Relying upon
research by the National Academy of
Sciences, the commission found that the
48 The National Interest
high levels of immigration since the 1960s,
partly fueled by family-chain migration,
were depressing the wages of low-skilled
Americans. The commission’s 1997 report,
“Becoming an American,” proposed
annual ceilings of four hundred thousand
visas for spouses, children and parents of
citizens and 150,000 visas for aliens with
exceptional skills and refugees, effectively
cutting legal immigration in
half. As is often the case with
recommendations of expert
bipartisan commissions, nothing
happened.
Although primarily tasked with
reforming legal immigration,
the Jordan commission also
addressed the vexed issue of
illegal immigration. The 1986
employer-sanctions provisions
had proven ineffective given the
ease of securing counterfeit workeligibility documents, and within
ten years there were even more
illegal aliens in the United States
than in 1986. The Jordan commission, for
its part, concluded that another legalization
program would only make matters worse
and instead recommended that employers
be required to verify each new employee’s
Social Security number by telephone or over
the Internet.
This E-Verify system, although easy
to use, has been resisted by business
lobbyists, in part because employers are
already required to furnish employee
Social Security numbers to the Internal
Revenue Service, which shares them
with the Social Security Administration.
Owing to bureaucratic politics within the
executive branch and between congressional
committees, this information is not shared
with immigration-enforcement agencies,
forcing employers to confirm the validity
of the numbers a second time to avoid
immigration penalties.
The Next American Majority
T
hroughout the history of American immigration legislation, starting with pre–
Revolutionary War laws on importing indentured servants and slaves, the paramount
influence on the legislative process has been
business interests. The avidity of business for
more labor is obvious: it kept wages from rising and labor from organizing. Until the formation of national unions in the twentieth
century, the labor interest was represented
in the legislative process by those whom we
would today call “progressives”—members of
the middle and upper classes who opposed
on moral grounds the use of child labor
and immigrant workers to depress wages
and break up unions. In 1895, Booker T.
Washington delivered the following plea to
attendees at the Cotton States and International Exposition in Atlanta:
To those of the white race who look to the
incoming of those of foreign birth and strange
tongue and habits for the prosperity of the
South, were I permitted, I would repeat what
I say to my own race: “Cast down your bucket
where you are.” Cast it down among the eight
millions of Negroes whose habits you know,
whose fidelity and love you have tested in days
when to have proved treacherous meant the
ruin of your fireside.
Washington and other progressives
were joined in opposition to unrestricted
immigration by yester year’s “social
conservatives”—citizens who feared that an
influx of Catholic and Jewish immigrants
would undermine the country’s Protestant
culture. However, even in combination,
progressives and social conservatives were
no match for the business interest, which
time and again blocked popular legislation
to control immigration.
Two developments tipped the scales
in the early 1920s, leading to the single
occasion in American history when
Congress acted to reduce the total level
The Next American Majority
of legal immigration. First, under the
leadership of Samuel Gompers, himself
an immigrant, the American Federation
of Labor made an end to mass migration
from Europe one of the key demands of
the country’s first nationally effective labor
organization. Second, and probably of
greater importance, anarchists and socialists
began showing up among the postwar flood
of immigrant workers into American cities.
Fear of social and political instability moved
enough businessmen into the restrictionist
camp to enable passage of the 1920s quota
legislation.
Today, as in the past, large-scale
immigration is supported by business
interests and opposed by most social
conservatives. What is strikingly different
today is the extent to which progressive
forces, including congressional Democrats,
civil-rights leaders and even segments of
organized labor, have sided with big business
in opposing most measures to restrict
immigration. This loss of a restrictionist
faction on the left to balance the openborders faction on the right is key to
understanding why a nation now confronted
with falling water tables, a collapsing
infrastructure, failing schools, declining
wages and widespread unemployment is
on the verge of sanctioning what amounts
to the largest wave of legal immigration in
American history.
When progressives initiated the 1965
reforms that triggered the current wave of
mass migration, they were not deliberately
aiming for greater diversity. On the contrary,
Senator Edward Kennedy testified, “Our
cities will not be flooded with a million
immigrants annually.” Senator Robert F.
Kennedy argued that the elimination of
quotas “can have no significant effect on
the ethnic balance of the United States.”
They were wrong. But Ted Kennedy went
on to embrace the ensuing demographic
revolution, as have contemporary liberals
November/December 2013 49
Why is a nation confronted with a collapsing infrastructure, declining
wages and widespread unemployment on the verge of sanctioning the
largest wave of legal immigration in American history?
like Joel Kotkin, who predicted in his 2010
book The Next 100 Million: America in
2050 that the “staggering amalgam of racial,
ethnic, and religious groups” that we are
destined to become would bring about “the
construction of a new civilization.” Amid
the celebration, more conservative voices,
such as Pat Buchanan in his 2011 Suicide of
a Superpower, deplored the abandonment of
our historic ethnic center of gravity, whose
values and habits (notwithstanding many
shortcomings) fostered political stability,
economic success and individual freedom
unparalleled in human history.
A
s writers on the left and the right debate whether white Americans should
celebrate or deplore their impending minority status, they seldom reflect on the implications for Hispanic Americans of their impending majority status. In so large a group,
one naturally encounters a remarkable range
of talent and perspectives. However, an accumulating mound of data gathered by Hispanic scholars indicates that as much as half
of the Hispanic population, far from forming the nucleus of a confident new middle
class that will set a fresh tone for another
American Century, are coalescing into a
new underclass.
What most distinguishes the booming,
immigration-driven Hispanic community
from non-Hispanic whites (and also from
the much smaller but equally booming
Asian immigrant community) is uneven
educational attainment, a handicap that
stubbornly persists from generation to
generation. In 2008, ucla sociology
professors Edward Telles and Vilma
50 The National Interest
Ortiz completed an exhaustive analysis of
intergenerational progress among Mexican
Americans entitled Generations of Exclusion.
Not surprisingly, they reported that firstgeneration Hispanic citizens outperformed
their parents, who often had not completed
grade school, but educational progress
in the second, third and even fourth
generations had been static or even reversed
itself. Among other striking conclusions,
the professors also found that more than
a quarter of fourth-generation Mexican
Americans were not graduating from
high school and that between the third
and fourth generations the percentage
graduating from college had declined
from 14 percent to 6 percent (compared
to 35 percent of non-Hispanic whites). In
2010, Carola and Marcelo Suárez-Orozco,
codirectors of immigration studies at nyu,
documented in Learning a New Land:
Immigrant Students in American Society
the extraordinary challenges of educating
children in the many schools where
Hispanic and other immigrant children
are now a majority of the student body,
including lack of parental support, ethnic
self-segregation and fear of violence.
This educational deficit has had
deleterious consequences, as measured
by the government’s “National Vital
Statistics Reports” and its periodic
“American Community Survey” and
“Current Population Survey.” According
to these sources, Hispanic immigrants are
significantly more likely to live in poverty
and to lack health insurance than their
white native counterparts. The likelihood
that poverty will pass to the next generation
The Next American Majority
is high, since half of Hispanic children
are born out of wedlock. What’s more, in
2010 University of California professors
Patricia Gandara and Frances Contreras
argued in The Latino Education Crisis: The
Consequences of Failed Social Policies that
encouraging reports of higher Hispanic
rates of graduation from high school often
did not account for Hispanics who never
entered high school in the first place. They
warned that “as a group, Latino students
today perform academically at levels that
will consign them to lives as members of a
permanent underclass in American society.
Moreover, their situation is projected to
worsen over time.”
Academic stagnation in so large
and rapidly expanding a segment of the
population has some sobering implications
for our nation’s standing in the world.
The fact that U.S. students score worse
on standardized tests than their peers in
many foreign countries is widely known.
ExxonMobil’s “Let’s Solve This” campaign
warns that “the Program for International
Students Assessment [pisa] ranked U.S.
students 17th in the world in science and
25th in math.” pisa is a project of the
Organisation for Economic Co-operation
and Development that tests fifteen-yearolds in over sixty countries every three
years. The 2009 test results are summarized
in the U.S. Department of Education’s
“Highlights from pisa 2009: Performance
of U.S. 15-Year-Old Students in Reading,
Mathematics, and Science Literacy in an
International Context,” which includes an
ethnic breakdown of U.S. scores.
Few educators will be surprised that Asian
Americans had the highest pisa scores,
followed by non-Hispanic whites, Hispanics
and African Americans, in that order. More
will be surprised to learn that in only one
Asian location (the city of Shanghai) did
students score better than Asian Americans,
in only one European country (Finland)
The Next American Majority
did they score better than non-Hispanic
whites and in no Latin American country
did students score better than Hispanic
Americans. African American students also
scored higher than students in the only
African country that participated in pisa
(Tunisia). Thus, although U.S. students on
average rank below the top-scoring Asian
and European countries in the pisa tests,
this says less about the relative quality of
our educational system than about the
relative diversity of our student population.
The academic performance of Hispanics
as a group compared to other ethnic groups
is not easy to explain, indeed no easier to
explain than the differing achievement
levels of, say, Korean Americans compared
to Filipino Americans or Jews compared
to gentiles. However, U.S. immigration
policies must shoulder some of the blame.
The problem with our policies is not that
we admit too many immigrants from
countries with low pisa scores; the problem
is that our immigration law discriminates
across the board against talent and
achievement.
November/December 2013 51
The experience of Cuban immigration
is enlightening. Prior to the 1980 Mariel
boatlift, most Cuban immigrants were
middle-class refugees from Fidel Castro’s
Communist regime. On average, these
Hispanic immigrants have flourished, as
have their children and grandchildren.
When I was an undergraduate at Yale,
and “diversity admissions” were just
getting off the ground, one of my new
Hispanic classmates told me that he
and other students filling the “Hispanic
quota” were amused to discover that most
of them were the offspring of well-to-do
Cuban professionals, not the children of
underprivileged Mexican Americans.
But Cuba was not unique in having a
large, well-educated middle class. Mexico,
the source of most Hispanic immigrants,
has millions of successful entrepreneurs
and professionals who have embraced
an ethic of work and learning and who
are prospering within the limits imposed
by crime, corruption and other local
impediments to upward mobility. Most
under the age of fifty are fluent or nearly
fluent in English and (in my experience)
are more cultured than their American
counterparts. Had the U.S. government
deliberately set out to increase the Hispanic
share of the U.S. population, it could easily
have done so by recruiting hundreds of
thousands of the “best and brightest” from
Mexico and other neighbors to the south.
N
ot everyone agrees that the disheartening statistics on Hispanic education
and family formation are harbingers of a
troubled future. In 2001, neoconservative
journalist Michael Barone predicted in The
New Americans that today’s Hispanic immigrants would repeat the triumphant march
into the American middle class of the Italian
immigrants who disembarked at Ellis Island
a century earlier. I agree with Barone that
Hispanic immigrants, imbued with many of
52 The National Interest
the Latin, Catholic traditions of the earlier
Italian immigrants, could do worse than to
emulate the achievements of their antecedents. The stretch of land between Boston
and Baltimore is thick with Roman Catholic
cathedrals, universities and hospitals established (and sometimes hand constructed) by
Italian, Irish and Polish newcomers.
Unfortunately, within the contemporary
Hispanic community there has been
comparably less building of institutions.
This may be due to bad timing. The
parochial schools that drilled so many
Catholic immigrant children in the rigors
of their religion and the mores of AngloProtestant culture are fewer in number and
cost more to attend, mainly because the
ranks of nuns who staffed them in exchange
for food and shelter have been depleted.
More importantly, the twentieth-century
revolution in automated manufacturing
that enabled Ellis Island immigrants as
well as their native-born contemporaries
to aspire to a middle-class lifestyle without
a university degree has come to a close
and been succeeded by revolutions in
transportation and information processing
that have globalized the economy.
The dual forces of rapid globalization
and mass immigration have stunted
upward mobility in the United States
and contributed to the much-lamented
growth in the wealth and income gap. In
a globalized, free-trading economy, any
product or service that can be made or
performed by a low-paid worker will be
imported from abroad, unless it cannot be
imported at all. Because of globalization,
the number of U.S. residents who can
earn a good living competing in the
market for importable goods and services
is shrinking; because of immigration, the
number of U.S. residents who must earn
their living providing retail, buildingmaintenance, nursing, carpentry and other
nonimportable services to the globally
The Next American Majority
As writers debate whether white Americans should celebrate or
deplore their impending minority status, they seldom reflect on the
implications for Hispanics of their impending majority status.
competitive minority is expanding. If the
number of people who can afford to pay
for a service is declining, and the number
of people who earn their living by providing
that service is growing, the law of supply
and demand mandates that the latter’s
wages must fall.
The collapse of real wages for Americans
without a college degree has had a
devastating impact on family formation,
and not just within the Hispanic
community. Last year, in Coming Apart:
The State of White America, 1960–2010,
Charles Murray of the American Enterprise
Institute tracked the growth of “lower class”
whites from 8 percent of the total white
population in the late 1960s to over 20
percent in 2010. The two largest segments
of this expanding lower-class population
were single mothers and men who could
not make enough money to keep two adults
out of poverty.
Acknowledgement of these realities has
been generally absent from the debate. In
a rare exception, T. A. Frank argued in the
New Republic earlier this year that liberals
should oppose the immigration-reform bill
currently under consideration for reasons
similar to those described above. But he
lamented that this view was likely to be
dismissed out of hand as retrograde and
unthinking: “The consensus among decent
people in favor of the immigration bill
making its way through Congress is so firm
that expressing dissent feels a bit like taking
the floor to suggest we chop down the
Redwood National Park.”
To the injuries wrought by uncontrolled
immigration on Americans of every race
The Next American Majority
and ethnicity has been added for Hispanic
Americans the unique insult of losing their
own voice. Traditional Hispanic groups
such as the League of Latin American
Citizens, run by dues-paying members and
advocating patriotism and assimilation,
have been nearly driven out of business
by foundation-funded organizations.
For some of these advocacy groups, the
Hispanic experience was foreshadowed
not by the uplifting saga of Ellis Island
immigrants, but instead by the struggles of
African Americans. From that perspective,
enforcing our immigration laws is just
another form of discrimination.
The simple fact is that in a globalized
society, mass immigration serves to depress
the wages of working-class citizens—both
natives and immigrants—and thereby to
swell an underclass whose problems seem
close to irremediable by our society and its
government. As Frank observed, this may
be “good for wealthy Americans,” but it’s
an “immense blow to America’s working
class and poor.” To say this is not a value
judgment on those who seek to come to
the United States. We, not they, are to
blame for our out-of-date, weakly enforced
immigration policies. The country and
the world have changed significantly over
the past century, and with these changes
America’s ability to successfully absorb
large numbers of low-skilled immigrants
has decreased sharply. But until this
issue can be examined in a cool and
dispassionate manner, the shadow cast by
a forest of myths will continue to occlude
a rational debate about immigration into
America. n
November/December 2013 53
Money Never Sleeps
By Christopher Whalen
P
resident Obama and Congress
continue to wrestle with competing
ideas to fix America’s housing crisis,
ranging from abolishing Fannie Mae and
Freddie Mac to introducing new regulations
for repairing the rickety mortgage-financing
system years after it crashed. To understand
the enduring nature of today’s housingsystem mess, it is not really necessary to
do much more than to look backward. To
look, that is, at the careers of two former
prominent politicians, each of whom has
played an integral role in American finance
in recent decades.
The first is former Connecticut
senator Chris Dodd; the other is former
Massachusetts representative Barney Frank.
Both men have a lot in common. Both
are Democrats. Both were influential
members of their chambers’ banking and
financial-services panels (they chaired their
respective committees when Congress
passed the Dodd-Frank financial-reform
law in July 2010). Both personified the cozy
tripartite relationship involving big banks,
big housing and big government. And
both pooh-poohed the skeptics and stoutly
defended Fannie Mae and Freddie Mac—
long after many experts were warning
that those huge government-sponsored
enterprises (gses) had overextended
Christopher Whalen is a writer and investment
banker who lives in New York City. He is the
author of Inflated: How Money and Debt Built the
American Dream (Wiley, 2010).
Money Never Sleeps
themselves in the frothy U.S. housing
market before the crash.
When it came to listening to dissenting
voices, Frank was a bully and proud of it.
During one subcommittee hearing, when
Congressional Budget Office director
Robert Reischauer expressed concerns
about taxpayer liabilities if Fannie and
Freddie encountered financial difficulty,
Frank responded so vehemently that the
subcommittee chairman, the gentlemanly
Texan Henry B. Gonzalez, admonished
him to stop badgering the witness. His
propinquity to Fannie Mae was manifest
when the company hired his domestic
partner upon his graduation from business
school at Dartmouth and in the $75,000
that Fannie donated to a Boston nonprofit
group cofounded by Frank’s mother. As
Gretchen Morgenson and Joshua Rosner
observe in their 2011 book, Reckless
Endangerment, “Frank was a perpetual
protector of Fannie, and those in his orbit
were rewarded by the company.”
And what about Dodd? He, too,
defended Fannie and Freddie, denying
that they were in serious financial straits
even after Treasury Secretary Hank Paulson
sought to augment capital and regulatory
requirements for the gses as part of a bailout
package. Dodd promoted legislation to assist
troubled subprime-mortgage lenders such
as California-based Countrywide Financial
when they faced collapse after the housing
bubble burst. It later turned out that he
had accepted below-market mortgage
November/December 2013 55
rates from Countrywide for refinancing
his Washington and Connecticut homes.
The Senate Ethics Committee concluded
that, while Dodd had not knowingly
pursued special treatment, he should have
investigated the matter when he discovered
that Countrywide had placed him in a
special category of customers.
Mark Calabria, director of financialregulation studies at the Cato Institute,
wrote in 2010 that nothing in the
Dodd-Frank legislation ended the huge
intervention by the U.S. government in the
mortgage market. Nor would it help avoid
the next crisis. He wrote:
Perhaps it should come as no surprise that Sen.
Christopher Dodd and Rep. Barney Frank, the
bill’s primary authors, would fail to end the
numerous government distortions of our financial and mortgage markets that led to the crisis.
Both have been either architects or supporters
of those distortions. One might as well ask the
fox to build the henhouse.
So should it really come as a surprise to
anyone that the Dodd-Frank bill, which
was supposed to prevent a recurrence of the
housing crisis, is riddled with problems that
Congress continues to attempt to remedy?
Three years after its passage, the bill
increasingly resembles a new Washington
Monument—to folly and hubris. Even its
supporters acknowledge its shortcomings.
Writing in the Wall Street Journal, for
example, Alan S. Blinder, a former vice
chairman of the Federal Reserve, noted,
“The Dodd-Frank Act is taking on water
fast.” The consequences for banks and the
economy could be dire. Yet it needs to
be said that most of the critics of the law,
including Blinder, would address concerns
about it with yet more regulation.
T
he Dodd-Frank law puts new obstacles
to getting credit in front of business-
56 The National Interest
es and consumers, while leaving the riskiest parts of the big banks untouched. The
law imposes partial limits on bank trading
for their own accounts through legislation
known as the Volcker Rule—a rule that, as
the Wall Street Journal noted, “languishes
unfinished and unenforced, mired in policy
tangles and infighting among five separate agencies whose job is to produce the
fine print.” It currently fails fully to curtail
commercial-bank securities activities or separate banks from securities dealers, as was
done by the Glass-Steagall provisions of the
Banking Act of 1933. Even today, despite
Dodd-Frank, the basic business model of
Wall Street, which helped foment the crisis,
remains largely intact. And the same federal
regulators who so badly botched things in
the years leading up to the crisis are still in
charge. Worse, investors in mortgage securities—many of whom were victimized by
lending fraud and questionable mortgage
bundling that occurred further upstream—
have been penalized repeatedly and forced
to foot the bill for cleaning up the mess,
including foreclosure settlements with the
states and litigation between banks and federal housing agencies. Meanwhile, gubernatorial aspirants such as attorneys general Eric Schneiderman of New York and
Kamala Harris of California have fattened
their electoral war chests by exploiting, in
the name of consumer protection, the ongoing settlement process with large banks.
If American consumers used their homes as
atms prior to the crisis, aspiring governors
like Harris use banks and private investors
as a source of ready campaign cash.
Given the cozy relationships reflected
in Dodd’s and Frank’s ties to Fannie Mae
and Freddie Mac, it isn’t surprising that
Congress didn’t directly address the root
cause of the crisis. The obvious conclusion
is that we need to reform Congress and
its corrupt relationship with the housing
industry. As one veteran counsel in the
Money Never Sleeps
House said in an interview for this article:
“Congress got in bed with the housingindustrial complex decades ago. Guess who
got screwed?” The roots of this prolonged
affair go back decades, to the beginning of
Washington’s involvement in the housing
sector. It was veteran Capitol Hill analyst
Robert Feinberg who originally called it
the “housing-industrial complex,” in a nod
to Dwight Eisenhower’s warning about the
military-industrial complex. The former
appears as impermeable to true reform
as the latter. For the subprime crisis was
the inevitable outcome of this housingindustrial complex and its years-long push
for a government-supported bull market
in residential real estate built upon public
finance.
The watchdogs and regulators who were
supposed to protect the country
from financial harm, Morgenson
and Rosner note, were actually
complicit in the actions that led
to the implosion of the American
economy. The watchdogs, in other
words, didn’t do much watching, and
the regulators didn’t regulate. From
the mid-1990s onward, the Federal
Reserve, the Treasury Department
and other regulators, along with
various federal housing agencies,
all acted as facilitators for acts of
securities fraud and malfeasance
by the largest banks that rivaled
the worst excesses of the Roaring
Twenties. These same regulators,
led by former treasury secretaries
Timothy Geithner, Hank Paulson
and Lawrence Summers, then told
Congress and the American people that
we could not prosecute the responsible
individuals for fear of “systemic risk.”
To date there have been just a handful
of minor fraud prosecutions involving
mortgage securities issued by the largest
banks. Dodd-Frank does not address
Money Never Sleeps
the issue of financial fraud, much less
the festering political issues behind the
subprime crisis.
It was Congress that nearly precipitated
the collapse of the economy by
systematically dismantling Glass-Steagall’s
separation of banking and securities
underwriting. Glass-Steagall imposed clear
and simple prohibitions on what banks
could and could not do in just five brief
sections of the Banking Act, comprising
just thirty-seven pages. Such simple
prescriptions didn’t require any huge new
enforcement bureaucracy. Dodd-Frank, by
contrast, is a mess. It takes up 2,319 pages
and imposes expansive and highly detailed
rules on nearly every aspect of financialinstitution management.
T h e n e w l a y e r s o f g ov e r n m e n t
regulation imposed on the financialservices industry include a new Consumer
Financial Protection Bureau (cfpb) to
protect Americans from the predations
of large banks. Another is the creation
of the Financial Stability Oversight
Council to manage the risk of sudden
November/December 2013 57
liquidation of large, troubled financial
companies. Hundreds of new restrictions
also are imposed on hedge funds and
ratings agencies, adding mind-numbing
new layers of regulatory bureaucracy to
these businesses. One result of this raft of
intrusive regulations and legal strictures is
that nearly a third of all Americans have
essentially been frozen out from buying a
home.
Meanwhile, although Dodd-Frank’s
statement of intent brims with promises,
the law lacks powerful provisions that
might help to prevent another financial
crisis. For example, former Democratic
senator Ted Kaufman of Delaware says
that the “orderly liquidation authority”
established by Dodd-Frank is a paper tiger.
At a Washington conference this May,
he said that Dodd-Frank cannot handle
the liquidation of insolvent financial
institutions and hence can’t end the
practice of government bailouts of large
banks. Curtailing the bailouts was of course
a primary goal of Dodd-Frank. Thomas
Hoenig, former president of the Federal
58 The National Interest
Reserve Bank of Kansas City and now vice
chairman of the Federal Deposit Insurance
Corporation, told the House Financial
Services Committee that the biggest banks
are “woefully undercapitalized” within a
“very vulnerable financial system.” sec
commissioner Daniel Gallagher blasted the
Dodd-Frank law in January. “It’s a perfect
example,” he said, “of not letting a good
crisis go to waste. . . . The act is a model
of the new paradigm of legislation: a good
concept, in this case regulatory reform,
overwhelmed by a grab bag of wish list
items.”
Ju s t a s t h e Sa r b a n e s - O x l e y l a w
sidestepped the securities fraud perpetrated
by Enron and WorldCom, and instead
focused on corporate governance, DoddFrank also deliberately misses the point.
Washington’s grab-bag habits stem from
the fact that few members of Congress have
the time, let alone the inclination, to study
finance, much less the intricacies of a bill
such as Dodd-Frank. When it comes to
designing legislation, members and their
staffs ultimately are led around by the
nose by big-bank lobbyists who finance
reelection campaigns—or not. But the most
telling point about Dodd-Frank is that
even with thousands of provisions it does
not address the root of the crisis—namely,
the government’s intimate involvement in
housing finance.
T
hat involvement goes back to the
Great Depression and, before that, to
progressive-era concepts that came to the
fore in American politics during World War
I and the presidency of Woodrow Wilson.
In terms of the origins of the subprime
crisis that led to the passage of the DoddFrank law, obviously housing is the main
foundation. Government subsidy and promotion of home ownership by all Americans from the 1930s onward is the historic precursor of the collapse of the U.S.
Money Never Sleeps
Although Dodd-Frank’s statement of intent brims
with promises, the law lacks powerful provisions
that might help to prevent another financial crisis.
financial markets in the last decade. The
failure of markets for private mortgage securities would start the avalanche that became
known as the subprime crisis, but the entire
U.S. mortgage market was built upon a
financial and legal template that assumed a
leading role for Uncle Sam.
Since the turn of the last century,
American progressives have pushed for legal
remedies to contain the worst tendencies
of big business and the malefactors of
wealth. A main goal of the progressive
movement was purification of government
by exposing corruption and undercutting
political machines and bosses. The other
notable tendency in Washington from
World War I through the Great Depression
was the creation of “parastatal” entities
in Washington, modeled after 1920s
European countries experimenting with
fascism and Communism, especially Italy,
Germany and the Soviet Union. The use
of gses during World War I and the New
Deal reinforced this model of a direct and
continuing role for the federal government
in the U.S. economy, a model that was
effectively combined with the progressive
urge to use the state as an agency for social
good. gses such as the Reconstruction
Finance Corporation (chartered by
President Herbert Hoover, a Republican
with progressive leanings) were explicitly
modeled after European organizations.
This tendency to rely upon the state
rather than private individuals for
economic solutions very much underlies
the U.S. approach to housing in the post–
World War II era and reflects a broader
philosophical conflict in the American
Money Never Sleeps
body politic. It is worth noting that when
Franklin Roosevelt commanded that
Congress pass the Glass-Steagall laws, it
was, of course, good politics to attack the
big banks and Wall Street speculators,
just as it is today. In 1936, the Journal of
Social Psychology sought to survey latent
authoritarian tendencies of the American
populace. While the vast majority of
respondents described themselves as
antifascist, they also expressed support
for fascist views so long as they were not
identified as such, as renowned cultural
historian Wolfgang Schivelbusch recounted
in his 2006 book Three New Deals. Even
Walter Lippmann had declared during the
early stages of the Great Depression that
perhaps the time had arrived to roll up
the Constitution and put it into abeyance.
The grim economic realities of the Great
Depression made Americans amenable to
authoritarian views that would never have
won majority support prior to World War I
or during the Roaring Twenties.
After losing the 1932 election, Hoover
identified housing as one of the more
attractive areas for generating employment.
Though he was highly critical of fdr’s New
Deal public-works programs and mildly
critical of government providing cheap
credit for private business, he supported
the use of housing to create jobs. “The
American people are always underhoused
both in quantity and quality,” Hoover
declared in pressing his case for government
support. Hoover, who had served as
commerce secretary in both the Harding
and Coolidge administrations (and as
Wilson’s Food Administration chief during
November/December 2013 59
World War I), was no ideologue when it
came to the economy. Unfortunately, fdr
and the Democrats in Congress ignored
Hoover’s proposal in 1933 to use the newly
created Federal Home Loan Banks to
discount mortgage loans, a proposal that
“would have done more good than billions
in tax money,” Hoover wrote in his threevolume memoirs.
The New Dealers were not about to
let a good crisis go to waste if they could
leverage it to gain a firm
grip on political and
economic power, which
is what they did. And
it’s fair to note that the
Great Depression was
so deep because of the
flimsy condition of
the mortgage-finance
industr y a centur y
ago. Mortgage finance
in the early 1930s
was primitive and
definitely not consumer
friendly, providing a
ready laboratory for
p r o g re s s i v e re f o r m
under fdr and the
New Dealers. Banks
did not typically provide mortgage loans,
which instead were short-term instruments
financed by title and insurance companies.
From the New Deal onward, the market
for home mortgages was dominated by
federal housing agencies such as the Home
Owners’ Loan Corporation (holc) and
the Federal Housing Administration (fha).
The holc had the power to restructure
existing home loans, while the fha provided
a guarantee for investors to encourage them
to hold mortgages. From the mid-1930s,
the government provided a guarantee to
investors willing to invest in mortgage
paper, thereby creating a marketplace that
otherwise would not have existed. Their
60 The National Interest
key innovation was to change the structure
of the mortgage from what was essentially
a short-term demand note into a longterm (typically twenty-year) fixed-rate, selfamortizing debt instrument.
Once the immediate emergency of
the Depression was met, however, the
federal apparatus created around housing
continued to operate and perform a role
that the private sector would not. The
holc was dissolved and the fha remained
as guarantor. Fannie
Mae was created to
facilitate a secondary
mortgage market.
Owing to laws passed
during the Depression
and several earlier
landmark Supreme
Court decisions, the
private sector was
not yet prepared to
underwrite twenty-year
fixed-rate mortgages
without a guarantee.
The fha provided
s u re t y f o r p r i v a t e
investors, and Fannie
Mae helped banks fund
term loans. But the key
point is that by embracing a governmentintervention model similar to those of
European nations such as Germany and
Denmark, Roosevelt fundamentally altered
both home financing and the country’s
political economy. fdr effectively replaced
traditional private lending with publicly
supported risk-pooling, rendering home
loans more affordable but also injecting a
large public subsidy—as well as the same
type of cronyism and political corruption
one now sees in the European Union’s
largely nationalized banking sector.
During and after World War II, the
U.S. government provided subsidized loan
guarantees to returning soldiers, creating
Money Never Sleeps
a new entitlement for housing that would
eventually grow into a more general federal
subsidy for much of the middle class. In
1944, a Veterans Affairs loan program was
added to the Veterans Bill of Rights. By
1948, Fannie Mae was buying va loans
and adding greatly to credit availability. In
1968, Fannie Mae was split in two, creating
Ginnie Mae to continue underwriting
government-guaranteed mortgages while
Fannie Mae was “privatized.”
An August 1968 memo from Housing
Secretary Joseph Califano to President
Lyndon Johnson outlines the budget savings
from the Fannie Mae privatization. Even
as the Johnson White House planned the
privatization, though, Fannie Mae was
pursuing an ambitious effort to promote
greater home ownership. “It will probably
save some $200 million in the budget
by having the private corporation, rather
than the public Fannie Mae, sell bonds in
September,” Califano told the president.
Little did the secretary know that four
decades later, a pseudoprivate Fannie Mae
would nearly bring about a collapse of the
U.S. financial markets.
Congress created Freddie Mac in 1970
to securitize mortgages originated by
savings and loans. Only then did the private
sector begin to think about getting into
housing finance in a serious way, without a
federal guarantee for the credit risk on the
mortgage. Indeed, from the 1970s onward,
a procession of federal subsidies and
initiatives increased the federal support for
the U.S. housing sector. In 1987, Congress
passed tax rules for “Real Estate Mortgage
Investment Conduits,” which gave Fannie
and Freddie an effective monopoly over
the market for residential mortgage-backed
securities. The fact of this legal monopoly
opened the door for the gses to underwrite
and sell toxic loans to investors under the
benign label of “short-term government
securities.”
Money Never Sleeps
I
n the forty years since Freddie’s creation, the U.S. housing market has gone
through dramatic boom-and-bust cycles. In
2006, the private sector was underwriting a
significant portion of the overall mortgage
market, but today private mortgage lending
has almost disappeared. Virtually all of the
$1.5 trillion in residential mortgages that
will be underwritten in 2013 will carry a
federal guarantee. Private mortgage-backed
securities will probably total no more than
$50 billion this year, down from hundreds
of billions annually before the crisis. The
last decade may mark a peak for private
financing for mortgages—and for home
ownership—that may not be reached again.
U.S. home-mortgage rates, although up
slightly since midyear, remain extremely
low. The current rates advertised by private
banks and lenders reflect a subsidy of
several percentage points above where a
hypothetical private market investor would
lend. And Dodd-Frank leaves the federal
monopoly on mortgage finance virtually
untouched.
Unfortunately, Dodd-Frank does not
address the financial crisis at its core.
Under the law, lenders are encouraged to
originate “qualified mortgages.” These lowrisk loans include those backed by the fha
and the va, conventional loans bought by
Fannie Mae and Freddie Mac, and some
“portfolio” loans, which are mortgages
that lenders originate and then keep. But
qualified mortgages exclude many of the
mortgage-loan options that have been
available in the past. The terrible irony of
Dodd-Frank is that it seeks to address the
misdeeds of Washington and Wall Street
by reducing the availability of credit for
American consumers at both ends of the
credit spectrum.
Blue-chip “jumbo” borrowers whose
loans are too large for the agency market
are discriminated against by Dodd-Frank,
an illustration of the mindlessness of
November/December 2013 61
The terrible irony of Dodd-Frank is that it seeks to address the
misdeeds of Washington and Wall Street by reducing the availability
of credit for American consumers at both ends of the credit spectrum.
the reform legislation. And Dodd-Frank
doesn’t just affect borrowers at the top of
the marketplace. The qualified-mortgage
guidelines limit points and fees to 3 percent
of the amount being financed and prohibit
prepayment penalties that protect lenders
from refinancing in the first three years of
a loan. But such a stiff standard will lock
many borrowers with weaker credit out of
the market. That certainly won’t expand
local real-estate sales or maintain home
values. Qualified mortgages, according
to the cfpb, “generally require that the
borrower’s monthly debt, including the
mortgage, isn’t more than 43 percent of
the borrower’s monthly pre-tax income.”
Unfortunately, the 43 percent debt-toincome standard and other rules imposed
by Dodd-Frank leave many potential
home buyers without financing. Instead,
American families will be locked into
renting homes at a cumulative cost far
above that required to buy the very same
dwelling. Is this what Chris Dodd and
Barney Frank mean when they talk about
helping American families?
I
n a sign of the continuing agitation in
Congress over the largest banks, Democratic senator Elizabeth Warren of Massachusetts and Arizona’s Republican senator
John McCain have introduced legislation to
separate commercial and investment banking in the mold of the Depression-era GlassSteagall law. The proposal is mostly a political exercise since the legislation has little
chance of approval, but it is important because the political attraction of assailing the
largest banks has not diminished even five
62 The National Interest
years after the onset of the subprime crisis.
The most interesting thing about
McCain-Warren is that it would complete
the evolution only partly accomplished in
Dodd-Frank by the Volcker Rule, named
after former Federal Reserve chairman
Paul Volcker, who pursued draconian
anti-inflation policies in the late 1970s
and early 1980s. Specifically, the McCainWarren legislation would separate securities
underwriting and trading from banking,
and allow large dealers such as Merrill
Lynch and Morgan Stanley to trade once
again for their own account. The Volcker
Rule’s limits on trading activities of banks
for their own account do not address the
causes of the subprime crisis, but they do
sequester bank capital from the financial
markets, reducing liquidity in many types
of debt and equity securities.
It is no small irony that the Volcker Rule
could be the cause of the next financial
crisis by limiting the ability of banks to
provide liquidity to financial markets,
as was the case this past June when Fed
chairman Ben Bernanke began to signal an
end to easy-money policies. Ultimately we
need to either repeal the Volcker Rule or
move forward with something like a GlassSteagall-type legal separation of banking
from investment activities to release this
capital. In the latter case, “narrow banks”
would function as depositories, lenders and
fiduciaries, and they would become clients
of the investment banks. The investment
banks would need substantial balance
sheets to operate outside the umbrella of
“too big to fail.” But this would be a big
improvement over the current—and very
Money Never Sleeps
dangerous—situation created by the half
measure of the Volcker Rule within DoddFrank.
The fact that members of Congress such
as Warren and McCain, among others, still
feel the need to push for a separation of the
securities and banking arms of the largest
universal banks speaks volumes about the
unfinished nature of the debate surrounding
the Dodd-Frank legislation. Bashing the big
banks remains good politics, even if chances
of actually passing legislation to split up
those banks are very thin. Besides, when
members of Congress bash the big banks,
the banks and their surrogates write ever
more checks to fill campaign war chests.
In the next several years, the full
negative impact of Dodd-Frank on the
U.S. economy, and particularly its housing
sector, will likely become apparent. Then
the emphasis on higher capital in banks
will be replaced by a desire for stronger
growth and more jobs. One of the key
targets for such counterreformation will
be the cfpb, the Calvinist instrument of
righteousness of Senator Warren, which
has greatly reduced the availability of credit
to American consumers. The intentions
of Warren and others may be noble, but
their efforts to regulate the U.S. financial
markets are almost certainly doomed
to failure. But even as Congress seeks to
repair some of the deficiencies of the DoddFrank bill, it will surely remain oblivious
to the real relationships between finance,
markets and capital. If history, as Edward
Gibbon recorded in The Decline and Fall of
the Roman Empire, consists of the “crimes,
follies, and misfortunes of mankind,”
then the congressional record on financial
regulation does little to dispel his gloomy
verdict. n
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Money Never Sleeps
November/December 2013 63
Reviews & Essays
Misunderestimating
Bush and Cheney
By Christian Caryl
Peter Baker, Days of Fire: Bush and Cheney
in the White House (New York: Doubleday,
2013), 816 pp., $35.00.
A
specter is haunting Washington—
the specter of George W. Bush.
President Obama may have spent
almost five years in the White House by
now, but it’s still possible to detect the furtive presence of a certain restless shade lurking in the dimmer corners of the federal
mansion. Needless to say, this is something
of a first: usually U.S. presidents have to
die before they can join the illustrious corps
of Washington ghosts, and 43 is, of course,
still very much alive in his tony Dallas
neighborhood, by all accounts enthusiastically pursuing his new avocation as an amateur painter. Yet his spirit is proving remarkably hard to exorcise.
Anyone who doubts this need only
consider the current debate about how to
deal with Bashar al-Assad. The pollsters
and the pundits have found a remarkably
stubborn public consensus against the
use of force, and the reasons for this
reluctance invariably circle back to the
Christian Caryl is a senior fellow at the Legatum
Institute in London and a contributing editor at
The National Interest and Foreign Policy.
64 The National Interest
case of a previous Baathist dictator who
stood accused of using weapons of mass
destruction against his own citizens.
America’s war against Saddam Hussein
may be history, but for once the American
people’s notoriously flabby short-term
memory has not failed them. They have
distinctly little appetite for anything that
looks like a redo.
So how could George W. Bush, of all
people, have created such a potent
legacy? As New York Times White House
correspondent Peter Baker reminds us in
his magisterial new book Days of Fire, Bush
left office as one of the most unpopular
presidents of modern times. The Iraq
War was clearly the signal failure of his
presidency—a point now conceded even
by many of his erstwhile supporters. But
that’s just the first item in the index of
errors. What about the shameful embrace of
torture as a principle of the so-called global
war on terror? The bewildering insouciance
toward the war in Afghanistan? The selfdestructive contempt for America’s allies?
The fumbling response to the Katrina
disaster? The policies that paved the way for
the worst economic crisis since the Great
Depression?
Given this list of cock-ups, it would have
been understandable if Baker had chosen
to structure his narrative as an 816-page
affidavit for the prosecution. There are still
plenty of short-fused Bushophobes out
there, so a hatchet job might have made
for great sales. But that would also be bad
history. For better or for worse, we—and
President Obama most of all—still live in
the world that Bush built.
Reviews & Essays
For better or for worse, we—and President Obama
most of all—still live in the world that Bush built.
Think about it. The prison at
Guantánamo Bay still operates. The drone
war goes on—the current president, indeed,
has expanded it far beyond Bush’s wildest
imaginings. As for the National Security
Agency’s vast warrantless-surveillance
schemes set up in the years after 9/11,
the current White House hasn’t missed a
beat there, either. Indeed, despite Obama’s
promises to guarantee government
transparency and protect whistle-blowers,
his White House has gone after leakers
with a ferocity that puts George W. to
shame. (The current administration has
brought charges against seven people under
the World War I–era Espionage Act; the
previous White House prosecuted only
one.)
So could one, indeed, argue that the Bush
presidency produced anything positive? In
his efforts to provide balance, Baker does
his best to make the case for Bush and Dick
Cheney. He argues that this duo
accomplished significant things. They lifted a
nation wounded by sneak attack on September 11, 2001, and safeguarded it from further assault, putting in place a new national
security architecture for a dangerous era that
would endure after they left office. At home,
they instituted sweeping changes in education,
health care, and taxes while heading off another
Great Depression and the collapse of the storied auto industry. Abroad, they liberated fifty
million people from despotic governments in
the Middle East and central Asia, gave voice to
the aspirations of democracy around the world,
and helped turn the tide against a killer disease
in Africa. They confronted crisis after crisis, not
Reviews & Essays
just a single “day of fire” on that bright morning in September, but days of fire over eight
years.
Baker’s effort to illuminate these aspects
of the story won’t make him any friends
on the left. Far from it. But, again, the
continuities are difficult to deny. The newly
elected Obama happily continued the
economic emergency measures instituted
by Bush in the waning days of his term.
The Troubled Asset Relief Program and the
bailout for the U.S. automotive industry—
some of the most far-reaching interventions
in the national economy ever undertaken—
were launched by the laissez-faire Texas
conservative, not the community organizer
from Chicago. And though few Americans
seem to have noticed, those programs
worked out pretty well in the end—and
both presidents can rightfully claim a share
of the credit.
Obama also has kept No Child Left
Behind, Bush’s signature education
reform, maintained the costly Medicare
prescription-drug program, and expanded
the higher fuel-economy standards and
renewable-energy incentives that Bush
passed in his second term. “While Obama
ran against Bush’s tax cuts, he ended up
preserving roughly 85 percent of them,
reversing them for just the top 1 percent
of American taxpayers,” Baker writes.
“And Obama made one of his highest
second-term priorities an overhaul of the
immigration system, moving to complete
Bush’s unfinished mission.” All correct.
In short, it’s too easy to diss George W.
Bush. For many of his detractors, he’s still
November/December 2013 65
a walking caricature: Dubya, the Shrub, the
lock-jawed dope of Will Ferrell’s road show.
But Baker convincingly argues that there’s
no understanding where we are today unless
we take a cold-eyed look at the reign of
Bush and Cheney.
Y
es, let’s not forget Cheney, so loathed
on the left. Baker shrewdly opted to
structure this book as a dual biography,
the story of an unprecedented partnership between the president and his deputy.
Previous accounts, Baker believes, have
tended to miss the full complexity of the
two men’s relationship. “Popular mythology had Cheney using the dark side of the
force to manipulate a weak-minded president into doing his bidding,” Baker writes.
“The image took on such power that books
were written about ‘the co-presidency’ and
66 The National Interest
‘the hijacking of the American presidency.’” But Baker says this is nonsense: the
“cartoonish caricature . . . overstated the
reality and missed the fundamental path of
the relationship.”
No doubt Cheney made himself into
the “most influential vice president in
American history”—a position he achieved
through his unparalleled knowledge of the
inner workings of Washington, which he
gleaned through decades of service in both
the executive branch and Congress. Yet
Baker goes on to show how Cheney blew
it. Ultimately he squandered this influence
as his president moved to the center in his
second term. While the basic arc of Bush’s
life is by now familiar to most politically
interested Americans (his early business
failures, his reinvention as a baseball team
owner, his fight against alcoholism and
his redemption through revivalist
Christianity), Cheney’s biography
is still obscured by myth, partisan
resentment and his own sere public
persona. I, for one, was shocked to
realize that Cheney is actually just
a mere five years older than his
president: I’d assumed (like many
Americans, I suspect) that he was at
least fifteen or twenty years Bush’s
senior. Maybe it was just his glabrous
head, but Cheney always exuded,
and continues to exude, a surly
gravitas that the peevish Bush never
mastered.
Nowadays we tend to think of
Cheney as a kind of cranky old battle
robot. But there was a time when
he was more of an enfant terrible,
Reviews & Essays
a remarkable political prodigy. In 1976,
thanks to a wily political patron named
Donald Rumsfeld, Cheney became, at age
thirty-four, the youngest White House
chief of staff in history (under President
Gerald Ford). Bossing around underlings
came naturally to him. In 1980, as
a fledgling congressman, he ran for and
won the number-four House post in
the Republican Party. At the end of the
decade he assumed the job of secretary of
defense under President George H. W.
Bush, in which capacity he was part of the
team that planned and implemented the
successful 1991 Gulf War, including the
fateful decision to leave Saddam in power
once allied forces had expelled him from
Kuwait—a decision that Cheney stoutly
defended, alleging that it would have been
foolhardy to go all the way to Baghdad.
Later he changed his mind. It was a career
that gave Cheney unparalleled insight into
the technology of inside-the-Beltway power.
But there was something else at work
as well. Cheney’s experience in the 1970s,
when the post-Watergate Congress was
feverishly working to curtail presidential
prerogatives wherever it could, left him
with a markedly expansive view of executive
power. In Cheney’s opinion (one he shared
with Rumsfeld), the job of the president
and his staff was to push back aggressively
against any efforts to impinge upon
presidential authority.
It was Cheney, indeed, who realized
that the oft-derided office of the vice
presidency was an ideal platform for anyone
determined to mount an all-out defense
of White House supremacy. The story of
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how Cheney ran Bush Jr.’s vice presidential
selection committee, only to end up getting
the job himself, has been often repeated.
Baker’s version is cautious and nuanced,
but still illuminating. “The official version
is that Bush never gave up on the idea of
having Cheney as his running mate and
wore him down,” Baker writes. There is
some evidence for this scenario—Cheney,
for example, refused the job the first
time Bush offered it to him. Yet Baker
concedes that it’s hard to entirely dismiss
the notion that Cheney, the maestro of
plausible deniability, had skewed the whole
process in his favor, a verdict that Barton
Gellman’s impressive book Angler, which
details the efforts of Cheney and his aide
David Addington to obtain compromising
material about other potential candidates
during the vetting process, suggests. Baker
observes:
Yet some losing candidates and even some
Cheney friends were convinced it was all an
elaborate orchestration. “Cheney engineered
the whole vice president thing,” said one friend.
“The brilliance of Cheney is he let the other alternatives just light themselves on fire, one after
the other. It was perfect.” Cheney never said
as much to this friend, but it says something
that someone close to him would come to this
conclusion.
If you’re a student of the science of power,
you’ll relish the passages that describe
Cheney’s maneuverings. From the very
beginning of his vice presidency we see
Cheney deftly recalibrating the bureaucratic
machinery to his own ends (for example,
November/December 2013 67
There is no evidence that Cheney ever succeeded in persuading
Bush to adopt positions that he wasn’t already inclined to accept;
there are, however, quite a few cases where Bush defied him.
by melding his high-powered staff with the
president’s to an extent that no one else had
ever dared to do before him).
One of the most intriguing accounts in
the book involves Cheney’s effort, early
in 2001, to gut U.S. approval of the
Kyoto Protocol, which had been signed
by Clinton. Cheney urged Bush to sign a
letter that robustly denounced the Kyoto
Protocol and rejected the notion of carbon
caps (despite a campaign promise favoring
carbon caps that actually enjoyed the
support of some influential members of
his team), then staged an extraordinary end
run around the rest of the White House
staff.
Cheney personally carried the letter to
the Republican leadership in the Senate.
Neither Christine Todd Whitman, Bush’s
administrator of the Environmental
Protection Agency, nor Secretary of State
Colin Powell, nor National Security Adviser
Condoleezza Rice was informed ahead of
time. Baker persuasively contends that this
moment, months before 9/11, marked the
real start of the Bush administration’s fateful
penchant for unilateralism. The Kyoto letter
“made only passing mention of working
with other countries to find alternatives to
the flawed pact, and no one had prepared
the allies for what was coming, feeding the
impression of a go-it-alone attitude on the
part of the new president.”
The Kyoto episode is a great example of
how that go-it-alone philosophy toward
other countries mirrored a similar mind-set
toward certain checks and balances within
the government itself. The vice president’s
determined refusal to provide details of
68 The National Interest
his meetings with industry representatives
during his deliberations on energy policy,
for example, was grounded in the same
philosophy of executive dominance.
Watergate always loomed large for the old
boy; he was determined to engage in his
personal rollback campaign, bolstering
the presidency by shedding congressional
restraints imposed during the Ford
administration. Cheney had an opening
that was denied his predecessors, too.
For obvious reasons, American wars have
always tended to empower presidents, and
the period following the terrorist attacks in
New York and Washington merely affirmed
this pattern.
B
aker’s account of 9/11 and its aftermath makes for a gripping read and
goes a long way toward illuminating the
motives of White House policy makers
who had to confront the possibility that the
attacks were merely a prelude to an even
more apocalyptic assault on the United
States:
But Bush saw one of the towers fall and
thought to himself that no American president
had ever seen so many of his people die all at
once before. Three thousand had been killed in
the deadliest sneak attack in American history,
all on his watch. At the time, he thought it was
even more.
He reminds us that Bush, whose presidency
was floundering, initially had a rocky time
responding to the crisis, but then rebounded to remarkable effect starting with his impromptu remarks at the still-smoking ruins
Reviews & Essays
at ground zero in New York. For a while,
buoyed by a remarkable bipartisan urge to
unity and revenge, his popularity ratings
soared to the 90 percent mark.
As it happened, Cheney, as James Mann
vividly reported in The Vulcans, was an
alumnus of many continuity-of-government
exercises during the Cold War era, and his
concurrent sensitivity to threats tended
to feed the general sense of vulnerability
and paranoia. (It was the vice president,
for example, who urged Bush to keep
away from Washington for most of the
day on 9/11 itself; though that may have
been a smart move on security grounds,
it ultimately exposed the president to
criticism.) Baker does an excellent job of
summoning up the febrile atmosphere of
the fall of 2001, when proliferating false
reports and a general state of jumpiness
merged with the mysterious anthrax-bymail attacks and accounts of Osama bin
Laden’s meeting with renegade Pakistani
nuclear scientists to keep a nation’s nerves
on end. And then, in October, a biologicalweapons sensor went off in the White
House:
“Mr. President,” Cheney started soberly, “the
White House biological detectors have registered the presence of botulinum toxin and
there is no reliable antidote. Those of us who
have been exposed to it could die.” Bush, taken
aback, sought to understand what he had just
heard. “What was that, Dick?” he asked. Colin
Powell jumped in. “What is the exposure time?”
he asked. Bush and Condoleezza Rice assumed
he was calculating his last time in the White
House, trying to figure out whether he had
Reviews & Essays
been exposed too. It turned out he had been
there within the possible exposure window.
Needless to say, it turned out to be a false
alarm. But it’s a vivid example of the not
entirely unjustified fears that vexed decision
makers at the time.
In contrast to the portraits painted by his
enemies, though, the vice president’s actual
power over Bush was limited. Cheney
was an enabler, someone who smoothed
the way, not a man who gave orders to
his superior. Baker notes that there is no
evidence that Cheney ever succeeded in
persuading Bush to adopt positions that
he wasn’t already inclined to accept; there
are, however, quite a few cases where Bush
defied him. Despite Cheney’s urgings,
Bush refused to stage the invasion of Iraq
in the spring of 2002. And Cheney also
strongly opposed Bush’s effort to obtain un
authorization for the war when it finally
took place a year later. (The U.S. draft
resolution was withdrawn when it became
clear that other members of the un Security
Council were prepared to veto it.)
As Baker tells the story, Cheney’s
enormous influence over the president was
not a figment of the conspiracy theorists’
imagination—but nor did it prove as
permanent as they might have supposed.
In Bush’s second term in office, eager to
craft a positive legacy that would outlive
the shame of the Iraq fiasco, the president
shifted to the center, leaving Cheney’s
neoconser vative camarilla suddenly
isolated. For years, the neocons had held
sway, isolating the State Department in
their machinations to enmesh Washington
November/December 2013 69
in a war of liberation in Iraq. They
succeeded all too well. The disasters that
ensued ended up creating shock, if not
awe, in Bush’s mind. After the thumping of
the 2006 midterm elections, Bush started
to shift course. The neocons were out;
the realists were in. At the Department
of Defense, Rumsfeld eventually gave
way to Robert Gates, a major moderating
influence on foreign policy. (The shift
also deprived Cheney of a crucial ally in
interagency squabbles.) Condoleezza Rice
assumed Powell’s old job as secretary of
state, where she lobbied for a whole range
of more moderate foreign-policy positions
on fronts ranging from Iran to North
Korea. Baker notes that her own bond
with the president arguably contained a
great deal more of genuine friendship and
intimacy—fueled, at times, by a shared
love of sports and exercise—than Bush’s
relationship with Cheney. (At one point,
as Baker recalls, Rice once inadvertently
referred to her boss as “my husband” in
the presence of journalists.) “By the latter
half of his presidency,” Baker writes, Bush
“had grown more confident in his own
judgments and less dependent on his vice
president.”
In one of the book’s most vivid scenes,
Bush’s national-security aides convene to
discuss the proper course of action against
an illicit Syrian nuclear reactor being built
with North Korean assistance. Should the
United States assist an Israeli strike against
the facility? Or simply let the Israelis go
it alone? Cheney is the only one at the
table to argue, forcefully, for a U.S. raid
on the reactor. Bush asks for a show of
70 The National Interest
hands: “Does anyone here agree with the
vice president?” No one, as it turned out.
Just in case there’s any doubt about
the extent of Cheney’s political isolation
by the end of Bush’s second term,
Baker frames his book with an account
of Cheney’s abortive efforts to persuade
Bush to grant a presidential pardon to I.
Lewis “Scooter” Libby, the Cheney aide
convicted by a jury of perjury during a
federal investigation to determine the
culprit responsible for outing Valerie Plame
as a cia agent (apparently in retribution
for an op-ed written by her ex-ambassador
husband Joseph Wilson that undercut
the administration’s case for war in Iraq).
While Bush was willing to commute
Libby’s sentence, he refused to overturn
the verdict of the jury, opening a breach
between him and his vice president that
undermines the customary description of
Cheney as a Darth Vader figure, capable
of shifting an indecisive president through
minor exertions of the Force. As Baker
shows us in the book on many occasions,
Bush was far from pliant.
B
aker has done a tremendous job of
knitting together the disparate strains
of a complex and multilayered narrative.
For all its density, the book proceeds at a
beach-read velocity that makes it a pleasure
to peruse. Especially enjoyable is Baker’s
commendable urge to puncture many of
the easy myths that still surround the Bush
years. (Baker rightly points out that Bush
administration hard-liners were not the
only ones who genuinely believed that Saddam still had a wmd arsenal, though he also
Reviews & Essays
shows how the White House’s determination to prove its case ended up distorting
the intelligence and, thus, the case that it
made to the world.) Anyone who reads
it will come away from this account with
their understanding of the period greatly
increased—which, after all, is just what a
history like this is supposed to accomplish.
It hardly comes as a surprise that a book
of such vast scope should leave its share of
loose ends. Despite his detailed treatment of
them are currently fighting in Syria.) Nor
does he dwell on the lingering damage to
the U.S. military, the many thousands of
U.S. service members left disabled or the
immense cost to the American economy. As
far as the latter is concerned, some recent
estimates put the total at some three trillion
dollars—money that might have come in
handy during the recent (and continuing)
economic unpleasantness. Nor, indeed,
does Baker spend quite as much time as
the causes of the Iraq War, Baker is a bit too
offhanded about its ultimate consequences.
He dutifully mentions the number of U.S.
and Iraqi dead and essentially leaves it
at that. But that really isn’t enough. He
doesn’t touch upon how the invasion and
its aftermath devastated Iraqi society, vastly
strengthening Iran’s position in the region
and creating a whole new generation of
battle-hardened jihadis who will bedevil the
United States for years to come. (Many of
he might have on the economic policies
of Bush and Cheney and the measures
they took that increased the nation’s
vulnerability to the shocks that led to
the Great Recession. If he can manage to
flesh out some of these darker aspects of
the Bush-Cheney legacy in later editions,
Baker might well claim to have written
the definitive account of the period. Even
in its current form, though, his book is a
remarkable achievement. n
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November/December 2013 71
A Frenzied
Pedagogue
By Amity Shlaes
A. Scott Berg, Wilson (New York: Putnam,
2013), 832 pp., $40.00.
W
hich previous president does
President Barack Obama resemble most?
Historians have likened the forty-fourth
president to the thirty-second, Franklin
Roosevelt. Obama, after all, chose to open
his first term with a progressive campaign
that explicitly evoked fdr’s progressive
Hundred Days. But Roosevelt functioned
in a more political and opportunistic
fashion than does Obama.
Asked once about his philosophy by a
close colleague, Frances Perkins, Roosevelt
replied, “I’m a Christian and a Democrat,
that’s all.” Obama, by contrast, approaches
topics with the comprehensive highmindedness of a law-school professor.
Roosevelt lived fraternally, for and in
coalitions, whether the task was building
them up or knocking them down. fdr’s
New Deal consisted of an entire network
Amity Shlaes, chairman of the board of the Calvin
Coolidge Memorial Foundation, serves as director
of the 4% Growth Project at the George W. Bush
Presidential Center. She is the author of Coolidge
(Harper, 2013) and The Forgotten Man: A New
History of the Great Depression (Harper, 2007).
72 The National Interest
of deals between varying parties—between
government and Congress, or, for a time,
between government and big business, and
between a leader and his people. Obama
places less emphasis on “between.” Our
current president prefers to go it alone.
Instead of a deal, Obama offers principles
for others to endorse if they wish.
Recently, scholars have started to point
to similarities between Obama and another
two-term progressive professor, Woodrow
Wilson. After all, the twenty-eighth
president, like Obama, looked at the world
in terms of idea and cause. And in the case
of Wilson, like Obama, there is a take-itor-leave-it attitude. “Are people interested
in personalities rather than in principles?”
Wilson’s daughter Nell recalls Wilson asking
in 1912 as he campaigned for president. “If
that is true they will not vote for me.”
Perhaps because 2013 marks the
centenary of Wilson’s inauguration, the
Obama-Wilson comparisons are popping up
with greater frequency. Often, the subject
seems to be not whether Obama evokes
Wilson but how. Not atypical has been the
discussion of the two presidents in the New
Republic, which was itself born during the
Wilson era. Presidents Wilson and Obama
share the feature of “technocratic arrogance,”
argues Jeffrey Rosen. Rosen says it is no
accident that Obama has leaned on a harsh
Wilson-era law, the Espionage Act of 1917,
to prosecute leakers of defense intelligence.
Like Wilson, Obama, we are told, has a
penchant for going to extremes, which
has manifested itself in the prosecution
of even mild offenders. The Georgetown
University historian Michael Kazin offers
Reviews & Essays
a somewhat more flattering comparison.
Obama resembles Wilson in his faith in
government, Kazin writes, suggesting that
Obama’s twenty-first-century plans to
expand domestic government are possible
only because Wilson “laid the foundation
for the 20th century liberal state.” Without
Wilson, there would have been no New
Deal, and then no Great Society, and no
Obama health-care reform and regulation.
Wilson ought to be rated more highly,
Kazin argues. As important as Roosevelt
or Lyndon Johnson, he is “the forgotten
president.”
That Wilson laid the foundations for
modern presidential policy, foreign and
domestic, cannot be denied. Wilson’s
predecessor, Theodore Roosevelt, waged
little wars to gain strategic territory for
the United States, whether the territory
involved was Cuba, the Philippines or at the
Panama Canal. For tr, war was an impulse.
Wilson, by contrast, proved the original
neocon. He was ready to stake all on a big
war if that war would serve a principle—
in his instance, the principle of making
the world “safe for democracy.” Wilson’s
decision to draft hundreds of thousands
of Americans and ship them overseas in
World War I was so bold a move that many
of his predecessors would never have even
contemplated it. “Perhaps the greatest
foreign army that ever crossed a sea in the
history of the world prior to the present
war was the Persian army of a million men,
which bridged and crossed the Hellespont,”
Wilson’s secretary of war, Newton Baker,
wrote in wonderment. Persia’s army failed.
America’s did not.
Reviews & Essays
Wilson altered foreign policy in
another way, by establishing American
multilateralism. Whether the framework
today is the United Nations or the G-20,
the very assumption of the value of that
framework can be traced back to Wilson,
as John B. Judis has done in The Folly of
Empire. Wilson’s own multilateral project,
the League of Nations, was an exercise in
futility, and most Americans know the
story of how, while selling the League to
the country on an exhausting railway tour,
Wilson fell ill and then suffered a stroke
that enfeebled him, putting paid to his
dreams of League participation. But Wilson
got Americans into the habit of thinking
multilaterally, a shift that has proven more
profound than the establishment of any
individual institution. Harry Truman
was a young captain mustering out in the
same month that Wilson and the Allies
handed a defeated Germany the Treaty of
Versailles. Back at home, preparing to use
his knowledge of supply chains to start a
new life as a haberdasher, Truman watched
Wilson launch an impassioned campaign
for the League of Nations.
In domestic policy, Wilson left just as
strong a mark, signing laws that created
many of our modern institutions. Not only
did Wilson sanction the income tax, he also
backed the credo that Obama and indeed
all Democrats sustain today: that taxing
the rich more heavily than others performs
the necessary work of “equalization” of an
out-of-kilter society. Wilson signed into
law the Clayton Antitrust Act, our first
modern piece of antitrust legislation.
And it was Wilson who, with great
November/December 2013 73
presidential effort, forced the Senate to
confirm his nomination to the Supreme
Court of Louis Brandeis, the nation’s most
powerful trustbuster. Under Wilson, the
Federal Reserve System and the Federal
Trade Commission were established, the
latter representing the first comprehensive
effort by the federal government to regulate
commerce.
That Wilson has been forgotten, however,
is a more dubious contention. Out of a
tactical desperation to eschew any similarity
with modern Republicans, Democrats tend
to play down the fact that Wilson’s military
interventionism in the name of sovereignty
or morality resembles that of George H. W.
Bush, who defended a Kuwaiti border, or
George W. Bush, who also made war not
only against terror but also for democracy.
But to this day the public ranks Wilson
among the top presidents in polls, beside
George Washington or Franklin Roosevelt
and well ahead of James Madison, John
Adams or Ronald Reagan. William Howard
Taft, Warren G. Harding and Calvin
74 The National Interest
Coolidge, the presidents who preceded or
followed Wilson in office, commonly rate
much lower than the former governor of
New Jersey. And succeeding presidents of
both parties paid great tribute to Wilson.
Coolidge, the president in office at Wilson’s
death, said that Wilson “made America a
new and enlarged influence in the destiny
of mankind.” The New Yorker Franklin
Roosevelt, who had served as assistant
secretary of the navy under Wilson, took it
upon himself to raise millions to establish
foundations and funds to honor Wilson’s
name. Truman, who went on to found the
League’s successor, the United Nations,
called Wilson “the greatest of the greats.”
S
uch tribute raises a question: Does the
record of the twenty-eighth president
actually warrant superstar status? Or was his
record more mixed than his fans acknowledge? Wilson’s foreign-policy record itself
has been scrutinized and found wanting by
European historians, but too rarely subjected to searching examination by American
ones. A second and even less examined area
is the effect of Wilson’s progressive domestic
program, the New Freedom. Both areas are
worthy of attention because whether or not
today’s politicians drop Wilson’s name, their
actions, more often than not, are based on
the premise that Wilson is worthy of emulation. A 2009 biography of the president,
Woodrow Wilson, by John Milton Cooper,
indicates simply that Wilson was a great
and remarkable leader, and sunnier than his
dour reputation might suggest.
All the more welcome, therefore, is the
darker Wilson, by Pulitzer Prize winner A.
Reviews & Essays
Does the record of the twenty-eighth president
actually warrant superstar status? Or was his
record more mixed than his fans acknowledge?
Scott Berg. Berg, who has chronicled the
lives of Maxwell Perkins, Charles Lindbergh
and Samuel Goldwyn, seeks to study the
president’s “lengthening shadow” over our
modern affairs. Indeed, Berg promises a
new approach to Wilson, looking at, as
the jacket copy says, “not just Wilson
the icon—but Wilson the man.” Berg
gained access to a valuable trove of newly
uncovered material, including descriptions
of a little-known operation performed on
Wilson at the White House and details
from Wilson’s physician, Cary Grayson,
from the period when Wilson vainly sought
Senate ratification of his League of Nations
treaty and suffered multiple strokes. Such
valuable facts are marshaled by Berg with
the aim, as he put it in a recent interview,
of telling the story not only of Wilson’s
political odyssey, but also “the twentieth
century through his life.”
And a tumultuous life it surely was,
starting with its origins during the Civil
War era. Thomas Woodrow Wilson was
born in 1856 in Staunton, Virginia, the
son of a stern Presbyterian minister, Joseph
Ruggles Wilson Sr. During the war his
family knew privation: short of several
staples, Wilson’s charitable mother fed
him nightly on soup made out of cowpeas.
The sheer carnage of the North-South
contest and the sight of blood and wounds
captured the child’s attention first. All
his life, Berg perceptively notes, Wilson
would “gravitate toward women who could
both nurse and nurture,” partly because
his mother was such a woman, and partly,
doubtless, because nurses were the figures
who mitigated the suffering of soldiers.
Reviews & Essays
But the impression of the War Between
the States upon Wilson was not and
could not be merely emotional. No, the
environment was rich with contradictions
that could not escape a perspicacious child.
Wilson’s first schoolmaster was a veteran
who called the Civil War the “War of
Southern Independence.” Wilson came
to chafe at the economic hypocrisy of the
commerce-oriented North, which backed a
tariff system that disadvantaged commerce
of all kinds relating to agriculture.
Moreover, Wilson was in Augusta, Georgia,
when federal agents arrested Jefferson
Davis, and he believed that the Civil War
was not only about slavery but also about
a subjugation of states and regions by a
predatory national power. “A boy never gets
over his boyhood,” the president explained,
and “never can change those subtle
influences which have become part of him.”
Indeed. As president, Wilson approved of
the extension of segregation in the federal
civil service.
As boy and then man, Wilson often
struggled. Wilson had trouble reading,
suffering from what we today call dyslexia.
Detached even as a youth, Wilson found
his teachers and peers did not always
recognize his brilliance or favor a youth
they rated as prissy. The 1883 purchase
of a typewriter changed his life. The
young man first enrolled at the College
of New Jersey, and then studied law at
the University of Virginia. Disliking
what he discovered of the practice of law,
and unwilling to descend to the level of
soliciting clients, Wilson determined to
become a professor. Around the same time,
November/December 2013 75
his loneliness ended. He fell hard for Ellen
Louise Axson, the daughter of another
Presbyterian minister. She reciprocated
Wilson’s ardor.
Berg is among the first to focus on the
extensive epistolary exchanges between the
two lovers. The intensity of their affection
for each other quickly emerges: Wilson
worshipped Ellen as though he had never
had another friend. It was to Ellen that the
young man revealed his greatest secret: “I
do feel a very real regret that I have been
shut out from my heart’s first—primary—
ambition and purpose, which was, to take
an active if possible a leading, part in public
life and strike out for myself, if I had the
ability, a statesman’s career.” Wilson’s passion
is so great that the reader fears that Ellen
will dump him. But she did not, and the
pair married just as Wilson commenced
teaching, lecturing at a women’s college,
Bryn Mawr, and then at Wesleyan
in Connecticut, before returning to the
College of New Jersey.
There Wilson experienced some of his
greatest triumphs.
As Berg notes, Wilson early on gravitated
toward certain philosophies and shunned
others. He was not a fan of moral
complexities. The young teacher approved
of the conservative authority of a monarch,
at least as described by Edmund Burke.
He respected democracy more than the
Constitution, which, he wrote in an 1885
book, Congressional Government, was “only
the sap center” of governance. In 1905, the
Supreme Court struck down a New York
state law limiting the number of hours a
baker might work, arguing that the law
76 The National Interest
compromised the “liberty of the individual”
to make a contract.
The case, Lochner v. New York, outraged
many progressives, Wilson among them. In
a second book, published in 1908, Wilson
warned that “the Constitution was not
meant to hold the government back to the
time of horses and wagons.” This lapidary
phrase influenced future presidents,
especially Franklin Roosevelt. After learning
that the Supreme Court had rejected
the labor rules of his National Recovery
Administration, fdr acidly paraphrased
Wilson and suggested that the new case,
Schechter Poultry Corp. v. United States,
was taking America back to the “horse and
buggy definition of interstate commerce.”
Suspecting Congress, both Senate and
House, of political mediocrity, Wilson also
concluded that “the best rulers are always
those to whom great power is intrusted.”
The American system of checks and
balances irritated the academic in Wilson.
He wrote, “The federal government lacks
strength because its powers are divided.”
Wilson preferred the all-or-nothing and
love-me-or-leave-me approach of the
parliamentary system, where the prime
minister rules until he loses the confidence
of lawmakers.
E
ven as he typed and argued, Wilson’s
family grew. Soon he and Ellen could
count three daughters, Eleanor, Margaret and Jessie, all of whom adored him.
Wilson’s family formed a moat between
him and the rest of the world. Wilson had
little to do with the eating clubs and the
social whirl of Princeton (as the college
Reviews & Essays
was renamed in 1896), later captured by F.
Scott Fitzgerald, which he regarded with
anathema and sought to anathematize. In
the classroom, the firm-jawed, erect and
pious Wilson inspired his
students. Like his father,
he relished preaching to
his flock. In 1902, the
college’s trustees named
Wilson president, the first
man to hold that job who
was not an ordained minister. Wilson envisioned
what he called “a Princeton
in the nation’s service.”
Soon he would demand
that America play a similar
role for the world. His
appreciation for the value
of executive authority
was heightened by his
promotion. Working on
an early speech to the
Princeton community, Wilson confessed
to Ellen, “I feel like a new prime minister
getting ready to address his constituents.”
Reforming a university is a risky venture
that can cost an unwary president his
post. A few years later at Amherst College,
another gifted president, Alexander
Meiklejohn, flamed out in trying to lead
his college toward “service” and away from
the clutches of the Protestant Church.
The trustees in the Connecticut Valley,
including President Calvin Coolidge, ended
up dismissing Meiklejohn, leaving their
beloved school a mass of recriminations,
embarrassments and tears. As Berg shows,
Wilson moved with alacrity to extrude
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students who failed to work hard enough
or who violated the Princeton honor code.
The mother of a boy expelled for cheating
wrote to Wilson and tried emotional
blackmail: “I am to have an operation and
I think I shall die if my boy is expelled.”
Wilson would have none of it. “Madam,”
he replied, “we cannot keep in college a boy
reported by the student council as cheating;
if we did, we should have no standard of
honour. You force me to say a hard thing,
but, if I had to choose between your life or
my life or anybody’s life and the good of
this college, I should choose the good of the
college.”
A ferocious recruiter, Wilson went after
his academic prey with the same singlemindedness Theodore Roosevelt exhibited
in pursuing an African elephant. Wilson
offered a young Chaucer scholar at Yale
November/December 2013 77
Wilson envisioned what he called “a Princeton in
the nation’s service.” Soon he would demand
that America play a similar role for the world.
named Robert Root a salary of $2,000,
on the high side, and interviewed him for
only forty minutes, during which time,
Root remembered later, “Wilson asked
no questions but spoke only of his plans
for Princeton.” By the end Root was
spellbound, so much so that had Wilson
asked him to “work under him while he
inaugurated a new university in Kamchatka
or Senegambia,” Root recalled, “I would
have said ‘yes’ without further question.”
Root added, “I think that no university in
the country has ever, before or since, added
to its faculty at one blow so large.”
Equally intrepid as a fundraiser, Wilson
studied donors for their quirks. While
not officially a minister like his father,
Wilson approached his targets with an
unapologetic missionary zeal. Many on
Wilson’s list of likelies were Presbyterians,
and, as Berg notes, Wilson had no trouble
“shamelessly bagpiping Princeton’s heritage
wherever he could.” Wilson worked
hard to extract millions from Andrew
Carnegie, the great industrialist-turnedphilanthropist, boasting to the old boy that
he himself was “of pure Scots blood” and
that Princeton was “thoroughly Scottish
in all her history and traditions.” Scot that
he was, Carnegie stayed tight, coughing
up not hoped-for millions but a measly
$100,000 for the conversion of swampland
into a lake for Princeton’s crew team.
Wilson pocketed the money but expressed
his disappointment: “We needed bread and
you gave us cake.”
But under Wilson, Princeton became
Princeton. Millions were raised, and those
millions were spent well. The college
78 The National Interest
got a real campus with quadrangles.
It deepened its academic bench with
respected scholars, and took its place
among the serious universities. The New
York Evening Post observed: “He has ruined
what was universally admitted to be the
most agreeable and aristocratic country
club in America by transforming it into an
institution of learning.” To be sure, there
were moments of failure, even at Princeton.
Wilson had been ferociously battling
with his former chum Andrew F. West,
dean of the graduate school at Princeton,
over the establishment of a new graduate
college with quads and tutorials based
on the Oxford model. Wilson wanted it
located in the heart of the college; West
believed it should be separate. Wilson
saw opposition to his plans not simply as
an intellectual disagreement, but also as
traitorous. He would not compromise. But
his uncompromising stance meant that just
as he would fail in the League of Nations
debate, so he lost the conflict with West
after a wealthy Princeton alumnus named
Isaac Wyman left his estate to the college
and named West as one of two executors.
Wilson was finished. “We have beaten the
living,” he told his wife, “but we cannot
fight the dead. The game is up.”
B
ut he entered a new one. Now it would
be Woodrow Wilson in the nation’s
service. New Jersey politics of the period
was a jungle of interest groups and insiders.
But Wilson did not run with the pack. He
ensured that it ran after him. Presenting his
lack of political experience as an advantage,
Wilson ran as a nonpolitician with the ca-
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pacity to break corruption. The Princeton
man’s speechifying entranced New Jersey
party operators, who found the reformer
refreshing. “Attempting none of the cheap
‘plays’ of the old campaign orator,” wrote
a state lawmaker who became a fan, James
Tumulty, “he impressively proceeded with
this thrilling speech.” Wilson’s message at
a state Democratic convention deeply impressed the Jersey cynics as well: “The future,” Wilson said, “is not for parties ‘playing politics’ but for measures conceived in
the largest spirit.”
In 1910, Wilson won election as
governor, a post in which he quickly
discovered his inner progressive. His first
move was to introduce a measure known
as the Geran bill that required the direct
elections of candidates in primaries rather
than leaving the choice of men to county
and state conventions. The bill became
law the following April. Other measures
were soon adopted. Joining Republican
reformers, he made workers’ compensation
New Jersey law, and established state
oversight of transportation and utilities.
A corrupt-practices law targeted electoral
bribery and fraud. The old insiders
marveled. There seemed to be nothing that
Governor Wilson could not accomplish.
His New Jersey work quickly earned the
attention of national progressives, including
the great activist against the railroad trusts,
attorney Louis Brandeis, who journeyed to
Sea Girt to visit with the governor in the
summer of 1912. Brandeis educated Wilson
on what he called “the curse of bigness,” the
case that the size of large companies alone
damaged the general welfare. Shrewder than
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anyone expected at charming the West,
Wilson’s courtship of Texas was complete
when he charmed Edward Mandell House
(often known as “Colonel House”), the
heir to a Texas fortune and a man of whom
peers said “he has the entire state of Texas in
his vest pocket.”
As Berg sketches it, Wilson’s ascent to
the presidency was remarkably smooth.
Wilson was a lucky fellow: the nation’s
most famous progressive leader, former
president Roosevelt, decided to create his
own Bull Moose Party, and targeted his
former protégé, President William Howard
Taft. Wilson watched Taft and Roosevelt
tussle with each other while he looked on
serenely for an opening. In 1911, Roosevelt
had written in Outlook magazine that he
nursed concerns about the trust-busting he
himself periodically championed: “Nothing
of importance is gained by breaking up a
huge interstate and international industrial
organization that has not offended otherwise
than by its size.” This softening was all that
Wilson required. Wilson ran for president
as a high-minded antitrust hawk, and fate
favored his chances. In the same way that H.
Ross Perot’s decision to run for president in
1992 against fellow conservative George H.
W. Bush created an opportunity for another
legally oriented professor and governor, Bill
Clinton of Arkansas, the progressives’ split
in 1912 worked for Wilson. The election
went four ways, with the resolute socialist
candidate, Eugene Debs, taking 6 percent
of the vote, the Republican Taft taking 23
percent and Theodore Roosevelt claiming
27.4 percent. Wilson therefore won with a
plurality of 41.8 percent.
November/December 2013 79
At this point one might ask: Was the
university president really ready to assume
the presidency? Wilson’s 41.8 percent was
the narrowest mandate any new president
has enjoyed since then. It was narrower
even than Bill Clinton’s slender 1992
plurality, which stood at 43 percent. For an
executive who believed that his power base
was the people, that fact must have been
profoundly discomfiting. What’s more, the
national scene that was the playground
of a Roosevelt or a Taft was brand new
to Wilson. As he moved into the White
House, Wilson’s health already troubled
him. He suffered from hypertension and
was in the habit of pumping his stomach
to siphon out gastric acid. When physician
Cary Grayson demanded that Wilson halt
this weird practice, the patient, as he always
did to those closest around him, lashed out,
calling Grayson a “therapeutic nihilist”—
and then hired Grayson as chief White
House physician. In reviewing the Grayson
papers, Berg shows that when Wilson made
Grayson White House doctor, he expected
Grayson to give his chronic stomach
disorder the same attention that Colonel
House or Joe Tumulty, now in the Wilson
entourage, might dedicate to foreign or
domestic policy. His own importance was
as significant as the welfare of the country.
Grayson’s reports of his patient convey
a sense of an autocrat who had already
internalized a sense of his authority over
the entire globe, practically declaring, “The
world, c’est moi.” Wilson categorized all
his troubles, whether troubles of state or
health, in the same way: he referred to his
gastric disorders as “turmoil in Central
80 The National Interest
America” or “disturbances in the equatorial
regions.”
I
n 1913, the new president could take
comfort in two facts. The first was that
the progressive train itself was moving forward: ratification of amendments to create the income tax, to get women the vote
and to create a modern central bank were
in progress or had already occurred. All a
president need do was play the role of the
statesman Wilson had described to Ellen,
seat himself at the head of the train and
claim victory. This Wilson did, with the
distinctions between his own progressivism
and Theodore Roosevelt’s fading to nothing. Wilson surrounded himself with likeminded men, including Brandeis. He also
hired a brilliant treasury secretary, William
McAdoo. He managed to overcome, at least
momentarily, a natural aversion to Congress
and, stunningly, traveled to the Hill to pitch
his New Freedom program before lawmakers, the first president to do so since John
Adams. Wilson’s wife was also ill, and the
Wilsons and their three daughters enjoyed
an active social life. Before long McAdoo,
a distinguished widower, would court and
win the hand of Wilson’s daughter Eleanor,
an event that only reinforced the clubbish
aspect of the president’s inner circle. The
second advantage was that the area Wilson
liked least, foreign policy, did not seem particularly significant. “It would be the irony
of fate,” Wilson said, “if my administration
had to deal chiefly with foreign affairs.”
It did. Just sixteen months after Wilson
assumed office, in a period when Wilson
was distracted by Ellen’s illness, Archduke
Reviews & Essays
Franz Ferdinand was assassinated by a
Serbian nationalist in Sarajevo. By August
1914, Wilson was convinced that the
United States could stay neutral: “We must
be impartial in thought as well as in action,
must put a curb upon our sentiments as
well as upon every transaction that might
be construed as a preference of one party
to the struggle before another.” Just days
later, Wilson’s wife died. Always uxorious,
the president nearly died from grief after
his wife’s passing. “God has stricken me
almost beyond what I can bear,” he wrote
around the time of Ellen’s death. Later,
in mourning and as Germany invaded
France and Belgium, Wilson wrote that the
European war distracted him. “In God’s
gracious arrangement of things I have little
of the world.” Berg goes on to trace the
familiar story that follows: Wilson did lead
the United States in entering the war, did
ship those millions overseas, did lead the
nation in sustaining hundreds of thousands
of casualties, and crafted a peace plan
on the principles of democracy and selfdetermination.
Berg paints all this well, capturing the
president’s agonies at his wife’s death. Even
after remarriage, Wilson kept a flashlight
on his stand at night, shining it on a
pastel portrait of Ellen whenever he felt
distress. Berg’s coverage of Wilson’s illnesses,
including a difficult recovery from an
operation that foreshadowed his stroke, is
excellent. The presidency aged men terribly
in those days, a smoke-filled era that
time to think about myself.” Berg, with
harsh accuracy, notes of the self-centered
Wilson that “with the destruction of his
universe, he found strength in the collapse
knew no statin drugs, no angiograms and
no antibiotics. Wilson was no exception,
and Berg’s camera moves close in to show
the tension in Wilson’s neck that signaled
Reviews & Essays
November/December 2013 81
circulatory weakness. In Berg’s picture,
one can almost detect the hardening of the
presidential arteries.
Berg likewise skillfully conveys the effect
of Wilson’s temperament and plans upon
the course of the war. After first staunchly
opposing entry, and even campaigning on
staying out in 1916, Wilson in the end
did jump in. As is so often the case with
presidents, the challenge of the crisis moved
Wilson to respond instinctually, rather
than intellectually. Wilson’s instinctual
response was religious: America became
the “Christ’s Army” he had described in
his early writings. The president who had
so boldly favored freedom abroad that he
placed the word in the title of his program
now behaved in remarkably cavalier fashion
when it came to the freedoms of others at
home. Over the course of the war Wilson
ran roughshod over the civil rights of war
skeptics. Debs’s campaigning against the
war may have been wrong, but Wilson
seemed to derive a special joy from keeping
his old political opponent behind bars.
Funding a “Christ’s Army” required
enormous sacrifice, as all realized. But
what the country could not expect was the
autocratic way in which the administration
would exact that sacrifice. Wilson and
McAdoo settled on a policy of confiscatory
taxation and heavy borrowing to fund the
conflict. Just years before, when lawmakers
had conceived of the income tax, they set
the levy at a top rate of 7 percent. Wilson
and McAdoo did not hesitate to raise that
rate all the way up into the 70 percent
range. Their justification for the tax rise
was not merely based on expedience but
82 The National Interest
also on morality. “We need not be afraid
to tax them, if we lay taxes justly,” he said.
Socking it to the wealthy was for their own
good as well as the country’s. Once again,
he took pleasure from scourging errant
sinners.
The presidential son-in-law, for his part,
set the total amount to be borrowed in
splendidly offhand fashion, which he later
described:
I had formed a tentative conclusion as to the
amount of the first loan. It ought to be, I
thought, three billion dollars. I can hardly tell
you how I arrived at the sum of three billions.
. . . I am sure that the deciding influence in
my mind was not a mass of statistics, but what
is commonly caused a “hunch”—a feeling or
impression rather than a logical demonstration.
Any protest at such high-handedness risked
earning public condemnation from the administration as representing the motives of
a low and coarse partisan operator. “Politics
is adjourned,” as Wilson loftily told the
Sixty-Fifth Congress.
During the war and after the armistice,
Wilson turned ever inward, playing solitaire
aboard the ship that took him to Paris.
After greeting him with a hero’s welcome,
France frustrated Wilson. He was disturbed
by French leader George Clemenceau’s
implacable anti-German stance. Wilson
joked that France’s position resembled
that of an India rubber ball: “You tried to
make an impression but as soon as you
moved your finger the ball was as round
as ever.” Rather than persevere, Wilson
faltered. His principle of self-determination
Reviews & Essays
Wilson went so far as to say, as John Kennedy and Ronald
Reagan later would, that tax rates like his own depressed
enterprise. But he did not declare the autocratic experiment over.
was inconsistently and self-servingly
applied at the conference. He returned
to America with a new mission, but was
unable to execute it, either. Increasingly,
and especially through the difficult and vain
domestic campaign to win support for his
League of Nations, Wilson was afflicted by
poor health. As he rasped his way across
America on a whistle-stop tour, he sacrificed
himself for his faith.
B
erg is admirably alert to Wilson’s debilities, mental and physical. But his
smooth professionalism means that he has
offered a rather superficial account. For in
focusing so diligently on Wilson’s tender
psyche and health, he neglects to give attention to the consequences of Wilson’s style or
his policies. What is missing, in other words,
is an analysis of Wilson as president rather
than celebrity or psychiatric case. This is a
grave defect in a book seeking to offer a definitive account. For Wilson was not merely
weak. He was also, often, just plain wrong.
The error starts on the crucial foreignpolicy front. Was U.S. entry into the
European war warranted? Most of us believe
so, but the case is not really considered
by Berg. After the war, Europe desperately
needed comity, some sense of international
union to preclude a repeat of World War
I’s carnage. But that comity could not be
enforced if the parties involved, domestic or
foreign, were not all in agreement. Wilson
antagonized the House and Senate by
failing to win their support for his League
effort, leaning on Colonel House rather
than the House. The president antagonized
the Senate in turn by presenting the treaty
Reviews & Essays
for ratification as a fait accompli. He
thereby doomed what he deemed his own
most precious objective.
More importantly, Wilson missed what
others easily saw. Without bearable terms
for Germany, the League of Nations could
not function, and Germany, wounded
by the war-guilt clause of the Treaty of
Versailles, would go to war again. Those
who cared not a whit for the feelings of
antagonized U.S. senators, the Europeans,
discerned this failure most clearly. Wilson,
John Maynard Keynes said, “allowed
himself to be drugged by their atmosphere”
at Versailles. To Wilson, his league mattered
more than Germany. The president treated
Germany as he had the wayward Princeton
student: as an abomination, a pestilence
to be expelled from the pristine Wilsonian
consciousness. Keynes was shocked and
ended up writing a book that prophesied
the next war, The Economic Consequences
of the Peace. Another perceptive observer
wrote that Wilson was “a man who,
had he lived a couple of centuries ago,
would have been the greatest tyrant of
the world, because he does not seem to
have the slightest conception that he can
ever be wrong.” Perhaps H. L. Mencken,
who branded Wilson the “late Messiah”
and a “fallen Moses,” captured Wilson’s
sententious delusions best: “When Wilson
got upon his legs in those days he seems to
have gone into a sort of trance, with all the
peculiar illusions and delusions that belong
to a frenzied pedagogue.”
In the case of domestic policy, the damage
created by Wilson’s fecklessness was also not
inconsiderable. McAdoo’s relentless fund
November/December 2013 83
drive did pay for the war, but also created
“economic consequences of the peace” at
home. America, then an academic and
intellectual backwater, lacked a Keynes to
limn those consequences. And Republicans
were not eager to appear disloyal. But the
consequences were real, starting with a fierce
inflation that the Wilson administration
never acknowledged. After wartime price
controls were lifted, prices shot up by
30–40 percent. Individual businesses made
immense fortunes supplying the weapons
and goods for Wilson’s crusade, but the
general financial markets went on a “capital
strike” after the war ended. Taxes were so
prohibitive that many companies hesitated
to rehire. Unemployment was heading
upward, too, past the 10 percent line. In
his 1919 State of the Union address, Wilson
went so far as to say, as John Kennedy and
Ronald Reagan later would, that tax rates
like his own depressed enterprise. But he did
84 The National Interest
not declare the autocratic
experiment over. Quite
the contrary. In the end
the mess Wilson created
could only be addressed
by a drastic cutting back
of government and a
severe tightening of
interest rates. William
P. G. Harding, the head
of the Federal Reserve,
found himself playing
t h e u g l y r o l e Pa u l
Volcker would later
hold, doubling interest
rates to kill inflationary
expectations. This
treatment worked: after a year or two, the
inflation and joblessness were gone. But the
Fed effort, especially, imposed a recession
on the nation. One of the casualties of that
recession happened to be the haberdasher
shop of the man who so admired Wilson,
Harry Truman.
Truman never made the connection
between Wilson’s arbitrariness and the
depression, as they called it then, of the
early 1920s. Nor, for that matter, did many
others at the time. In a gold-standard era,
inflation was so rare that citizens did not
recognize the new animal when they saw
it. Therefore Wilson was given a pass, even
supported, when he rated the high prices
as the consequences of war profiteering.
Nor was Wilson alone. This monetary
misunderstanding begat subsequent errors
and losses.
A striking example of such
incomprehension came across my desk as I
Reviews & Essays
researched my own presidential biography,
Coolidge. In 1919, the Boston police force,
demanding higher compensation, joined
Samuel Gompers’s American Federation of
Labor and walked off the job. Chaos ensued
in Boston, and the sitting governor of the
state, Coolidge, backed up the Boston
police commissioner in a decision to fire the
strikers. Conservatives strongly admire the
Coolidge decision, and many believe that it
inspired Ronald Reagan in an equally tough
decision he took more than half a century
later, the decision to fire the striking
air-traffic controllers of the Professional
Air Traffic Controllers Organization.
Conservatives also cite the courage of
Coolidge in discussions over the pension
demands of public workers in Wisconsin
or Michigan. The general argument is that
Coolidge, and then Reagan, taught publicsector unions a necessary lesson.
Yet a perusal of the details in the Boston
case reveals a hidden factor in the Boston
police action: inflation. As prices rose
following the war, wages did not rise with
them, and policemen struggled to pay for
their families. In those days, there were no
automatic adjustments to wages for changes
in the price level. The Housewives’ League
wrote the president a letter that grappled
with the mysterious price problem, asking
him to “reduce the cost of living, which
through present prices of bread, meat
and corn has become unbearable.” The
policemen needed, and wanted, more
money. By treating such concerns as mere
labor obstreperousness, Coolidge and others
ignored a true grievance. Those others
included President Wilson, who, after
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hesitating, came down on the police like a
ton of cobblestones, calling their strike “a
crime against civilization.” Thus did Wilson
hurt the labor movement at the center of
his progressive platform.
B
erg refrains from illuminating such internal inconsistencies and consequences of progressive policy. This unwillingness
doubtless derives in part from the perils
of the biographical genre. A biographer
must choose between telling the story from
his subject’s point of view and telling it
from his own. Often, opting for the former
conveys more information. Perhaps Berg
concluded that suspending disbelief and
trailing Wilson faithfully on his via dolorosa would give Americans the man he had
promised. As Berg has doubtless observed,
the results of hostile or even purely analytic biographies are often mediocre: Robert Caro’s portrait of Robert Moses of New
York represents the rare exception. And
an intensely hostile biography will stoke a
fire, but the smoke it generates precludes
enlightenment. In addition, in getting to
know one’s subject, the biographer comes
to like and defend him. To pen a hostile
biography is a desolate task, especially over
a decade, the period of time for which Berg
studied Wilson. In the case of a president,
let alone a war president like Wilson, to
criticize one’s subject also feels downright
treasonous.
The book market for its part reinforces
these antianalytic tendencies in authors.
Biography readers are like the voters
whom Wilson looked down upon: they
prefer personality to ideas. They enjoy
November/December 2013 85
the odd portrait of the villain: Hitler,
Mao, Stalin. But most U.S. readers will
not accept anything close to a vilification
of an American president. As a result of
some mix of these factors, Berg does not
entirely achieve the “telling of the twentieth
century” to which he aspires. He separates
icon from man, as promised, but does not
deliver the era. Wilson is just Wilson.
Perhaps a description of the full extent
of Wilson’s folly requires not a biography
but a general history. In Woodrow Wilson
and the Roots of Modern Liberalism, Ronald
Pestritto has carried out some of the
work, but he focuses more on the sphere
of philosophy than on quotidian society.
In Bernard M. Baruch, a biography of
Wilson’s adviser and financier of that name,
James Grant captures some of the more
unfortunate financial results of the Wilson
administration. But more is required. If
Wilsonian interventionism failed abroad,
modern interventionists need to know
more about why that happened. And if
Wilsonian intervention in the economy
failed at home, modern planners and
presidents, including of course President
Obama, need to know that, too. That
Wilson could not recognize the damage he
perpetrated hardly constitutes an excuse for
historians to downplay it. The discussion
over what variety of Protestant or narcissist
Wilson was has been long, interesting and
stimulating, but the next biographer would
do well to focus on his policies in a more
thorough and sustained fashion. America’s
early progressives, presidents and others,
require at this moment not canonization
but invigilation. n
86 The National Interest
Breach of Logic
By James Joyner
Andrew J. Bacevich, Breach of Trust: How
Americans Failed Their Soldiers and Their
Country (New York: Metropolitan Books,
2013), 256 pp., $26.00.
F
ollowing his graduation from West
Point, Andrew J. Bacevich had a
distinguished career as an army officer, retiring as a colonel and serving in both
Vietnam and the Gulf War. He has since
carved out a second career as an iconoclastic scholar preaching the evils of perpetual
war. In numerous essays and books, Bacevich, who teaches international relations at
Boston University, has ventilated his contempt and despair for America’s penchant
for intervention abroad, directing his ire at
both the liberal hawks and neoconservatives. Throughout, his stands have been
rooted in a cultural conservatism that sees
America as having strayed badly from its republican origins to succumb to the imperial
temptation.
In his new book Breach of Trust, Bacevich
expands upon his critique of American
society and the military. Bacevich’s central
James Joyner is an associate professor of security
studies at the Marine Corps Command and Staff
College and a nonresident senior fellow with the
Brent Scowcroft Center on International Security
at the Atlantic Council. The views expressed in this
essay are his own.
Reviews & Essays
contention is that a chasm has
developed between the two, one
that ill serves both. He depicts a
crisis in civil-military relations, one
that rests on the transformation of
the military into a separate caste
in violation of the fundamental
tenets of American democracy.
Historically, it has been citizens who
have shouldered the responsibility
to defend the Republic. Relying
on professionals, he argues, makes war too
easy and those trusted with conducting it
unaccountable.
But just how compelling are these claims?
Bacevich explains that he “began this book
intending to write a conventional narrative
history of U.S. civil-military relations since
World War II,” but ultimately decided to
write on the problems created by America’s
“reliance on a force of military professionals
who exist at a considerable remove from
the rest of society.” He would have been
better served had he pursued the intended
project. Instead, he has produced an
unpersuasive work that vents myriad gripes
and grievances while misattributing their
cause.
Bacevich manages to undermine his
central argument in his introductory
chapter. According to him, “To sustain
a massively unpopular war, the state had
resorted to coercive means: report for duty
or go to jail.” As a result, “Those less clever
or more compliant ended up in uniform
and in Vietnam.” Yet just two pages later,
it is the all-volunteer force that enables the
2003 invasion of Iraq: “With the people
opting out, war became the exclusive
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province of the state. Washington could
do what it wanted—and it did.” Given
that Washington was able to sustain a
much more massive, exponentially more
deadly war through three presidential
administrations with a draftee force, it
stands to reason that something other than
switching away from conscription is the
underlying issue.
Bacevich himself has repeatedly told
us what that “something” is. In his 2005
work The New American Militarism, he
argued that American foreign policy has
historically been dominated by a desire
to “reshape the world in accordance with
American interests and values.” Indeed, he
wrote, Americans see those as “so closely
intertwined as to be indistinguishable.” He
also cited C. Wright Mills’s 1956 argument
that the United States is possessed of “a
‘military metaphysics’—a tendency to
see international problems as military
problems and to discount the likelihood of
finding a solution except through military
means.”
Next in his 2010 work, Washington Rules,
Bacevich references Henry Luce’s 1941
Life manifesto clamoring for an “American
November/December 2013 87
Century” and exhorting his fellow citizens
to “accept wholeheartedly our duty to
exert upon the world the full impact of our
influence for such purposes as we see fit
and by such means as we see fit.” Bacevich
rightly tells us that “at times, the armed
forces have relied on citizen-soldiers to fill
their ranks; at other times, long service
professionals.” Yet a continuity exists:
Call them the sacred trinity: an abiding conviction that the minimum essentials of international peace and order require the United
States to maintain a global military presence, to
configure its forces for global power projection,
and to counter existing or anticipated threats
by relying on a policy of global interventionism.
The arguments in those two books are,
on their face, much more in accord with
the historical record. And indeed, Bacevich
is much too good a historian—and too
intellectually honest—to hide key evidence
from the reader. Thus, he is consistently
obliged to undercut his own case by
pointing to inconvenient facts, yet seems
not to notice that he is doing so.
B
y far the most compelling charge that
Bacevich levels against a professional
force is that it violates the American social
contract. He refers to the 1944 declaration
by Under Secretary of War Robert Patterson that “in a democracy, all citizens have
equal rights and equal obligations. When
the nation is in peril, the obligation of saving it should be shared by all, not foisted
on a small percentage.” Bacevich notes
that America fielded a twelve-million-man
88 The National Interest
force for World War II, including the sons
of the president and other leading politicians, Hollywood idols, sporting heroes
and other elites. Yet we’re not trying to
raise a force of twelve million today, let
alone the proportionally larger force for
a national population that has more than
doubled. It seems odd, indeed, to force
those who would otherwise be wildly successful in their own chosen field to instead
fight our wars.
He cites statements by Winston
Churchill and the Pentagon’s Joint War
Plans Committee that the populations of
England and the United States would not
put up with a long war of attrition. He says
that this is why “compared to the losses
suffered by the other major belligerents, the
United States emerged from the war largely
unscathed.” It also helped that we joined
World War II several years after the other
nations and fought it as an away game and
therefore took no casualties on the home
front. But the democracies generally took
few casualties compared to the autocratic
states; the Soviet Union, Germany, Japan
and China are the only participants who
lost as many as five hundred thousand
dead—and they all lost millions.
Moreover, the United States lost over
thirty-six thousand in Korea and fifty-eight
thousand in Vietnam, both with draftee
armies. In all of the wars and military
actions over the four decades of the allvolunteer era combined, we’ve lost fewer
than 7,600. The death of 266 volunteers
was enough to send us high-tailing it out of
Beirut; it only took forty-three in Somalia.
While it’s not inconceivable that the
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The most compelling charge that Bacevich levels against a
professional force is that it violates the American social contract.
transition to an all-volunteer force has
made us more risk averse rather than
less—Bacevich himself has documented
the emergence of a cult of worship of the
military—the more plausible explanations
lie elsewhere. Many of the interventions
of the past decades, while small, were
undertaken to further peripheral interests.
The fact that the battles of the last two
decades have been fought and documented
almost instantaneously on television and,
more recently, in social media has also
personalized each casualty in a way that
didn’t happen even as recently as Vietnam.
Military training, equipment and medical
care have all improved radically, reducing
the death toll.
Regardless, there’s simply no evidence
that the fact that “somebody else” is doing
the fighting and dying has made us less
sensitive to the loss of American sons and
daughters. Far from it. We’re demonstrably
much more sensitive to military casualties
than we were during the most recent draft
era and, indeed, any previous point in
American history.
Bacevich is particularly concerned with
what he terms the “Great Decoupling” seen
in the war on terror in which, unlike in the
Civil War and World War II, fighting a war
didn’t come with a radical transformation
of the civil economy. Instead of rationing
consumer goods and manning the
factories, Americans not in uniform were
told to go shopping and “enjoy America’s
great destination spots” while receiving
a tax cut. Whatever the folly of tax cuts
while spending hundreds of billions of
dollars fighting overseas conflicts, there’s
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no unemotional argument for imposing
austerity on the public in the aftermath
of the 9/11 attacks. The Civil War and
World War II involved massive field armies
slogging it out in symmetrical conflict; the
wars in Afghanistan and Iraq were both
lightning-fast regime-change missions
followed by years of counterterror and
counterinsurgency operations. Not only
would we not have wanted to fight these
wars with amateurs, but their cost was a
small fraction of gdp compared to those
earlier conflicts.
Bacevich romanticizes the Civil War and
World War II as exemplars of an earlier
golden era when “war was the people’s
business and could not be otherwise. For
the state to embark upon armed conflict
of any magnitude required informed
popular consent.” Alas, he laments, “In
their disgust over Vietnam, Americans
withdrew from this arrangement.” But this
elides a rather important point: Americans
fought in Vietnam under that arrangement.
Nearly sixty thousand died in the most
controversial war in our history. And most
of them had no choice in the matter. No
wonder Americans withdrew from the
arrangement.
A s a c o n s e q u e n c e o f t h e Gre a t
Decoupling, Bacevich charges,
“Washington’s penchant for war has
appreciably increased.” This is nonsense.
As Geoffrey Perret lays out, in a book
Bacevich cites elsewhere, we are A Country
Made By War. The book’s subtitle: From
the Revolution to Vietnam—The Story of
America’s Rise to Power. Consult a timeline
of U.S. military operations and one finds
November/December 2013 89
a steady stream of them throughout
every time period, seemingly irrespective
of whether there’s a draft on. Similarly,
Bacevich repeatedly refers to George C.
Marshall’s declaration that “a democracy
cannot fight a Seven Years War,” noting
that we did just that in Iraq, with an allvolunteer force, but somehow overlooking
the fact that we also did it in Vietnam with
a conscript force—odd, considering he
served there himself as a young army officer.
Indeed, the war had passed the seven-year
threshold by the time he left.
Nor is this the only place that
Bacevich goes badly astray. He notes that
Richard Nixon campaigned in 1968 on
ending the draft on the grounds that
it was incompatible with freedom.
90 The National Interest
Bacevich attributes this to “Nixonesque
opportunism” aimed at undermining the
antiwar protests and laments that “although
Nixon had run for the presidency vowing
to end the Vietnam War, eliminating the
draft permitted him instead to prolong it.”
This is wrong. Nixon empaneled the Gates
Commission, which recommended a move
to an all-volunteer force in its February
1970 report. But the existing draft was
scheduled to expire at the end of June
1971, and Nixon asked for and received
a two-year extension. The draft did not
end until June 1973—five months after
the Paris peace accords ended U.S. combat
operations in Vietnam and three months
after the last American troops left South
Vietnam.
At times, Bacevich seems to be
arguing against himself. He cites Lyndon
Johnson’s White House aide Joseph
Califano’s suggestion that “by removing
the middle class from even the threat
of conscription, we remove perhaps the
greatest inhibition on a President’s decision
to wage war.” Bacevich smacks him down:
“Yet conscription hadn’t dissuaded Harry
Truman from intervening in Korea in
1950 or stopped Johnson from plunging
into Vietnam in 1965, facts that sapped
Califano’s argument of its persuasive
power.” Indeed. And Bacevich’s.
B
acevich also provides a muddled account of social change in the military.
He recounts the substantial improvements
in the lot of the enlisted soldier that were
necessary to “induce sufficient numbers
of smart, able-bodied young Americans to
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volunteer for military service.” He notes,
“In peacetime, the army had treated the
draftee as an unskilled day laborer, available to perform whatever tasks might need
doing. In the volunteer army, a soldier’s
time acquired value. An increasingly costly
commodity, it was not to be wasted on
nonessentials.”
While seemingly cause for celebration,
Bacevich detects in these changes the
roots of the institution’s own destruction.
For one thing, routine drudge work—
“scrubbing pots and pans, grooming the
parade ground, and even guarding the
front gate”—was farmed out to civilian
contractors. It’s true that pretty much
every large company and organization in
the country has done the same thing and,
indeed, wouldn’t even consider making its
own employees perform these tasks. But, for
Bacevich, “Here was another insurgency of
sorts, for-profit enterprises taking over turf
the army had previously claimed as its own.
In pursuit of economy, the army forfeited
self-sufficiency.”
Even worse, while draftees tended to be
single and get out as soon as they were
legally able, volunteers tended to get
married, start families and reenlist. This is
a good thing, no? Apparently not, in that
it obligated the army to become “family
friendly” and build child-care centers.
Also, the wives were “no longer content to
accept the designation of ‘dependent’ while
offering their services as volunteers, that is,
unpaid auxiliaries.”
This is truly a bizarre formulation. For
one thing, it was not the wives of draftees
who served as “unpaid auxiliaries.” As
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Bacevich himself notes, the draftees were
mostly young and single. It was the wives
of the senior noncommissioned officers and
officers who “volunteered” to run the social
support network and keep the fires burning
on the home front. Moreover, none of this
was a function of ending conscription and
going with an all-volunteer force; rather,
it was a function of changes in society as a
whole. The women’s movement was under
way at the same time as we were moving
to an all-volunteer force and would almost
surely have come to fruition even if we
had not. Indeed, some of the same cultural
changes that challenged conscript soldiering
made treating its women as second-class
citizens unacceptable. And that’s to say
nothing of the notion that we ought to
augment a system where men are forced to
serve in the military with one that likewise
obligates their wives. Freedom isn’t free, I
guess.
Similarly, Bacevich seems to lament the
fact that “life for military families residing
off-base became all but indistinguishable
from the life of nonmilitary families living
next door” and that “both on duty and
off, the army became a place that Beetle
Bailey would have scarcely recognized
and into which he would not have been
allowed entry.” Offhand, these strike me as
unalloyed goods.
Quoting a young female recruit’s 1975
prediction that “if there’s another war,
we’ll be there because with this voluntary
system the men who don’t want to be here
aren’t here,” Bacevich writes, “Male and
female alike, Americans had abandoned
collective obligation in favor of personal
November/December 2013 91
choice. Thanks to Richard Nixon, this
applied to soldiering no less than to other
pursuits.” Why this is anything but cause
for celebration, Bacevich does not disclose.
Indeed, he concedes that, while there have
been some unfortunate incidents along the
way, overall women “performed admirably”
in the war in Iraq. Beyond this, while
active recruiting of women into positions
formerly reserved for males was doubtless
initially a necessary compromise to increase
the pool of potential volunteers, the
aforementioned changes in the society writ
large would have forced it to happen with
or without a draft.
A
fter the fall of the Soviet Union, Bacevich tells us, “For the Pentagon, peace
posed a concrete and imminent threat.
Generals who had slept undisturbed back
when Warsaw Pact commanders had ostensibly been planning to launch World War
III now fretted nervously over the prospect
of their budget taking a hit.” In response,
Bacevich charges, army leaders “conjure[d]
up new dangers” to which only the “army
could offer the necessary response.” And, he
tells us, Saddam Hussein proved “a madeto-order helpmate.”
The problem with this is that when
Saddam invaded Kuwait in August 1990,
the U.S. Army was still very much on a
Cold War footing. Despite the fall of
the Berlin Wall months earlier, few were
expecting the imminent collapse of the
ussr. And the army brass, including Colin
Powell, chairman of the Joint Chiefs of
Staff, were far from eager for war in Iraq
against Saddam’s mighty, battle-tested army.
92 The National Interest
It was not until well after Desert Storm that
the end of the Cold War suddenly became
obvious to all. Browse through the archives
of this journal, for example, and one will
find talk of “The Coming Resurgence of
Russia” and musings such as “If the Cold
War is over, why do we still feel a chill
wind?” in the spring of 1991.
No doubt Bacevich nicely documents
the exuberance with which the army
embraced its post–Cold War transition
into a lighter, smaller, more versatile force
(if downplaying the extent to which it
remained essentially a scale model of its
predecessor). He suggests that Army Chief
of Staff Gordon R. Sullivan and others in
the brass were obsessed with demonstrating
“continued relevance” and were “keen
to put soldiers to work, taking on new
assignments in unfamiliar places.” The
evidence here is slight. Indeed, Bacevich
notes that “within two years of the Soviet
Union’s demise, Sullivan had discerned that
the world was ‘growing more dangerous.’”
Sullivan identified
a litany of problems: “ethnic and religious hostility, weapons proliferation, power struggles
created by the disappearance of the Soviet
Union, elimination of the fear of regional conflicts escalating to superpower confrontation,
radicalisms of a number of varieties, rising expectations of democracy and free markets coupled with the inability of governments to meet
those expectations.”
As it turns out, Sullivan was remarkably
prescient. Furthermore, civilian international-relations scholars were writing the exact
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There’s simply no evidence that the fact that “somebody
else” is doing the fighting and dying has made us less
sensitive to the loss of American sons and daughters.
same thing at the time. It was hardly as if
the army was alone in trying to divine the
shape of the “post–Cold War” future; it was
a full-blown industry.
Oddly, Bacevich seems here to be arguing
for a larger force—or, at least, the ability
to rapidly create one via conscription
should the nation so desire. Bacevich
correctly notes that, for the wars in Iraq
and Afghanistan, the force was “much too
small for the tasks at hand. The quality
differential—highly trained, extravagantly
equipped troops—did not fully compensate
for the shortage of numbers.” Additionally,
he points out that, with an all-volunteer
force, “there existed no easy way to convert
a too-small force into a sufficiently large
one.” As a result of this shortfall, a very high
operations tempo became “the new normal”
for active-duty soldiers. Yet, in contrast to
the conscript force in Vietnam, “the army as
a whole did not disintegrate, nor did troops
in the ranks protest or revolt. They kept
going back again and again to wars they
could not win.”
The problems with this analysis are
manifold. First off, it’s by no means a given
that having a substantially larger available
force—even one comparably trained and
equipped, much less an inferior version—
would have made the difference in Iraq
or Afghanistan. As in Vietnam, it’s quite
probable that the strategic goals were
simply unachievable, especially at a price
America was willing to pay. Second, to the
extent that the missions to which we apply
military force are in the nation’s interests,
it would seem beneficial indeed that the
current force is ready, willing and able to
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absorb the bumps and bruises of the long
fights in Iraq and Afghanistan and go on
to the next fight. Third—and Bacevich’s
writings here and elsewhere make it clear he
agrees—the solution to the problem of not
winning unwinnable wars is rather obvious:
stop fighting them. But that’s a decision up
to civilian policy makers, not the service
chiefs.
The common thread is one that Bacevich
discussed at length in The New American
Militarism: a large standing force. In the
introduction to that book, he quotes James
Madison: “War is the parent of armies.”
But it is also the case that armies are the
parent of war. This is not because of some
sinister cabal of war profiteers in a militaryindustrial complex—the merchants of
death, as they were known after World War
I—but rather because, in a world where
presidents are constantly besieged to “do
something” about myriad global crises, that
“something” quite frequently has a military
component. Over the last two decades,
these forces have been routinely called up
without backlash from the public or the
citizen-soldiers themselves. Bacevich says,
“The military thereby voided the implicit
contract that had defined the terms of
service for these part-time soldiers—that
the nation would call upon them only in
extreme emergencies—and converted them
in effect into an adjunct of the active-duty
force.”
Then again, this has now been the norm
for more than two decades, going back
to Desert Shield and Desert Storm and
continuing without much break through
the various humanitarian interventions of
November/December 2013 93
the 1990s and the war on terror. Those who
signed up in recent years surely were not
promised the “implicit contract” that was in
effect when Bacevich and I served. Indeed,
for all but the most senior members, the
Reserve Component has always been
an adjunct of the active force. Bacevich
claims that “all options remain on the
table” has become the “signature phrase
of contemporary American statecraft.” He
further asserts:
All it takes to bomb Belgrade, invade Iraq, or
send Navy seals into Pakistan is concurrence
among a half dozen people and a nod from
the president. No need to secure prior congressional assent, certainly no need to consult the
American people: that’s what the all-volunteer
force allows.
But the all-volunteer force came into being
with the end of the draft on June 30, 1973.
Earlier that same year, Congress passed,
over Nixon’s veto, the War Powers Resolution, which sought to claw back some of the
legislature’s power over the use of force after
decades of executive overreach. It’s debatable whether the trend has accelerated since
the end of the draft and, if it has, whether
and to what extent the end of the draft contributed to said acceleration. By definition,
however, something that happened well
after a trend has been identified cannot be
the cause of the trend.
B
acevich identifies some genuine problems with the American military that
ought to be addressed. He notes that there
were some 260,000 contractors on Amer-
94 The National Interest
ican payrolls in Iraq and Afghanistan in
2010, “more than the total number of U.S.
troops committed to those theaters.” The
expansion of private security contractors is
indeed very expensive and wrought with
issues of command and control. But he
lumps in private security contractors who
are de facto mercenary soldiers with those
engaged in food service and other logistical duties; these are very different issues. In
addition, Bacevich charges, with little evidence, that the explosion in contractors is
the result not of a bloated, disconnected bureaucracy and a Congress failing in its oversight responsibilities but rather of a cozy
relationship between members of Congress,
retired generals and admirals, and the rich
fat cats who stand to profit from massive
government contracts amounting to legally
sanctioned corruption.
Bacevich reasons that, with a large
conscript force, the military could go back
to “guarding its own gates, hauling its own
fuel and supplies, preparing its own rations,
and disposing of its own human waste,
not to mention doing its own thinking.”
But there’s no obvious reason why it
would want to—much less why Americans
should consent to allowing their sons and
daughters to be involuntarily conscripted
to perform such menial tasks. To be sure,
contracting out these functions is expensive,
and there has been a good amount of fraud,
waste and abuse. Bacevich cites several
studies pointing to over $60 billion in such
losses, equal to “about $1 for every $3.50
spent on contractors.” But much of this
money went to overseas firms, meaning
it wasn’t lining the pockets of American
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businessmen, politicians and other elites,
and all of it was subject to the vast Pentagon
contracting bureaucracy. A July report from
the special inspector general for Afghanistan
reconstruction is devastating in its critique
of both Defense Department and usaid
leadership on this issue. Such boondoggles
as “moving forward with a $771.8 million
purchase of aircraft the Afghan National
Army cannot operate or maintain” will not
be solved by the involuntary servitude of
America’s youth for latrine duty.
The last third of the book is devoted to
odd anecdotes calling out various pet peeves
only tangentially related to the ostensible
thesis. Considerable space is devoted to the
sad saga of Colonel Theodore Westhusing,
a 1983 West Point graduate who earned
a PhD in philosophy at
Emory studying military
honor—only to commit
suicide in Iraq when “his
conception of honor collided
with a radically discordant
reality.” After receiving an
anonymous letter claiming
that a government contractor
was not only cheating
the U.S. government but
also committing humanrights abuses, Westhusing
dutifully reported it up
his chain of command to
then lieutenant general David Petraeus—
appending his own view that the allegations
were unfounded and that the contractor
was “complying with its contractual
obligations.” Inexplicably, Westhusing
suddenly demonstrated a complete change
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of personality and, a week after alerting
Petraeus, fatally shot himself with his
service revolver.
Rather than seeing this as an indictment
of the army’s mental-health system,
Bacevich concludes that corrupt contractors
and a leadership that looks the other way
are to blame. Indeed, it was “a sacrificial
act and should command the attention
of anyone concerned about the health of
the military profession.” Bacevich sneers
at an army psychologist’s conclusion that
Westhusing possessed a “surprisingly
limited” ability to understand that some
people sought to profit from war and
instead believed “that doing the right thing
because it was the right thing to do should
be the sole motivator for businesses.” That
some seek to profit from war has been a
fact of life since well before the American
Revolution; it should surely not have been
news to a highly educated army colonel
in 2005, let alone so at odds with one’s
worldview as to prompt suicide.
November/December 2013 95
Yet, despite the fact that Westhusing’s
own report cleared the contractor in
this instance, his death was somehow
“the fire bell that rang in the night” and
demonstrates that “in forging its lucrative
partnership with defense contractors, the
army to which he had devoted his life
had sullied itself.” Bacevich’s solution:
“Limit the nation’s ambitions to those
that a relatively small professional army
can manage (which implies giving up
on globalism) or . . . revive the citizensoldier tradition (with globalism becoming
contingent on a popular willingness to
participate in war).” But these are not the
only choices. Indeed, the more obvious
response would be to expand the size of the
professional force such that the tasks could
be performed by uniformed troops subject
to the chain of command, the Uniform
Code of Military Justice and the law of
war.
P
erhaps the most disquieting passages in
Bacevich’s book appear toward its close.
He says, “U.S. national security policy increasingly conforms to patterns of behavior
pioneered by the Jewish state.” He charges
that the United States is “mimicking Israel”
by treating relatively powerless foes as major
threats, often through the preemptive use of
force. He describes the bipartisan post–Cold
War approach as a “quest for global military
96 The National Interest
dominance” in which “the United States
stumbled willy-nilly into an Israel-style condition of perpetual war—with peace increasingly tied to unrealistic expectations that
adversaries and would-be adversaries will
comply with Washington’s demands for submission.” Consequently, armed intervention
went from occasional to commonplace.
While the United States intervenes abroad
militarily far too often, the evidence that
a “quest for global military dominance”
is the root cause is dubious. As Bacevich
himself notes in The New American
Militarism, “With the end of the Cold War,
the constraints that once held American
ideologues in check fell away.” As the world’s
sole superpower, it should not be surprising
that America’s new status came with
increased demands, both domestically and
internationally, to “do something” whenever
a major global crisis erupted.
While the author musters a lot of
evidence that there is something wrong
with how many wars America fights and
how it fights them, he never demonstrates
that restoring a draft would solve any of
those problems. Indeed, as evidenced by the
recent showdown over Syria, Americans,
weary from wars in Iraq and Afghanistan,
seem to be addressing the fundamental
issue all on their own by pressuring their
representatives in Washington to shun
avoidable wars. n
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