David R. Henderson  

Incentives in Foreign Policy

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One of the issues I emphasized in my speech last night, "The Economic, Moral, and Constitutional Case for a Non-Interventionist Foreign Policy," was the role of incentives. Here's part of what I said:

Now consider the incentive problem. Neither the President nor Congress has the incentive to make good decisions. That's why it's best for governments to focus simply on defending their own country against foreign attack. Even here, the government might mess up because the government officials don't have the right incentives, but this may be a worthwhile risk if your country is being attacked. But if your country isn't being attacked, it's not worth the risk.

And later:
There is a good chance that, had it not been for the harshness of the Versailles Treaty, Adolf Hitler would never have come to power. In turn, had Clemenceau not sought vengeance on Germany and had Wilson not been so ineffective, the Treaty would have been less harsh. Which means that Clemenceau, by pursuing his own personal agenda, regardless of the costs imposed on millions of Europeans--French, German, British, and otherwise--helped cause World War II, a war in which over 60 million lives were lost. Clemenceau intervened and caused huge problems, partly because he didn't understand what he was doing and partly because he didn't care about the consequences--he had the wrong incentives.

Indeed, Zac Gochenour and I have documented, in "War and Presidential Greatness," Independent Review, Spring 2013, the strong positive relation between the percent of his country's population a U.S. president loses in war and historians' ranking of that president's greatness. This gives presidents an obvious incentive to go to war.

It's an incentive about which at least two presidents stated clearly their awareness and we lead with quotes about or from those two presidents. The first is Arthur Schlesinger, Jr. on John F. Kennedy:

War, he observed, made it easier for a president to achieve greatness.

The second is Theodore Roosevelt:
If there is not war, you don't get the great general; if there is not the great
occasion, you don't get the great statesman; if Lincoln had lived in times of
peace, no one would know his name now.

One incentive I did not mention in my talk last night, but should have, is the incentive of the foreign policy establishment to push for war. Leon Hadar had a good piece on that yesterday, titled "Why This Town Loves Going to War." An excerpt:
Following in Leibovich's footsteps, though, perhaps we should apply his main thesis to the debate over foreign policy and national security. What drives political players in Washington today has less to do with the partisan fights between Republicans and Democrats, or the ideological struggles between conservatives and liberals, and more to do with the personal and institutional interests of the powerful men and women who rule this city. These are the people who use their position to advance their own interests, to gain fame and make money.

Ask yourself why there is this continual effort by the Beltway insiders and journalists to elevate foreign policy and national security to the top of the agenda. Could it be because they believe a "player" in Washington has a better chance of drawing public and media attention, of gaining recognition, and of accumulating power when he or she is dealing with matters of war and peace as opposed to, say, the makeup of the next budget?


That reminds me of a conversation I had with a colleague a few years ago. This colleague's specialty is the Middle East. I ran into him and asked him how things were going. "Great," he said, "the Middle East is in turmoil."


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COMMENTS (9 to date)
Tom West writes:

I agree with your thesis, but I do think that if Clemenceau and Lloyd George had been less punitive, they would have faced a massive backlash from their citizenry.

Millions of French and British died in what was seen as an unmitigated war of aggression. Furthermore, years of propaganda made it clear that every German was responsible (how else to shoot them with a clear conscience), so mere removal of the heads of state would not be nearly enough.

There was no mood for magnanimity in victory, and thus to have avoided Versailles would have required far greater politicians than either of the two leaders.

Greg G writes:

Yes, historians usually undervalue the presidents who keep us out of war.

Keynes was the first and the loudest to predict disastrous results from the Treaty of Versailles.

Chris H writes:

I agree with Tom. Versailles was most likely as much a failure of leaders listening to their people as personally wanting vengeance (indeed Wilson's more enlightened approach to the issue can likely largely be traced to the fact that Americans lost a LOT less than the French and British and thus felt less vindictive).

But since I didn't get to attend your speech (a downside of not living in Southern California), I wonder if you mention the idea that warfare somehow creates more moral people as one of the factors driving interventions? Think of the whole concept of the "greatest generation" being forged in WW2, or the concern evident in the writings of some of the founding fathers (and in the Federalist papers too if I'm remembering right) about ensuring the national character is sufficiently war like.

Eric Falkenstein writes:

After plagues real wages go up, so perhaps a war was good for those polled ex post?

Chris H writes:

@Eric,

More likely it's just because wars are a lot more interesting to study. Having been in a lot of history classes I know how boring peacetime history can seem in comparison.

Brian writes:

David,

Interesting points made in this post, especially about the incentives for leaders to go to war. What I don't understand is your statement as a general principle that "neither the President nor Congress has the incentive to make good decisions." On what basis do you make this claim?

It appears to me that decision makers in government often make good decisions. My evidence is that even when a candidate strongly criticizes previous decisions made by those in power, the policies once in power are rarely very different. (Obama is a case in point.) This suggests that the policies are equilibrium positions and thus more likely to be right than wrong. Why do you think otherwise?

Tom E. Snyder writes:

Brian, public choice theory. Politicians do not act in the public interest because there is no such thing. They act in their own interest which is the same regardless of party. It's called power. Politics gives them the opportunity for their evil side to manifest and persecute the rest of us.

Bedarz Iliaci writes:

@Tom E. Snyder
Politicians do not act in the public interest because there is no such thing

Then how do you explain long-term consistency shown in numerous national policies. Such as American anti-imperialism in early 20C, European imperialism in 19C, American anti-communism of second half of 20C etc.

Shane L writes:

World War II, so massive and traumatic, seems to have shaped foreign policies in a number of countries ever since.

- Neutral states like Norway and Netherlands learned that neutrality would not be respected so they joined NATO.

- Neutral states like Ireland, Switzerland and Sweden learned that their neutrality would keep them out of disastrous wars, so they maintained this policy.

- Britain learned that appeasing tyranny would backfire, so they needed to be more assertive.

- Russia/USSR learned that they needed to strengthen their western flank and if possible exert control over countries to the west.

- Japan and Germany learned that militarism was disastrous so they accepted subordinate and fairly peaceful roles in alliances dominated by others.

- Perhaps (I'm not sure of the history) East Asian colonies learned that European powers would not protect them from aggression from Japan and therefore they may be better off independent.

- The US learned that "isolationism" (its less assertive foreign policy of the 1930s, though it was still interventionist in ways) had failed so it needed to be aggressively engaged abroad.

Hence I sometimes see Americans dismiss less interventionist foreign policies on the grounds that "that didn't work very well in 1941". Yet they could have easily have learned any number of lessons from World War II, just look at the other countries for details.

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