David R. Henderson  

Wishful Thinking and Unintended Consequences

Myth of the Rational Voter<... Warren Buffett, out of sample...
Mrs. Clinton was won over. Opposition leaders "said all the right things about supporting democracy and inclusivity and building Libyan institutions, providing some hope that we might be able to pull this off," said Philip H. Gordon, one of her assistant secretaries. "They gave us what we wanted to hear. And you do want to believe."
This is from Jo Becker and Scott Shane, "Hillary Clinton, 'Smart Power' and a Dictator's Fall," New York Times, February 27, 2016.

The article, which is long, is outstanding. It tells of Hillary Clinton's key role in persuading President Obama to attack Libya. Scott Shane, by the way, is the author of one of my favorite books of the 1990s: Dismantling Utopia: How Information Ended the Soviet Union.

What's striking about the article--and this is why I excerpted the paragraph I did--is how a huge decision was made based on little information and some wishful thinking. I saw this up close on domestic policy when I was a senior economist with President Reagan's Council of Economic Advisers. From everything I've read in foreign policy, it's even more true there and there are two good reasons that I've talked about in "The Economics of War and Foreign Policy: What's Missing?" Defense & Security Analysis, Vol. 23, No. 1, pp. 87-100, March 2007.

The first reason is that, as the NYT article shows, the government's information problem is more severe: government officials know even less about foreign countries than they know about their own. That is Hayek's "fatal conceit" squared.

The second reason is that the incentive to make a good decision is even less. The main victims will be people in other countries and they don't vote in the country of the intervenor.

HT2 Tom Nagle.

Comments and Sharing

COMMENTS (3 to date)
Charley Hooper writes:

There are typical externalities, such as when your factory pollutes the air of your neighbors nearby. But at least your neighbors have some recourse. They can go to the courts. They can buy a competitor's product. They can protest. They can give you dirty looks.

This type of foreign policy externality is worse--those who were bombed have little recourse and those who were killed have none. Could there be, or is there, a metric, or at least some adjectives, to measure the "seriousness" of the externality?

Roger McKinney writes:

I started visiting the Middle East in 1976 and have stayed informed since. It's shocking and frightening how little anyone in DC understands about the region.

We should apply Hayek's emphasis on humility in economics to foreign policy. Also, I would like to promote the writings of the great Cambridge historian Herbert Butterfield who also promoted humility in foreign relations. Butterfield wrote that European diplomats invented limited war in the 18th century because of unintended consequences. They knew that war unleashed monsters that would be very difficult to conquer, so they kept wars as small as possible. One key was to never characterize the enemy as totally evil and inhuman.

Khodge writes:

Roger McKinney: I had never considered that...in fact, even more so than David's government information problem, we, here, in North America, having been spared any real war on our ground in the last 150 years (property destruction, large scale death and population displacement, plunder, and so forth) probably cannot understand war as most other parts of the world have lived it, even with extensive study.

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