Send No More Roses by Eric Ambler. In my opinion, the only thriller writer worth reading. A postmodernist avant le nom, his untrustworthy narrators manage to convey absolute conviction that the events are real, even while the reader knows that they are probably lying about all the details. He doesn’t load up with technical detail in the manner of Tom Clancy et al, but does a much better job of convincing you that he has it all at his fingertips.

We’re starting to see some analysis of the Bush doctrine of pre-emption and what it all means. As an economist, I’m at least as interested in what it will cost and who will pay.

On the first question, I’d estimate that the annual cost of any serious attempt to implement the Bush doctrine would be at least $100 billion per year and probably closer to $200 billion per year. To get a ‘back-of-the-envelope’ approach to these numbers, I assumed that the a conservative implementation of the doctrine would entail deploying a front-line force of 100 000, and backup and logistic forces of 500 000 with an average annual cost of $150 000 per person. I’m assuming that this will be additional to existing forces. There’s some scope for redeploying forces from NATO but this can be overstated. Much of the US force structure in Europe has already been reoriented from defence against the Red Army to a forward deployment against enemies in the Middle East and elsewhere. To come at the estimate another way, the cost of the Gulf War is estimated at $80 billion, and it only lasted a few months. The Bush doctrine implies a semi-permanent occupation of Iraq and probably the recipients of future pre-emptive defence.

Who will pay. As we’ve repeatedly been reminded, the US is the wealthiest country in the world. However, wealth belongs, by definition, to the wealthy, and nowhere is this more true than the US. The owners of wealth in the US have demonstrated, in a number of ways, that they have no intention of paying anything. Among the signs
(i) Conspicuous consumption on a scale unparalleled in history
(ii) Flagrant tax evasion/avoidance accompanied by moralistic attacks on ‘welfare queens’ and workers cheating the earned income tax credit (both get far more investigation than the rich or big companies
(iii) the massive tax cuts introduced at their behest by George W. Bush
As a result of the tax cut and other policy initiatives, the US government was in chronic deficit before the announcement of the Bush doctrine.
The natural inference is that other US taxpayers will either have to pay more or accept less in non-defence services. But there’s very little capacity to do this. No-one is going to propose an increase in taxes for the middle classes without first repealing the tax cut for the rich, and the latter is not going to happen. On the services side, there are already big unmet demands, such as the prescription drug program promised by both sides.

Another alternative that has been proposed is that the Iraqis and others could hand over oil as reparations. There are, of course, a number of names for pre-emptive demands for reparations of which extortion is one of the less unpleasant. It seems doubtful that even the Bush Administration could seriously entertain this idea.

The truth is that, as in the Gulf War, the Europeans and Japanese will pay, only this time they will be lenders rather than donors. The obvious question is when the pile of US dollar denominated debt will get so high that lenders start to worry about adding to it. At that point, but probably not before, the Bush doctrine will run out of puff.

This story, comparing J.P. Morgan to (spectacularly failed hedge fund) Long-Term Credit Management shows that the great derivatives crisis has just moved one step closer.

Tim Dunlop argues that those on the Left who dismiss Bush as a fool are in fact fooling themselves. He says:

“I, for one, can’t come at this sort of assessment. Nor can I accept the milder account that he is a bumbling amateur who just happens to get lucky. Such an argument is expressed here, on Electrolite‘s comments box by Iain Coleman :

I think the fundamental problem is the amateurishness, rather than the dishonesty. Tony Blair’s government has become notorious for spin, media manipulation, and stretching the truth until it snaps. Nonetheless, I trust Blair in matters of war much more than I trust Bush. This is because, whatever his other faults, Blair is a highly able politician who will put a lot of hard graft and determination into achieving his goals. Bush, by contrast, is a lazy amateur with the attention span of a small houseplant. With Blair, there’s always the chance that the foreign policy will be wrong: with Bush, there’s the certainty that it will be half-assed.”

This isn’t quite right, but there’s more to it than Tim is willing to concede. Bush has shown that capacity to push very hard and successfully for particular goals – the tax cut, the overthrow of the Taliban and the invasion of Iraq, but then the attention span problem kicks in. Given the disappearance of the surplus, the tax cut is sustainable only with rigorous restraint in expenditure, but Bush has shown no inclination to fight hard for this. In fact, it’s been pretty much ‘spend and let spend’ with the Democrats getting money for their priorities in return for supporting Bush’s military initiatives. Similarly, the risk that Afghanistan will collapse back into the kind of warlordism that set the stage for the Taliban is growing every day, and the US seems to be willing to accept this rather than anything that might even slightly compromise the operational freedom of its armed forces. Finally, in relation to Iraq I’d suggest reading James Fallows article (previous post) and asking whether anyone thinks the current Administration has the attention span required to follow through on a successful invasion.

Finally, a serious analysis of the options facing the US after a military victory in Iraq from James Fallows. It would be really encouraging to see some indication that the Bush Administration has thought at all beyond the day the Stars and Stripes are raised over Baghdad.

The headline from a thoughtful piece by Hilary McPhee

Paul Krugman shortens the odds on a double-dip recession in the US. While I agree with Krugman on a lot of things, I tend to give more credence to the Schumpeterian idea that in an economy bloated with excess, recession is unavoidable. The obvious imbalance in the US economy is the huge current account deficit, now near 5 per cent of GDP. It’s hard to see how this can be maintained for long, and also hard to see how it can be reduced without a recession. Of course, this is relevant to other chronic deficit countries like Australia.

The NYT gives the full Text of Bush’s Iraq Proposal . The key clause
“The president is authorized to use all means that he determines to be appropriate, including force, in order to enforce the United Nations Security Council resolutions referenced above, defend the national security interests of the United States against the threat posed by Iraq, and restore international peace and security in the region.”
It would be interesting to see some of our experts in textual analysis analyze what limits, if any, this places on Bush’s power to make war anywhere in the Middle East for any reason.

According to theWashington Post the US government has decided that inspections to detect germ warfare programs aren’t a good idea.

Glenn says:

Well, you’re talking about equipment for *making* bombs, and Wright’s talking about the bombs themselves.

My reply:

I’m not saying that the 1991 experience *proves* that inspections will work and that anything found will be destroyed. But it’s silly to discuss hypotheticals without reference to relevant historical experience, and in a way that implicitly assumes that the relevant historical events didn’t happen.

In any case, no-one I’ve seen is claiming that Saddam has anything more than equipment at this stage. The whole case for immediate invasion is that we need to stop him before he gets a bomb.