The inevitability of corruption

Over the course of the Iraq war, a lot of opponents of the war have made a big noise about corruption among US contractors, the most common target being Halliburton. More recently, the pro-war blogosphere has been in an uproar over the ‘discovery’ that Saddam bribed a range of officials, including some in the UN, so that he could get kickbacks from the sale of oil, which was supposed to be used solely for the purchase of food and other essential imports. There has been a sense of baffled rage that no-one is much interested in pursuing these ‘discoveries’.

The scare quotes around ‘discovery’ reflect the fact that everyone who was paying any attention knew about this all along, and, indeed could deduce it from first principles. For example, in a piece on financing the reconstruction of Iraq written in May 2003, I observed

A return to normal output would yield gross income of around $US 20 billion per year at current prices, but most of this money was already being spent under the Food-for-oil program and most of it be needed for the same purpose in future. About 25 per cent of the money was taken to pay interest on debts associated with reparations for the 1991 War. If these were forgiven, some additional money would become available. In addition, it appears that Saddam managed to cream off $1 billion to $2 billion per year. If this were returned to the Iraqi people in general, it would make a small but positive contribution.

I didn’t bother to point it out, but it was obvious that Saddam could only get his cut by bribing those on the other side of the deal, that is, employees of the UN, the oil companies and the governments involved.

In the same piece, I made the point that the US contractors doing the work in Iraq were bound to charge a lot and deliver little, so that the cost of reconstruction would be far beyond the minuscule amounts that had then been budgeted. The appropriate response was not to complain about corruption but to accept reality and the need to spend a lot more money.

Iin both cases, it was, or ought to have been, obvious that the policy in question would produce corruption. That was why the US and UK initially tried to keep sanctions much tighter, with the result that thousands of Iraqi children died of starvation or inadequate medical treatment. Those who supported the Oil-for-Food program, knew, or ought to have known, that Saddam would take a large cut, and supported it anyway. Those who supported large-scale expenditure on reconstruction after the war knew, or ought to have known, that unscrupulous contractors would make a fortune, and supported it anywar. I’m happy to admit to supporting both policies, and to accepting corruption as one of the inevitable costs.

Having said all that, corruption is a crime and those guilty of it should be punished. But, unless you favor starving Iraqi children or doing nothing about reconstruction, trying to use either Halliburton or ‘UNSCAM’ to score points regarding the desirability or otherwise of the war is just silly.
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Abhorrence

This NYT story gives a pretty clear indication of how the Bush Administration’s abhorrence of abuse and torture will be manifested:

* A short spell in jail for those silly enough to be caught on camera or caught holding one
* A reprimand and no future promotion[1] for their immediate superiors
* No consequences for those who set up the system
* A new coat of paint for Abu Ghraib

I hope the Muslim world is more favourably impressed than I am.

fn1. As far as I can tell, this is what is meant by the NYT description of the reprimands as ‘career-ending’.

Sorry to be right

Like most commentators, I’ve made some correct predictions about Iraq and some incorrect ones. In my case, I’ve mostly erred on the side of pessimism, which I think is appropriate with regard to war – more disasters have been caused by excessive eagerness to go to war than by excessive reluctance. This prediction, made about a week into the Iraq war, seemed a bit over the top in the subsequent months, during which very little evidence emerged to support it. In retrospect, however, it turns out to be almost[1] entirely accurate.

Given the increasing frequency of references to Northern Ireland and Guantanamo Bay it’s reasonable to assume that torture of prisoners classed as ‘terrorist suspects’ will begin within the next few weeks, if it hasn’t started already. This will be denied with great vehemence, then, when it comes out, defended as an inevitable response to Saddam’s evil methods.

fn1. To be fair, while the response of the Bush Administration has been pretty much as expected (I forgot to mention the standard intermediate step of blaming it all on ‘a few bad apples’), and plenty of right-wing commentators have treated the whole thing as good dirty fun, some supporters of the war have been genuinely horrified. Sgt Stryker, (following correspondent BruceR) makes the same suggestion as I have previously, to “level Abu Ghraib, as the Bastille of the modern world that it is, send any prisoners worth keeping to other facilities, release the rest, and then offer substantial recompense for Iraqis, one and all, who claim to have been wrongfully imprisoned/abused in custody while there” . Sgt Stryker also proposes dissolving the army units involved.

The social desirablity of social democracy

Recent opinion polls have shown overwhelming majorities in favour of devoting any additional resources to improvements in public services, particularly health and education, rather than to tax cuts. Discussing these results, Andrew Norton notes that some people may be “giving the socially acceptable answer, rather than what they really want” (see also here. I think he’s probably right, and I certainly hope so.

The reason I think Norton is probably right is that the majorities are so overwhelming (75-22 in this Nielsen poll and even more in others) that a fair number of people in the majority (people on above-average incomes with below-average needs for services) would almost certainly be worse off in a narrow personal sense. While some of these may be consistently altruistic, others may want to appear altruistic in a poll but might actually prefer the cash. Taking account of these responses would produce a less lopsided majority for services, but still a majority, as is shown by Labor’s electoral dominance at the state level.

The reason I hope he’s right is that it means that social democracy has won the public debate, at least for the moment. After all, if everyone believed that tax cuts would benefit, not merely a subset of high-income earners but the entire community, then the socially acceptable answer would be to support tax cuts. That certainly seemed to be the way things worked during the tax revolt of the 1970s and 1980s. At that time, opposing tax cuts was socially unacceptable. Well into the 1990s, I was regarded as wildly heretical for advocating higher taxes. Obviously, this has changed, though the political parties have been slower to catch up than the commentariat.
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How to deal with the Axis of Evil

The other day, I saw in the list of WashPost Oped pieces one by James Dobbins entitled Time to Deal with Iran. No sooner had I seen the headline than I had my refutation ready, wondering what kind of neocon fruitcake would advocate compounding the problems we already have by taking on the Iranians. Didn’t Dobbin know, I wondered, that the US had already exhausted its reserves of troops, money and political credit? Being cautious, though, I decided I might as well read the article before writing my riposte.

It turns out that Dobbin means “Time to Cut a Deal with iran”. He makes a very strong case that this is the sensible course of action and that Iranian good offices with the Shiites would help build support for an interim government. But it struck me as a curious inversion of the domino theory that was one of the justifications for the war. The idea was that 100 000 or more US troops in the Middle East would scare neighbouring governments, particularly those of Iran and Syria, into good behavior. Instead, the help of the Iranians is needed to discourage attacks on the troops.

Coming to Syria, it was initially assumed that US complaints about “foreign fighters”[1] coming into Iraq from Syria were sabre-rattling, creating an implicit pretext for a subsequent invasion. It now seems more likely that Syria has been handed a bargaining chip – if the Syrian government seals its borders effectively, there’ll be no more complaints from the US about Assad junior’s unlovely regime.

fn1. There’s no evidence of large numbers of foreign fighters. But the classic role of a country like Syria in this context would be that of a safe haven for domestic Iraqi insurgents when the pressure gets too heavy inside Iraq.
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Fallacy of the Commons

Like Jon Mandle, I was repulsed by Garrett Hardin’s 1974 article Lifeboat Ethics: The Case Against Helping the Poor The idea that large sections of humanity were doomed and should be abandoned forthwith was quite popular at the time. The Paddock brothers prominently advocated a policy of “triage”, cutting off aid immediately to countries like India which were, they argued, doomed to starvation in any case. Judging by this 1996 interview, Hardin (who died last year) didn’t change his views much over time.

Having reacted against this piece by Hardin, I was glad to discover that his more famous contribution to the environment debate, the Tragedy of the Commons was, in historical terms, a load of tripe.
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What I saw at the Senate Roundtable

The Senate Committee on the FTA held a roundtable meeting to which I was invited along with a fairly high-powered panel (listed below). Apart from the Andy Stoeckel and Lee Davis of the CIE, who were, naturally enough, defending the work they did for DFAT and Alan Oxley of Austa, the main pro-FTA lobby group, the evidence was almost uniformly against the FTA. Although there were a lot of different perspectives, there was, in the end, agreement on the point that the net welfare effects of the FTA on merchandise trade were sufficiently close to zero to be disregarded. Since these are the only effects for which economists have more-or-less reliable measuring techniques, this was somewhat discouraging, but it indicates that the terms in which the FTA have been discussed so far have missed the point.

The real issues relate to questions like services, intellectual property, the interaction between politics and economics, the US and Asia and so on. These are complicated, but most of the evidence suggested that the FTA will be a net negative, unless, like Oxley, you think that tying ourselves as closely as possible to the US is the optimal response to all these issues.

For what it’s worth the discussion reinforced the view I reached (with some assistance from Ken Parish) when the FTA came out .

The politics of this seem entirely straightforward for Labor. Hardly anyone in Labors constituency has anything obvious to gain from the deal (in fact, the immediate benefits for anyone in Australia are trivial and the indirect benefits entirely speculative) Latham has already alienated anyone who objects to standing up to the Americans. OTOH, the majority of the Labor base who objected to the Iraq war can see that Howard hasn’t even managed to secure fair treatment in return for our loyal support of the US, let alone any favours…the [standard] procedures for examining the treaty mean that nothing will come before Parliament until after the next election. It seems to me that this makes things even better for Labor. Rather than rejecting the treaty outright, they can say that, when elected, they will demand a renegotiation of the treaty (the fact that the US will also have an election complicates the issue, but mostly in a way favorable to this claim – for example, a statement by Bush that the terms of the agreement are ironclad can’t bind his successor).

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