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The Hoover Institution on War, Revolution and Peace was established at Stanford University
in 1919 by Herbert Hoover, a member of Stanfords pioneer graduating class of 1895 and the
thirty-first president of the United States. Created as a library and repository of documents,
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HOOVER DIGEST
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The Hoover Digest explores politics, economics, and history, guided by the
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ON THE COVER
Ships ride at anchor and planes fly overhead
in this curiously placid image of British forces
sent to Gallipoli, one of the most bitter battles
of the Great War, drawn by a British officer
whose sketchbook is in the Hoover Archives.
The 1915 campaign by combined armies
from Australia, New Zealand, and the United
Kingdom was meant to overwhelm Turkish
defenses, seize Constantinople, and open a
way to defeat Germany and Austria in the
East. Like many well-laid plans, it went badly
awry. See story, page 204.

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DIRECTORS
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(Bechtel Director of Public Affairs)
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Director of Library & Archives)

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Summer 2016
HOOVER D IG E ST

P O L IT IC S
9

Ten Commandments for the Next President


Thou shalt not covet red lines. Thou shalt not trust soft
power. Thou shalt mistrust and verify. By Victor Davis
Hanson

15

The Facts and the Furious


Disagreementsand insults. Presidential politics, on the boil.
By James W. Ceaser

22

The Populism Bomb


The Trump phenomenon explained. By Niall Ferguson

26

Conservatism Is Compassionate
Why do conservatives believe in free markets and limited
government? Because they make life betterespecially for
those in need. By Peter Berkowitz

30

Where the Left Is Going


The long, strange trip of progressivism. By James W. Ceaser

38

Trade Winds
Globalization is buffeting states as never before. The stable
systems will be those that best handle rapid economic change.
By David W. Brady

H O O V ER D IG E ST S u m m e r 2016 3

T HE ECO N OMY
48

The Tax Plans Cometh


Get ready for profound changes in economic policy, whoever
becomes president. By Michael J. Boskin

52

Defending Free Trade


Presidential candidates have been waving the bloody shirt of
protectionism. Why attacking free trade is wrongand cheap.
By Richard A. Epstein

60

Thank a Banker
Wall Street has had a rough yearon the campaign trail,
that is. In the real world it still excels at allocating capital and
making Americans better off. By Paul R. Gregory

E N T IT L EME NT R E FOR M
65

Candid Candidates
The real litmus test of this campaign season is Social Security.
Who will save it? By Charles Blahous

F OR E IGN P OL ICY
70

Three Principles, Three Challenges


How to focus on what really matters: American interests. By
Stephen D. Krasner and Amy B. Zegart

H O O VER DI GEST Summer 201 6

T E R R OR ISM A ND DE FE NSE
75

Strategy Matters
A victory could be worse than defeatif it showed we had no
strategy. By Kori N. Schake

82

Still a Dangerous Neighborhood


The perils of nuclear proliferation didnt end with the Cold
War. By William J. Perry

92

Seven Deadly Strategic Sins


A common thread runs through US military disappointments:
errors at the top. By Mark Moyar

101

Pre-emption Comes in from the Cold


The Obama administration has quietly embraced a oncecontroversial doctrine about getting in the first punch. By
Jack Goldsmith

IN T E LLIGE N C E
105

Software Meets Soft Power


After the clash between Apple and the FBI, a question: what if
forcing a company to yield its secrets strengthens one kind of
security but damages another? By Amy B. Zegart

109

Beijing Borrows Moscows Playbook


China taps into the information age to learn everything
aboutand to controlits people. By Mark Harrison

T HE M IDDL E E AST
112

Ghosts of the Arab Spring


The world seems to have forgotten Arabs yearning for
freedom. Yet real stability can come about only when this
yearning is satisfied at last. By Amr Hamzawy and Michael
A. McFaul

H O O V ER D IG E ST S u m m e r 2016 5

117

The Saudis Feel Cornered


Riyadh is at the center of a coming regional storm. By Charles
Hill

122

Riyadhs Double Bind


Saudi Arabia both nurtures Wahhabi activism and struggles
to tame it. By Abbas Milani

S C IEN C E A ND ME DIC IN E
126

Hope for Stolen Lives


For families struggling with rare diseases, bureaucracy is in
some ways a tougher enemy than the diseases themselves.
How to change that. By Henry I. Miller

E DUCAT I ON
130

From Working Class to Middle Class


In enabling the children of the poor to escape low-skill, lowwage work, schools really matter. By Michael J. Petrilli

DE M O CRACY A N D FRE E DO M
137

Totalitarian Spin
Social media and the Internet were supposed to enable
democracy to triumph around the world, but now despots are
using tech as an instrument of oppression. By Christopher
Walker, Marc F. Plattner, and Larry Diamond

H O O VER DI GEST Summer 201 6

CA L IFORNIA
144

Pity the Almond


Californias biggest crop has transformed farming, marketing,
water policies, and even labor practices. That drives the left
nuts. By Victor Davis Hanson

IN T E RVIE WS
150

Libertarian on the Bench


Hoover fellow Clint Bolick, just appointed to the supreme
court of Arizona, describes his new job: to give effect to every
single word in the constitution. By Damon Root

158

The McKinley Pivot


His rival tried to drive Americans apartbut William
McKinley brought them together. Seasoned campaigner Karl
Rove sees echoes of the 1896 faceoff in todays presidential
contest. By Peter Robinson

170

Shocks to the System


Hoover fellow Lee E. Ohanian created a better economic
model by adding a new variable: exogenous shocks. By David
Andolfatto

VA LU E S
177

To Gratitude
In a time of sound and fury and presidential politics, a word on
being grateful. By William Damon

H O O V ER D IG E ST S u m m e r 2016 7

HISTORY A ND C ULT URE


181

Herbert Hoover Versus the Great Depression


After the Crash of 1929, Hoover took steps that were vigorous,
creative, and even radicalif, alas, ultimately unavailing.
By George H. Nash

HOOV E R A R C HIVE S
191

The Accidental State


The making of Taiwan. By Hsiao-ting Lin

204 On the Cover

H O O VER DI GEST Summer 201 6

POLI T I C S

Ten
Commandments
for the Next
President
Thou shalt not covet red lines. Thou shalt not trust
soft power. Thou shalt mistrust and verify.

By Victor Davis Hanson

ne: do not deflect blame onto others. Take personal responsibility when foreign policies implodeand at least a few will.
Read Winston Churchills speech after the fall of Tobruk in
1942. Presidents do not scapegoat Congress, the opposite

political party, the secretary of state, the most recent president, cable news,
obscure video-makersor the American peoplefor an intervention gone
badly. Telling the truth is far easier and simpler than inventing a web of
Sunday-morning-television talking points, excuses, lies, and pretexts.
Two: share credit for success with Congress and allied leaders. Do not
indulge in chest-thumping and spiking the ball over supposedly unilateral
presidential achievements when the real work was often done by unsung

Victor Davis Hanson is the Martin and Illie Anderson Senior Fellow at the
Hoover Institution and the chair of Hoovers Working Group on the Role of Military History in Contemporary Conflict.
H O O V ER D IG E ST S u m m e r 2016 9

[Taylor Jonesfor the Hoover Digest]

military heroes or intelligence operatives. A good way to start is by curbing


the presidential use of I, me, mine, and my. Avoid especially the narcissistic monotony of my team, my staff, and my advisers. The public
knows well enough that the president of the United States runs the country
and influences the world without hearing ad nauseam from him that he is the
center of the universe. The president is supposed to be larger, not smaller,
than the rest of us.
Three: do not utter threatsno red lines, step-over lines, or deadlines.
Failing to enforce an ultimatum only weakens US credibility, while dutifully

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H O O V ER DI GEST Summer 201 6

carrying out a loud warning becomes anticlimactic and merely dutiful. Teddy
Roosevelts century-old advice to speak softly and carry a big stick still
remains wiser than backing brutes into a corneronly to let them worm
outor trading insults with thugs. When a president is forced to say, I dont
bluff, we know that he does.
Four: by the same token, do not publicly insult foreign leaders
whether enemies or friends. Avoid ridiculing Russian president Vladimir
Putin as some sort of class cutup, or Israeli prime minister Benjamin
Netanyahu as an insensitive ideologue, or Frances former president Nicolas Sarkozy as a showboater, or British prime minister David Cameron as
ineffectual. Even presidents and prime ministers are creatures of emotion.

H O O V ER D IG E ST S u m m e r 2016 11

Enemy strongmen, once insulted, are more likely to cause gratuitous problems. Friendly leaders will keep their distance if they feel the president of the
United States is an adolescent name-caller. Inspiration demands elevation;
the commonplace earns contempt.
Five: praise soft power, but put little faith in it. Until the nature of
humanity changes, hard power will matter more than all the noble appeals to
shared aspirations and similar economic and cultural interests. Soaring rhetoric about global ecumenicalism has a shelf life of about two
speeches; after that, audiences can fill in the blanks and snooze no
matter how eloquent the cadences. The amoral Chinese and Russians will draw away our allies if the latter feel they are safer and
more secure joining with dictators than remaining friends with the
United States. Deterrence is won or lost not just by force or the lack
of it but by either the likelihood or the impossibility that it could at any
moment be used.
Six: do not expect to make a lasting bargain, breakthrough treaty,
or new friendship with a thug. Democratic leaders lie far less and can be
trusted far more than dictators, who have misleading and cheating imprinted
in their DNA. Age-old vocabulary like allies, enemies, and neutrals has
not suddenly become invalid. The Castros in Cuba, Recep Erdogan in Turkey,
theocratic Iran, Bashar al-Assad in Syria, and Kim Jong Un in North Korea
have long been renegades for a reason: if they were not the brutes that they
are, they would not have power. The ancient Athenian playwright Aeschylus
was right when he warned, It is not the oath that makes us believe the man,
but the man the oath.
Seven: do not trust periodic bursts of hysteria from politicians, celebrities, media figures, or pundits. Most members of
those categories in the BostonNew YorkWashington corridor
have no real ideology; they simply align for a while with perceived
success or distance themselves from assumed failure. If a bombing
or a rescue operation goes badly, there will be few to admit that they once
demanded such action. If an intervention goes well, even its opponents will
claim parentage. Obsequious reporters and politicians have a moth-to-flame
addiction to the flicker of power; they are not especially fond of, or loyal to,
the person who happens for the moment to wield it.
Eight: accept that some problems are for the present intractable.
They wont go away until larger geostrategic conditions changeor current
leaders lose power. There is a reason why most Palestinians do not and will
not accept Israel, and why Israel cannot be willing to grant concessions until

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H O O VER DI GEST Summer 201 6

they do. To believe that a president of the United States can by force of personality, charisma, ego, or skill cut the Middle Eastern Gordian Knot is sheer
narcissismand dangerous.
Nine: speak nicely of, but never rely on, the leadership of the United
Nations. Its resolutions were of no value in Libya. It did nothing to stop
genocide in Syria. It is run by a majority vote of its membersand the majority of the members of the General Assembly are crudely nondemocratic, and
H O O V ER D IG E ST S u m m e r 2016 13

many of them are themselves targets of UN sanctions. If multilateral action


becomes necessary, only the United States can assemble and lead the necessary coalition. Multilateralism is neither better nor worse than unilateralism.
(The greatest multilateral force in history was the varied and huge contingent of 500,000 soldiers from Hitlers allies who joined the 3.5-million-man
Wehrmacht to invade the Soviet Union in June 1941.) The mission, not the
breadth of the coalition, determines the morality.
Ten: listen to Winston Churchills advice and never criticize or apologize for the United States while abroad. Plenty of foreigners are available
to trash America without the president of the United States joining in the
rebuke while on foreign shores. The job description of the president is not
that of the secretary-general of the United Nations or of a campus activist. If
a president does not believe that, then he should not be president.
Reprinted by permission of National Review. 2016 National Review,
Inc. All rights reserved.

Available from the Hoover Institution Press is American


Contempt for Liberty, by Walter E. Williams. To order,
call (800) 888-4741 or visit www.hooverpress.org.

14

H O O VER DI GEST Summer 201 6

POLI T I C S

The Facts and the


Furious
Disagreementsand insults. Presidential politics,
on the boil.

By James W. Ceaser

nger is all the rage in American politics. A recent New York


Times column bore the headline The Year of the Angry Voter,
while an earlier Washington Post story read Its Not Just
Trump: Voter Anger Fuels Outsider Candidates. Our nations

choleric mood has not gone unnoticed in other parts of the world: Why
Are Americans So Angry? a BBC think-piece wondered. Backed up by poll
after poll purportedly showing that Americans are somehow angry (maybe
because they are being prompted by the question), the conventional wisdom
has settled on the idea that this is a nation today at wits end.
It is not just voters who have been subjected to psychological examination. Political analysts partitioned the candidates into two emotional camps:
the genuinely angry (Donald Trump and Ted Cruz on the Republican side,
Bernie Sanders for the Democrats), and the feigned-angry (Hillary Clinton)
or not-angry-enough (Marco Rubio and John Kasich). That the candidates in
the first category have enjoyed such successtapping into anger, stoking it,
and riding it to electoral victoriesis taken as proof that this passion is the
defining feature of this election cycle. The politician in our febrile political
James W. Ceaser is a senior fellow at the Hoover Institution and the Harry F.
Byrd Professor of Politics at the University of Virginia and director of the Program
on Constitutionalism and Democracy.
H O O V ER D IG E ST S u m m e r 2016 15

climate has no alternative but to understand and confront anger, either to


harness it for electoral gain or else, while acknowledging it, to somehow limit
or counteract it by other appeals.
Yet for all this attention to the subject, our pollsters and analysts have been
less than precise in their treatment of it. Not all the anger associated with the
three self-proclaimed outsiders is of a piece: the frustration that the Trump
campaign has simultaneously fed and fed off differs from the kind that drew
people to Cruz and from that behind the Sanders surge. And upon closer
examination, what has been labeled anger may in fact be a more complex
mixture of emotions.
BEATING THE ELITE
Trumps appeal no doubt has focused on anger, but it also plays to other feelings. The Trump program is filled with reassurances full of upbeat hyperbole. Were going to take care of the economy, he told supporters after his
victory in New Hampshire. Were going to take care of jobs. Were going to
take care of all the things that I saidour border, everything, health care. Its
going to be so great. Call this hope and change, Donald-style. Though Trump
does not speak of slowing the rise of the oceans or healing our planet, he at
least promises to Make America Great Again.
Trumps different themes, as the exit polls and surveys show, have resonated most powerfully among working-class white men, a demographic group
that has not seen appreciable improvements in its fortunes over the past
eight years or more. Still, to attribute the emotional reactions of the hardpressed middle class solely to anxiety over economic factors, as President
Obama did in one interview
with NPR, misses the specificity of anger.
Political correctness, which insults
The old political anathe working classs intelligence, tries
lyst Aristotle may have
to force people to act or even think in
something here to teach
stark opposition to their experience
our modern pollsters and
and common sense.
consultants. Anger, he
instructs in his Rhetoric,
is an impulse . . . . to a conspicuous revenge for a conspicuous slight
directed without justification toward what concerns oneself or toward
what concerns ones friends. The reaction of blue-collar workers, so
far as they are angry, comes from their feeling of being disregarded.
Obama has been at the receiving end of this reaction from the moment

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H O O VER DI GEST Summer 201 6

of his famously contemptuous dismissal of those who cling to guns or


religion.
Their anger has further grown in response to various forms of political correctness, which insults the working classs intelligence, trying to force people
to act or even think in stark
opposition to their experiThe reaction of blue-collar workers,
ence and common sense.
And while these workers
so far as they are angry, comes from
clearly believe that immifeeling disregarded.
gration policies and new
environmental regulations have harmed their economic prospects, the core
of their anger comes less from their economic plight than from the sheer
insult of an elite, professing to be their protectors, who ignore or deny that
these policies have had any adverse impact.
Anger, as Aristotle stresses, is directed more at a specific person or target
than at a condition. It is not just a matter of being screwed, but of someone
screwing you. Trump has peeled the veneer from these buried insults and
brought this anger to the surface.
Ted Cruz was more explicit in his anger. He drew the picture of a smug,
patronizing, and detached liberal elite, comprised of career politicians, lobbyists, and the media. This Washington cartel uses government to protect
and extend its place, power, and privilege, claiming to protect the equality of
citizens while in fact displaying contempt for the American populace. Cruz
operated under a general theory deriving from a strand of conservatism that
helps explain who should be the objects of peoples ire. Government is supposed to be limited, but it is being expanded and perverted by those seeking
advantage. The anger people feel toward this group, which Cruz both articulated and stimulated, is accompanied by a special kind of anger toward many
of those in his own party, who, elected to take on the system, have betrayed
their promises from want of conviction or courage. After all, as Aristotle
observed, we are angrier with our friends than with other people, since we
feel that our friends ought to treat us well and not badly.
The revenge that anger seeks would in both cases be satisfied by bringing
down the establishment, which can be accomplished by the reunification of
that old Reagan coalition . . . conservatives and evangelicals and libertarians
and Reagan Democrats all coming together as one, as Cruz put it after his
victory in Iowa. Colored by the evangelical flavor of his support, he struck
a righteous tone: Weeping may endure for a night, but joy cometh in the
morning . . . . Morning is coming.

H O O V ER D IG E ST S u m m e r 2016 17

Trump supporters, and to a lesser degree the supporters of Cruz, come by


their anger from what they are feeling and experiencing in their own lives.
It is an anger, especially in Trumps case, that is visceral, unaccompanied by
any kind of general theory or set of ideas. For Trump it is wholly outside of
conservative thought, even if it sometimes confirms or conforms to certain
conservative themes.

[Taylor Jonesfor the Hoover Digest]

18

H O O V ER DI GEST Summer 201 6

THIRD-DEGREE BERN
In his relationship to ideas, Bernie Sanders presents a different case. Sanders has personally been feeling his burn for more than half a century, having
been instructed by the teachings of a prepackaged ideology of socialism just
who are his mortal enemies. Sanders embraced this ideology as a young
student and has not deviated from it one iota. To his mind, the economic

H O O V ER D IG E ST S u m m e r 2016 19

problems and growing inequality facing America have nothing to do with the
current policies of a progressive administration, except for the fact that it
has not gone far enough in seeking to bring about a full political revolution
to humble the rich capitalists. Obamas call in 2008
Few if any of Sanderss young supfor fundamentally transporters were ever slighted by a
forming the United States
of America turns out to be
banker or shown disregard by a Wall
only a harbinger for SandStreet broker.
erss promise of transforming America in 2016. Sanders is at once closer to and more distant from
Obama than Hillary Clinton.
What is new for Sanders is the unexpected appearance, thanks in part to
the Occupy movement, of a more receptive audience for his message. The
vehicle for this change has been the rise of a strong emotion. I am angry,
Sanders told Iowans in January (as if they could not see it), and millions
of Americans are angry. Sanders found a specific target in the Wall Street
banks, which by his account caused the Great Recession of 2008 and which,
having been deemed too big to fail, were bailed out. This double insult provides the basis for Sanderss best applause line: The taxpayers of this country bailed out the illegal behavior of Wall Street. It is time for Wall Street to
bail out the middle class.
While Sanders found this specific object on which to vent, the passion he
has kindled does not really flow from any concrete experience encountered
by his most passionate supporters, the university students who flock by the
thousands to his rallies. Few if any of them were ever slighted by a banker
or shown disregard by a Wall Street broker. For them, the enemy has been
defined abstractly through the lens of ideas. Aristotle would call their emotion hatred or enmity rather
than anger: Anger is always
concerned with individuals,
Socialists and Marxists are old
he wrote, whereas hatred
hands at class hatred.
is directed also against
classes. Socialists and Marxists have always preached class hatred more
than class anger. The bad news for America is that while those who are angry
would have the offenders suffer for what they have done, those who bear
enmity would have the offenders cease to exist.
Given these different passions and various kinds of anger, how should
they be managed? The Stoics, concerned mostly with the peace of mind of

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H O O VER DI GEST Summer 201 6

the individual, advised never letting anger enter ones consciousness in the
first place. Once it begins to carry us away, it is hard to get back again into
a healthy condition, Seneca argued, because reason goes for nothing once
passion has been admitted to the mind. But while that option might be possible for the individual, it is unavailable in politics, and certainly in the political
circumstances in America in 2016.
Aristotle, ever the political scientist, accepted the inevitability of anger
inside political life and even saw that it could be put to some good, provided it
was made use of, not as a general, but as a soldier. The problem in American politics today is that some of our prospective commanders in chief cast
themselves in the mold of angry generals only too happy to lead an electorate
of angry soldiers.
Reprinted by permission of the Weekly Standard (www.weeklystandard.
com). 2015 The Weekly Standard LLC. All rights reserved.

Available from the Hoover Institution Press is Issues


on My Mind: Strategies for the Future, by George P.
Shultz. To order, call (800) 888-4741 or visit www.
hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 21

P O L I TI CS

The Populism
Bomb
The Trump phenomenon explained.

By Niall Ferguson

anic is setting in. Watching Donald Trumps rise, I now understand . . . exactly how Hitler could have come to power in Germany, writes my Harvard colleague, political theorist Danielle
Allen.

A plague has descended on the party in the form of the most success-

ful demagogue-charlatan in the history of US politics, according to Robert


Kagan of the Brookings Institution.
[Trumps] remedy is 1930s to the core: nationalism, crude bombast,
mytho-history, and sloganeering, says Victor Davis Hanson, a senior fellow
at the Hoover Institution.
Welcome to Weimar America.
I respect these writers, but Im afraid I dont buy their analogy. If we had
rerun the Great Depression after 2008, then Weimar Germany might be
relevant. But we didnt. The German unemployment rate in 1932, the year of
Hitlers two election victories, reached 25 percent. The unemployment rate in
the United States today is 5.5 percent. This is not the 1930s.
In fact, a much better analogy to our own time is the period from the
mid-1870s to the mid-1890s. On both sides of the Atlantic, the crash of 1873
was followed by a period of deflation. This was an age of industrialization,
Niall Ferguson is a senior fellow at the Hoover Institution.
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H O O VER DI GEST Summer 201 6

globalization, and mass migration. The combination of rapidly expanding


production of iron and wheat and the tight monetary policies imposed by the
gold standard resulted in deflation. Contemporaries spoke of a great depression, but the impact on output and employment was minimal compared with
the years after 1929.
Like the late Victorians, we too are living in an age of industrialization (in
our case, Chinas), globalization (they had the telegraph, we have the Internet), and mass migration
(in those days people fled
The irony behind the populist hurrah
Europe, now they flock to
it). We too have seen a vast
is that we know, or should know, that
expansion in the production
populism doesnt work.
of both industrial and agricultural commodities. True, we dont have the gold standard, but despite the
creative exertions of our central bankers, we do have something very close
to global deflation: very low inflation in most countries, falling prices in a
significant number. We avoided a 1930s-style slump. But, like our great-greatgrandfathers, we are experiencing a period of stagnation compared with the
pre-crisis boom.
In the 1880s, as in our own time, the political result of stagnation was not
fascism but populism. Fascism was all about violence: marching men in uniforms, battered opponents, re-armament, war. The violence of populism, by
contrast, is mostly verbal. Populist leaders are demagogues, but demagogues
in suits, not jackboots. They insult their opponents rather than break their
legs. They tend to be against overseas wars.
This is not to say that Donald Trump is identical to William Jennings
Bryan, the great populist orator of the late nineteenth centuryonly that he
is much closer to Bryan than to Hitler.
As in Bryans day, the populist backlash is directed against financial elites
and their political cronies; free trade; immigration; and racial integration
(though this last target is not explicit today). As then, populists base their
appeal at least partly on xenophobia. Today Trump complains about the
Chinese, Mexicans, and Muslims. In the 1880s, populists were more likely to
be anti-Semites or segregationists.
Yet the important point is that populism is about more than bigotry. Its
core economic argument actually has some substance. My fellow white
Americans, Trump is essentially saying, I know you feel less good today
than you expected to feel. I know you feel America is no longer great.
The people you should blame are people like my opponents [professional

H O O V ER D IG E ST S u m m e r 2016 23

[Taylor Jonesfor the Hoover Digest]

politicians with ties to the banks], the Chinese [shorthand for globalization],
and Mexicans [immigration].
I think this is mostly wrong. But the reason for Trumps successes is that
no other candidate has had a more convincing explanation of why so many
Republican voters genuinely are worse off today than they were in 2000.
And the key is that he blames both George W. Bush and Barack Obama
both Republican and
Democratic party
Populist leaders are demagogues, but
establishments.
There is nothing spedemagogues in suits, not jackboots.
cifically American about
populism. As in the 1880s, we have it in Europe, too. Can populism come to
power? Of course. There are populists in power already in Greece, Hungary,
and Poland. And in many ways the Russian president Vladimir Putin is the
ultimate populist, whose interests all of this serves.
The irony of all of this is that we know, or should know, that populism
doesnt work. In the part of the world where constitutions have repeatedly
failed to keep populists outLatin Americait has been tried again and
again, both by the right and by the left. Bankers get arrested. Tariffs get
imposed. Border fences get built and sometimes fought over. The result?
Visit Venezuela.
The question is whether or not we in the Northern Hemisphere need to
relearn this lesson the hard way. That is the right thing to panic about.
Reprinted by permission of the Boston Globe. 2016 Boston Globe Media
Partners LLC. All rights reserved.

Available from the Hoover Institution Press is


Inequality and Economic Policy: Essays in Memory of
Gary Becker, edited by Tom Church, Chris Miller, and
John B. Taylor. To order, call (800) 888-4741 or visit
www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 25

P O L I TI CS

Conservatism Is
Compassionate
Why do conservatives believe in free markets
and limited government? Because they make life
betterespecially for those in need.

By Peter Berkowitz

his campaign season has exhibited large amounts of rhetoric


that reinforces a perception of right-wing callousness. Ted Cruz
adopted an angry, uncompromising tone in Iowa and in the aftermath of his primary victory there. The vulgar rhetoric of Donald

Trump also has fed this perception.


Cruz and Trump and many of their supporters insisted that politics
requires toughness and an iron will. So it does. Yet Cruz and Trump also lend
credence to a widespread view, aggressively promoted by progressives and
internalized by some conservatives, that the public policies of those on the
right reflect hard hearts and mean spirits while programs championed by
those on the left mirror their caring and generous natures. The stereotypes
about liberals and conservatives stand front and center.
The serious political question at issue in 2016 is what best serves the interests of the American people: conservative devotion to individual freedom
and limited government or progressive dedication to overcoming economic
inequality through aggressive government regulation and redistribution.
Peter Berkowitz is the Tad and Dianne Taube Senior Fellow at the Hoover Institution and a member of Hoovers Working Group on the Role of Military History in
Contemporary Conflict.
26

H O O VER DI GEST Summer 201 6

But seldom did the Republican hopefuls address the needs of, and governments legitimate responsibilities toward, those unable to care for themselves
or who find themselves temporarily in need of a helping hand.
The problem predates the rise of this years electoral field. In introducing
himself to America during the 2000 presidential campaign as an advocate of
a compassionate conservatism, Texas governor George W. Bush declared
that conservatives also cared about the poor, the unemployed, the sick and
disabled, and the elderly. And Bush argued for distinctive reforms that incorporated market mechanisms and the voluntary associations of civil society to
lift up the less fortunate. But Bushs terminology had the unfortunate effect
of reinforcing the impression that compassion supplied something to conservatism that it was otherwise lacking, as if a Democrat were to embrace a
realistic progressivism.
Indeed, progressives are vulnerable to the charge that they focus more on
burnishing their pleasing self-image as caring individuals than on the actual
benefits and costs to those whom they purport to assist.
When conservatives
highlight data showing
George W. Bushs compassionate
that some welfare proconservatism made the unfortunate
grams create a debilitating
dependency on government, suggestion that compassion was
that affirmative action
something conservatism lacked.
often undermines minority
students prospects by systematically placing them in academic programs
for which they are poorly equipped, and that humanitarian military interventionshowever pure the moral impulses that inspired themcan sow chaos,
progressives are more inclined to impugn conservatives motives for mentioning inconvenient facts than to reconsider their own policy preferences.
A group of twelve distinguished conservatives contends that championing human rights and effective measures on behalf of the poor, persecuted,
and vulnerable remains an essential component of the conservative tradition. The groupwhich includes columnist and Ethics & Public Policy
Center Senior Fellow Mona Charen, theologian Michael Novak, Twenty-First
Century Initiatives CEO Michael Horowitz, Hoover Institution senior fellow
Chester Finn, and Quadrant magazine editor John OSullivanproduced a
report, Challenging the Caricature, that argues that concern for human rights
flows from conservative convictions about liberty and limited government
and that restoring human rights to the center of the conservative agenda is
vital to fashioning long-term conservative majorities.

H O O V ER D IG E ST S u m m e r 2016 27

The authors reconstruct an impressive record. Conservatives have been at


the forefront of efforts to combat sex trafficking; end labor slavery at home
and abroad; rein in the tendency to over-criminalize and over-incarcerate in
the United States; and prevent prison rape and violence while encouraging
respect for basic human rights in prisons in the developing world.
Conservatives have promoted higher education access by fighting escalating tuition costs and relentless administrative bloat. They have worked
assiduously to provide education for the children in poor and low-income
inner-city families through voucher programs and charter schools.
Conservatives also have rallied to the assistance of developing-world girls
and women by battling the plague of obstetric fistulas, which leave women
infertile and incontinent. They have directed substantial support to the
fight against AIDS in Africa. They have taken the lead in exposing dictators human rights abuses in general and in particular have sought to bring
pressure to bear on China and the United Nations to end support for North
Korea. Conservatives can be found championing Internet freedom in closed
societies, standing up for religious freedom around the world, and fighting
the scourge of anti-Semitism.
Whereas progressives seek to divide the world into those on the left who
care about the less-well-off and the mean-spirited conservatives who do not,
the authors of Challenging the Caricature contrast two competing conceptions of how to deal with poverty, misfortune, and human rights abuses. The
left backs a central and centralizing government that raises and, through
massive bureaucracies and administrative agencies, transfers vast sums of
money to those it regards as in need. In contrast, the right seeks to rein in
government taxing and spending, to direct government toward its constitutionally assigned tasks,
to enlist wherever possible
market mechanisms, and,
A candidate could enlarge the conby invigorating civil society,
servative tent by explaining how
to foster the virtues of selflimited government advances the
reliance. These measures,
interests of the least well-off and
conservatives contend, will
vindicates human rights.
promote economic growth,
create opportunity, and
reduce dependency on government, thereby breaking the cycle of poverty
that progressive policies perpetuate.
The authors of Challenging the Caricature stress that persuading Americans of the superiority of the conservative conception of fairness is crucial to

28

H O O VER DI GEST Summer 201 6

conservatives electoral prospects. In 2012, President Obama carried by an


enormous margin the 21 percent of voters who said that caring for people
like me determined their choice for president. Republican nominee Mitt
Romney lost decisively
among African-Americans,
Mitt Romney lost decisively among
Hispanics, Asian-Amervoters inclined to reject candidates
icans, and young, single
they considered cold and uncaring.
womenall critical demographic groups inclined to
reject candidates out of hand whom they consider cold and uncaring. If the
mere letter R on the ballot elicits that reaction, Republicans long-term
prospects look bleak.
Changing perceptions wont be easy. This is not least because the left
determinedly propagates the belief that the defense of human rights is inherently progressive and antithetical to conservatismand because too many
conservative leaders play into their hands.
So far, no one among the Republican field has done much to recognize
the legitimate political claims of the powerless and the persecuted or the
resources within the conservative tradition to address them. This creates
an opening for a candidate to enlarge the conservative tent by explaining
how the principles of limited government, and policies consistent with those
principles, advance the interests of the least-well-off and vindicate human
rights.
Reprinted by permission of Real Clear Politics. 2015 RealClearPolitics.
All rights reserved.

Available from the Hoover Institution Press is


Constitutional Conservatism: Liberty, SelfGovernment, and Political Moderation, by Peter
Berkowitz. To order, call (800) 888-4741 or visit www.
hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 29

P O L I TI CS

Where the Left


Is Going
The long, strange trip of progressivism.

By James W. Ceaser

strange period has now passed into history. Captivated by


a presidential campaign in 2008, Americans by the millions
came to believe that a new
leader would be able to

produce more than a transformed society


and an era of world peace. Politics could
be extended beyond its ordinary boundaries and bring about a spiritual renewal.
This exhilarating prospect fed on its own
spiraling expectations, surprising even its
original purveyors.
Faith in this political religion eventually
dissipated. Four years into the experience, many ceased to believe. Today most
have forgotten. Politics has retreated to its
more usual limits, focusing on the harder
core of ideology.

Key points
Modern progressivism
fully owns the Democratic
Party.
Progressives characteristically insist they are on
the right side of history.
Progressive intellectuals
advance a theory of dysfunctional government
that justifies ever-greater
presidential power.
The left blames all ills
on the shrinking part of
the political order and
society it does not yet fully
control.

James W. Ceaser is a senior fellow at the Hoover Institution and the Harry F.
Byrd Professor of Politics at the University of Virginia and director of the Program
on Constitutionalism and Democracy.
30

H O O VER DI GEST Summer 201 6

Modern progressivism has driven much of American politics for the past
seven years. It now fully owns the Democratic Party. President Obama failed
to achieve the general electoral realignment that many anticipated after 2008,
but he succeeded in creating an ideological realignment within his own party.
The result was attained by subtraction. Advocates of rival positionsNew
Democrats, blue dogs, pro-liferswere either sacrificed or induced to sacrifice themselves. The Democratic Party is now divided between a progressive
wing and a more progressive wing, one that openly wears the label of socialist.
DOES HISTORY HAVE A RIGHT SIDE?
Modern progressivism is a combination of three components: theories
inherited from the original progressives of the early twentieth century; ideas
introduced since the 1960s by the intellectual movements of the left (the
New Left, multiculturalism, postmodernism); and the practices and patterns
of behavior that have resulted from progressivisms central role in shaping
American politics and culture.
The enormous debt modern progressives owe to the movements originators begins with a belief in the idea of progress, the notion that there is an
intrinsic force within history pushing toward expanded prosperity, greater
equality, and peace. Progressives took their bearings for the idea that history
has its own will from the great nineteenth-century theoretical systems found
in German idealism (Hegel),
French sociology (Comte),
Modern progressives are sure
and evolutionary biology
(Darwin). Modern progresthings will be less bumpy this
sives have kicked away this
time around.
philosophical ladder, preferring to be known as pragmatists. Their pragmatism comes fully prepackaged, however, with a residual
faith in an arc of history. Progress may temporarily be slowed or derailed by
those who cling to the past, but under the guidance of enlightened leaders
history will inevitably resume its forward course.
Modern progressives take credit for expanding the scope of government
and for forcing the spring on many social, religious, and lifestyle issues.
Progressives also insist that they are on the right side of history in foreign affairs. After Russias annexation of Crimea, Secretary of State John
Kerry let President Putin know in no uncertain terms, You just dont in the
twenty-first century behave in nineteenth-century fashion. President Obama
decreed that ISIS has no place in the twenty-first century.

H O O V ER D IG E ST S u m m e r 2016 31

CURVEBALL: President Woodrow Wilson, shown throwing out a pitch in


1916, fostered the idea of leader democracy: that political power should be
concentrated in the executive. Leadership and control must be lodged somewhere, he wrote. Progressives after 1968 later complained of the imperial
presidency, but they found executive power more acceptable when Democrats regained the White House. [Library of Congress]

The original progressives possessed a similar confidence in the ameliorative powers of the twentieth century, though many grew disillusioned when it
produced barbarisms on an unparalleled scale. Modern progressives believe
that things will be less bumpy this time around. Even the idea of progress
progresses.
Modern progressives spend much of their time inveighing against the
1 percent, just as the old progressives assailed the malefactors of great
wealth. For both, inequality is societys greatest problem, threatening
democracy by ceding real control to the trusts and the super-rich. The
charge today is that we have government of the 1 percent, by the 1 percent,
and for the 1 percent. Inequality, for progressives, surpasses all concern
about economic growth and enhanced opportunity, although progressive
economists manage to bundle all these challenges together and attribute
the root cause to inequality. President Obama subscribes to many economic
nostrums of the original progressives, from his theory, revealed on the run in
2008 to Joe The Plumber Wurzelbacher, that when you spread the wealth
around, its good for everybody, to his thesis, shared with Senator Elizabeth

32

H O O VER DI GEST Summer 201 6

Warren, that you didnt build that, a position that regards societys wealth
as being by right collectively owned, to be distributed by the government on
the basis of social justice and utility.
Modern progressives have for the moment rallied around the idea of
leader democracy that was introduced by the nations first progressive
president, Woodrow Wilson. Wilson called for a concentration of political
power in the presidency, arguing that it was both futile and inadvisable to
attempt to restrain power by partitioning it among different institutions.
Leadership and control must be lodged somewhere, he wrote. No living
thing can have its organs offset against each other as checks, and live. Power
would be restrained through presidential elections.
Following a number of Republican presidencies after 1968, progressives
seemed to abandon this view, sounding the alarm against the imperial
presidency. Senator Obama in 2008 was an important voice for this position:
The biggest problems that were facing right now have to do with George
Bush trying to bring more and more power into the executive branch and
not go through Congress at all. But second (or third) thoughts have brought
most progressives closer to the original position. Few presidents have shown
greater contempt for Congress, or seized more powers legislative in character, than Barack Obama. Government by decree is now being legitimized.
Progressive intellectuals have been Obamas enablers, advancing a theory of
dysfunctional government that justifies presidential aggrandizement.
LEAD US INTO TEMPTATION
All political parties have yielded at one time or another to the temptation of
constitutional opportunism and shifted their position on institutional arrangements to promote a partisan goal. Progressives are unique, however, in doing
so without qualms, knowing that their opportunism has received absolution in
advance from a higher source. Constitutional forms, by their account, always
take a back seat to the imperative of promoting progress. No legal framework
merits permanency. Stripped of the pretense of concern for constitutional
theory, the progressive claim today is that a progressive president opposed by
an unprogressive Congress rightfully acquires a vast new reservoir of authority. That authority could conceivably come to an end on January 20, 2017.
Modern progressives have the same confidence in national public administration as the original progressives, who spoke in broad and bold strokes in
favor of social engineering and social control. Given the twentieth-century experience with totalitarian governments, few dare to use this language
today. Yet modern progressives do not hesitate to urge federal agencies to

H O O V ER D IG E ST S u m m e r 2016 33

prod, nudge, and command in ever-increasing spheres of activity. National


administration remains the progressives primary instrument for transforming American society.
The old progressives wrote many of the seminal works on the theory of
public administration. Remembered often as champions of civil service
reform, which they were, they had objectives that went well beyond the
late-nineteenth-century reformers goal of eliminating patronage, corruption, and inefficiency. Nor did progressives find that much to admire in the
British model of the civil service, with its senior corps of classically educated
generalists known for their
prudence, neutrality, and
Modern progressives, even if they
respect for the rule of law.
The progressives more
call themselves pragmatists, hold a
ambitious aim was to train
residual faith in an arc of history.
and empower a new breed of
policy expert educated in the social and technical sciences. Operating under
the loose direction of the president, administrators were the vanguard of the
progressive project who would promote the peoples best interests, earning
the common mans confidence over the long run.
Modern progressives profess to follow the same model. Yet as with many
elites, they have not been able to hide their arrogance toward those they are
supposed to serve. The recent travails of two public servantsProfessor Jonathan Gruber, the main architect of the Affordable Care Act, and Lois Lerner, the
IRSs zealous suppressor of unprogressive political activityillustrate the problem. Both were highly acclaimed within the administration for their intelligence
and dedication until their progressive virtues shone too brilliantly.
National public administration is the natural foe of civil society. In the
classic conception of liberal democracy, two basic modes of governance share
power: the visible source of legal authority (the state) and a less visible,
informal process known as civil society.
Civil society, the more difficult mode to grasp, consists of the network of
private institutions and associations (families, churches, clubs, corporations,
civic groups, and the like), as well as selected public bodies such as state universities, local public institutions, and, in relation to the national state, lower
levels of government. Civil societys significance lies in its function as a system of rule. Where civil society thrives, much of the nations life is indirectly
governed by the activities and decisions of its many parts, whether acting
individually or in concert. Coordination in civil society is decentralized,
relying on the mechanisms of markets, contracts, voluntary undertakings,

34

H O O VER DI GEST Summer 201 6

customary procedures, and informal agreements. The preservation of this


system rests on a basic principle: the expectation of the parties involved that
their choices and engagements are for the most part made freely, without
interference from, or pre-emption by, a higher outside power. Weaken this
expectation and the patterns of interaction and the habits on which civil
society depends begin to wither.
By habituating people to take responsibility for handling a wide range of
social and economic matters, civil society promotes enterprise, initiative, and
independence. Those habitually engaged in managing affairs become jealous
of their role in governing and seek to protect large spheres of activity from
interference by distant administrative bodies. Civil society develops its own
complex idea of liberty. It goes beyond the legalistic state model of a central
government that protects individual rights to include a strong sense of obligation to participate in governing community activities.
Progressives have contributed to political analysis by making visible some
of the hidden workings of civil society. Their aim, however, has for the most
part been to expose its deficiencies. Civil society in their description operates
to shield business corporations as they exploit workers and gouge consumers,
and to protect local governments as they favor the wealthy and deny basic
rights. Even where the intentions are more benign, civil society is defective.
It is a piecemeal and decentralized system that lacks the overall authority to
provide economic security and to supply the equal entitlements of a modern
welfare state. It is not rational. Only national public administration can ensure
uniformity and equality in the delivery of benefits and services.
It may take a village to produce a good life, but it will be a village whose
school curriculum is guided by the Department of Education, whose police
force is under surveillance
by the Department of Justice, whose zoning laws need Progressives know their opportunism has been forgiven in advance.
approval by the Department of Housing and Urban
Development, and whose school lunch menu is planned by the first lady.
With the collapse in the 1960s of a public understanding of the limits of
the federal governments jurisdiction, national policy making began to touch
an ever-growing number of activities. Civil society lost one source of its
legal protection. Fewer reminders of its importance were heard in public
discourse. This change paved the way for the emergence and dominance of
the policy-making mindset. The administration of things has replaced the
government of men.

H O O V ER D IG E ST S u m m e r 2016 35

CIVIL SOCIETY IS THE TARGET


Yet as the best progressive thinkers well know, the war between national
administration and civil society is not over. As long as civil society has a grip
on even part of the American populace, progressivism is not secure. Almost
any measure, therefore, that extends federal administrative control, even if
its benefits are dubious, garners support, just because it weakens civil society. Expanding the scope of national administration creates additional client
groups, which improve the progressives prospects of consolidating control
of the electorate. Practical progressive politics is all about creating dependencies. Poor policy can sometimes be good politics.
With all the attention paid to social justice, it is sometimes forgotten that
progressivism has its own visions for shaping the right kind of human type.
The original progressives followed the philosopher John Dewey in rejecting the independent spirit of the old individualism and calling instead for a
new individualism to remake Americans into more social, collective, and
democratic beings. Deweys point of entrance for this project was K12 education. By transforming educational theory and schools of education, he sought
to change what transpired daily in every classroom in the country. Modern
progressives also have perfectionist projectsjust look at what is going on in
universities. They rely increasingly on national administration to promote their
goals and use federal funding in an effort to build a parallel progressive civil
society, supporting groups like ACORN and Planned Parenthood.
The expansion of national administration over the past seventy years, and
notably over the past seven years, may be applauded or deplored. It cannot
be denied. Even where institutions of civil society appear to be acting on
their own, closer inspection reveals that they often
Its all the fault of the system. Like
make decisions in accord
Peter Pan, progressivism will not
with existing regulations or,
grow up. By its own self-conception,
what is just as important, in
anticipation of possible new
it cant.
regulations or with a view to
preventing unwanted regulations. National administration is palpable, even
when it is not acting. The outward forms of civil society remain, but its inner
force is dwindling.
Progressivism emerged when liberal capitalismroughly the Constitution
and a free market economywas in place as the system. Progressivism was
the youthful challenger, not yet part of the system, that aimed to replace the
established rival. Viewing progressivism in this light, which initially accorded
36

H O O VER DI GEST Summer 201 6

with reality, became a habit of thinking. It was one that progressives, for
political reasons of their own, had reason to encourage. Even as progressivisms actual influence expanded to cover more and more aspects of American
life, progressives continued to disclaim responsibility for any of the ills that
plagued society. These were all the fault of the system. Like Peter Pan, progressivism will not grow up. By its own self-conception, it cannot.
The statute of limitations on this intellectual anachronism should by all
rights have expired long ago. Progressivism has been around now for well
over a century and can no longer plausibly present itself as new or young. All
of its wrinkleshuge and inefficient bureaucracies, ponderous regulations,
and endemic violations of the rule of laware showing through its makeup.
Nor is progressivism the innocent outsider or wayfarer begging at the door
for admittance to the system. Progressivism is the system, at least as much
as, if not more than, liberal capitalism. And with its vast interests to defend
and its clients to sustain, progressivism is also every bit as much constitutive
of the status quo. Just as liberal capitalism has bred pathologies like crony
capitalism, progressivism has created its dysfunction of crony progressivism.
Conservatives look out at the political world today and see it as being run
by a progressive establishment. Progressives, though surely aware of their
enhanced status, elect for obvious reasons to claim that the decisive power lies,
much as it did in the past, with the big interests and a capitalist economic elite.
The left today is all about the ideology of progressivism. It is fated to blame
all ills on the shrinking part of the political order and society it does not yet
fully control and to demand more measures to shrink it still further. Progressivism is on a treadmill, running either at a fast clip toward huge, new piecemeal changes or at a faster clip toward a change to socialism. The direction is
the same.
Adapted and reprinted by permission of the Weekly Standard (www.
weeklystandard.com). 2016 The Weekly Standard LLC. All rights
reserved.

Available from the Hoover Institution Press is Perjury:


The Hiss-Chambers Case, third edition, by Allen
Weinstein. To order, call (800) 888-4741 or visit www.
hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 37

P O L I TI CS

Trade Winds
Globalization is buffeting states as never before.
The stable systems will be those that best handle
rapid economic change.

By David W. Brady

olitical instability, defined as volatility in electoral politics, is on


the rise in Western democracies and shows no signs of abating.
Granting the premise just for the moment, why is this happening? Political cultures are complex, with lots of moving parts and

difficult-to-establish relationships between institutions, attitudes, material


realities, and external influences. But in this case, the data suggest that the
answer is relatively straightforward: the perturbations of globalization best
explain the variance.
Let us now establish the premise, taking the United States as the first
example. In 1992, when the Democrats regained full control of the federal
government for the first time since 1980, many scholars and pundits concluded that the end of divided government would enable the country to move
forward on pressing problems like health care, the recession, and the restoration of those who played by the rules (as Bill Clinton once called them) to
their rightful place. The joy was short-lived, as the 1994 off-year elections gave
Republicans, touting their Contract with America, control of both the House
and Senate for the first time in forty years. The Clinton presidency looked as
though it would be a one-term job, with Republicans set after 1996 to control
all branches of government for the first time in forty-four years and only the
David W. Brady is the Davies Family Senior Fellow at the Hoover Institution and
the Bowen H. and Janice Arthur McCoy Professor of Political Science at Stanford
Universitys Graduate School of Business.
38

H O O VER DI GEST Summer 201 6

second time in sixty-eight. Clintons victory, with the Republicans holding the
House and increasing their numbers in the Senate, yielded divided government with a different face: Democratic president, Republican Congress.
George W. Bushs victory over Al Gore in 2000, albeit with a minority of the
votes cast, gave Republicans their first unified control of government since
Dwight Eisenhower won in 1952, and they hoped it would last longer than Ikes
mere two years. The Bush victory in 2004 added two more years of undivided
Republican control of government, leading some to speculate that Bush and
Karl Rove had pulled off a William McKinleylike realignment favoring the
Republican Party. But the war in Iraq and other issues gave Democrats a huge
win in 2006, stripping the Republicans of both houses of Congress.
Barack Obamas major win in 2008 gave the Democrats their first sixtyseat Senate majority since Jimmy Carter and their highest House total since
1990. These sweeping victories led pollster and pundit James Carville (and
two co-authors) to write a book titled Forty More Years: How the Democrats
Will Rule the Next Generation. Apparently generations do not last that long,
because in the 2010 Democratic debacle, Republicans gained Senate seats
and retook the House, driving the Democrats from 257 seats down to 193.
Again Republicans had high hopes, and many believed they could regain control of the government in two years. The 2012 election continued the stalemate, however, with Democrats keeping the presidency and the Senate while
the Republicans held the House. The 2014 elections yielded 1994-like results,
with both houses going solidly Republican. With 247 members, the Republicans had achieved their greatest share of the House since 1928.
In short, in the years between 1992 and 2014, the United States saw a level
of instability or flip-flopping of electoral results comparable to the 187494
period. Judging by the longitudinal evidence, it is as if the electorate is
restless, trying first to sleep on its left side, then on its right, then on its left
again, and so on, without finding true repose. And just as with individuals,
this restlessness has made the electorate a bit cranky as of late.
TUMULT IN EUROPE
Contemporary instability is not limited to the United States. In Great Britain,
the mother of parliamentary democracy, electoral politics is less stable than
it has been in more than fifty years. And this definition of instability does not
even take into account the near loss of one of its constituent parts.
In 1948, Britain abolished plural voting, university constituencies, and the
remaining two-seat constituencies, resulting in the current system. In the
1950 and 1951 elections, won respectively by Labour (Clement Attlee) and

H O O V ER D IG E ST S u m m e r 2016 39

the Conservatives (Winston Churchill), more than 97 percent of the electorate voted either Labour or Tory, with Conservatives winning almost 50 percent in Scotland in 1951. In the 2015 elections, by contrast, those two parties
were down to slightly more than two-thirds of the vote: 67.3 percent. The
UK Independence Party (UKIP), the antiEuropean Union party, garnered
12.6 percent, while the Liberal Democrats (LD), the Scottish National Party
(SNP), and the Greens
(GRN), took 7.9, 4.7, and 3.8
From 1992 to 2014, the United States percent, respectively. In a
saw a great deal of flip-flopping of
little more than sixty years,
electoral results.
Britain had moved from two
to six parties.
In France, the Front National (FN) won 0.05 percent of the vote in 1973. In
1981, Jean-Marie Le Pen of the FN tried to run for president but failed to meet
the minimum requirements. Some thirty years later, in 2012, Marine Le Pen
received 18 percent of the presidential vote. Two years later, the FN won twelve
cities in the 2014 mayoral elections and finished first in the European parliamentary elections with 24.9 percent of the vote and 24 of Frances 74 seats.
Today, the FN has 1,546 and 459 councilors over two levels of French government, and, according to a June 2015 survey, 31 percent of voters feel closest to
the party, higher than the numbers for either the UMP or the Socialists. As in
the United States and the United Kingdom, most voters feel the country is not
doing well, with 67 percent saying the economy has gotten worse.
The rise of rightist, anti-immigrant parties is not exclusive to France. In
the June 2015 elections in Denmark, the anti-immigration, anti-Brussels
Peoples Party won a quarter of the vote. In Austria, the Freedom Party won
more than 20 percent in the September 2013 elections, the countrys most
recent. Finland, the Netherlands, Serbia, and Switzerland all have similar
movements and parties, while the south of Europe has not escaped either,
as evidenced by the rise of the Northern League (Lega Nord) in Italy. Just
before the 2008 economic crisis, the Northern League won less than 5 percent of the vote for the Chamber of Deputies and the Senate. By 2010, it had
doubled its share and become Silvio Berlusconis major coalition partner.
This instability is not limited to the anti-immigrant right; it has also affected the European left. Dissatisfaction with stagnant economies and European
Unionimposed austerity policy has led to the rise of Podemos in Spain and
Syriza in Greece. Meanwhile, the UK Labour Party elected Jeremy Corbyn
as its leader in 2015. Corbyn is a man of the old lefta Labour socialist who
wants Britain to abandon its nuclear weapons and quit NATO, remains

40

H O O VER DI GEST Summer 201 6

skeptical about the European Union, and aspires to renationalize certain key
market sectors, such as rail transport and coal.
BIG MARKETS MEAN BIG CHANG ES
Why does political instability afflict Europe and the United States? The answer
is that just as the great transformation of the world economy between 1850 and
1890 generated political instability, so too does the globalization of the present era. In addition, the second great transformation of the world economy is
larger than the first, and thus, not surprisingly, generates greater churn.
In the second half of the nineteenth century, technology increased agricultural productivity while transportation costs dropped, leading to a twentyfold increase in shipping capacity. Increases in industrial capacity allowed
Europe to export many more manufactured goods while importing farm
goods and raw materials from around the world. The telegraphs introduction
of near-instantaneous communication linked markets from Tokyo to Argentina to London. Great Britains leadership in this technological revolution led
the world to adopt its gold monetary standard, which enhanced global trade
by ensuring that debts and earnings were paid in one predictable currency.
While the nineteenth-century wave of globalization made people wealthier
overall and increased standards of living, it also generated immense problems. The fall in farm prices devastated rural areas in Europe and parts of
the United States. Crafts of many kinds became obsolete, and craftsmen had
to find other ways to make a living. The great depression of 187396, actually
a gradual decline of prices,
exacerbated the problems,
and the gold standard and
In little more than sixty years, Britain
the bankers responsible for
moved from two parties to six.
it received the blame. Italy,
Spain, and Portugal abandoned the gold standard, while in the United States
the Democrats adopted an anti-gold plank.
By the turn of the century, the thirty-year period of economic productivity and growth had ended. Free trade and the gold standard behind it were
at risk. Many nationsincluding the United Statesturned to protectionism, passing anti-immigration policies to keep jobs for native-born citizens.
Income inequality and the wealth of bankers became core political issues.
The Democratic Partys 1896 platform, for example, took advantage of the
populist sentiments evoked by the first great transformation of the world
economy. It proposed the free coinage of silver at a 16-to-1 ratio to gold, and
denounced the issuance of notes by the National Bank. On immigration, it

H O O V ER D IG E ST S u m m e r 2016 41

opposed the importation of pauper labor while bemoaning the absorption


of wealth by the few and demanding an end to trusts and pools. The platform sounds eerily similar to the reaction to big banks, income inequality, the
loss of low-skilled jobs, and mass immigration of today.
Major transformations or convergences of economic systems generate
great efficiencies and wealth, and the larger the global market, the bigger
the payouts to winners. Unfortunately, these benefits come with the costs of
changes in jobs, markets, and ways of life. The current convergence of world
economies is more difficult than the first not only because vastly more people
and polities are involved but also because climate change calls into question
the sustainability of growth.
THE VANISHING INDUSTRIAL WORKER
In both large and small European democracies, as in the United States, political instability has risen since the 1970s and especially after 2008. What, to
return to the main question, could account for this increase?
One answer is, of course, the upheaval caused by the transformation or
convergence of economies, especially in social and economic structures.
But the changes wrought by the current transformation are not the same as
those of the nineteenth century, thanks to differences in a number of conditions. By 1900 a new class had come to prominence: the blue-collar industrial
worker. While the two most common types of workers in 1900, farmworkers
and household servants, were geographically scattered and therefore hard to
organize, factory employees worked and lived together in large towns, such
as in St. Denis, outside Paris, in the valleys of Pennsylvania and Germany,
and in Manchester, England. They were not, contra Marx, a majority, but
through their ability to
organize, they would come
The second great transformation
to dominate politics in the
industrial world.
of the world economy is even more
These workers of the
profound than the first.
early twentieth century
did not get overtime, pensions, vacations, sick days, or health insurance,
and they had no job security. By 1950, however, industrial workers were the
largest single group in every Western democratic country and, by and large,
unionized workers had attained middle-class living standards. They enjoyed
job security, pensions, paid vacations, unemployment insurance, and health
plans. And they had, in large part, attained these things because they had
gained political power, either by forming parties composed of trade unions,

42

H O O VER DI GEST Summer 201 6

such as Labour in Britain, the Social Democratic Party (SPD) in Germany,


and the General Confederation of Labor (CGT) in France, or by using their
union base to influence left-of-center parties, such as in the United States.
Sixty years later, the number of industrial workers in the United States has
declined from more than 40 percent to fewer than 20 percent. The disappearance of blue-collar jobs has been slower in most other Western democracies,
but by the 1980s others showed declines similar to the United States. Thus,
in Europe today, the percentage of the labor force in blue-collar or industrial
jobs is well below half of
what it was in the 1950s. In
While the nineteenth-century globalshort, industrial workers no
ization made people wealthier overlonger dominate political
parties. They have become
all and increased standards of living,
just another interest group.
it also generated immense problems.
Economists differ on
when the shift began, but it seems clear that in the 1970s the loss of bluecollar industrial jobs accelerated. American companies automated everything they could and exported capital overseas, where production costs were
lower. Other countries faced a choice: keep the jobs by fiat and lose out on
productivity, making the economy worse off; or allow automation and export,
enjoy increased productivity, and suffer the wage problems that afflicted the
United States. The effects of their choices had profound consequences for
political parties and systems.
By the 1950s, manufacturing workers across Europe and the United States
were well organized, and political parties revolved around them. In the United
States, Harry Truman could win re-election in 1948 by campaigning against
section 14(b) of the Taft-Hartley Act (which permits states to pass right-to-work
laws), while in the United Kingdom politics was divided into two categories:
Labour and anti-Labour. From 1945 through 1957, the French left, both Communists and Socialists, never fell below 40 percent popularity and averaged about
45 percent of the vote for the six elections of the postWorld War II Fourth
Republic. In Italy, labor-based parties never had less than 35 percent of the vote
and rose to 40 percent in the late 1950s. Their main rival, the anti-left-labor
Christian Democrats, went from 36 percent in 1946 to 49 percent in 1948, and
throughout the 1950s never fell below 40 percent or failed to be in government.
In Sweden, Socialists and Communists had majorities in every postWorld
War II election until 1973. The politics of Belgium, the Netherlands, Denmark, and other European countries were essentially contests between
labor-left parties and Christian right parties.

H O O V ER D IG E ST S u m m e r 2016 43

In West Germany, the first postwar election in 1949 yielded a narrow


winby less than 2 percentfor Konrad Adenauer of the Christian Democratic Union/Christian Social Union (CDU/CSU). Socialist Party leader Kurt
Schumacher refused a grand coalition, thus putting the leftist parties in
opposition, where they remained throughout the 1950s. Again, politics could
be described as left-labor versus Christian Democratic conservative.
At present, leftist parties are quite different. They can no longer be elected
largely by their base of manufacturing workers and thus have had to accommodate some conservative market principles: witness Gerhard Schrder, the
most recent SPD prime minister, on reforming the German economy.
Because the labor/antilabor divide no longer domiThe Democrats 1896 platform
nates political systems in
sounds eerily similar to todays reac- Europe, parties have to build
tion to big banks, income inequality,
majorities by adding other
the loss of low-skilled jobs, and mass constituencies. In the United
States, the Democratic Party
immigration.
added minorities, cultural
liberals, and others, but in the process created Reagan Democrats as pro-labor
but socially conservative voters abandoned the party. In Britain, the Labour
Party lost voters overall from 2010 to 2015, but gained among voters aged
eighteen to thirty, especially if they were urban and socially liberal. They also
did well with minorities and voters who were not UK natives. Labour paid a
price, however, losing voters over sixty-five, who have the highest turnout rates
(about 80 percent), to the Tories. Labour also lost votes to UKIP, the Liberals,
and the Greens. In short, putting majorities together is difficult in a diverse,
heterogeneous economy, because economic interests diverge while social and
lifestyle issues now matter a good deal more than they once did.
VIVE LA BOURGEOUSIE
In France, the Socialist Party has been undergoing a similar change. In 2015,
activist Franois Sabado called it an acceleration in the bourgeois transformation of social democracy. . . . [T]he socialist parties have become less
and less working class and more and more bourgeois. As is the case in the
United States, Britain, and other Western countries, these bourgeois, socially
liberal, urban partisans dont always see eye-to-eye with their blue-collar
fellow leftists.
In Spain and Greece, parties of the left have seen revivals: Podemos in
the former and Syriza in the latter. Both parties seek to renegotiate their

44

H O O VER DI GEST Summer 201 6

countries debt structure and ease the austerity requirements imposed by


the European Union, and both draw support from younger, urban voters.
Syriza managed to take power in Greece and even retained it despite failing
to persuade the European Union to abandon its austerity program.
The globalization of economies has generated changes in parties on
the right as well. Buoyed by the election of Ronald Reagan and Margaret
Thatcher, right-wing parties gained ascendance in the 1980s. In Germany,
Helmut Kohl and the CDU dominated national politics from 1982 to 1996;
they liberalized the political agenda and put moral issues up for debate. In
France, the right lost the presidency to Franois Mitterrand in 1981 but won
departmental, municipal, and European parliamentary elections in 1982,
1983, and 1984 respectively. In 1986, it won the National Assembly. Moreover,
while Mitterrand followed a radical economic policy from 1981 to 1983which
included nationalizing some key industries, increasing the minimum wage,
and establishing a five-week vacation period, among other reformshe made
a shift to the right when the economy worsened.
In Italy, according to scholar Paolo Morisi, the turn from the mass to a catchall party was the result of the blurring of class divisions under the unprecedented economic growth of the 1960s. Both working-class and conservative parties
lost their raison dtre as unique representatives of particular social groups.
The Socialists, under Bettino Craxi, kept the Communists out of government
and formed the governments of the 1980s with the Christian Democrats. The
conservative, anti-centralization Lega Nord came to the fore in the 1990s, and
Silvio Berlusconi and Forza Italia came to prominence in 1994.
The turn away from the
left was not, of course,
Putting majorities together in a
universal, and differed from
country to country. However, diverse, heterogeneous economy is
as the labor base of indusmore difficult than it was.
trial workers declined, the
basic premises of politics shifted, and the parties of both left and right had to
find new majorities in a changing economic and political reality. Parties of the
left from Sweden to Germany to Italy had to adjust their policies to keep their
economies competitive, in light of capitals growth in prominence relative to
labor. On the right, parties had to deal with rising inequality and job losses in
the new sharing economy, and some began favoring government aid.
Overall, the changing economy has driven many Socialist parties in Europe
to support economic programs that differ only slightly from those of conservative parties. Conversely, European conservative parties, while generally

H O O V ER D IG E ST S u m m e r 2016 45

defending markets, have endorsed comprehensive welfare programs (see the


CDU/CSU in Germany and Frances neo-Gaullists, for example). Since no
party, country, or individual leader has discovered the policy path to achieve
economic growth while substantially mitigating the ills such growth engenders, we should expect to see political instability grow, not decline, and with
it distrust of government.
ARE YOU CONTENT?
Such instability will vary depending on economic well-being. Though political
instability has risen across Europe and the United States, some have it worse
than others. The contrast between the relatively healthy economies of Switzerland, Norway, Germany,
and Denmark and the lessThe changing economy has driven
prosperous economies of
many Socialist parties in Europe to
France, Greece, Italy, and
support economic programs only
Spain is obvious. Political instability has risen in
slightly different from those of the
the prosperous economies
conservatives.
since the late 1970s, but not
nearly as steeply as it did in the four poorer economies. This is unsurprising:
since employment opportunities, expendable income, and job stability are more
prevalent in good economies, voters are more likely to stick to their traditional
political preferences. Where unemployment levels are high and expendable
income is lower, voters shift preferences, looking for alternatives to provide
economic stability in their lives.
In sum, as economic modernization decreased the number of manufacturing jobs that paid middle-class wages, political stability declined. Over time,
the left could not win with its labor base alone and had to modify its appeal
in order to create majorities. Parties on the right benefited early on, but over
time also had problems creating majorities with old policies.
The type of political system and electoral rules affected the strategy of
political parties. In first-past-the-post, two-party systems like that of the
United States, parties have to scramble for majorities. Thus, in the United
States, Republicans picked up some blue-collar workers who had guns
and traditional values, as well as voters who opposed abortion. Democrats
picked up minorities and pro-choice voters who had been Republican, but
neither party has created a stable majority. In multiparty systems, with
forces opposed to globalization, the new economies, and the free flow of
immigrants, movements like the Peoples Party in Denmark and the Front

46

H O O VER DI GEST Summer 201 6

National in France arise. In Italy, the neo-fascists came and went and came
again, while Lega Nord rose to prominence on a platform of separating the
non-productive South from the efficient North.
One burning issue that arises under increasing globalization in both
Europe and the United States is immigration. When the economy is shifting and inequality is rising, the influx of outsiders generates controversy. In
the United States, a Donald Trump tries to capture the anti-immigrant vote
through the Republican Party primaries, while in France an entire party, the
Front National, represents this view. In Italy, Lega Nord has increased its
vote shares by focusing on immigration. However, anti-immigration voters
and movements, regardless of the specific arrangements, need not be rightwingers on other issues, as attested by the Front Nationals position on social
welfare and protection for French workers, or the Danish Peoples Partys
position on cruelty to animals, school funding, and aid for the elderly and the
needy. Other examples abound, but suffice it to say that the political instability observable in Europe and the United States takes multiple forms depending on the nature of the political system and the electoral rules that obtain in
it.
However, the cause is the same: the transformation of the world economy.
As we move toward ever more interconnectedness, an economy in which
employees take their skills from one company to the next and both parents
work, the challenge of forming coherent, stable political parties is magnified.
Those countries able to keep unemployment and inequality within bounds
will be more stable. The greater the levels of inequality and unemployment,
the greater the political instability and the smaller the chance of achieving
stable economic growth.
Reprinted by permission of the American Interest. 2016 The American
Interest LLC. All rights reserved.

Available from the Hoover Institution Press is Puzzles,


Paradoxes, Controversies, and the Global Economy,
by Charles Wolf Jr. To order, call (800) 888-4741 or visit
www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 47

T H E ECONOMY

The Tax Plans


Cometh
Get ready for profound changes in economic
policy, whoever becomes president.

By Michael J. Boskin

ig changes are under way in the United States as the country


gears up to elect a new president, one-third of the Senate, and
the entire House of Representatives this November. The outcome
will have profound consequences for US economic policy, and

thus for both the domestic and the global economy.


Americas media and political junkies are consumed by the many possibilities. Can Donald Trump be stopped? By whom, how? Will he fracture
the Republican Party? Will the Trump nomination inevitably elect Hillary
Clinton? Many Republicans also worried during this campaign season that a
Trump nomination would cost them the Senate and the White House.
With so much uncertainty, there are a number of directions that US
policy could take in the coming years. While a lot of attention has been paid
to headline-grabbing issues like immigration and national security, and to
personality and temperament, American voters are highly concerned about
economic issuesconcerns that the leading candidates have addressed in
very different ways.
Michael J. Boskin is a senior fellow at the Hoover Institution, a member of
Hoovers Shultz-Stephenson Task Force on Energy Policy and Working Group on
Economic Policy, and the T. M. Friedman Professor of Economics at Stanford University.
48

H O O VER DI GEST Summer 201 6

On trade, Trumps ideas would reverse decades of bipartisan American


leadership in trade liberalization, with potentially large tariffs on foreign
imports, especially from China and Mexico. The other Republican candidates
favored trade but with stronger protection for American interests.
As for the Democrats, Bernie Sanders inveighs against free trade. Hillary
Clinton has flip-flopped to oppose Canadas Keystone XL pipeline and the
Trans-Pacific Partnership, which she promoted as secretary of state. The
risk of a trade war is low, but rising.
Clinton has also inched toward Sanderss position on several issues, such
as financial-system reform, as his attacks on her for taking large donations
and speaking fees from Wall Street clearly struck a chord among young
voters. Confronting the big-bank bogeyman was a centerpiece of Sanderss
campaign; Clinton is now partly echoing his populist anti-bank positions.
The Democrats tend to favor loose monetary policy, low interest rates, and,
as a result, a depreciated dollar. Republicans also oppose bailouts, but worry
about excessively loose monetary policy and too much discretion for the
Federal Reserve aside from real emergencies.
These differences will have a far-reaching impact. By appointing a new
Fed chair (or reappointing Janet Yellen), and possibly other Fed governors,
the next president will have an indirect influence on interest rates, exchange
rates, and global financial markets. If inflationary pressures riselimited
in the near term, but possible when the global economy gains strengththe
Feds response will be a key determinant of economic stability.
The candidates have also differed enormously in their tax and spending
plansand thus their deficit
and debt proposals. SandThe next leader of the free world
ers proposed about $18
should know that when a ship starts
trillion in additional spendleaking, the first priority is to plug the
ing over the next decade to
cover a single-payer health
leak, not open new ones.
care system, infrastructure
investment, and free (that is, taxpayer-paid) tuition at public colleges.
During that period, he would impose tax hikes of $6.5 trillion, including
huge increases in marginal rates, mostly on the wealthy. The catch: like
most Democrats, he defines wealthy as an annual household income above
$250,000roughly the starting salary of an urban couple in their first jobs
after law school. The $11.5 trillion deficit would eventually have to be covered
by an even more gigantic future tax hike. Clinton has similar spending and
tax priorities, though with smaller increases.

H O O V ER D IG E ST S u m m e r 2016 49

The Republicans want to lower personal income tax rates and broaden
the tax base. They would reduce Americas corporate-tax ratethe highest
in the OECDto a far more competitive level. Candidate Ted Cruz offered
a bolder, pro-growth reform that would also replace the current payroll and
corporate income taxes with a business flat tax, resembling a value-added
tax (VAT) on consumption. The Republicans would slow growth in spending
in most areas, while increasing defense spending. Trump proposed an outsize
$10 trillion in tax cuts (statically scored), but with little specific on spending
cuts, risks larger deficits.
John Kasich drafted a more
economically and arithmetiThe next president will have an
cally plausible fiscal plan.
indirect influence on interest rates,
Cruzs plan also scored
exchange rates, and global financial
better than Trumps, but
markets.
depended on little base erosion in his new business flat
tax. Real-world VATs leave items out and tax others at preferential rates, and
some worry that such a revenue-raising machine could eventually pay for
bigger government. Campaign proposals are, of course, partly aspirational,
and would have to be negotiated with Congress.
The empirical evidence suggests that tax cuts are more likely than spending increases to spur growth, and that lower spending is more likely than tax
increases to consolidate budgets effectively. Experience indicates that constraining spending growth will not be easy, especially with the aging of the
post-1945 baby boom generation fueling rising health care and pension costs.
But several countriesincluding Canada, the United Kingdom, Sweden, and
even the United Stateshave managed to do so in recent decades.
Republicans and Democrats differ starkly on reforming exploding entitlement costs, which have unfunded liabilities several times the national debt.
The Republicanswith the exception of Trump, who rejects future Social
Security cutswould gradually slow growth, and Cruz opted for adding personal accounts. The Democrats propose increasing Social Security
benefits.
The next leader of the free world should know that when a ship starts leaking, the first priority is to plug the leak, not open new ones.
Overall, the policies proposed by Sanders and Clinton would take the
United States ever closer to a European-style social-welfare state and are far
more likely to reduce economic growth. Those policies may be applauded by
Western European elites, but by reducing future American incomes they will

50

H O O VER DI GEST Summer 201 6

reduce demand for our trading partners exports, harming their economies.
And they would put pressure on US military budgets, in turn risking our
allies security.
As Republicans point out, Western Europes standard of living is 30
percent lower than that of the United States, on average; Europe also has
slower growth, higher unemployment, heightening social tensions, and hollow militaries. That is why Republican candidatesfor the presidency, the
House, and the Senatewant to roll back President Obamas tax and spending increases, expensive health care reform, and regulatory overreach, not
add to them.
Adapted from an essay distributed by Project Syndicate (www.projectsyndicate.org). 2016 Project Syndicate Inc. All rights reserved.

Available from the Hoover Institution Press is Across


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Crisis, edited by Martin Neil Baily and John B. Taylor. To
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H O O V ER D IG E ST S u m m e r 2016 51

T H E ECONOMY

Defending Free
Trade
Presidential candidates have been waving the
bloody shirt of protectionism. Why attacking free
trade is wrongand cheap.

By Richard A. Epstein

ne signal issue of the 2016 presidential campaign has been the

Key points
Free trade indicts Americas unsound economic
policies.

rising hostility to free trade


specifically, to the Trans-

Free trade gives the


federal government and the
states strong incentives to
clean up their act.

Pacific Partnership. On the Republican side,


Donald Trump built a big lead in large part
because of his protectionist rhetoric. On the
Democratic side, Hillary Clinton was seen
veering leftward to fight off a determined
challenge from Vermonts democratic socialist Bernie Sanders, another unapologetic
protectionist.
There are of course major differences
between the insidious Trump and buffoonish

The American labor


movement, which seeks
monopoly power, has historically opposed free trade.
The best protection for
the displaced tenant and
worker is an open economy
that offers multiple options
for housing and jobs.

Richard A. Epstein is the Peter and Kirsten Bedford Senior Fellow at the Hoover
Institution and a member of the steering committee for Hoovers Working Group
on Intellectual Property, Innovation, and Prosperity. He is also the Laurence A.
Tisch Professor of Law at New York University Law School and a senior lecturer
at the University of Chicago.
52

H O O VER DI GEST Summer 201 6

Sanders. The former, for example, favors low taxes and the latter confiscatory ones. Still, the real selling point of each boils down to one issue: in the
indecorous language of the pollster Pat Caddell, Americans feel they have
been screwed by free trade. Caddell writes as if this virulent falsehood is an
undisputed fact. What is undisputed, however, is that Adam Smiths defense
of free trade is in retreat as protectionism becomes the common thread
across both political parties. It is as though the economic un-wisdom of the
1930 Smoot-Hawley Tariff Act is back.
Why is protectionism having a political moment? One
answer is that things have
The forces of competition are relentnot gone well in the United
less: no one keeps a lock on his
States. Standards of living
current economic position. That is
have been static at best, and
exactly as it should be.
people feel economically
insecure. In this environment, it is easy to blame obvious culprits, like the
tide of imports and the systematic movement of American jobs overseas to
locations where the regulatory environment is more favorable and where the
cost of labor is cheaper.
But telling the story this way conceals the key benefit of free trade. Free
trade offers an uncompromising indictment of, and a powerful corrective for,
Americas unsound economic policies. Private investors have been voting
with their feet in response to such policies. Simply put, the reason that local
businesses outsource from the United States is the same reason foreign
businesses are reluctant to expand operations here. Our regulatory and labor
environment is hostile to economic growth and there are no signs of that
abating anytime soon.
A LENS ON EFFICIENCY
The United States has slipped to eleventh place on the Heritage Foundations
2016 Index of Economic Freedom. And it is not just because other nations
have moved up. It is also because the steady decline in freedom and productivity inside the United States has continued apace. Ironically, the strong likelihood that the next American president will expand protectionist practices
will only make matters worse: firms, both foreign and domestic, are more
reluctant to invest in the United States, and the risk of a trade war by other
countries such as Mexico is a live possibility, especially if a President Trump
were to impose high tariffs on automobiles made there for the American
market.

H O O V ER D IG E ST S u m m e r 2016 53

The great advantage of a


free-trade policy is that it
both reduces these political risks and makes it
impossible to conceal
these glaring structural defects from
the world. And
once they are
recognized
at home, free
trade gives

54

H O O VER DI GEST Summer 201 6

the federal government and the individual states strong incentives to clean
up their act so that they can once again be attractive to foreign investment.
There is, moreover, only one way for that cleanup to proceed. The United
States must reduce the drag that its regulations impose on all businesses
that operate within its borders, which means rooting out the various forms
of monopoly power, like unions, that can survive only if protected by state
law.
This point explains why the American labor movement has historically
opposed free trade. The essence of unionism is, and always will be, the acquisition of monopoly power. There is no way for a union to obtain that monopoly power in the marketplace. It can secure it only through legislation. The
first step in that process was the exemption of unions from the antitrust laws
under section 6 of the Clayton Act of 1914. The second major step was the
legitimation of collective bargaining under the National Labor Relations Act
of 1935, which gave the union the exclusive bargaining rights against the firm
once it was successful in a union election. These major statutory benefits
strengthened private-sector unions and imposed inefficiencies on unionized firms. This, in
turn, opened the field

[Taylor Jonesfor the Hoover Digest]

H O O V ER D IG E S T S u m m e r 2016 55

for new firms, like the Japanese automobile companies, to organize outside
the union envelope.
In response, labors strategy went one step further. It pushed hard on trade
and tariff barriers to keep out foreign imports, and exerted political influence to encourage local zoning boards to exclude new businesses that do not
use union labor. Add to these issues the aggressive rise of minimum-wage
laws and other mandates like ObamaCare and family-leave statutes, and
you construct a regulatory fortress that defeats the corrective forces of free
trade and renders the nation less economically resilient and productive than
before.
STATES TELL THE REAL STORY
It is easy to say that people are screwed by free trade if you look only at the
stories of those individuals who lose their jobs. It is much more difficult to
make that case after taking into account the simple but powerful truth that
overall levels of profitability and wealth increase under free trade.
The short-term relief that targeted groups get from protectionist measures
masks the larger inefficiencies that slow down the rate of growth. Despite
what the Democrats think, transfer programs are no substitute for growth.
Indeed, the imposition of new taxes without return benefits on the firms
taxed only depresses the rate of return on investment further, which will
necessarily compound the problem.
There is, however, a powerful way to see that free trade in international
markets is not the villain. It is to look at trade and the competition for business between states. This point was missed by Time magazine writer Rana
Foroohar, who explored trade in a recent article. She started off correctly by
noting that globalization and
free trade do increase global
The economic un-wisdom of the
wealth and prosperity. But
she then added this unwise
1930 Smoot-Hawley Tariff Act is
caveat: But they have also
making a comeback.
increased the wealth divide
within countries, in part because these forces created concentrated groups
of economic losers in specific parts of our country, including the Midwestern
Rust Belt, which gave Trump and Sanders the opening to power themselves
to their primary victories in Michigan.
On this last point, Foroohars narrative went badly astray. The Rust Belt
states have been hit hard because they have been badly governed. They lose
much of their business to other states that are better governed. Just look at

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H O O VER DI GEST Summer 201 6

SEA CHANGE: The mega-ship Barzan sets out on its maiden voyage to Hamburg in June 2015. Overall levels of profitability and wealth increase under free
trade. [HummelhummelCreative Commons]

the internal migration of people and businesses across state lines within the
United Stateschanges that cannot be attributed to the supposedly malevolent influence of foreign trade on domestic trade. It can, however, be attributed to differences in the business climate across the states.
A careful study by the Small Business Enterprise Council reveals a
marked difference between low-ranking states like California (50), New
Jersey (49), and New York (45), and high-ranking ones like South Dakota
(1), Nevada (2), and Texas (3). It is wrong to dismiss these key differences,
and to think that the decline in badly governed states is but a foretaste
of what will happen across the board if free trade is allowed to run its
course.
These population shifts matter. Before California turned leftward, it was
a magnet that drew huge numbers of people from New York into its borders. Now, places like Texas are experiencing population growth. States like
Illinois, New Jersey, and New York, all of which are under fierce financial
pressure, are also the victims of outward migration. When it comes to the
loss of manufacturing jobsa big symbolic issue for people like Trump and
Sandersit is states like Illinois, as the Illinois Policy Institute reminds us,
that consistently lose out to Indiana, Michigan, and Wisconsin, which have
recently enacted right-to-work laws, and which have sharply lower workers

H O O V ER D IG E ST S u m m e r 2016 57

compensation rates. Strong union pressures block intelligent internal reform


as the economic bleeding continues.
At this point, it is necessary to clarify once again the economic case for
competition: the interplay of market forces tends to lead to the most efficient allocation of scarce
resources. The creation of
Free trade is strong medicine: it
a monopoly raises prices
offers an uncompromising indictover marginal costs by
blocking beneficial trades,
ment of, and a powerful corrective
reducing firm formation,
for, Americas unsound economic
and diminishing innovation.
policies.
The forces of competition
are relentless in that they let no individual keep a lock on his or her current
economic position. But that is exactly as it should be.
American agriculture has long suffered because of the view that farmers
are entitled to guaranteed prices for their crops no matter what conditions of
supply and demand prevail. The imposition of rent control and rent stabilization in certain key real estate markets like New York City drives up the costs
of housing, including for people from outside the city who have no voice in
local politics. The parties whose rights are vested celebrate the stability that
government regulation brings into their lives. But they blissfully ignore the
higher rates of uncertainty that their actions place on others who have fewer
market opportunities for housing and jobs now that the incumbents have
sewn up their protected positions.
The great challenge in this area is to ask whether there is some way to
cushion the blow when the various legal protections are no longer made
available to groups that have
come to rely on them. Some
The reason local businesses outpeople argue that displaced
source is the same reason foreign
workers should receive
job-retraining programs or
businesses are reluctant to expand:
our regulatory and labor environment cash payments to ease their
transition. But the former
is hostile to growth.
never work, and there is
sensible resistance to the latter. (And we never engage in these programs for
loss of jobs from one state to another.)
There is, indeed, a third way to deal with this problem, which is not to
assume that low rates of growth are a fixed fact of nature. They need not be.
The best protection for the displaced tenant and worker is an open economy

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H O O VER DI GEST Summer 201 6

that offers multiple options for new housing and new jobs. But that wont
happen so long as our national, state, and local policies are protectionist to
the core.
There you have it. The great bipartisan tragedy of the 2016 election is that
Trump and Sanders want to double down on the failed policies that have
brought us to our current impasse. So long as economic discourse is controlled by economic know-nothings, prospects for economic improvement
will remain bleak.
Reprinted from Defining Ideas (www.hoover.org/publications/definingideas), a Hoover Institution journal. 2016 by the Board of Trustees of
the Leland Stanford Junior University. All rights reserved.

Available from the Hoover Institution Press is The Case


against the Employee Free Choice Act, by Richard A.
Epstein. To order, call (800) 888-4741 or visit www.
hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 59

E N T I T LE M E N T R E F OR M

Candid
Candidates
The real litmus test of this campaign season is
Social Security. Who will save it?

By Charles Blahous

any voters have said during this election season that they
want a president who tells it like it is. At the March 10
Republican presidential debate, for instance, the candidates
were given an opportunity for such candor when the politi-

cally treacherous subject of Social Security came up. With Social Security,
telling it like it is requires recognition of several difficult realitiesincluding
the perilous consequences of not touching the program at all.
Social Security faces a large and growing financing shortfall.
According to the latest trustees report, Social Security faces a financing gap roughly equal to 21 percent of its scheduled tax collections or 16
percent of scheduled benefits over its seventy-five-year actuarial valuation
window. Even corrections of this large size would produce only a temporary solvency finding, leaving program finances on an unstable course.
The shortfall would begin to re-emerge the very next year after the fix.
Correcting the programs total structural shortfall would require larger
adjustments, equal to roughly 33 percent of scheduled taxes or 23 percent
of scheduled benefits.

Charles Blahous is a research fellow at the Hoover Institution and a senior research fellow at the Mercatus Center.
H O O V ER D IG E ST S u m m e r 2016 65

Social Securitys current shortfall is already much larger than the one corrected in the landmark 1983 amendments, the most comprehensive programfinancing reforms ever enacted. Todays is larger on its face (2.7 percent of
taxable worker wages versus 1.8 percent) but the actual difference is much
greater, a fact disguised by a change in the trustees actuarial methodology
between then and now. Todays shortfall is nearly double that of 1982even
relative to todays larger tax baseif measured with 1982 methods.
The programs trustees have unanimously called for prompt financing reforms. The summary of the latest report states (among other warnings), The Trustees strongly urge lawmakers to enact legislation promptly
to achieve sustainable financial balance.
Literally not to touch Social Security would mean allowing it to
become insolvent, triggering sudden, deep benefit reductions. Current
Social Security law limits benefit payments to those that its trust funds can
finance. This means that when trust fund reserves are depleted, payments
must be reduced to the amounts that can be financed from incoming tax
revenues. Thus a literal no action scenario would trigger sudden benefit
reductions, beginning with disabled beneficiaries in 2022.
Social Security could cease to be an earned benefit. Because its unlikely lawmakers would allow a literal no action scenario to suddenly slash benefit payments, the more probable consequence of a protracted dont touch
policy would be the abandonment of Social Securitys financing structure.
Historically Social Security has been financed mostly by a payroll tax paid
by workers, with additional revenue coming from the taxation of benefits.
Those individual payroll tax assessments form the basis for calculating
each workers benefits. Its
unlikely this framework can
Social Security could end up as just
long continue if corrective
action is further delayed.
another general-fund-financed welFigures published in the
fare program, competing with other
annual trustees report
programs for money.
accentuate the point that continued delay would probably doom our chances of maintaining Social Security
within its historical financing structure. Even today it would be quite difficult to
fix system finances while holding current beneficiaries harmless: a 20 percent
reduction in future claimants scheduled benefits would be needed to attain
seventy-five-year balance within projected revenues. But if action were delayed
until the point of combined trust fund depletion, even complete elimination of
benefits for all new retirees would not be enough to close the shortfall.

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H O O VER DI GEST Summer 201 6

[Taylor Jonesfor the Hoover Digest]

At the brink of insolvency there would be little practicable alternative but


to bail out the program from the governments general fund, severing Social
Securitys long-standing contribution-benefit link and ending its status as an
earned benefit. From that point onward, Social Security would just be another general-fund-financed welfare program, competing with other programs
for funding. Beneficiaries would no longer be protected from sudden and
unpredictable benefit changes, while means-tests and other benefit payment
restrictions would likely be introduced.
The reason Social Security faces a shortfall is that scheduled benefits
substantially exceed worker contributions. Although Social Security is
popularly thought of as an earned benefit, this does not mean that participants simply get back what they pay in. To the contrary, scheduled benefits
far exceed the value of contributions plus interest. A program cannot remain
viably self-financing unless its income and outgo are kept in balance.
Social Security benefit costs are growing much faster than the
economys ability to keep pace. This is an unsustainable rate of increase and
it requires corrections.
Under a dont touch scenario the program will make mounting
demands upon federal taxpayers in upcoming years. Last year, Social
Security costs exceeded its tax collections by $84 billion, the difference being
made up by payments of interestfinanced by general taxpayersto its
trust funds. Before the programs combined trust funds are depleted, these
annual general revenue obligations will exceed $300 billion in 2015 dollars.
Such payments would be required above and beyond payroll tax and benefit
tax collections.
Under current law, younger generations will face significant net
income losses through Social Security, even if they receive all scheduled
benefits. According to the trustees report, Social Security alone will subtract net income from those now entering the workforce, equal to 4 percent
of their lifetime earnings. These income losses would likely render Social
Security unable to perform its intended function of protecting future seniors
from poverty. If the system is restored to financial balance solely by raising
taxes or by constraining these younger generations benefits, these losses
will not be ameliorated. The only way to reduce the hit on the young is if baby
boomers contribute to the solution.
Todays workers can claim Social Security benefits three years
younger than during the Roosevelt administration, despite lifespans having lengthened considerably. Virtually every proposal to keep the growth
of Social Security costs within sustainable rates involves some long-overdue

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H O O VER DI GEST Summer 201 6

changes to eligibility ages, as some of the presidential debate participants


responsibly acknowledged. One candidate suggested finances could be
sustained without addressing eligibility ages, though a proposal fitting that
description was developed several years ago when the financing shortfall
was smaller. Measures which then would have fixed the systems finances no
longer will.
And, as noted previously,
promising not to touch
Todays Social Security shortfall is
Social Security would lead
nearly double that of 1982even
to the worst outcomes of all.
relative to todays larger tax base.
Social Security is a terrific topic for testing whether
presidential candidates are willing to tell it like it isand whether voters
are willing to listenwhen uncomfortable truths are involved. One core truth
is that no responsible president can leave Social Security finances careening
along their currently untenable course.
Reprinted by permission of e21. 2016 Economic Policies for the 21st Century. All rights reserved.

Available from the Hoover Institution Press is Pension


Wise: Confronting Employer Pension Underfunding
And Sparing Taxpayers the Next Bailout, by Charles
Blahous. To order, call (800) 888-4741 or visit www.
hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 69

F O R EI GN POLICY

Three Principles,
Three Challenges
How to focus on what really matters: American
interests.

By Stephen D. Krasner and Amy B. Zegart

mericans worry that the


United States is declining,
the Middle East is unraveling, Europe is stumbling,

terrorists and repressive autocrats are


winning, and cyberthreats are multiplying.
As Fox Business Networks Maria Bartiromo put it during one of the Republican
candidate debates, Sometimes it seems
the world is on fire.
In a threat environment this complex

Key points
The US should be unapologetic about pursuing
its economic and security
interests but more tempered
in pursuing its ideals.
US leaders need to invest
time, effort, and resources
into alliances.
America must develop
flexible unilateral capabilities to use against varied
threats.

and uncertain, leaders risk focusing on

Stephen D. Krasner is a senior fellow at the Hoover Institution, the Graham H.


Stuart Professor of International Relations at Stanford University, and Stanfords
senior associate dean for the social sciences at the School of Humanities and Sciences. He is also a senior fellow at the Freeman Spogli Institute. Amy B. Zegart
is a Davies Family Senior Fellow at the Hoover Institution and a member of the
Hoover task forces focusing on Arctic security and intellectual property and innovation. She is also the co-director of the Center for International Security and
Cooperation at Stanford University.
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H O O VER DI GEST Summer 201 6

the wrong things, allowing more important foreign-policy challenges to grow


more serious. For example, the one thing all presidential candidates have in
common is a fixation with the self-proclaimed Islamic State organization. In
the Republican and Democratic debates last February, the group received far
more attention than anything else, garnering nearly sixty mentions. Russia, by contrast, received just sixteen mentions, nuclear dangers had seven,
cyberthreats got three, and Pakistanarguably one of the most dangerous
places on earth, with mobile, questionably secure nuclear weapons, a serious domestic Islamist insurgency, and a long-running border feud with its
nuclear-armed Indian neighborgot no attention at all.
For the past two years, we have convened a bipartisan group of Hoover
Institution and Stanford scholars to better understand foreign-policy challenges and develop a strategy for the next administrationwhoever winsto
address them. Our conclusion: US foreign policy needs to get back to basics.
A smart national security strategy starts with three guiding principles and
focuses on three key strategic challenges: Russia, China, and black swan
threats comprised of biological, nuclear, and cyber dangers.
THREE GUIDING PRINCIPLES
The first guiding principle is that the United States should be unapologetic
about pursuing its economic and security interests but more tempered in
pursuing its ideals. Interventions against horrific regimes to foster democratic reforms have bred more horrific violence and destabilizing political
vacuums, from Tripoli to Damascus. America has always stood for universal
freedoms but we have pursued those freedoms in different ways at different
times. When it comes to democratic interventions, history has spoken loudly:
democratization in the Middle East has failed, whether led from above, on
the ground, or behind. It is time the United States takes a more prudent
course that prioritizes the stability and security that most directly promote
our interests.
Second, the international order is underrated by too many foreign-policy
makers and observers. The United States has more than sixty alliance
partners around the world and still plays a pivotal role in all of the institutions that form the cornerstone of the international order. These alliances
and institutions will not take care of themselves. American leaders need to
invest time, effort, and resources into nurturing our unparalleled alliances
and adapting institutions that have been the bedrock of the international
order for seven decades. This means standing firmly by NATO against Russia, bolstering alliance networks in the Asia-Pacific region, and modernizing

H O O V ER D IG E ST S u m m e r 2016 71

the governance structures of institutions such as the International Monetary


Fund and United Nations.
Third, reinvigorating the international order is not enough: the United
States must also develop flexible unilateral capabilities that can be deployed
against varied threats. This starts with developing a strategic energy policy
that takes advantage of our newfound natural resources to strengthen allies
and weaken adversaries. It includes more attention to countermessaging,
and not just in the realm of counterterrorism.
International leadership hinges on the force of ideas, not just the use
of force. Defense Department acquisition reform, despite Secretary Ash
Carters best efforts, is still broken and desperately needs fixing so that
the Department of Defense can buy smarter and invent faster. Never again
should the United States spend seventeen years developing a program like
the F-35 Joint Strike Fighter that costs so much and performs so poorly.
...AND WATCH OUT FOR THE SWANS
The list of specific foreign-policy challenges is long, but not all threats are
equal. China, Russia, and black swan cyber, biological, and nuclear threats
will remain the three most important challenges for years to come.
Chinas future is far from certain. What is certain is that Chinas role on
the world stage, by virtue of the countrys size and economic position, will
be large no matter what we do; that its military capabilities will continue
to increase dramatically; that its domestic stressors are likely to grow and
present new challenges to the regime; and that China shares both mutual
and conflicting interests with the United States that must be carefully managed. The United States
should pursue a policy that
Foreign policy needs to get back to
seeks to integrate China into
the existing international
basics.
orderincluding military
hedgingthat makes it clear to China that joining the American-led global
order is its best option. Recent experience with Chinas creation of the Asian
Infrastructure Investment Bank, which attracted the support of Americas
closest allies, suggests that policies designed to isolate rather than welcome
China into international regimes have backfired.
It is time for a new direction: the United States should fully embrace a
policy of giving China the role that its size and contributions warrant in existing international organizations, provided that China agrees to follow the recognized and accepted rules of international behavior. At the same time, we

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H O O VER DI GEST Summer 201 6

should vigorously pursue ratification of the Trans-Pacific Partnership (TPP),


ratify the Law of the Sea Convention, insist on multilateral resolution of territorial disputes in the region, maintain our regional alliances and encourage
more robust relationships between our regional allies and partners, assert
freedom of navigation in the Western Pacific, and develop strategic partnerships with other major Asian countries, notably India and Indonesia.
Russia is a declining power, but will remain one of the worlds most powerful militaries (with a large nuclear arsenal) for the foreseeable future. Nor
is Vladimir Putin going
anywhere anytime soon,
as he continues to stoke
Todays principal foreign-policy
domestic support by engagchallenge is distraction.
ing in aggressive behavior
abroad and castigating the United States as an adversary bent on humiliating Russia. The United States must be clear-eyed about cooperating with
Russia where possible (on nuclear proliferation and counterterrorism, for
example) while containing Putins ambitions in Europe by making a sharp
distinction between NATO and non-NATO states and leaving no ambiguity in
the minds of Russian leaders that any effort to invade or dismember a NATO
member state would be met by force. Perhaps the greatest danger is that
Russia would engage in subversion by claiming to protect Russian minorities
in the Baltics. NATO must work to continue to clarify attribution for subversion, identify subversive measures that would be violations of Article 5, and
publicize what measures would be taken if such violations occur.
The probability that black swan cyber, nuclear, and biological threats will
materialize is unknowable. Two things, however, are knowable: first, these
black swan dangers are not confined to jihadist terrorist groups. Some states
are already engaging in large-scale cyber operations and other states, including Pakistan and North Korea, have a long history of trafficking nuclear
materials to third parties. Second, the diffusion of technology is making it
easier for individuals to gain access to the material resources necessary to
inflict massive disruption and destruction.
The first line of defense against black swan dangers is improving intelligence and domestic policing. The second line is promoting good enough
governance in badly governed polities and strengthening the security capacity of local rulers willing to cooperate with the United Statesa path that
can be effective and does not require high resource commitments.
Where it is impossible to strengthen local capacity, the United States
and its allies might have to engage in targeted attacks against transnational

H O O V ER D IG E ST S u m m e r 2016 73

terrorist groups. But we should have no illusionsthe policy options that can
lessen the risk of black swan events may involve strengthening the security
capacity of rulers who have little regard for democracy or human rights. The
best policies involve a choice among bad options.
Todays principal foreign-policy challenge is distraction. In a threat
environment this crowded and uncertain, making priorities from headlines
is misguided and
responding to every
International leadership hinges on the
foreign-policy challenge with force is
force of ideas, not just the use of force.
foolish. American
leadership starts with unambiguous guiding principles and priorities that
make clear what we stand for, what our goals are, what capabilities we need
to achieve them, and what challenges matter most.
Reprinted by permission of the blog War on the Rocks (http://
warontherocks.com). 2016 War on the Rocks. All rights reserved.

Available from the Hoover Institution Press is Ronald


Reagan: Decisions of Greatness, by Martin and
Annelise Anderson. To order, call (800) 888-4741 or
visit www.hooverpress.org.

74

H O O VER DI GEST Summer 201 6

T E R R OR I SM A N D DE F E N SE

Strategy Matters
A victory could be worse than defeatif it showed
we had no strategy.

By Kori N. Schake

dmund Burke in 1775 best characterized the nature of the problem we now face: The use of force alone is but temporary; it
may subdue for a moment but it does not remove the necessity
of subduing againand a nation is not to be governed that must

perpetually be conquered. It only adds poignancy to the reection that the


nation about which Burke spoke comprised Britains thirteen rebellious
North American colonies. In his Speech on Conciliation with America,
Burke appealed to his government not to rely on military means of suppressing the uprising, but instead to improve the quality of governance Americans
were experiencing. Gaining the voluntary acquiescence of those Britain
would rule was the right frame of reference for Britains strategy. He considered military force a feeble instrument for that purpose.
The United States used military force as the principal means of state
power in its conquest of Indian tribes as American settlers spread across
the continent and in the Hawaiian Islands, but the governments objective
was the extinction of the indigenous way of life. In lands Americans would
not inhabit, Burkes approach was repeatedly proven both more effective and
cheaper than predominant reliance on military force.
Roosevelts Corollary to the Monroe Doctrine expanded the writ of American intervention in the Western Hemisphere, taking onto the United States the

Kori N. Schake is a research fellow at the Hoover Institution and a member of


Hoovers Working Group on the Role of Military History in Contemporary Conflict.
H O O V ER D IG E ST S u m m e r 2016 75

responsibility for Latin American government payment of commercial debts


to European creditors. In essence, we indemnied Europeans against governmental default on loans extended by their businesses in order to remove any
pretense for European colonial or neocolonial usurpation of local control.
Dearth of infrastructurerailroads, canals, roads, telephone networksnecessary for economic development coupled with proigate spending and corruption by caudillo governments precipitated a bevy of American interventions in
the Dominican Republic, Haiti, Nicaragua, Mexico, and Guatemala when those
governments threatened default (often, after a military coup a caudillo would
attempt to repudiate the debts of his predecessors). It was in these occupations that the American government came to appreciate Burkes approach.
The Marine Corps 1940 Small Wars Manual was the doctrinal result of the
militarys extensive experience in such interventions (the Marine Corps alone
landed troops 180 times in 37 countries from 1800 to 1934). It describes small
wars as those wherein military force is combined with diplomatic pressure in the internal or external affairs of another state whose government is
unstable, inadequate, or unsatisfactory for the preservation of life and of such
interests as are determined by the foreign policy of our Nation. The manual
cautions that the solution of such problems being basically a political adjustment, the military measures to be applied must be of secondary importance
and should be applied only to such extent as to permit the continuation of
peaceful corrective measures. The difculty is sometimes of an economical,
political, or social nature and not a military problem in origin.
During the years after
1934, the United States
The United States should consider
lost its prociency in wars
where diplomacy has not
itself lucky that enemies have not
ceased to function and the
emerged better able to take advanState Department exercises
tage of our self-imposed difficulties.
a constant and controlling
inuence over the military operations. The overriding importance of major wars
crowded out expertise of this kind in both the civilian and military leadership.
Only when tactical successes in Afghanistan and Iraq failed to produce victories
did the mainstream of civilian defense analysts and the military institutions
return to hard-won knowledge of small wars. The patterns of thought from the
Small Wars Manual can be clearly seen in the development of counterinsurgency
doctrine and the concepts that drove the 2006 surge campaign in Iraq.
What unfortunately did not change, and what continues to be the catalyst of
American failure in the wars we are ghting, is the inability of our governments

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H O O VER DI GEST Summer 201 6

nonmilitary agencies to contribute in the ways and at the level necessary to


develop coherent strategies in which military force provides the securitythe
time and spacefor non-military means to capitalize on tactical gains to change
the political, economic, and social dynamics necessary to produce strategic
(and therefore sustainable) outcomes. We are settling for what Edmund Burke
cautioned more than two hundred years ago is the temporary use of force.
Americas hegemonic moment gave us such a wealth of power that we were
afforded, and took, the opportunity to be sloppy in the conduct of our national
security. We declined to
put our federal spending on
Americas hegemonic moment gave
a sustainable footing that
would keep the economy
us such a wealth of power that we
growing and retain discrebecame sloppy in the conduct of our
tionary space for higher
national security.
defense expenditures. We
allowed our diplomatic power to atrophy and transferred ever larger amounts
of inherently civilian activity into the military instead of bringing the State
Department up to a standard of performance adequate to its responsibilities.
We reduced our means of inspiring those who are our natural allies by shuttering the US Information Agency and other governmental propagations of American ideals and cultureand also by being thoughtless of the impression our
behavior was having. We shackled our military with a dysfunctional weapons
procurement system and a thick adipose layer of administrative requirements
and social policies that impede its ability to ght. We declined to hold our political leaders accountable for winning our wars.
As Shakespeare has Henry V accuse Scrope, You have been reckless with
our royal person. We ought to consider our country very, very fortunate that
enemies have not emerged better able to take advantage of our self-imposed
difculties.
A FAILURE OF LEADERSHIP
Blame for the failure of strategy in our current wars rests rst and foremost
with the elected political leadership. It is the responsibility of the president
of the United States to protect and advance our national security. The latest two presidents have been in thrall to our strength and to our weakness,
respectively. Instead of the healthy prudence that strategist/author Colin
Gray instructs is the basis of the practice of strategy, the past two presidential administrations have not been scrupulous in examining the potential consequences of their major national security choices. President Bush

H O O V ER D IG E ST S u m m e r 2016 77

dened political end states for Afghanistan and Iraq that were not achievable
by the means he was willing to invest. President Obama gave primacy to ending American involvement in the wars irrespective of the political end states.
What both failures have in common is an inability to marry ends and means.
Since strategy consists of matching those two things, it is axiomatic that
neither president acted strategically.
Strategy, so often reied as a high priestly undertaking, is dened simply
by Sir Lawrence Freedman, a professor of war studies, as the creation of
power. It is the creative use of available means to improve on the outcome
you would otherwise have attained. Since the end of the Cold War, the
United States has failed to deliver outcomes commensurate with, much less
improved on, the outcomes we ought to have attained.
Washington is practically papered over with pious entreaties for whole-of-government operations, which is merely another way of saying that we should not
rely only on our military if we expect to achieve sophisticated outcomes.

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H O O VER DI GEST Summer 201 6

But notice how rapidly policy debates about any national security issue
telescope down to whether or not to use military force, and how much. This
reductionism is an illustration of the paucity of strategic thinking we are
allowing in our government.
Even when the government understands
it needs a more rounded approach,
it signally and repeatedly fails to
produce it. The surges of troops
to Iraq in 2006 and to Afghanistan in 2009 were both
ostensibly to be accompanied by a civilian surge.

[Taylor Jonesfor the Hoover Digest]

H O O V ER D IG E S T S u m m e r 2016 79

In neither case were the non-military agencies able to develop a feasible plan
for civilian components of operations, deliver qualied people in numbers
required by their plans, or conduct their activities in tandem with military
operations. In both cases, military operations far outpaced what civilian
activity there was. In both cases, grandiose plans for civilian leadership
never materialized and were eventually shelved.
It is illustrative that State Department claims to leadership in the 2010
Quadrennial Diplomacy and Development Review werent even mentioned in
the 2014 QDDR.
But America needs State and the other civilian agencies to become much
more procient, and for our political leaders to integrate their abilities more
fully into our planning for not just the wars,
but for all our engagements with the world.
Goodwill lowers the price If we are to improve on current outcomes,
we must strengthen the performance of our
of what our country tries
civilian agencies: the Department of State,
to do in the world.
the Department of Treasury, the US Agency
for International Development, the Department of Agriculture, the Commerce Department, the Export-Import Bank.
That reinforcement is not only, or even principally, a funding issue. In the case
of the State Department, institutional culture is a much bigger impediment to
prociency than is money. The State budget has increased substantially since
2001 and the size of the Foreign Service has doubled, but the problems of personnel management that prevent it from becoming the peer of the Department of
Defense have not been addressed. The Foreign Service has the luxury of being
as selective as Stanford University: it has sixteen qualied applicants for every
ofcer it hires. And yet, by its own admission, it does not have people with the
skills it needs. It doesnt hire the right people, it keeps them all, and it doesnt
teach them anything. The three secretaries of state before John Kerry (Colin
Powell, Condoleezza Rice, and Hillary Clinton) all provided funding and personnel slots for State to develop a program of professional education. In all three
cases, State diverted the money and people to increase stafng at embassies. It
is a recipe for institutional failure, abetted by managerial inattention.
WE NEED STRATEGIC THINKING
If we are to arrest the atrophying of our national security strength, our political leaders will need to become knowledgeable again about strategy, so that
they design Americas engagement with the world relying not narrowly on
the instrument of our militarys power to intimidate but on the much wider

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orchestra of our countrys ability to inuence and inspire. Political leaders


must learn to become orchestrators of a multiplicity of instruments, and
pace the music such that they work together.
The United States of America is a country good at so many things, most
of them outside the reach of our own government. We have the worlds nest
universities and its most dynamic generators of technological innovation. We
deserve political leaders who will reach beyond the narrow levers the government can control to engage the involvement and creativity of means beyond
government control. It is those soft powers with which the United States
shapes the international environment and which persuade most countries and
most people in the world not to oppose what we are seeking to do. We have
underestimated for the past twenty years how much that goodwill drives down
the price of what our country attempts to do in the world.
Our failures are not the result of intervening in the wrong places. Although
we can choose whether and how to intervene, the universe of activity is
dened by where the problems are. What makes interventions succeed or
fail is the quality of thinking that has gone into determining the nature of the
problem and crafting a plan for engaging it.
Our failures are the result of growing lazy at the practice of strategy. Even
in the post-9/11 world of terrorist organizations armed with weapons to produce large-scale damage with little or no warning, the United States has such
a wide margin of error that our political leaders are able to get by without
developing prociency in the prudential use of our national strengths. We
areso far, at leastable to lose our wars yet retain our primacy. But it is a
costly way to do the nations business, both nancially and morally.
Adapted from the monograph Tactical Success Versus Strategic Victory, by
Kori N. Schake. This article is part of a series of essays produced by Hoovers
Working Group on the Role of Military History in Contemporary Conflict
and available online at www.hoover.org/publications/analysis. 2015 by the
Board of Trustees of the Leland Stanford Junior University. All rights reserved.

Available from the Hoover Institution Press is State of


Disrepair: Fixing the Culture and Practices of the State
Department, by Kori N. Schake. To order, call (800)
888-4741 or visit www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 81

T ERRORI S M AND DE F E N SE

Still a Dangerous
Neighborhood
The perils of nuclear proliferation didnt end with
the Cold War.

By William J. Perry

Hoover senior fellow William J. Perry delivered this address, titled A National
Security Walk around the World, as the annual Drell Lecture last winter at
Stanford University. The lecture is named for Sidney D. Drell, also a Hoover senior
fellow, and the founding science co-director of the Center for International Security
and Cooperation (CISAC).

n the eve of World War II, the poet W. H. Auden wrote: In the
nightmare of the dark / all the dogs of Europe bark, / and the
living nations wait, / each sequestered in its hate. Today, that
poem could well be applied to the Mideast, where the nations

wait, sequestered in their hate . . . but not just the Mideast. The dogs are
barking in many other places of the world. Let us visit some of those nations
where the barking could conceivably escalate into a nuclear catastrophe:
Russia, China, North Korea, Iran, and Pakistan. I believe the likelihood of a
nuclear catastrophe today is greater than it was during the Cold War. I will
establish why I believe that.
William J. Perry is a senior fellow at the Hoover Institution and the Freeman
Spogli Institute for International Studies and a member of Hoovers Shultz-Stephenson Task Force on Energy Policy. He is the Michael and Barbara Berberian
Professor at Stanford University and co-director of the Nuclear Risk Reduction
initiative and the Preventive Defense Project.
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Ill start off with Russia. I am, in fact, a Russophile. Ive visited Russia more
than thirty times. Ive led four Stanford study tours to Russia. I love their
music, I love their literature, I love their art. I have many friends in Russia,
some of them for more than
three decades. But today, I
am very concerned about
NATO expanded up to the Russian
Russia. We are now in a
border before Russia was quite willperiod comparable to the
ing to accept the fact that NATO was
dark days of the Cold War.
a partner, not an enemy.
How could we have let that
happen?
During the early Nineties, the Soviet Union was dissolved. A very dangerous period followed. It could very well have led to a major conflict or civil war.
Instead, it did not, and I give great credit to the Russian people for avoiding
catastrophic bloodshed. But they did suffer from a substantial economic collapse and there were gross abuses in the privatizing of the state properties.
There were many hardships for millions of Russians, particularly the elderly,
as their pensions became worthless. Some of us proposed something like a
Marshall Plan to help Russia through this difficult transition to democracy.
But, of course, that never happened.
When I became secretary of defense, I had an opportunity to at least
foster relations with the Russian military and work to bring Russia inside the
Western security circle, instead of outside throwing rocks at it. I invited the
Russian minister of defense to attend the NATO meetings, which he did.
We formed something called the Partnership for Peace, by which Russia
and the other nations of the former Warsaw Pact were able to join together
with NATO nations in joint peacekeeping exercises. We had many such exercises. We conducted joint military operations in Bosnia. And although it was
considerably difficult, I was able to arrange for a Russian brigade to be a part
of an American division, reporting to an American division commander, in
that operation. We jointly dismantled four thousand nuclear weapons in the
former Soviet Union. We jointly agreed to honor Ukrainian boundaries. This
was, I think, the high point of US-Russian relations.
When I left the Pentagon, I believed we were well on the way to ending
forever that Cold War enmity. But that was not to be. What happened?
The first thing that happened was that NATO expanded right up to the
Russian borders, I believe prematurely, before Russia was quite willing to
accept the fact that NATO was a partner, instead of an enemy. The United
States then went on to deploy ballistic-missile defense systems right up

H O O V ER D IG E ST S u m m e r 2016 83

MAN IN BLACK: In this official photo, North Korean leader Kim Jong Un visits
a power plant. North Koreas nuclear ambitions have continued despite years
of largely ineffective sanctions. [North Korean Central News Agency]

to the border of Russia, which Russians believed threatened their nuclear


deterrence. And, of course, the United States supported color revolutions in
the Mideast.
Vladimir Putin, when he regained the presidency in 2012, believed that the
United States was in the process of supporting a color revolution in Russia,
designed to overthrow him, which didnt please him very much. Ambassador Mike McFaul had just been appointed at that time. He was right in the
crucible of that ferment in Russia. So the bad relations between the United
States and Russia were partly stimulated by actions of the US government.
They were also, of course, stimulated by Putin, anxious to restore the power
and the glory of the former Soviet Union and all too willing to thumb his nose
at the United States. The actions that manifested that were hugely popular in
Russia and still are hugely popular.
He annexed Crimea. He threatened Ukraine. He threatened his neighbors in Europe with nuclear Iskander missiles based in Kaliningrad. And he
indirectly threatened the United States. Dmitry Kiselev, the head of Russian
media, made the following remarkable assertion in print. He said, Russia is

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the only country capable of turning the United States into radioactive ash.
It happens to be true. What would inspire Putins appointed head of media to
make that statement publicly?
This bombast against the United States, of course, is mostly rhetoric. What
is not rhetoric is some of the actions Russia is taking. Theyre well advanced
in rebuilding their Cold War nuclear arsenal. And they have dropped their
former policy of no first use of nuclear weapons and replaced it with a policy
that says nuclear weapons will be their weapon of choice if they are threatened. So theyre playing a very aggressive gamebut I must say, theyre
playing it with a very weak hand. They have no significant allies. Their
demographics is a disaster, with a population actually declining. And their
economic situation is getting worse every year.
When oil was a hundred dollars a barrel, Russia prospered, but Russians
did not use those resources to diversify. The oil revenues funded the social
programs so important to many Russian people. At eighty dollars a barrel,
they started to get into problems. At thirty dollars a barrel, they are in really
deep trouble. Theyve been eating into their cash reserves for over a year
now. And those reserves may well be completely depleted in another year of
thirty-dollar oil.
While thats a lot of trouble for Russia, its not good news for the United
States because Putin is diverting attention from these domestic problems by
playing the nationalism card. And that could lead to real danger.
Putin, Im quite convinced, does not want a military conflict with NATO
or the United States. The Baltic Sea has a great geographic advantage, but
everything else, all of the other fundamental advantages, are with NATO:
stronger and more numerous conventional military forces, stronger economy
and larger economy, and much better technology. Those are fundamental
advantages that are bound to prevail in any conflict.
The danger, then, is
not that Putin will seek a
Dmitry Kiselev, head of Russian
conflict, but that he will take
actions which will cause him media, boasted, Russia is the only
country capable of turning the Unitto blunder into a conflict.
Any such conflict, in time,
ed States into radioactive ash.
Russia would lose, unless
they decided to use their tactical nuclear weaponsthat is, unless they did
what they say they will do. If they did that, theres no way of predicting or
controlling the escalation that would follow. And I must say, I do not like that
scenario.

H O O V ER D IG E ST S u m m e r 2016 85

FEINTING WITH CHINA


Let me switch to China. China has had more than 10 percent growth now for
almost three decades, but I think theres trouble ahead. In 2015, their growth
dropped to 6.9 percent, the lowest its been in twenty-five years. You say, I
wish we had 6.9 percent. Many countries would say that, but it is not enough
for China. There are more than a hundred million Chinese who are not yet
receiving the benefits and the prosperity that other Chinese have enjoyed
these past few decades. Every day, they see on television the good life of the
Chinese living in eastern China.
Beyond that, minority problems in western China are leading to both social
and political problems, and there is a serious pollution problem. Pollution is
turning into a political problem for the government, so the government needs
a safety valve.
The time-proven safety valve for any government thats in trouble is ultranationalism, which in the case of China translates into anti-Americanism and
anti-Japanese sentiment. And it could leadand, in fact, is leadingto some
military adventures. China has had major growth in the past decade or so
in military expenditures. China is forming a blue-water navy and developing
very effective anti-ship missiles, all designed to drive the US Navy hundreds
of miles back from the Chinese coastline. On the other hand, the US Navy
does not intend to be driven back a hundred miles or more from that coastline. So thats a scenario for potential conflict.
One specific activity is the
building of artificial islands
More than a hundred million Chinese in the South China Sea. In
have yet to receive the benefits and
a sense, China is regarding
the South China Sea as a
the prosperity that other Chinese
domestic lake; we regard it,
have enjoyed.
and most other countries
regard it, as international waters. So Chinas actions have been challenged by
the US Navy and will be challenged again. Thats another scenario for confrontation with China.
I have to say that Im genuinely optimistic we will find a way to work out these
conflicts without a military conflict. The stakes are so huge, and both governments realize it. Still, I worry about wandering into some kind of a conflict.
NORTH KOREAAND A FAINT HOPE
Now let me pivot to Chinas neighbor, North Korea. During the Nineties,
I spent many a day, many an hour, trying to develop a non-nuclear North

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ON TARGET: An Indian air force fighter launches an air-to-air missile during


an exercise earlier this year. Both India and its rival, Pakistan, are armed with
nuclear weapons. [Amit DaveReuters]

Koreaworking within our own government, working with allies, working


with the North Koreans. What can I say? I failed. North Korea today is building a nuclear arsenal. Clearly its the highest priority in their government,
and they have adopted outrageous rhetoric about how they might use those
nuclear weapons.
Some years ago, when I was in Pyongyang to meet with the government,
I reviewed the schedule and found it unsatisfactory. You dont have any
meetings for me with your top military people, I said. I was the secretary of
defense, so I wanted to meet with some military people. And the next morning, as I sat down for the meeting, the door opened and in walked a North
Korean general, just as I requested. We shook hands and he said, Im General
So-and-so, and this meeting was not my idea; I was directed to meet with
you. He said, I dont think we should even be talking about giving up nuclear
weapons.
So I asked, Why are nuclear weapons so important to you?
He said, To defend ourselves.
From whom? I asked.
And he looked at me incredulously, From you!
I like a person who talks straight. This was during the days when NATO
was bombing Serbia. He said, If you drop bombs on Pyongyang, you will find
H O O V ER D IG E S T S u m m er 2016 87

nuclear weapons going off in your own cities . . . (pause) . . . not excluding
Palo Alto. Hed done his homework. The meeting actually turned out to be
pretty good after that rocky beginning.
Well, that was bluster then. But since those days, theyve actually built an
arsenal of medium-range ballistic missiles capable of reaching both South Korea
and all of Japan. And theyre developing ICBMs, which could threaten the United
States. These missiles, today, have only conventional warheads so theyre of no
significant concern. But they are developing nuclear warheads. They already
have developed a nuclear bomb and the tests to come will be designed to perfect
a bomb compact enough and durable enough to fit into a warhead. So what to do
about that, aside from wringing our hands and making speeches?
Professor Siegfried
Hecker has proposed
Sanctions programs hurt Iran quite seri- what he calls his three
ously. Tehran began telling a different
nos. Back off trying to
get them to simply agree
story about its nuclear program.
to give up their nuclear
weapons, being a bridge too far right now. But get them, instead, to agree
to no more nuclear weapons; no better nuclear weapons; and no transfer of
nuclear technology. If we could get those three agreements, that would be a
step forward. However, neither the Bush nor the Obama administration has
followed that approach.
The sanctions we do have against North Korea are largely ineffective; that
is, they make uncomfortable a number of common people in North Korea but
are not effective in affecting the policies. North Korean leaders have China
as a safety valve. China continues to provide food and fuel, which keeps the
sanctions from biting too hard. So were not on a path to a solution.
I do have one faint hope for North Korea. If China and the United States
could agree on a common negotiating strategy, which I think is possible, then
we could agree on a joint program to contain their nuclear weapons. In the
past year or so, China has begun to show substantial concern for the North
Korean nuclear program, so it might be time for a quietand I emphasize
quietUS probe to China. If we did this, our diplomats would have to be very
careful to avoid the blame game, that is, blaming all the problems of North
Korea on China. Theres plenty of blame to go around.
IRAN: CASE CLOSED
The next walk around the world takes me to Iran. For many decades, Iran
has had a robust nuclear program oriented around civil nuclear work. But in

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the past five or more years, part of this program has increasingly appeared
to be cover for a weapons program, just as North Korea had used its commercial program to cover up a weapons program.
So, about five or so years ago, Sig Hecker and I met with the Iranian
national security adviser. We listened very carefully to what he had to say. He
said they didnt want nuclear weapons, they were not pursuing nuclear weapons, which sounded good but did not really jibe with what we were observing.
I dont think either Sig or I was very encouraged by those discussions.
But then two big changes occurred in the government. One, Iran elected a
new president, much more reasonable than Mahmoud Ahmadinejad, whom
he succeeded. And perhaps more significant, serious sanctions programs
were brought to bear on Iran, not like the ones in North Korea. These sanctions programs were followed by all the leading nations in the world, including China and Russia, and they really bit. They hurt Iran quite seriously.
With those two changes, Iran began telling a different story.
We met again, this time with the Iranian foreign minister, for unofficial
meetings. And I, at least, was very hopeful because of what Mohammad
Zarif was telling me. I thought there was a chance we might be able to
make an arrangement satisfactory to everybody. About that time, serious
political negotiations began and Sig and I dropped out of the unofficial
negotiations.
Well, after several years, after a long, hard, slog of negotiations, negotiators did cut a deal last year. It was a better deal than I thought we would get,
based on my discussions. Nevertheless, there has been, as you all know, passionate opposition to that
deal. The major opposition
Its clear that the end of the Cold War
comes from what I would
consider to be strange
was not quite the end of history.
bedfellows. They are Israels
Prime Minister Netanyahu, 55 percent of the American Congress, and Irans
Revolutionary Guard. The irony here is that these people in Israel and the
United States oppose the deal because they fear it will allow Iran to get a
bomb, whereas the opposition in Iran opposes the deal because they fear it
will prevent Iran from getting a bomb. Both cannot be right.
The opposition in the United States has a simple formula: We should withdraw from the deal. We should reinstate sanctions and we should renegotiate
a better deal. Let me be as blunt as I can. This is a fantasy. There is not the
remotest possibility that the sanctions could be reapplied if the United States
withdrew from this deal, because the day we withdraw our allies are gone,

H O O V ER D IG E ST S u m m e r 2016 89

the sanctions are gone, and there will be no negotiations without sanctions.
So this deal, like it or not, is the only deal we will ever get.
WHERE THE NIGHTMARES ARE
Ive saved the bad news for the end, and thats Pakistan. Pakistan has had
three wars, all of which theyve lost, and they have since then reverted to
what I would call irregular warfare. Both India and Pakistan now, since those
three wars, have nuclear weapons, I would say more than one hundred in
each country, and the missiles to launch them. In addition, Pakistan has wellfunded, well-trained terror groups, at least some of which have some connection with the government, though the connection may be shadowy and hard
to prove.
You are all familiar with the Mumbai attacks of a few years ago. At that
time, India, though outraged, showed commendable restraint. In the past
couple of years here at Stanford, we have had perhaps three meetings with
Pakistanis and Indians,
sometimes together in a
China is spending heavily to drive
room, talking about the
future. And all of them worthe US Navy back from the Chinese
ry about what they envision
coastline.
as a Mumbai II, a follow-on
terror attack, not necessarily in Mumbai, of course. The Indians believe that
if that took place, this time they would not show restraint. India would mount
a punitive military expedition into Pakistan. The Pakistanis then predict
that their leaders would respond with tactical nuclear weapons. They would
use them, in this account, only in Pakistan against the Indian troops who are
in Pakistan, believing that this would not provoke a nuclear response from
India. The Indian representatives say they are mistaken. It would provoke a
nuclear response.
So this is the nightmare of how a regional nuclear war could start, a
nightmare that would involve literally tens of millions of deaths, along with
the possibility of stimulating a nuclear winter that would cause widespread
tragedy all over the planet. So it is clear that the end of the Cold War was not
quite the end of history.
THREE DANGERS
Here then is a summary of the present nuclear dangers. The first is of a
nuclear war occurring by accident or by miscalculation. During the Cold
War, we used to think the Soviet Union was planning nuclear attack. Nobody

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thinks that now about Russia, so the focus is on a war occurring by accident
or miscalculation. That danger eased with the ending of the Cold War, but
now its returning. And the risk could increase as both the United States and
Russia continue to rebuild their nuclear arsenals.
The second danger is a regional nuclear war, a threat that did not really
exist during the Cold War. An India-Pakistan war would be the poster child
for that.
And the third danger is nuclear terrorism, another threat that arose after
the Cold War.
Today the danger of some sort of a nuclear catastrophe is greater than
it was during the Cold War. And most people are blissfully unaware of this.
Therefore, our policies and our actions do not adequately reflect the danger.
Special to the Hoover Digest.

Available from the Hoover Institution Press is Andrei


Sakharov: The Conscience of Humanity, edited by
Sidney D. Drell and George P. Shultz. To order, call
(800) 888-4741 or visit www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 91

T ERRORI S M AND DE F E N SE

Seven Deadly
Strategic Sins
A common thread runs through US military
disappointments: errors at the top.

By Mark Moyar

trategic defeat often results from an accumulation of tactical


failures. Repeated battlefield setbacks can destroy an adversarys
capabilities, as befell Napoleonic France, or its will, as befell Britain in the American War of Independence. In such cases, military

organizations may deserve at least some of the blame for the strategic loss,
because in most countries the military leadership bears primary responsibility for training, equipping, and commanding armed forcesfunctions that are
fundamental to tactical effectiveness. Military strategy, by contrast, is often
set by civilian leaders, and in the case of the United States it is the statutory
prerogative of the civilian commander in chief.
When a country enjoys tactical military success as consistently as the
United States, responsibility for strategic success must rest primarily with
those who make strategy. The American military could be held culpable for
recent strategic setbacks were it highly influential in the crafting of strategy.
But its influence under the Bush administration was limited, and under the
Obama administration its strategic advice has largely been ignored.

Mark Moyar is a member of the Hoover Institutions Working Group on the Role
of Military History in Contemporary Conflict. He is a senior fellow at the Joint
Special Operations University.
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A review of Americas military interventions since 2001 reveals that seven


broad errors account for Americas inability to turn tactical successes into
strategic victories. In every instance, the error was the direct result of
presidential decisions on policy or strategy. Some of those decisions ran in
direct contradiction of the militarys advice. The military can be faulted for
some significant tactical errors, such as ignorance of counterinsurgency in
the early years of the Iraq War and excessive reliance on population-centric
counterinsurgency doctrine in the middle years of the Afghan War. But the
military eventually corrected its major tactical problems, and none of those
problems thwarted strategic success.
Incompetence, in the form of bad judgment and disorganization, contributed heavily to the mistakes of both the Bush and Obama administrations. Reliance on flawed theories, which could be attributed to ideological fervor as well as incompetence, also hurt both administrations.
Theories on democratization made Bush and Obama overly optimistic
about the prospects for intervention in certain countries. President
Obamas adherence to McGovernite ideology fueled an undue aversion
to the use of American military power. In addition, preoccupation with
domestic politics and personal popularity guided many of Obamas illfated strategic decisions.
TOO CONFIDENT ABOUT DEMOCRATIZATION
President George W. Bush and key advisers believed that the hostile governments of Afghanistan and Iraq could be replaced with democratic regimes
capable of maintaining domestic order and suppressing extremists on their
own. For this reason, they did not assign American troops to the invasions in
the numbers required for countering insurgents after regime change and did
not plan to keep American
troops for more than a short
Bush and Obama erred repeatedly
period beyond the formain their choices of allies within contion of new governments.
tested societies.
This thinking reflected both
a lack of understanding of
the factions in those countries and an underestimation of the difficulties of
establishing liberal democracy in societies with authoritarian traditions. The
short-term strategic successes of regime change that Americas tactical successes made possible in Afghanistan and Iraq evaporated as the new democratic governments failed to take the military and political actions required
for stabilization.

H O O V ER D IG E ST S u m m e r 2016 93

Obama engineered the overthrow of Libyas Muammar Gadhafi based on


the same misplaced confidence in democratization. Unlike Bush, he pursued
regime change without deploying US ground forces, arguing that American
forces would be an impediment to Libyas stability and political development.
Libyas democratic experiment yielded even poorer results than Iraq, as
anti-democratic forces dismembered the democratic government in less than
three years, ushering in chaos and violence.
THE WRONG LOCAL ALLIES
Bush and Obama erred repeatedly in their choices of allies within contested
societies, to include many of the people who led the newly installed democracies mentioned above. Had the United States chosen different individuals in
these cases, its experiments in democratization might have fared better. As
history has shown in such places as Botswana, Chile, and Kosovo, leadership
quality is often a critical factor in the viability of nascent democracies.
In Iraq, the Bush administration excluded Baathists and military officers from
the postwar government, casting its lot instead with exiles, outcasts, and Shiite
politicians, who turned out to be less virtuous than anticipated. The new Iraqi
government lacked the governors, police chiefs, and military officers to cope
with the insurgents, many of whom were former Baathists or military officers.
Because of their ineffectiveness, the US military had to step into the breach.
Subsequent decisions to
allow former Baathists and
The Syrian rebels underwritten by
military officers back into
the Obama administration are utterly the government contributed
to the stabilization of the
ineffectual.
country in 2007 and 2008.
Prime Minister Nouri al-Maliki, a highly sectarian Shiite whom Obama kept
in power after the disputed 2010 elections, undid the progress by removing many of those same individuals when the US military withdrew from
Iraq. He thereby weakened the governments security forces and rekindled
Sunni antagonism toward the central government, leading to the rise of the
Islamic State.
In Afghanistan, the Bush administration chose to empower Hamid Karzai,
based upon exaggerated estimates of his leadership skills. Bestowing key
government posts on favored tribes and persons, Karzai gave free rein to
malign actors whose predatory behavior drove Afghans into the arms of the
insurgents. By the time he left office, he was almost universally derided for
incompetence and corruption.

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In Libya, the Obama administration backed rebels about whom it knew


very little, and who were ultimately too weak to establish governmental control over the country. Abed Rabbo Mansour Hadi, whom Obama pushed into
power in Yemen, proved incapable of holding off the Houthi insurgents. The
Syrian rebels underwritten by the Obama administration have been utterly
ineffectual, and some have defected to extremist groups.
HASTE IN COUNTERINSURGENCY
From late 2003 to late 2006, the Bush administration tried to hurry up the
counterinsurgency in Iraq, in the belief that prolonged American involvement would alienate xenophobic Iraqis and dissipate
ISIS appears no weaker now than
American public support
for the war. To extricate
when our air campaign began.
the United States quickly,
Bush ordered the rapid expansion and fielding of Iraqi forces. But the Iraqi
forces kept getting crushed by the insurgents, a problem ultimately traced
to poor leadership, which was itself the result of abbreviated training and
politicization of appointments. The US government ultimately rectified the
situation by allowing officers from the former regime into the Iraqi national
security forces and by compelling the Iraqi government to appoint leaders
based on merit.
Afghanistan, by contrast, did not have a comparable body of experienced
officers upon whom the government could call when security deteriorated.
Ravaged by decades of civil war, Afghanistan had seen many of its talented
and dedicated leaders perish, and disintegration of central governance in the
1990s had left a generation of Afghans devoid of professional soldiers and
policemen. Creating a new, professional officer corps in Afghanistan would
take at least ten years of training and education. Early on, the Bush administration undertook a serious effort to build an Afghan army officer corps, but
it entrusted the building of the Afghan police leadership to the German government, which trained far too few police officers. Afghan police leadership
development did not begin in a serious fashion until the United States took
on a large role, starting in 2008. Building capable police forces, therefore, is
likely to take until 2018 or later.
Obama decided early in his administration to intensify counterinsurgency
in Afghanistan in the hope that short-term gains would allow the United
States to turn the war over to the Afghans in a few years, which was politically appealing to Obama because of the high costs of American involvement

H O O V ER D IG E ST S u m m e r 2016 95

and the unpopularity of the war among his political supporters. To permit
rapid enlargement of Afghan forces, the United States boosted funding and
the number of American trainers. It also lowered recruiting standards for
the Afghan army and police and shortened training, with the result that the
enlarged Afghan forces suffered from the indiscipline and incompetence
common to ill-led security units.
In 2011, Obama curtailed Americas counterinsurgency effort in Afghanistan by canceling large-scale clearing operations in eastern Afghanistan.
The lack of a sustained counterinsurgency campaign allowed the insurgents
to recruit replacements across the east. Those insurgents now provide
safe haven for other terrorists and pose an existential threat to the Afghan
government.
OVERRELIANCE ON SURGICAL STRIKES
From 2002 to 2008, the small US military forces in Afghanistan relied
primarily on raids and ambushes to thwart Afghan insurgents and their
Al-Qaeda allies. Although the Americans inflicted heavy losses, they could
not keep the insurgents from gaining in strength. The subsiding of violence
in Iraq in 2008 permitted the shifting of US military resources to Afghanistan, prompting recommendations from the military leadershipincluding
surgical-strike pioneer General Stanley McChrystalto shift from surgical
strikes to troop-intensive counterinsurgency. In late 2009, Obama consented
to counterinsurgency and the additional troops it required.
Obamas cancellation of
counterinsurgency operaSince the withdrawal of US troops
tions in eastern Afghanistan
from Afghanistan, the security situa- in 2011 necessitated a move
back toward a strategy
tion has deteriorated badly.
reliant on surgical strikes.
Although drones and raids inflicted heavy losses, they failed to hold the
enemy at bay in eastern Afghanistan. With the withdrawal of American
troops, the security situation deteriorated to such a degree that in early 2014
the CIA had to shut down its outlying Afghan bases and its secret army of
Afghan counterterroristsassets that were critical to surgical strikes.
In 2008, President Bush began precision drone strikes in Pakistan against
Al-Qaeda and other extremists. The Obama administration increased the
rate of strikes, but by then Al-Qaeda had taken effective countermeasures,
including the relocation of leaders into urban areas where drone strikes
were off-limits. Obamas drone effort killed mainly low-level fighters from the

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Pakistani Taliban, an extremist organization of greater concern to Pakistan


than to the United States. The drone program depended heavily on cooperation from Pakistans Inter-Services Intelligence agency, which often was
unable or unwilling to provide targeting information to the United States.
Najibullah Zazi, the would-be subway bomber, and Faisal Shahzad, who drove
an SUV bomb into Times Square, received their terrorist training in Pakistan at the peak of the drone strikes.
Because of the Pakistani governments unwillingness to authorize US ground
operations inside Pakistan, the United States conducted only a handful of
special operations raids
in Pakistan between 2005
and 2011. The last of those Our interventions in Afghanistan and
raids, which killed Osama
Iraq instilled fear of the United States
bin Laden, provoked
in much of the worldfor a time.
such an outcry that the
Pakistanis expelled American special operations forces from the country, shut
down the main US drone base, and obstructed CIA activities. The United
States has conducted no subsequent raids in Pakistan and its drone program
has been drastically curtailed. Al-Qaeda and other extremist organizations are
now regenerating in Lahore, Karachi, and other sprawling cities.
In Yemen, US military officers argued that the United States should help
government forces secure the countrys rural areas by supporting counterinsurgency operations, but the Obama administration chose to rely exclusively
on surgical strikes to counter Al-Qaeda in the Arabian Peninsula (AQAP).
Although drones killed a number of key AQAP figures, the lack of counterinsurgency operations allowed AQAP and Houthi rebels to gain ground. Enemy
control of the population reduced American access to information, which
in turn impeded drone targeting and led to misdirected strikes that killed
women and children. Exploiting those mishaps to recruit new followers,
AQAP increased in size from three hundred to more than a thousand during
the period of sustained US drone strikes. Obamas Yemen strategy of counterterrorism without counterinsurgency collapsed entirely at the beginning
of 2015, when insurgents overran the capital, dismantled the Yemeni security
services, and drove out the CIA.
According to US spokesmen, precision air strikes have killed thousands
of Islamic State fighters in Syria and Iraq. Yet the Islamic State appears no
weaker now than when the air campaign began more than a year ago. It has
undertaken effective countermeasures to protect key personnel and has
recruited thousands of new followers in the areas it occupies, in addition to

H O O V ER D IG E ST S u m m e r 2016 97

attracting foreign radicals. The air strikes failed to prevent it from seizing
one of its biggest prizes, the Iraqi city of Ramadi.
REFUSAL TO COMMIT A MILITARY FOOTPRINT
In 2011, the United States and its European allies used air power to help
rebels destroy the Gadhafi regime, then touted Gadhafis death as proof
that they could achieve their objectives without deploying their own
ground forces. While the absence of US ground forces from Libya kept
the United States from sustaining casualties, it also prevented the attainment of lasting strategic success. In the chaotic aftermath of Gadhafis
overthrow, no forces intervened to secure critical Libyan facilities, as US
forces had done at Iraqi facilities in 2003. The doors to Gadhafis prisons
were flung open and untold numbers of extremist leaders escaped. Miscreants looted the regimes armories of heavy weapons and surface-to-air
missiles. When insurgents flouted the new governments authority, no
foreign troops could beat them back, as American troops had done in Iraq
and Afghanistan.
In the case of Syria, Obama refused to send American ground troops to
assist rebel forces, despite warnings from his military experts that American
ground troops would be required to give the rebels a chance of succeeding.
Obama reportedly hoped that American-backed rebels could assert enough
strength on their own to force a negotiated solution of the conflict. When
inserted into Syria, however, the rebels have been kidnapped, killed, or
turned almost to a man.
REFUSAL TO MAINTAIN A MILITARY FOOTPRINT
In Iraq, the tactical military successes of 2007 and 2008 led to several years
of strategic success, during which Iraqis stopped fighting the government
and participated increasingly in the democratic process. Vice President Joe
Biden declared in 2010, Youre going to see a stable government in Iraq that
is actually moving toward a representative government. According to Biden,
the political advancement of Iraq could be one of the great achievements of
this administration.
At the end of 2011, President Obama withdrew all US forces from Iraq
while asserting that a large American civilian presence would suffice to
preserve stability. The American civilian presence, however, failed to contain Iraqs sectarian impulses as US military forces had. As soon as the last
US troops left the country, Maliki rounded up Sunni politicians en masse
and purged Sunni officers from the security forces. He also curtailed US

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H O O VER DI GEST Summer 201 6

intelligence activities, leading to a sharp degradation of counterterrorism


operations. These developments paved the way for the rise of the Islamic
State in 2014.
When Obama sent American forces back to Iraq in 2014, he constrained
their effectiveness by keeping them few in number and confining them to
bases. American troops could not exert nearly as much political and military influence as Iranian personnel in Iraq and the one hundred thousand
Iraqi Shiite militiamen whom the Iranians had trained. As a consequence,
the United States has been unable to rehabilitate the Iraqi national security
forces or regain Sunni confidence.
SIGNALS OF RETRENCHMENT
Another reason behind the Obama administrations inability to turn tactical
successes in Afghanistan into strategic gain has been the Afghan perception that Obama planned to abandon the country. This perception arose
from Obamas frequent statements about removing American forces from
Afghanistan, beginning with his West Point speech in December 2009. It
received reinforcement from the succesThe absence of ground forces from Libya
sive withdrawals of
prevented US casualties, but it also ruled
American troops from
2011 onward. Opportu- out lasting strategic success.
nistic Afghans supported the insurgents in the belief that the Americans would depart before
the Afghan government was strong enough to fend off the insurgents on its
lonesome. Pakistan, interpreting Americas departure from Afghanistan as
the segue to Indian domination of the country, stepped up support for the
Taliban and Haqqani network.
Voluminous foreign complaints about American intervention in Afghanistan and Iraq have obscured the fact that those interventions instilled
respect and fear of the United States in much of the world. By overthrowing hostile regimes and maintaining a US presence in the face of vicious
insurgencies, the United States dispelled the notionencouraged by the
abandonment of South Vietnam in 1975 and the Black Hawk Down episode of
1993that it was unwilling to stomach prolonged and costly military expeditions. Americas adversariesin such places as Damascus, Tehran, Moscow,
Beijing, and Pyongyangtook note. For a time, therefore, Americas military
accomplishments in Afghanistan and Iraq worked to its strategic advantage
elsewhere.

H O O V ER D IG E ST S u m m e r 2016 99

The respect and fear began to subside in December 2009 with Obamas
announcement of his Afghanistan withdrawal timeline and tumbled sharply
in late 2011 with the evacuation of American forces from Iraq. American prestige fell still further with the Syrian red line debacle, Russias
unchecked aggression against Ukraine, and the rise of the Islamic State. The
United States thereby suffered a decline in its strategic position on issues
such as Irans nuclear program, the China Development Bank, and the Syrian
civil war.
Adapted from the monograph The White Houses Seven Deadly Errors,
by Mark Moyar. This article is part of a series of essays produced by
Hoovers Working Group on the Role of Military History in Contemporary
Conflict and available online at www.hoover.org/publications/analysis.
2015 by the Board of Trustees of the Leland Stanford Junior University.
All rights reserved.

Available from the Hoover Institution Press is The War


that Must Never Be Fought: Dilemmas of Nuclear
Deterrence, edited by George P. Shultz and James E.
Goodby. To order, call (800) 888-4741 or visit www.
hooverpress.org.

100

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T E R R OR I SM A N D DE F E N SE

Pre-emption
Comes in from
the Cold
The Obama administration has quietly embraced
a once-controversial doctrine about getting in the
first punch.

By Jack Goldsmith

ast spring the State Departments top lawyer, Brian


Egan, gave an important but
underreported speech that

marked the final stage of the Obama


administrations normalization of oncecontroversial Bush-era doctrines about
the conduct of war. Before a gathering
of geeky international-law-loving lawyers in Washington, Egan announced
the Obama administrations official
embrace of the same pre-emption doc-

Key points
The theory of pre-emption
depends on the magnitude of the
harm, the probability of attack,
and evidence of the adversarys
intention to use the weapons.
Bushs application of pre-emption in Iraqwhere the premises
were false and the consequences
of error largewas criticized.
The Obama interpretation,
though it focuses on nonstate
actors, embraces the same principles.

trine that justified the invasion of Iraq.


Jack Goldsmith is a senior fellow at the Hoover Institution and co-chairman of
Hoovers Jean Perkins Working Group on National Security, Technology, and Law.
He is the Henry L. Shattuck Professor at Harvard Law School.
H O O V ER D IG E ST S u m m e r 2016 101

Egans speech marked the culmination of a continuity project that began,


to many peoples surprise, at the beginning of Barack Obamas first term.
Since 2009, Obama has adopted the notion of a global war against Al-Qaeda
and associates; he expanded the legal basis of that war to include ISIS;
he embraced military detention without trial, military commissions, state
secrets, and large-scale secret surveillance; and he ramped up drone strikes,
deployment of special forces, and cyberattacks.
Until recently, however, the Obama team had stayed away from the doctrine that justified the invasion of Iraq. That doctrine, known as pre-emption,
is an interpretation
of international-law
Future presidents who want to use force
rules related to anticiabroad wont invoke the doctrine used
patory self-defense.
International law has
in the disastrous Iraq War. They will cite
long permitted nations
Obamas interpretation.
to deploy force in
self-defense in the face of an imminent attack from another nation. The
George W. Bush innovation was to adapt the concept of imminent threat
to the capabilities and objectives of todays adversaries, in the words of the
National Security Strategy of 2003:
The greater the threat, the greater is the risk of inactionand the
more compelling the case for taking anticipatory action to defend
ourselves, even if uncertainty remains as to the time and place of
the enemys attack.
Based on historical precedents and analogies, the Bush administration ultimately argued that the justification for applying pre-emptive force against
rogue states and terrorists grew in proportion to the magnitude of the harm,
the probability of attack, and evidence of the adversarys intention to use the
weapons. It also argued that the United States must take advantage of the
available limited windows of opportunity to defeat the threat.
Bushs pre-emption doctrine was not warmly received in some quarters.
The ever-prudent candidate Obama never questioned the doctrine itself
but famously questioned its application to Iraq, which he argued was not an
imminent threat. But others attacked the doctrine. Then-senator Joe Biden
urged President Bush not to act upon the new doctrine of pre-emption,
which he described as frightening. When then-senator Hillary Clinton
voted for the Iraq War in 2002, she distanced herself from Bushs pre-emption doctrine, stating that it carried grave dangers for our nation, the rule

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H O O VER DI GEST Summer 201 6

of international law, and the peace and security of people throughout the
world.
Vice President Biden and former secretary of state Clinton have not, however, criticized the Obama administrations embrace of pre-emption doctrine
beginning in 2014. The administration justified its attacks against the AlQaeda-affiliated Khorasan Group in Syria in 2014 as self-defense in the face of
an imminent threat.
Far better to be to the left of a boom than to the right of it, explained the
Pentagon press secretary, Admiral John Kirby, using a military expression
that refers to defusing roadside bombs. And thats what were trying to do,
is get to the left of any boom to prevent the planning from going any further,
and certainly to prevent them getting into an execution phase, which we
dont believe they were in yet.
Hitting a threat before it gets into the execution phase is the essence of
Bushs pre-emption principle, but one might dismiss Kirbys statement as a
press-conference slip rather than official doctrine. Egans speech, however,
cleared up the ambiguity and made plain that pre-emption is now the official
doctrine of the Obama administration.
Egan explained that the factors the United States considers to determine
whether a threat is imminent for purposes of self-defense include the nature
and immediacy of the threat; the probability of an attack; whether the anticipated attack is part of a concerted pattern of continuing armed activity;
the likely scale of the
attack and the injury,
International law has long permitted
loss, or damage likely
nations to deploy force in self-defense in
to result therefrom in
the absence of mitigatthe face of imminent attack.
ing action; and the
likelihood that there will be other opportunities to undertake effective action
in self-defense that may be expected to cause less serious collateral injury,
loss, or damage.
Egan here embraces all the tenets of Bush pre-emption. Though he
discusses the principle in the context of force against nonstate-actor terrorists, the rationale applies readily (and indeed less controversially) to states
themselves. If anything, Egan announces a broader principle than Bushs,
since he (unlike the Bush team) applies it in the context of threats short of
the weapons of mass destruction that motivated Bush.
The Bush team, of course, fatefully applied its pre-emption theory in
the controversial context of Iraq, where it turned out that the premises

H O O V ER D IG E ST S u m m e r 2016 103

of analysis were false and the consequences of error were enormous. The
Obama team, by contrast, is applying its similar theory in a less controversial
light footprint context where the terrorists are indeed menacing and the
consequences of error much lower. That context makes the principle easier
to swallow and will give it broader acceptance and legitimacy. So, too, will
the fact that it is articulated by an administration known to be friendly to
international law.
Though the contexts for the Obama and Bush pre-emption principles differ, the principle is the same. But it is the Obama teams articulation of the
principle that will be influential. Future presidents who want to use force in
other nations wont invoke the doctrine used in the disastrous Iraq War. They
will instead adopt the functionally identical principle that the Obama administration normalized and legitimated.
Reprinted by permission of Time (www.time.com). 2016 Time Inc. All
rights reserved.

Available from the Hoover Institution Press is In This


Arab Time: The Pursuit of Deliverance, by Fouad
Ajami. To order, call (800) 888-4741 or visit www.
hooverpress.org.

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I N T E LLI G E N C E

Software Meets
Soft Power
After the clash between Apple and the FBI, a
question: what if forcing a company to yield its
secrets strengthens one kind of security but
damages another?

By Amy B. Zegart

he war of words between Apple and the FBI over cracking a


terrorists phone has been widely seen as a security versus
privacy dilemma. But its much more than that. It is also
fundamentally a security-versus-security dilemma. Lost in the

conversation about whether the computer company should help investigators is a more serious discussion of what we as a society value more: our
security interests in maximizing the prospects of successful law enforcement
investigations (including investigations of terrorist attacks) or our security
interests in maximizing US power on the world stage by ensuring that the
American tech industry continues to thrive.
Apple isnt just any company. It is a critical part of the technology ecosystem that is vital to US prosperity and a key driver of the global economy.
Consider this: in 2015, Apple and Alphabet (Googles parent company) posted

Amy B. Zegart is a Davies Family Senior Fellow at the Hoover Institution and
a member of the Hoover task forces focusing on Arctic security and intellectual
property and innovation. She is also the co-director of the Center for International
Security and Cooperation at Stanford University.
H O O V ER D IG E ST S u m m e r 2016 105

combined revenues of more than $300 billion. Thats a figure equivalent to


the GDP of the worlds thirty-eighth-largest economy.
The government does have a compelling interest in keeping Americans
safe from terrorist attack. But the government also has a compelling interest in safeguarding the sources of American
power over the long term. And increasingly the sources of national power
in the twenty-first century are
economic, not military.

[Taylor Jonesfor the Hoover Digest]

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H O O VER DI GEST Summer 201 6

In international politics, power is the ability to get


others to do what you want them to do. Historically, power came from military might. That is less
true now than ever before. The United States
has the worlds best military and spends
more on defense than the next several
nations combined. But today we face
a range of asymmetric threats
from states as well as nonstate
actorsthat render those
advantages less decisive on and off hot
battlefields.

H O O V ER D IG E ST S u m m e r 2016 107

The unraveling situation in the Middle East, Chinas escalating aggression


in the South China Sea, and the daily drumbeat of cyberattacks against US
companies, government organizations, and citizens remind us every day that
military dominance isnt what it used to be.
What does all this have to do with Apple? A lot. If the government compels
technology companies to weaken encryption in ways that make their products
and the Internet substantially less secure, US tech companies stand to lose.
How much, we dont yet know. But this much we do know: the more that US
tech companies lose, the more US economic clout declines. And the more US
economic clout declines, the weaker the United States is on the world stage.
American power matters. The global economic order, the spread of democratic values, the longest period of great-power peace in the modern eraall
of these things did not emerge by magic. They arose because the United
States had tremendous power and principle and exercised both.
FBI Director James Comey understandably wanted to do everything he
could to investigate the San Bernardino terrorist attack. Apple understandably wants to do all it can to protect the privacy of its customers and the
vibrancy of its business. Their disagreement continues to raise hard questions about how to strike the right balance between privacy and security.
But who will measure the security-security tradeoff? What are the potential marginal benefits of unlocking shooter Syed Rizwan Farooks iPhone
compared to the potential marginal losses of undermining confidence in
American products sold around the world? How do we reconcile short-term
and long-term national security interests? The ability to investigate specific
threats versus the ability to forestall future ones through the preservation
and exercise of national power?
Reprinted by permission of Lawfare, a project of the Harvard Law
School/Brookings Project on Law and Security. 2016 The Lawfare Institute. All rights reserved.

Available from the Hoover Institution Press is Eyes on


Spies: Congress and the United States Intelligence
Community, by Amy B. Zegart. To order, call (800) 8884741 or visit www.hooverpress.org.

108

H O O VER DI GEST Summer 201 6

I N T E LLI G E N C E

Beijing Borrows
Moscows
Playbook
China taps into the information age to learn
everything aboutand to controlits people.

By Mark Harrison

hina is investing heavily in its capacity to monitor and evaluate the attitudes and behavior of its population. In June 2014,
the State Council gave notice that China would begin work on a
social credit system. The government envisages that by 2020

every adult Chinese citizen will have a social credit rating.


In a market economy, a persons credit is based on the record of what he or
she earns, spends, borrows, and repays. You gain credit by demonstrating that
you can handle money within the law and by honoring your debts. In China,
social credit is partly financial, but its also cultural and political. Social credit
is gained not just by handling money honestly and non-corruptly, but also, on a
reasonable interpretation of the official language, by knowing the right people
and showing the right attitudes in your social and political behavior.
In other words, just as you can lose financial credit by breaking money
rules, you will lose social credit by knowing the wrong people and saying the
Mark Harrison is a research fellow at the Hoover Institution, a professor of economics at the University of Warwick, and an associate of Warwicks Centre for
Competitive Advantage in the Global Economy.
H O O V ER D IG E ST S u m m e r 2016 109

wrong things. And these things will interact, so that if you know the wrong
people or say the wrong things you will put at risk your ability to borrow and
to find responsible employment.
Whats it all about? Based on its official motivation, the program uses
encouragement to keep trust and constraints against breaking trust as incentive mechanisms, and its objective is raising the honest mentality and credit
levels of the entire society.
Thus, its explicit that social credit is an incentive mechanism aimed at
behavior change at the level of the population. Every single adult must
understand the norms that Chinas ruling Communist Party sets for personal
behavior in economic, cultural, and political life. Break those norms and you
lose trust. Lose trust, and there will be personal consequences. No one will
be beyond the system.
Communist regimes have always aimed to classify their subjects for political reliability, but classification was usually crude and error-prone. Stalins
usual suspects (described in my new Hoover Press book, One Day We Will
Live Without Fear) were anyone from a non-proletarian background, anyone
educated under the old regime, anyone of foreign origin or with experience of
life abroad, anyone with religious beliefs, and so forth.
In Maos China, people were classified into red and black. What the
Chinese authorities have in mind today is a classification that is more sophisticated in every way: multidimensional, continuously calibrated, and above
all comprehensive.
Its not hard to see the benefit for the party leadership. The party authorizes the norms that you should follow, but enforcing those norms throughout
society is an unremitting
slog. Through comprehensive social credit rating
Just as you can lose financial credit
of the population, based on
by breaking money rules, you will
big data, the rulers gain a
lose social credit in China by knowsystem that sets up clear
ing the wrong people and saying the
incentives for every single
wrong things.
citizen to conform in every
aspect of their lives. If you
have the wrong friends or youre indiscreet on social media, you lose the
promotion or you are denied the loan you hoped for. So most people will be
persuaded to conform.
Plus, the system will also identify the minority that isnt persuaded and so
resists the official incentives, and it marks them out as security risks.

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H O O VER DI GEST Summer 201 6

Recently my attention was grabbed by the technology website Ars Technica discussing Chinas investments in big-data collection such as CCTV:
The authorities are watching for deviations from the norm that
might indicate someone is involved in suspicious activity [my
emphasis].
I knew I had seen this somewhere before. So I looked for it, and heres what I
found:
Our communists should be concerned every day to study and
know more deeply processes that are essentially anomalous,
that is, incorrect, deviating from the general rule of processes and
phenomena, and in a timely way to obtain alerts leading to the
exposure of persons intending to carry out hostile actions that can
lead to serious consequences [my emphasis again].
This was nearly fifty years ago: on April 24, 1968, Lieutenant Colonel Matulionis, an officer of the Soviet Lithuania KGB, was speaking to a meeting
on counterintelligence priorities of the day. (The documentary record is
held on microfilm by the Hoover Institution Library and Archives, where I
consulted it.)
Communism in Europe and China had common roots. After that, they went
different ways. China today looks very different from the Soviet Union. But in
respect of what makes a security risk, Chinas secret policemen have retained
exactly the same idea as the Soviet KGB. An ordered society has normal processes. Good citizens follow those norms. When social norms are disrupted,
the result is anomalous, that is, incorrect.
Thats where the secret policeman steps in. What is anomalous is incorrect.
It arouses suspicion of a crime, and what is suspicious must be investigated
for evidence. Who is behind this, and is the hand of the enemy at work?
Special to the Hoover Digest. Adapted from Mark Harrisons blog
(https://blogs.warwick.ac.uk/markharrison).
New from the Hoover Institution Press is One Day We
Will Live Without Fear: Everyday Lives under the
Soviet Police State, by Mark Harrison. To order, call
(800) 888-4741 or visit www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 111

T H E MI DDL E E AST

Ghosts of the
Arab Spring
The world seems to have forgotten Arabs yearning
for freedom. Yet real stability can come about only
when this yearning is satisfied at last.

By Amr Hamzawy and Michael A. McFaul

ive years after the Arab Spring, democracy seems a distant


dream in the Middle East. Arab ruling elites, royal families, militaries, security services, and some businesspeople welcome this
outcome. Restoring stability, the argument goes, is more impor-

tant than democracy.


Many Western governments have embraced this logic as well. Threatened as a result of state failure and an accompanying terrorist upsurge,
US and European officials now argue that the most urgent need in the
Middle East is fighting the Islamic State and its affiliatesa fight that
requires collaboration with autocratic rulers. Strengthening Arab autocratsincluding, for some, even the mass murderer Bashar al-Assadis
an evil necessary to defeating the Islamic State in Syria, Iraq, and the rest
of the region.
Amr Hamzawy, a former member of the Egyptian parliament, is a visiting
scholar at the Center on Democracy, Development, and the Rule of Law at Stanford University. Michael A. McFaul is the Peter and Helen Bing Senior Fellow
at the Hoover Institution, a senior fellow at the Freeman Spogli Institute for International Studies at Stanford University, and a professor of political science at
Stanford. He recently served as US ambassador to Russia.
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H O O VER DI GEST Summer 201 6

This logic is flawed. A return to supporting Arab autocrats may produce


some short-term gains, but at the price of long-term disaster. Arab ruling
elites and their Western supporters must resist the false promise of autocratic stabilitynot in the name of lofty ideas about democracy but simply in
pursuit of stability. Incremental, political changes are the only way to prevent
violent, radical changes in the future.
Aside from Tunisia, the Arab Spring did not produce the kind of regimes
that we both hoped for in 2011. Lessons need to be learned, and mistakes
must be studied, but it is naive to argue for a return to practices that predate
2011. Which is the more fanciful prediction: that Middle East autocracies will
be stable and strong in twenty years or that these regimes will face new, bigger challenges in the coming two decades?
Egypt, the most populous Arab country, is celebrated as the place where
restoration of autocracy has been most successful. To re-establish the
culture of fear that was broken by Egyptian citizens in 2011, Egypts new
authoritarian regime has
enacted laws aimed at demonstrations and terrorism.
Arab ruling elites and their WestEgyptians are bombarded
ern supporters must resist the false
with messages about the
promise of autocratic stability.
need to prioritize stability
over human rights.
Egypts new autocracy, however, is not providing stability but sowing the
seeds of even greater insecurity. Since the coup that brought him to power,
President Abdel Fatah el-Sisi has prosecuted students, human rights activists, and members of the Muslim Brotherhood, and at times even resorted to
mass killing as a means to holding on to power. Egypts inhumane prisons are
full, a well-known recipe for radicalization. Indiscriminate killing in the Sinai
boosts Islamic State recruitment. Any regime that must rely on such methods is weak and unstable.
The regime also has failed to stabilize the economy. More than twentytwo million Egyptians live in poverty, the unemployment rate hovers
around 13 percent, and economic growth rates remain below 3 percent.
Protests are on the rise, especially among students, workers, and civil servants. Sisis repressive strategy for governing can work for a while, but not
for years or decades. The regime lacks the sources of legitimacy that have
sustained autocracies historically and in other parts of the world, such as
economic growth, a monarchy, or an ideology. Without reform, this system
will fail.

H O O V ER D IG E ST S u m m e r 2016 113

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H O O VER DI GEST Summer 201 6

The Egyptian regime and its external backers must pursue a new strategy
for generating regime legitimacy: power-sharing. Full-blown democracy is
not realistic right now. But political liberalizationopening up spaces for
safe participation in politicsshould be embraced.
First, the Egyptian regime should release its tens of thousands of political prisoners, some of whom have been jailed for the most trivial of offenses.
Second, it should revoke the repressive security laws it has passed since 2013
and establish a framework for transitional justice, including establishing a
truth-and-reconciliation
commission and reforming
Egypts inhumane prisons are full.
the security services. Third,
the regime should allow all
They are a well-trodden path to radiactors to enter the politicalization.
cal process, provided they
credibly commit to the rule of law and nonviolence and refrain from hate
speech. Fourth, at some point in the not-too-distant future, the regime must
hold parliamentary elections. Because of wide-scale vote-buying and low
voter turnout in 2015, the newly constituted House of Representatives has
little legitimacy. Only a new election can begin a slow, evolutionary process of
restoring parliamentary legitimacy, which would be a first, small step toward
checking presidential power.

[Taylor Jonesfor the Hoover Digest]

H O O V ER D IG E S T S u m m er 2016 115

Improbable? Maybe. But it is also the only plausible strategy for regime
survival. For regime supporters, these incremental steps toward political
liberalization would offer reduced societal tensions, enhanced governmental
legitimacy, and greater likelihood of long-term stability. For regime opponents, power-sharing with the government is the only way they can stop
human rights violations, participate in politics again, and gradually push for
longer-term goals regarding the rotation of power, rule of law, and democratizing civilian-military relations.
The alternativedoing nothingguarantees more violence, greater radicalization, and, eventually, the breakdown of the state. Small positive changes
now can avoid big negative changes later in this most important country in
the Arab world.
Reprinted by permission of the Washington Post. 2015 Washington Post
Co. All rights reserved.

Available from the Hoover Institution Press is


Reflections on the Revolution in Egypt, by Samuel
Tadros. To order, call (800) 888-4741 or visit www.
hooverpress.org.

116

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T H E M I DDLE E AST

The Saudis Feel


Cornered
Riyadh is at the center of a coming regional storm.

By Charles Hill

erhaps no grand strategic moment has been caught by the camera in such an unposed yet meaningful way. There on the heavy
cruiser USS Quincy at anchor in Egypts Great Bitter Lake in
February 1945, is President Roosevelt, fresh from Yalta and on

his way back across the Atlantic, having tea with King Ibn Saud AbdulAziz of Saudi Arabia. An American orderly squats before His Highness to
ask how he likes his tea. The kings expression warms the scene: a friendly,
beneficent monarch. FDR asks about Saudi support for Jewish immigration
to Palestine. Then, strategically, out of this moment came a quiet agreement that the United States would train and assist Saudi forces, amounting
to guaranteed security for the kingdom and requiring an American presence in Saudi Arabias predominantly Shia Eastern Province. In return the
Saudis would guarantee a secure and steady supply of oil for the United
States. Thus emerged Americas unique standing in the region: trusted
working relationships on the highest security level with both Arabs and
Israelis. So mutually advantageous was this arrangement that it would
survive the 1967 and 1973 Arab-Israeli wars and the Saudi oil embargo on
countries backing Israel.

Charles Hill is a research fellow at the Hoover Institution and co-chairman of


Hoovers Herbert and Jane Dwight Working Group on Islamism and the International Order.
H O O V ER D IG E ST S u m m e r 2016 117

Nineteen seventy-nine brought two remarkable events. The Great Mosque


in Mecca was seized by an apocalyptic band whose version of the faith
claimed to be even more purely Muslim than the Saudis puritanical Wahhabism that won control of Islams two holy mosques of Mecca and Medina
in the early nineteenth century. For the first time, Saudi pre-eminence was
challenged by a religious uprising from within the kingdom.
That same year brought Ayatollah Khomeinis overthrow of Americas
close ally the shah to establish the Islamic Republic of Iran. By storming the
US embassy to take American diplomats hostage, the new regime announced
its rejection of the international systems basic principle of diplomatic immunity. And by declaring that the ayatollahs new Shia theology aimed to unite
all MuslimsSunni and Shiathe new regime challenged Saudi Arabias
religious paramountcy over the faith.
The new Iran quickly established itself as both inside the established
international system as a recognized state with all the privileges and immunities of a sovereign power and at the same time an enemy of that system
through terrorism, subversion, and a secret program to acquire nuclear
weapons. Playing on both sides of the line would serve Iran well from 1979
onward.
The rise of revolutionary Iran compelled Saudi Arabia to lean ever
more heavily on the United States. The Saudis also would emulate Iran in
playing both sides of the line. On the one hand the kingdom would conduct itself as a good citizen of the state system while on the other hand
it would subsidize Wahhabi mosques and schools throughout the Muslim
world and beyond. All knowledge not based on the Quran or the practices
of the prophets time was anathema; the concept of the state itself was
unacceptable.
Here was a theological confrontation. Ayatollah Khomeini had revised
Shiism so that the highest clerics, formerly quietist, would now become the
ultimate governing authorities; it was neo-Shia. Saudi
On a regional map, Riyadh begins to
Arabia would turn back to
its founding Wahhabi strucresemble a bulls-eye.
tures; it was retro-Sunni.
Following the 1979 shocks, Iran conducted a disruptive, revolutionary
statecraft. Saudi Arabia portrayed itself as a status-quo power except for its
far-reaching Wahhabist proselytizing. The rivalry turned deadly in 1996 when
Khobar Towers, a US Air Force residence building in the Saudi Eastern
Province, was bombed by a branch of the Iranian-backed Shia Hezbollah

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H O O VER DI GEST Summer 201 6

militia, killing nineteen Americans and wounding some five hundred others.
This was an attack on Saudi rule carried out in the one province of the kingdom that was Shia rather than Sunni in population.
Over the next twenty years, and rapidly in the past few years, Saudi Arabia
has realized that it is becoming geostrategically encircled. Across the northern tier of the region Iran
now holds sway over a Shia
arc of influence that runs
The recent civil wars are consolifrom Iran through Shiadating themselves into one big war
governed Iraq and Tehrans
between Shia Iran and Sunni Saudi
satellite Syria, into HezbolArabia, with nuclear weapons castlah-controlled Lebanon to
ing an enlarging shadow.
the Mediterranean. Russias
intervention in Syria has
prevented the linchpin of this arc of powerthe Assad regimefrom collapsing. As seen from Riyadh, Iran also is driving a northeast-to-southwest
line of Shia influence from the Persian Gulfs Shia-majority Bahrain to Saudi
Arabias Eastern Province and then by sea to Yemens Iran-backed Houthi
forces. On a map of the region, Riyadh begins to resemble a bulls-eye.
This perception contributed to the Saudi decision to execute the Eastern
Province cleric Nimr al-Nimr and forty-seven others at the beginning of this
year, the largest mass execution since after the 1979 seizure of the Grand
Mosque. Under Saudi Arabias new King Salman, and propelled by his son
Mohammad bin Salman as defense minister, the Saudis are signaling that
their long partnership with the United States has changed dramatically:
arms sales, yes, but in policy and strategic matters, Riyadh no longer has
confidence in Washington. By its commitment to a nuclear deal with Iran,
the United States is holding itself hostage, reluctant to disturb Tehran in any
way for fear the deal will be lost. To the Saudis, Americas non-response to
Irans high-handedness in the region seems incomprehensible.
Thus Saudi Arabia under the Salmans can no longer be expected to
define itself as a status-quo power. We may expect the Saudis to further
emulate what they see as aggressive Iranian dynamism in the region. If
Iran is going to be a nuclear weaponswielding power, so also will be Saudi
Arabia. If Iran is to consolidate a Shia sphere of influence crisscrossing the Middle East, so the Saudis will activate to a greater extent their
networks of Wahhabi-indoctrinated Sunni populations in and beyond the
region. Saudi fighter-bombers now fly out of Turkish airfields. Recent
signs of radical Islamism in mildly Muslim Malaysia and Indonesia show

H O O V ER D IG E ST S u m m e r 2016 119

signs of Saudi-stimulated change. Saudi Arabias offer to send ground


troops northward to fight the Islamic State, under American auspices,
if not taken seriously by the United States, could lead to an informal
SaudiIslamic State marriage of convenience in a wider Sunni war against
Iranian Shia hegemony.
The United States finds itself in an unprecedented situation. Irans
strategyextend dominance over the region in
Americas non-response to Irans
the near term, go nuclear
high-handedness seems incomprelaterproceeds apace.
hensible to the Saudis.
The decades-long USSaudi partnership is in
shreds. Americas commitment to Israel remains, but the mood is sour
and unproductive. Russia and the United States get along well in keeping
each others fighter jets from colliding, but otherwise Russias extensive
military operations in Syria leave the United States looking hapless and
humiliated.
The United States is now back-footed wherever in the arena it may try to
play. The several layers of civil wars that have roiled the region for the past
ten to fifteen years are consolidating themselves into one big war between
Shia Iran and Sunni Saudi Arabia, with nuclear weapons casting an enlarging shadow across the area. The options for the next American administration are limited. Mediation between the two regional powers faces the barrier
of diminished American credibility and a record of hesitancy or retreat.
Going to one or the other side in this expanding crisis would insert the
United States in a religiously inflamed conflagration, something Washington
will do anything to avoid.
The Middle East upheaval will not be suppressed or solved by those in
the Middle East themselves. The only workable option for the United States
under these conditions is to undertake a significant diplomatic effort that
does the following:
Convince the major outside powers that the collapse of the international
state system in the Middle East would not be confined to that region alone.
World order itself is at stake.
Gain informal agreement among the outside powers not to intervene on
behalf of one side or the other, but to consult and cooperate on a strategy to
shore up the international system throughout the region.
Take particular care not to fuel a regional arms race, recognizing that all
the regional parties will have legitimate reasons for arms transfers.

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H O O VER DI GEST Summer 201 6

Above all must come a recognition that the current situation resembles
one of those few times in modern history when signs of a general conflict are
appearing on the horizon and cooperative efforts must urgently be made to
fend off the coming of another world war.
Subscribe to The Caravan, the online Hoover Institution journal that
explores the contemporary dilemmas of the greater Middle East (www.
hoover.org/publications/caravan). 2016 by the Board of Trustees of the
Leland Stanford Junior University. All rights reserved.

Available from the Hoover Institution Press is The


Weavers Lost Art, by Charles Hill. To order, call (800)
888-4741 or visit www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 121

T H E MI DDL E E AST

Riyadhs Double
Bind
Saudi Arabia both nurtures Wahhabi activism and
struggles to tame it.

By Abbas Milani

perfect storm is brewing for Saudi Arabia. Ominous clouds


are gathering on the countrys domestic, regional, and global
horizons. Virtually every once-reliable pillar of the kingdoms
stability is facing daunting challenges.

Saudi Arabias stability, indeed survival, has been based on two virtual

bonds. The first, some two hundred years ago, forged an alliance between the
Saud family and the founder, and later the followers, of the Wahhabi version
of Sunni Islama puritan reinterpretation of Islam based on the notion that
only the ways and words of the Prophet Muhammad exemplified pure Islam,
and Muslims salvation depended on going back to the literal words of the
Quran and of the prophetas understood, approved, and articulated by Abd
al-Wahhab (170391). So long as this new iteration of Islam remained only a
Saudi affair, it caught little attention.
With the rise of the kingdoms oil revenues, however, the kingdom, under
pressure from its domestic religious allies, substantially increased funds for
Abbas Milani is co-director of the Hoover Institutions Iran Democracy Project,
a member of Hoovers Herbert and Jane Dwight Working Group on Islamism and
the International Order, and a Hoover research fellow. He is also the Hamid and
Christina Moghadam Director of Iranian Studies at Stanford University, where he
is a visiting professor of political science.
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H O O VER DI GEST Summer 201 6

new mosques and madrassas (Islamic religious schools) all over the world,
in order to spread the Wahhabi version of Islam. Some scholars now refer
to the Wahhabization of Sunni Islam. Because some Islamists from the
ranks of Al-Qaeda and ISIS had drawn their inspiration from Wahhabi ideas,
the once-overlooked role of Saudi Arabia in the rise of this new radicalism
became more controversial.
A spate of new warnings,
The kingdom, under pressure from
articles, and speeches in
Western capitals about the
its domestic religious allies, has
need for Saudi restraint in
substantially increased funds for
supporting radical Islamist
new mosques and madrassas all
interpretations is sure to
over the world.
strain one of the pillars of
Saudi security.
The Saudi authorities are in a double bind.
On the one hand, limiting their contributions to Wahhabi Islam will provoke the ire of the religious establishmentand today, more than ever, the
Saudi political order needs the legitimizing umbrella provided by the kingdoms religious leaders.
On the other hand, continued Wahhabi activism will not only increase
tensions with the West but could easily further fuel the fires of radicalism
across the Middle East as well as in Europes Muslim populationnow far
more numerous than ever in the thirteen-hundred-year history of Islams
encounter with the Judeo-Christian West. This religious problem is all the
more ominous because it is
taking place during one of
the most public and acriAmericas incremental rapprochemonious fights for succesment with Iran, coinciding with Irans
sionand for determining
new regional assertiveness, has
policyamong the memSaudi authorities feeling increasbers of the royal family. The
ingly restless.
relatively newly crowned
king is already ailing. The
jockeying for power and privilege has overflown the traditional banks of
Saudi discretion.
The second pillar of Saudi stability has been its accommodation with the
United States. In return for the Saudi governments role in maintaining
a stable supply and price of oil, the United States has offered the realm a
security umbrella. But with the United States becoming a major exporter of

H O O V ER D IG E ST S u m m e r 2016 123

PILLAR: A pilgrim prays at the Great Mosque of Mecca during the Hajj. Today,
more than ever, the Saudi political order needs the legitimizing umbrella provided by the kingdoms religious leaders. [Ali MansuriCreative Commons]

oil, Americas envisioned pivot to Asia, President Obamas obvious aversion


to entanglements in the Middle East, Russias new effort to Chechnyaize
Syria (i.e., turn the country into virtual rubble and have a puppet rule over
the ghost of the land), and finally with the United States and the West forced
to merely play the role of an anxious observer in that war-torn land, Saudi
Arabia is clearly having second thoughts about the strength of its alliance
with the United States.
Regionally the situation is no less fraught for Saudi Arabia. Its war in
Yemen is turning into a quagmire, while Egypt, whose survival in the past
two years has depended on massive Saudi aid, is engulfed in a war with radical Islamists (not just in the Sinai desert with an ISIS offshoot, but in cities
around the country with supporters of the Muslim Brotherhood). Finally,
if all of these threats were not sufficient, with Americas incremental rapprochement with IranSaudi Arabias main rival for regional hegemony and
for influence in the Muslim worldcoinciding with Irans new assertiveness

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H O O VER DI GEST Summer 201 6

in Syria, Iraq, Lebanon, and Yemen, Saudi authorities feel increasingly, but
understandably, restless.
So far their solution has involved doubling down on past policies: promoting Wahhabi Islam, while also entering into the fight against ISIS, and
simultaneously forging an increasingly open and assertive anti-Iran and
anti-Shia coalition. The odds of their success, given plunging oil prices and
their historic reliance on their deep pockets to maintain stability at home
and promote their policies regionally, are not great. When wise and prudent
leadership is most needed in Washington and Riyadh, it is most wanting.
Subscribe to The Caravan, the online Hoover Institution journal that
explores the contemporary dilemmas of the greater Middle East (www.
hoover.org/publications/caravan). 2016 by the Board of Trustees of the
Leland Stanford Junior University. All rights reserved.

Available from the Hoover Institution Press is The Myth


of the Great Satan: A New Look at Americas Relations
with Iran, by Abbas Milani. To order, call (800) 8884741 or visit www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 125

S C I ENCE AND ME D ICIN E

Hope for Stolen


Lives
For families struggling with rare diseases,
bureaucracy is in some ways a tougher enemy
than the diseases themselves. How to change that.

By Henry I. Miller

ecently I participated in a Rare Disease Day program at the Sanford Burnham Prebys Medical Discovery Institute in La Jolla,
California. It was quite memorable.
In the United States, a rare disease is defined as one that

affects fewer than 200,000 patients. Their aggregate toll is huge: there are
more than 6,800 of these conditions known, affecting more than twentyfive million Americans. The small numbers of patients can make gathering
information and designing drug studies difficult, and there are treatments
available for only a couple hundred of these diseases.
The specific topic of the La Jolla conference was an obscure but large
collection (about seventy and counting) of diseases caused by genetic errors
in the essential machinery of cells that chemically attaches various kinds of
sugars to proteins and lipids. (About half of the proteins synthesized within
cells have sugars attached.) These defects can lead to a wide spectrum
of problems because accurate glycosylation, as these modifications are
called, is essential for the functioning of many signaling molecules such as
Henry I. Miller, MD, is the Robert Wesson Fellow in Scientific Philosophy and
Public Policy at the Hoover Institution.
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H O O VER DI GEST Summer 201 6

hormones and neurotransmitters, as well as the receptors to which these


molecules bind.
Little is known about what causes the mutations that give rise to these
congenital disorders of glycosylation, or CDGs, and there are treatments
for only a few. Some of the mutations are considered extremely rare, found in
only dozens or hundreds of patients worldwide. I suspect that many physicians have never heard of even the category of CDGs, let alone the dozens of
manifestations.
In addition to the scientific attendees and meI was there to discuss the
intersection of science, medicine, and public policya couple dozen kids
affected by CDGs and their families were in the audience. They made a profound and indelible impact on me.
For an entire afternoon, the health professionals met in small groups with
the families and kids. At one point I was sitting about a foot from a beautiful
little girlabout two years old, Id guessand every couple of minutes shed
have a seizure, marked by her eyes rolling back and her head drooping onto
her chest. (Her medications are apparently able to
The government could redirect
prevent only more violent,
generalized seizures.) Then
funding from less-critical problems
she would recover and
and streamline the way clinical triresume pressing the screen
als are done.
of her small tablet. The girls
anguished father was stroking her arm throughout. I wanted to tell him how
adorable she was, but every time I was about to say something, I choked up.
Throughout the session, I had that experience again and again.
During the question-and-answer session, one child would occasionally
let out a blood-curdling scream, another would periodically make quacking
noises, while others sat there in various stages of deterioration.
Watching the parents was difficult, too. Some were hyperalert, asking lots
of questions stimulated by having devoured every scientific paper and blog
and Google article in existence; others just seemed confused; but the worst
were the ones with the thousand-yard stare who looked beaten, as though
they might go home, drive into the garage, open the car windows, and leave
the engine running.
For most of the parents, the random bad luck of their childs genetic defect
has stolen their lives, which have become a series of endless visits to occupational therapy, physical therapy, speech therapy, pediatricians, geneticists,
neurologists, neuropsychologists, endocrinologists, and ophthalmologists. In

H O O V ER D IG E ST S u m m e r 2016 127

addition, most of the kids get large numbers of medicines, and many need to
be fed via a gastric feeding tube inserted surgically through an incision in the
abdomen. One woman was there with her thirty-two-year-old son.
One of the researcher/clinicians, who is also an avid advocate for more
government-funded research on rare diseases, urged attendees to visit
their Congress members and senators to lobby for more attention to CDGs
in particular and rare diseases in general. He related that when he tried to
see elected officials in Washington, he couldnt get the time of dayunless
he was accompanied by
affected kids and families.
Drug companies would respond to
On those occasions, he said,
incentives to develop treatments for
We provide the opportunity
for a good photo-op. (Parthese small groups of patients.
don the cynicism.)
There is much that government can do. First, redirect funding from
less-critical problemsthe National Institutes of Health is still supporting
research on projects like cranberry juice to treat urinary tract infectionsto
projects in molecular genetics that can offer insights into the disorders of
metabolism in rare diseases.
Second, transfer primary regulatory authority over early clinical trials for
rare diseases from the FDA to the institutional review boards of research
institutions (which must weigh in anyway), so that small-scale trialswhich
are often conducted on only a handful of patientsface less red tape.
Third, create incentives to get drug companies to develop therapies
for what otherwise would not provide a good return on investment. One
mechanism already in place is the availability of priority review vouchers
to companies that develop drugs to treat life-threatening rare diseases for
which there are no therapies. The voucher, issued by the FDA, can be used by
the companyor sold to another companyto move a future application for
marketing approval of any drug to the front of the FDAs queue for review.
The lure of such vouchers is a potent incentive. Last August, one of them
was sold for $350 million. However, that program will expire October 1
unless Congress extends it. FDA officials are on record as opposing the
extension, because while they strongly support the goal of incentivizing
drug development for rare pediatric diseases, they have seen no evidence
that the program is effective, according to the FDAs response to the Government Accountability Office. FDA officials also expressed concern that
the program adversely affects the agencys ability to set its public health
priorities.

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H O O VER DI GEST Summer 201 6

My heart bleeds for the poor, beleaguered regulators: during the past
seven years, they have had to issue exactly six vouchers for rare pediatric
indications. Moreover, when a company wishes to use its voucher, it must pay
the FDA a special $2.7 million user fee. Really, without strong incentives,
why would a drug company expend huge resources to develop a drug for a
couple hundred patients?
Fourth, CDGs should be classified by government assistance programs in
a way that makes the patients and their families eligible for comprehensive
health care benefits, as are certain similar ailments such as cerebral palsy.
In the world of medicine, practitioners in a few especially difficult and personally demanding specialties are, in my canon, on the path to sainthood. I
would include among them pediatric oncologists, the staff of burn units, and
those who diagnose and treat debilitating genetic diseases and work with the
kids families. They are true heroes.
Special to the Hoover Digest.

Available from the Hoover Institution Press is In


Excellent Health: Setting the Record Straight on
Americas Health Care, by Scott W. Atlas. To order, call
(800) 888-4741 or visit www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 129

ED U CATI ON

From Working
Class to Middle
Class
In enabling the children of the poor to escape lowskill, low-wage work, schools really matter.

By Michael J. Petrilli

obody knows how this years wild presidential campaign is


going to end. But one things for sure: it has exposed some
fundamental rifts in American society that wont easily be
resolved.

Donald Trumps and Bernie Sanderss populist messages have struck a

chord, particularly with working-class voters. That doesnt surprise scholars


and intellectuals on the right and left, who have studied these issues for years
and sounded the alarm about rising inequality in wages and lifestyle.
As Charles Murray put it in the Wall Street Journal, During the past halfcentury of economic growth, virtually none of the benefits have gone to the
working class. Furthermore, for someone living in a town where the big
company has shut the factory and moved the jobs to China, or for a roofer
who has watched a contractor hire illegal immigrants because they are
cheaper, anger and frustration are rational.
Michael J. Petrilli is a research fellow at the Hoover Institution, executive editor
of Education Next, and president of the Thomas B. Fordham Institute.
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H O O VER DI GEST Summer 201 6

State and national leaders have warned since at least the 1980s against
leaving people behind. Southern governors particularlythink Bill Clinton
and Lamar Alexander, Dick Riley and George W. Bushunderstood what
globalization and the changing economy meant for their citizens, and they
grasped the imperative of getting many more of their workers ready for highskill jobs. Then-governor Alexander said in 1986, What has suddenly riveted
everyones attention on our education system is that our standard of living
is threatened. . . . Were not going to have the jobs and the good incomes in
America if we dont have the good skills. That was thirty years ago.
And to be sure, there have been lots of school reform efforts over the
yearsmost well-meaning, and some even effective, like raising standards,
publishing test results, creating charter schools, and offering vouchers for
poor kids to attend private schools. But it hasnt been nearly enough. While
NAEP scores have risen at the fourth- and eighth-grade levels, they remain
stubbornly flat at the end of high school. Fewer than 40 percent of our graduates leave school ready for collegenot just four-year universities, but community colleges too. The numbers are much, much worse for kids growing up
poor and working-class. We saw the need to equip a vastly larger number of
people with stronger skills, and we didnt get the job done.
So here we are, with low-income and working-class voters getting hammered and falling further behind their college-educated neighbors. Now
theyre letting their anger be heard.
But theres a silver lining: the political system, regardless of its dysfunction, is
starting to respond. In part because of the Trump phenomenon, the challenges
faced by the working class have finally captured the attention of key thinkers
within the conservative coalition. Intellectuals such as David Frum and Reihan
Salam, and political leaders including House Speaker Paul Ryan, are calling for
specific policies to help working Americans. Reform conservatives, in particular, are showing an openness to new ideas such as an expanded earned-income
tax credit, child tax credits, and more comprehensive wage supports.
But is that all we can do? We should ease the burden of poorer Americans by
buttressing their incomes. But we must not accept that poor and working-class
children will also be confined to low-skill, low-wage work. That would be tantamount to giving up on the American Dream. Instead, we should do all we can
to make sure that the next generation develops the skills they need to compete
for the middle-class and high-wage jobs that our economy can still produce. Our
generation of reformers must succeed where the previous generation fell short.
Our schools cant do it all, or all by themselves, but theres still plenty of
low-hanging fruit that most schools have yet to plucktested strategies

H O O V ER D IG E ST S u m m e r 2016 131

that can help low-income and working-class kids and spur upward mobility
nationwide. Lets take a look at three of them.
TECHNICAL ED: A PATH TO THE MIDDLE CLASS
Theres a good reason why education reformers have become obsessed with
getting many more low-income students to and through four-year college
degrees: they are the closest things we have to a guarantee of propelling poor
kids into the middle class.
But as Andrew Kelly of the American Enterprise Institute has argued,
while a college degree has a big payoff, it also comes with a low probability.
Among children from the bottom third of the income distribution, Kelly
estimates, just 14 percent will complete four-year degrees. Even if we could
double that proportion, there would still be a large majority of poor and
working-class kids needing another path to the middle class.
Thankfully, there is such a route: high-quality career and technical education (CTE), culminating in industry-recognized postsecondary credentials.
But were going to need to rethink our approach to high school if we want
many more students to be able to take this promising path.
Right now, we mostly shuffle kids through so-called college preparation
courses. According to the most recent data, 81 percent of high school students are taking an academic route; only 19 percent are concentrating in
CTE (which means earning at least three credits in a single CTE program
area).
Its not working. About 20 percent of teenagers dont graduate from high
school at all, including 28 percent of economically disadvantaged students.
Of those who do graduate, about two-thirds matriculate to some form of
college, including about half of low-income students. But a majority of
students entering community collegesand 20 percent of those going into
four-year collegesland in remedial (development) education because
they are not academically prepared for college. Two-thirds of low-income
students at community colleges start in remedial classes that earn them no
degree credit.
Heres where things really fall apart: almost two-thirds of community
college students who start in remedial courses wont complete a credential
within six years; 40 percent dont ever get beyond the remedial stage. Its not
hard to understand why. Our K12 system, especially at the high school level,
is simply not getting most of these students ready for success.
All too often, then, the outcome of our current strategywhat you might
call bachelors degree or bustis that a young person drops out of college

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at age twenty with no postsecondary credential, no skills, and no work experience, but a fair amount of debt. Thats a terrible way to begin adult life, and
its even worse if the young adult aims to escape poverty.
A better approach for many young people would be to develop coherent
pathways, beginning in high school, into authentic technical education options
at the postsecondary level. Such efforts show great promise in better engaging students, helping them succeed academically, boosting their college-going
and college-completion rates, and brightening their career prospects. These
arrangements not only provide access to workplaces where students can
apply their skills, they also offer seamless transitions into postsecondary
education, apprenticeships, and employer-provided learning opportunities. By
age twenty, graduates of such programs have academic credentials, technical
credentials, and work experienceand, usually, well-paying jobs.
To make this option a reality, however, local communities and education
leaders will have to overcome the painful legacy of tracking. It simply doesnt
work to wait until kids are
eighteen for them to choose
an academic path that leads
A young person drops out with no
to a four-year college or a
credential, no skills, and no experitechnical path that leads
encebut plenty of debt.
to an associates degree,
certification, or license. Generic high school experiences are not preparing
low-income students to thrive in either academic or technical routes after
they receive their diplomas. The system shouldnt choose a students path
but there should be a choice.
REMEMBER THE STRIVERS
The past few years have brought long-overdue attention to the needs of highachieving, low-income students, as well as new initiatives to ensure that they
have opportunities to take rigorous coursework in high school and apply to
selective colleges upon graduation.
But as welcome and important as these are, they must be complemented
by efforts to help high-potential, low-income students much earlier in their
academic careers.
As Tom Loveless of the Brookings Institution argues, affluent high-achievers who come into school with so many advantages typically enjoy opportunities that prepare them well for college: gifted-and-talented programs,
accelerated courses, and classes with high-achieving peers. Low-income
high-achievers, on the other hand, are often denied these opportunities.

H O O V ER D IG E ST S u m m e r 2016 133

Their urban school systems dont offer (or greatly restrict) gifted-and-talented programs; they mandate heterogeneous groupings of students and tell
teachers to do their best meeting a panoply of diverse needs using differentiated instruction. Out of fealty to the principle of equity, they dont let
high-achievers move faster than their peers. This even though an advanced
academic track would help to reduce inequalities in opportunity between rich
and poor (and suburban and urban) students with great academic promise.
Partly as a result of federal pressure, many large urban districts have also
embraced the idea that they should slash student suspensions and expulsions, on the grounds that doing so will interrupt the school-to-prison
pipeline. The impulse is understandable, but if it results in more disruption
in urban schools (an all-too-likely consequence), well-behaved and academically striving low-income students will lose out yet again. Who is looking out
for their interests?
As Loveless argues, these issues tend to come to a head in middle school.
If traditional public schools refuse to provide a safe, orderly, academically
enriching environment for young adolescents to prepare for college-preparatory high schools or high-quality career and technical options, then we
should encourage the development of charter schools, magnet schools, and
other choice strategies that do. By focusing all of our energy on the toughest
casesthe very poorest kids, in the most difficult circumstanceswe risk
overlooking the needs of their low-income peers with the best shot at making
it. That needs to change.
TEACH THE SUCCESS SEQUENCE
Several years ago, Isabel Sawhill and Ron Haskins of the Brookings Institution made a startling discovery: even young people with just a high school
diploma can make it into the middle class if they work full time and delay
parenthood until they are at least twenty-one and married. Ninety-eight percent of the people who followed those norms arent poor; the vast majority
are in the middle class. They termed these three stepsgraduate from high
school, work full time, and delay parenthood until marriagethe success
sequence.
It raises the question: is there anything schools could do to promote the
success sequence, and especially the last componentdelaying parenting
until marriage, or at least until young people are ready for the challenges of
starting a family?
Its not hard to understand why this is such a critical issue. Its tough
enough to gain the academic and related skills to be ready for a four-year

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H O O VER DI GEST Summer 201 6

college or high-quality technical training. Add a baby and the odds can
become insurmountable. You try finishing school, working a low-wage job,
and caring for an infant or a toddler all by yourself. Its no surprise, then, that
only 40 percent of teen mothers finish high school, and fewer than 2 percent
finish college by age thirty.
But as the working class has gotten beaten up economically, its families
have fallen apart too. Single-parent families went from just under 20 percent
of the working class in the 1950s to over 60 percent by the 2010s.
So what can schools do? Beyond making sure that their charges receive
effective instruction about birth control, they can help teenagers develop
strong prospects for interesting, decently paid careers (a good motivation for
delaying parenthood). Weve already discussed the role that well-designed
technical education programs can play in getting young people ready for
postsecondary education and work. Such education also appears to have a
positive impact on the success sequence itself. A sophisticated evaluation
by MDRC found that
young men who had
graduated from a
Poor schools often dont let highcareer academy were
achievers move faster than their peers.
33 percent more likely
to be married and living with their spouses than selected peers in a control
group. They were also significantly likelier to have custody of their children.
Schools can also help their students develop the character skills needed
to think long term and stay out of trouble. The time-honored way to do this
is with religion. A 2012 study by David Figlio and Jens Ludwig found that
Catholic high school students were less likely to participate in risky behaviors, including teen sexual activity. They speculated that Catholic schools
put the fear of God into their students. Religious instruction, they reported,
could affect students tastes for misbehavior, or increase the perceived
costs of misbehavior by defining a number of activities as sins that have eternal consequences. And there was also the role of positive peer pressureby
exposing them to more pro-social peer groups, particularly by selecting out
or expelling students more likely to engage in risky behaviors.
A newer and explicitly secular approach to teaching character is best illustrated by KIPP, which has placed character education at the heart of its no
excuses ethos. As made famous by Paul Toughs best-selling book How Children Succeed, many KIPP schools now use a character growth card to help
teachers, students, and parents work together to develop specific character
traits like optimism and curiosity. Some KIPP schools are incorporating

H O O V ER D IG E ST S u m m e r 2016 135

mindfulness training and even yoga to help their students build the selfcontrol to make better choices and build their long-term success.
Theres another way that schools can help students develop important
character strengths and avoid pregnancy: provide an excellent suite of
extracurricular offerings. This might be one secret to Catholic schools success; in their 2012 paper, Figlio and Ludwig report that students in Catholic
schools spend more time on homework and extracurricular activities than
those in public schools. . . . Private schools may thus reduce delinquency if
only because of an incapacitation effectteens who are doing homework or
running track are not out looking for trouble.
Extracurricular activities, including athletics, appear to be important for
public school students too. As June Kronholz reported in Education Next,
studies have long found that disadvantaged students who participate in such
activities are less likely to drop out, use tobacco or alcohol, or get pregnant;
they are also more likely to score well on tests, enroll in college, and complete
college.
While our education system alone cannot solve the stubborn, tragic problem of persistent poverty and the growing gaps between working-class and
college-educated Americans, theres much it can do for the children entrusted to it. But first we have to change the way we think about the problem and
its possible solutions.
Poor and working-class voters are right to be angry. Our leaders saw
globalization coming and understood that it would upend our economy. But
we failed to provide opportunities for all Americans to build their skills and
compete for well-paying jobs. Lets not do the same to their children.
Excerpted from Education for Upward Mobility, edited by Michael J.
Petrilli (Rowman & Littlefield Publishers, 2016). 2016 by Michael J.
Petrilli. All rights reserved.

Available from the Hoover Institution Press is What


Lies Ahead for Americas Children and Their Schools,
edited by Chester E. Finn Jr. and Richard Sousa. To
order, call (800) 888-4741 or visit www.hooverpress.
org.

136

H O O VER DI GEST Summer 201 6

D E MO CRACY A N D F R E E DOM

Totalitarian Spin
Social media and the Internet were supposed to
enable democracy to triumph around the world,
but now despots are using tech as an instrument
of oppression.

By Christopher Walker, Marc F. Plattner, and Larry Diamond

new global competition in soft power is under way between


democracy and autocracy, but only one side seems to be competing seriously. Many had assumed that the era of globalization would give democracies a huge advantage in this sphere.

The argument is that a more open global political economy and the relentless
flow of information across borders will boost open societies over repressive ones. But it is the undemocratic states that have been the nimblest at
enhancing their influence.
The leading authoritarian regimes have invested heavily in building vast,
sophisticated soft-power arsenals that operate in every corner of the world.
This has occurred in the context of a decade-long global democratic decline,
according to Freedom House, during which already-authoritarian regimes
Christopher Walker is vice president for studies and analysis at the National
Endowment for Democracy. Larry Diamond is a senior fellow at the Hoover
Institution and a coordinator of Hoovers Project on Democracy in Iran. He also
is a senior fellow at the Freeman Spogli Institute for International Studies and
is the Peter E. Haas Faculty Co-Director of the Haas Center for Public Service at
Stanford University. Diamond and Marc F. Plattner are founding co-editors of
the Journal of Democracy and co-chairs of the Research Council of the International Forum for Democratic Studies. Diamond, Plattner, and Walker are the
co-editors of Authoritarianism Goes Global: The Challenge to Democracy
(Johns Hopkins University Press, 2016).
H O O V ER D IG E ST S u m m e r 2016 137

have become even more repressive. At the same time, the most influential
authoritariansChina, Russia, and Iranhave become more internationalist. Authoritarianism has gone global.
Today dictators are cooperating with and learning from one another, sharing know-how and technology across borders. This is visible, for instance,
in the strategies that China and Russia have adopted to stifle independent
online voices. Within months of each other, the authorities in both countries
enacted similar regulations to target online users with significant followings, with the aim of silencing the most influential commentators on popular
social-media platforms.
The authoritarians not only repress reform-minded voices at home but
are seeking to reshape international values and norms in order to limit the
global ambit of democracy. A key feature of todays authoritarian surge is the
creation of lavishly funded international media enterprises. Chinas CCTV
and Russias RT are the television outlets with the highest profiles, but these
are only one part of a more extensive, multidimensional global effort to shape
the media environment.
The Washington headquarters of CCTV America employs some thirty
journalists producing Mandarin-language content and more than a hundred
producing English-language content. CCTV also has broadcasting facilities
in New York and Los Angeles. In November 2015, it came to light that China
Radio International (CRI), Beijings state-run radio network, operates as a
hidden hand behind a global
web of stations for which the
Today dictators learn from one
Chinese government conanother, sharing know-how and
trols much of the content.
According to a 2015 Reuters
technology across borders.
investigation, thirty-three
stations in fourteen countries primarily broadcast content created or supplied by CRI or by media companies it controls in the United States, Australia, and Europe. Like CCTV, Russias RT has built up its media infrastructure in the United States, with headquarters in Washington and broadcast
facilities in New York, Miami, and Los Angeles.
The state-run Islamic Republic of Iran Broadcasting (IRIB) has gone
global, too. IRIB runs a host of international networks that include HispanTV
in Spanish and Press TV in English. IRIBs Sahar network offers programming in English, French, Arabic, Urdu, Azeri, Kurdish, and Bosnian. IRIB
also manages a half dozen radio stations that broadcast programs in twentyfive languages.

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H O O VER DI GEST Summer 201 6

As part of this new global competition, the authoritarian trendsetters are


focused on regions and countries where democratic standards and values
are being actively contested. Russia is rapidly scaling up its influence in the
new EU member states of Central Europe as well as in the Balkans, both
regions where the future of democracy is in question. In 2015, for example,
the Russian state-backed news portal Sputnik opened a Serbian-language
service at a time when independent news sources in Serbia have been rapidly
shrinking.
China, meanwhile, has been building up its influence in Latin America and
Africa, coordinating its large economic investments there with wide-ranging
initiatives in media, culture,
and education. In a growing
The authoritarian trendsetters focus
number of African countries, popular English-lanon regions and countries where
guage newspapers draw on
democratic standards and values are
content offered for free or at actively contested.
bargain rates from Xinhua,
the Chinese state news agency. Television viewers can get their international
news from either CCTV or China Radio International. These outlets systematically disseminate Chinese narratives throughout the region at a time
when Western international news outlets have dramatically scaled back their
presence in Africa. As of 2013, Xinhua had eighteen offices in Latin America
and CCTV had five. Chinas activity in the spheres of culture and academia
is likewise growing in Latin America, where there are forty-two Confucius
Institutes or Classrooms.
The new authoritarian challenge to democracy is not limited to the
manipulation of the information environment; it is also apparent in efforts
to weaken the democracy and human rights mechanisms of key rules-based
institutions, including the Organization of American States, the Council
of Europe, and the Organization for Security and Cooperation in Europe.
And they have in their sights the bodies concerned with governance of the
Internet.
Autocrats are also creating new international institutions that seek to
propel authoritarian norms beyond their borders. They use their own
clubs, such as the Shanghai Cooperation Organization, the Gulf Cooperation Council, and the Eurasian Economic Union, to institutionalize norms of
unbridled sovereignty and noninterference beyond the generally accepted
limits of these concepts. These bodies reinforce domestic repression by helping autocrats share techniques of political control, exchange watch lists of

H O O V ER D IG E ST S u m m e r 2016 139

[Taylor Jonesfor the Hoover Digest]

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H O O V ER DI GEST Summer 201 6

dissidents, and promote agreements


for the forcible expulsion or return of
exiles and refugees who are branded
as terrorists. The apparent crossborder abductions by the Chinese
authorities of Chinese dissidents
in Thailand and of several Hong
Kong booksellers are striking
examples of the internationalization of Chinas repression.
Now that authoritarianism
has gone global, we must confront the disconcerting prospect
that the most influential antidemocratic regimes are no longer content
simply to contain democracy. Instead,
they want to roll it back by reversing the
advances dating from the democratic surge
of the late twentieth century. The challenge

H O O V ER D IG E ST S u m m e r 2016 141

presented by regimes in Moscow, Beijing, and Tehran is being taken to an


entirely new level by virtue of their projection of illiberal values and standards beyond their own national borders.
Just a decade ago, few political observers could even have imagined such
a development. This growth in authoritarian influence comes at a time
when the United States and the European Union have scaled back their
own ambitions with regard to supporting democracy abroad and the values
underlying it.
Perhaps it should come as no surprise that an authoritarian surge is taking
place at a time when malaise seems to grip the worlds leading democracies.
Some of this malaise no doubt stems from massive global economic disruption that few Western political elites seem to firmly understand and the fact
that inherited state institutions seem unable to manage the crisis well. This
has led by now to a protracted loss of confidence in the West. Destabilized
and pessimistic nations tend to lose confidence in the virtues of their own
political orders. That loss of confidence, in turn, undermines the energy
needed to defend and propagate those virtues.
The worlds most powerful authoritarian regimes are thus operating today
in an unusually permissive environment. Therefore, while it is true that the
autocrats themselves possess inherent political and economic weaknesses,
including massive unchecked corruption, it would be folly to underestimate
the threat that they pose. If the democratic progress of recent decades is
to be preserved, the worlds democracies must respond to the challenge of
resurgent authoritarianism.
To begin with, the democracies must mount a far more determined effort
to compete in the realm of ideas. Resurgent autocrats take seriously the
shaping of public opinion
and beliefs in other counThe most influential antidemocratic
tries; so must democrats.
regimes are no longer content simply This requires new and
invigorated efforts at interto contain democracy. They want to
national
broadcasting and
roll it back.
public diplomacy, making
intensive and innovative use of social media. It should also entail greatly
enlarged efforts to translate and distribute democratic knowledge and ideas
into other languages.
Second, the democracies must recover their self-confidence and improve
the functioning of their own deficient institutions. Democracy may be performing poorly at the moment, but this was also the case forty years ago,

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H O O VER DI GEST Summer 201 6

when the United States and Europe were wracked by economic stagnation
and political malaise. Democracies have shown a consistent capacity for
self-correction and renewal
in the wake of challenging
Autocrats take seriously the shapcircumstances, and they
can do so again. Pragmatic
ing of public opinion and beliefs. So
actors and thinkers from
must democrats.
across the political spectrum in the United States have been proposing a number of possible reforms
in institutional rules and procedures that could reduce gridlock and encourage compromise. These deserve a serious hearing.
Third, democrats need to take steps to prevent the authoritarians from
hollowing out the key regional and global rules-based organizations. In particular, democratic governments and civil society actors must band together
to block the dogged efforts of China, Russia, and their allies in key Internet
governance bodies to impose an online code of conduct that would set in
place an authoritarian norm directly at odds with Internet freedom.
Finally, the established democracies must demonstrate stronger solidarity with nascent democracies, such as those in Tunisia and Ukraine that are
seeking to consolidate representative institutions against great odds. Given
the authoritarians mounting ambitions, the stakes are far too high for the
democracies to sit this competition out.
Reprinted by permission of the American Interest. 2016 The American
Interest LLC. All rights reserved.

Available from the Hoover Institution Press is Nuclear


Security: The Problems and the Road Ahead, by
George P. Shultz, Sidney D. Drell, Henry A. Kissinger,
and Sam Nunn. To order, call (800) 888-4741 or visit
www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 143

CA LI FORNI A

Pity the Almond


Californias biggest crop has transformed
farming, marketing, water policies, and even labor
practices. That drives the left nuts.

By Victor Davis Hanson

hen the year began, there were more than a million acres in
California planted with almondsnow the largest crop in the
state. To get an idea of how much acreage that is, imagine
a single swath of orchard, running north to south from San

Francisco to San Jose, and east to west from Highway 101 to the Pacific Ocean.
Californians are witnessing the most radical shift in croplands in their
entire agricultural history, a change fraught with misunderstanding, controversy, and cultural and economic consequences.
What caused the rush to convert irrigated farmland to almond orchards?
Profit certainly explains much of the shift. The price per pound of almonds
paid to each farmer has soared, from about $1 a pound in 2000 to over $4 in
mid-2015 (it has since fallen in 2016).
Its not immediately obvious why the price should have increasedgiven
that year by year the supply of almonds has climbed to unprecedented levels.
In the early 1960s, there were only about one hundred thousand acres of
California almonds. By 2016, there was more than ten times that acreage.
Planting and growing almonds is also an expensive proposition in heavily
regulated California: it can cost well over $10,000 per acre over the three
years required to see young trees reach initial production.

Victor Davis Hanson is the Martin and Illie Anderson Senior Fellow at the
Hoover Institution and the chair of Hoovers Working Group on the Role of Military History in Contemporary Conflict.
144

H O O VER DI GEST Summer 201 6

The vast increase in almond acreage has been accompanied by a steady


increase in the production of nuts per acre, from around six hundred pounds
to seven hundred pounds in the 1960s to well over two thousand by 2015.
Some newer varieties and young orchards often produce three thousand
pounds per acre. Last year, some talented growers of mature, vigorous
orchards grossed somewhere between $8,000 and $12,000 per acre. California may produce 85 percent of the worlds supply of almonds this year.
How could such a huge increase in the supply of almondsCalifornia now
produces more than two billion pounds a yearresult in soaring commodity
prices? Lets look deeper.
GREEN ACRES
Ideal almond farmland is rare in the world. The tree requires a Mediterranean climate of brief, cold winters with enough chilling hours to ensure full
dormancy (three hundred to six hundred hours), and hot dry summers, as
well as access to irrigation. Most countries do not have either the climate, the
capital, the available acreage, or the water.
More important, in the past twenty years, the industry has rebranded
the almond as something far more than an edible nut like the pistachio or
pecan. Almonds are sold diced, whole, seasoned, raw, and roasted. Almond
milk, almond butter, and almond oil can be found on grocery shelves, and are
popular thanks to health food fads like paleo and gluten-free diets.
Almond consumption has increased tenfold since the 1960s and the almond
has overtaken the peanut as the most purchased nut in the country. The
domestic market now accounts for about one billion pounds per year, roughly
half the crop. US health studies regularly cite the nutritional benefits of
almond-rich diets and their potential role in protecting against heart disease,
Alzheimers, and cancer.
The other half of the crop goes overseas. The United States has become the
largest exporter of almonds in the world. As the range of processed almond
products multiplied, so did importers with enough foreign exchange to pay
for them. EuropeansGermans and Italians especiallyremain voracious
consumers of California almonds, but the greatest importer is now a newly
affluent China. There are also strong sales in India, Japan, and South Korea.
As almonds sales, prices, and acreage all grew, so did the individual
production per acre. Indeed, it tripled in a mere thirty years. How? Largely
through far more efficient drip irrigation, new disease- and insect-resistant
rootstocks, improved almond cultivars, increased bee pollination, and
advances in the use of fertilizers and herbicides. Unlike olives and pistachios,

H O O V ER D IG E ST S u m m e r 2016 145

ROOTS: A stereoscopic image taken by prolific photographer Carleton Watkins (1829-1916) shows an almond grove in Fair Oaks during the nineteenth
century. [New York Public Library]

almonds are not particularly alternate bearing (the tendency of a tree to


produce a greater-than-average crop one year, and a lower-than-average crop
the next year). And unlike grapes and soft fruit, they do not require heavy
doses of fungicides and pesticides. Nor is the crop immediately perishable.
Almond growers do not usually lose crops to a sudden rain or hailstorm, and
the ripening crop does not suddenly rot when harvesting is delayed.
There are other reasons that explain the boom. Almonds, unlike
plums, peaches, oranges, many grapes, and most other soft fruits such as

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H O O V ER DI GEST Summer 201 6

strawberries, require almost no manual labor. Unlike in most fruit orchards,


there is no annual pruning of mature treesand no thinning, little cultivation, and complete mechanized harvesting.
One or two operators can run various almond harvesters that shake,
sweep, and collect what once required the labor of hundredsand much
more thoroughly and at a fraction of the time and cost. With complex labor
regulations, steady increases in the minimum wage, and controversy over
illegal immigrant labor, many growers would have yanked their peach
orchards and raisin vineyards even without the hope of enormous profits,
just to escape the tentacles of California bureaucracies.

H O O V ER D IG E ST S u m m e r 2016 147

Almonds and mechanization have also helped redefine illegal immigration


as increasingly a nonfarm challenge. Agriculture now draws upon the labor
of about 20 percent of those in the state illegally.
The almond price would probably have to crash well below $2 a pound to
bust the almond boom. For now, almonds remain much cheaper an acre to
produce than the vast majority of California crops, perhaps costing as little
as $2,000 to $3,000 per acre per year, ensuring huge profits at $4 a pound
and a viable income at $2.
WHERE IS THE LOVE?
Should the great California almond boom be celebrated? Doesnt it represent the growing prosperity of California farmers and rural communities
after years of agricultural depression? Arent almonds a healthy and versatile food source that uniquely fit twenty-first-century tastes and diets?
Isnt the upsurge in production helping America win billions of dollars
from trade?
Not to the left. Almonds have become its new bte noire. The nut is blamed
for exacerbating the California drought, overtaxing honeybee colonies, starving salmon of river water, and price-gouging global consumers. Almonds
may be loved by consumers, but almond growers, it seems, are increasingly
despised in the media. In 2014, the Atlantic published a melodramatic essay,
The Dark Side of Almond Usewith the ominous subtitle, People are eating almonds in unprecedented amounts. Is that okay?
If no one much cared that California agriculture was in near-depression for
much of the latter twentieth centuryand that almonds were hardly worth
growing in the 1970speople now worry that someone is netting $5,000 to
$10,000 per acre on the nut.
To a social or environmental activist, it is almost too much to bear that
a corporate farm of five thousand acres could in theory clear $30 million a
yearwithout either exploiting poor workers or poisoning the environment,
but while providing cool people with a healthy, hip, natural product. The kind
of people who eat almond butter and drink almond milk, after all, are the
kind of people who tend to endorse liberal causes.
As for almonds worsening the drought: the truth is that the nut uses about
the same amount of water per acre as other irrigated California crops such
as pasture, alfalfa, tree fruit, pistachios, cotton, or rice. In fact, almonds
require a smaller percentage of yearly irrigation use than their percentage
of California farmland calls for. Nonetheless, the growth of almond farming
represents to many a greedy use of a scarce collective resource.

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Environmentalists claim to care about water scarcity, but they caused


the cancellation of the construction of key dams and canals of the California Water Project and Central Valley Project. They also cut off millions of
contracted acre-feet of irrigation water and diverted it during a drought for
largely failed efforts at fish restoration.
And yet they grew furious that almond growers kept planting almonds and
making money by drilling deeper wells and pumping the aquifer. Stopping
dams, restoring scenic rivers, and diverting water to the sea were supposed
to make Californians live within their means in a pristine nineteenth-century
paradiseoverseen by select green stewards. Almond growers got around
all thatand often got rich in the processin a manner that does not fit the
usual progressive narrative of human or natural exploitation. That apparently drives lots of people crazy.
The almond boom certainly hinges on building more dams and canals to sustain the aquifer. Electrical power usage for pumping finite and declining ground
water has soared, as gravity-fed surface water from the Sierra Nevada was
diverted to the sea. Farms are getting even larger and more consolidated, as
few family farmers can afford the steep costs to switch to almonds or the pricey
machinery their cultivation requires. Farm laborers have less work. A devastating bust may well follow from land speculation and wild investor schemes based
on specious ideas that almonds will continue to generate a profit of $4 a pound.
Mono-cropping historically creates greater crop vulnerabilities.
These are legitimate issues. But they are not what put the great California
almond boom in the news.
Reprinted from Defining Ideas (www.hoover.org/publications/definingideas), a Hoover Institution journal. 2016 by the Board of Trustees of
the Leland Stanford Junior University. All rights reserved.

Available from the Hoover Institution Press is NAFTA


at 20: The North American Free Trade Agreements
Achievements and Challenges, edited by Michael J.
Boskin. To order, call (800) 888-4741 or visit www.
hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 149

I N TERVI EW

Libertarian on
the Bench
Hoover fellow Clint Bolick, just appointed to the
supreme court of Arizona, describes his new
job: to give effect to every single word in the
constitution.

By Damon Root

lint Bolick has been at the forefront of libertarian and conservative public-interest litigation for nearly three decades. As a
co-founder and former director of strategic litigation for the
Institute for Justice, Bolick helped bring about landmark legal

victories on behalf of students, parents, property owners, and entrepreneurs.


In 2002 Bolicks litigation on behalf of school choice culminated in the US
Supreme Courts ruling in Zelman v. Simmons-Harris, in which Clevelands
pioneering school voucher program was upheld.
Three years later, Bolick argued and won before the US Supreme Court in
a case known as Granholm v. Heald, in which the court struck down protectionist state laws that banned the direct sale of wine to consumers from
out-of-state wineries.
In 2007 Bolick joined the Goldwater Institute in Phoenix, where he took up
the reins as vice president for litigation. In 2009 Legal Times named him one
Clint Bolick is a research fellow at the Hoover Institution and a contributor to
Hoovers Conte Initiative on Immigration Reform. Since January he has served as
a justice on the Arizona Supreme Court. Damon Root is a senior editor for Reason magazine.
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H O O VER DI GEST Summer 201 6

of the ninety greatest DC lawyers in the past thirty years. Bolick found the
time to write several influential books, including Davids Hammer: The Case
for an Activist Judiciary and Immigration Wars: Forging an American Solution,
which he co-wrote with Jeb Bush.
Now Bolick has begun a legal career on the other side of the bench. In
January, Arizona governor Doug Ducey announced Bolicks appointment to
the Arizona Supreme Court.
Clint is nationally renowned and respected as a constitutional law scholar
and as a champion of liberty, Ducey said. He brings extensive experience
and expertise, an unwavering regard for the rule of
If you want to be a revolutionary in
law and a firm commitment
to the state and citizens of
America, the best route to doing that
Arizona. Im confident Clint
is through constitutional law.
will serve impartially and
honorably in this important role. Bolick was Duceys first appointment to the
states highest court.
In a telephone interview with Reason senior editor Damon Root, Bolick
reflected on his new job, his legal philosophy, his judicial heroes, his pessimism about the future of immigration reform, and why he decided to get
visibly tattooed.
Damon Root, Reason: What first led you to pursue a career in the law?
Clint Bolick: I had planned to be a schoolteacher and to get involved in politics. Three things that happened late in college to change my direction were,
first of all, student teaching in an inner-city high school, where I discovered
just how horrible our public schools are for many of our students. It made
me realize that I could do more for education focused in a systemic direction
rather than just a few students at a time.
And I interned for Orrin Hatchwhich illustrates just how long Orrin
Hatch has been in the Senateand I really had the epiphany that politics
is all about shades of grey. Im much more of a black-and-white person. Id
rather lose with a chance of winning than be engaged in the art of compromise all the time.
And I took a course in constitutional law. I had not even thought about
being a lawyer before that. But cases like Brown v. Board of Education made
me realize that if you want to be a revolutionary in America, the best route
to doing that is through constitutional law. You can really achieve systemic
change and principled outcomes. So a career in constitutional lawof course

H O O V ER D IG E ST S u m m e r 2016 151

I had no idea how difficult it would be to have such a careerthat seemed


really to suit me.
Root: Youve written extensively over the years about the judiciary and about
the proper role of the courts in our system. Now that youre a justice yourself, how do you envision your job?
Bolick: Of course there are lots of aspects that are not terribly glamorous,
like supervising the state bar and administering the courts and all of that.
But with regard to the state constitution, the role of a justice is to give effect
to every single word in the constitution. And to do so in a manner that is as
true to the intent of the constitution as possible.
Root: We hear a lot about different legal philosophies these days. Originalism, living constitutionalism, etc. How would you describe your legal philosophy, or would you?
Bolick: I always hate to use a jargonistic term, but Im a textualist. I believe
that the written Constitution reflects the social contract that people have
made with each other and with their government. And just as with any contract, a judges role is to enforce that contract vigorously. And the best way of
doing that in an objective manner is to resort to the text, and to give meaning to the words as they were intended to mean. Obviously thats not always
possible, so occasionally a judge will have to resort to legislative intent and
things of that manner. But I think textualists are the most faithful to the
Constitution. When you stray from the text you are literally amending the
Constitution, which in my view leads to judicial lawlessness.
Root: Do you have any judicial role models or heroes?
Bolick: Emphatically yes. Certainly my contemporary role model is Clarence
Thomas. I dont always agree with Thomas, but Thomas is the one justice
who, when enforcing the Constitution, consistently begins with the text,
rather than with Supreme Court decisions that have interpreted that text
and often placed a gloss on it. I think that exercise is necessary whenever a
court is interpreting the Constitution.

IM A TEXTUALIST: Hoover fellow Clint Bolick says: I believe that the written Constitution reflects the social contract that people have made with each
other and with their government. And just as with any contract, a judges role
is to enforce that contract vigorously. [Allison ShelleyNewscom]

H O O V ER D IG E S T S u m m e r 2016 153

Root: Clarence Thomas played a role in your own career, correct?


Bolick: Yes, I worked at the EEOC [Equal Employment Opportunity Commission] when he was chairman and we became quite close. He is the godfather to the second of my three sons. I think that we share a common view of
how a judge should go about interpreting the Constitution, even if sometimes
our conclusions might differ.
Root: You wrote a book with Jeb Bush a few years ago titled Immigration
Wars, in which you made a case for immigration reform that you called
pro-immigration and also prorule of law. Are you optimistic about the
chances for immigration reform? Has the 2016 presidential race made you
less optimistic?
Bolick: It is not in my nature to be pessimistic, but it is impossible not to be
pessimistic about immigration reform. The current Republican campaign
has been a reflection of a very disturbing nativist trend. One of the things
that has especially disturbed me is, as we report in the bookwhich was
published only three years ago, so things have really moved in a bad direction
really quicklymainstream
Republican opinion at that
When you stray from the text you
time and consistently before
are literally amending the Constituthat time was pro-immigration, which in my view leads to judition. The typical Republican
strongly supported border
cial lawlessness.
security but also strongly
supported a path to citizenship for illegal immigrants and other, I would say,
mainstream or moderate reforms. For the first time in well over a decade,
polls this year show Republican sentiment growing far more nativist. It is
impossible to get systemic immigration reform without bipartisan consensus. And when you see someone like Paul Ryan really duck and cover on the
immigration issue, you know that the pendulum has swung in the wrong
direction.
Root: Youve been a practicing lawyer for three decades. Is there one case
youve been involved with that youre the most proud of?
Bolick: If I had to choose one that was my favorite it was a case that never
even ended up resulting in a legal decision. Back in the 1990s a number of
states were discriminating in adoption placements. There is a group called
the National Association of Black Social Workers that had adopted the

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mantra that adoption of black children by nonblack families was, to use their
term, cultural genocide. As a result, a number of states were making it very
difficult for black children to be adopted by nonblack families. This was horrible for black children because there was a surplus of black children looking
for adoptive families but a paucity of black families looking to adopt children.
So black children were in foster care for very lengthy periods of time.
I teamed up with an unlikely alliance of liberal law professors from Harvard Law SchoolLaurence Tribe, Randall Kennedy, and Elizabeth Bartholetand we filed a classaction lawsuit in Texas on
behalf of a Native American
Polls this year show Republican
mom and a white dad who
sentiment growing far more nativwanted to adopt two black
ist. It is impossible to get systemic
children who were their
immigration reform without bipartifoster children. The little
san consensus.
boy they had in their house
was brought in at birth and
he was addicted to crack cocaine and infected with syphilis and they nursed
him back to health. They fell in love with him and decided they wanted to
adopt him. At that point he was removed from their home because they were
not black. The little boy was named Matthew; his brother was Joseph. So we
filed this lawsuit and it got so much attention that Matthew and his brother
Joseph were reunited with the family and Texas changed its law to make it a
crime to discriminate in adoption placements. We called it the Send a Social
Worker to Jail Statute. Then Congress in turn passed legislation making it
illegal for public entities to discriminate in adoption placement.
The reason that case was perhaps my favorite is that it reunited a family.
Even with school choice, with the kids going to good schools and everything,
and the entrepreneurs that weve represented over the years, seeing the
family being brought back together in the face of this heinous abuse of their
rights by the state of Texas was just as gratifying as it gets.
Root: Whats the biggest change in the law youve seen during the course of
your career?
Bolick: This is the flip side of immigration because Ive really seen some
wonderful changes in the law. I think that the main evolution, and this
is attributable to organizations like the Federalist Society, the Institute
for Justice, and the Goldwater Institute, is a rebirth of appreciation for

H O O V ER D IG E ST S u m m e r 2016 155

examining the original intent of the Constitution. Thats been very, very
gratifying. Its really a sea change, when you look back only a few decades to
the Warren court and the notion that judges can make it up as they go along,
essentially.
The other revolution is more recent and Im proud to have had a part in
it. And that is a revival of and emphasis on federalism and a focus on state
constitutions. State constitutions often contain protections of individual
rights and limitations on
government power that
Most of the Constitutions framers
are not found in the United
States Constitution. Only
were what we would consider today
within the past decade have
to be libertarians.
conservative and libertarian
organizations been focusing increasingly on state constitutions. The results
so far have been very positive and there are now about a dozen state-based
organizations focusing on state constitutions from a market perspective,
starting with the Goldwater Institute, but theyre now all over the country
and growing in number and effect.
Root: In a famous 1905 dissent, Supreme Court Justice Oliver Wendell
Holmes wrote, The Constitution does not enact Mr. Herbert Spencers Social
Statics, meaning that the Constitution does not enshrine classical liberal or
libertarian principles. Was Holmes right about that?
Bolick: Technically Holmes was right that the Constitution did not enact
Mr. Herbert Spencers Social Statics. But the notion that the Constitution
does not reflect a very deep philosophy and set of principles is absurd.
Entire careers have been spent plumbing the depths of the philosophy of
our Constitutions framers. The Constitution does
Its really a sea change, when you
reflect a philosophy and
look back only a few decades to the
its not entirely a libertarian philosophy; but it is in
Warren court and the notion that
large measure a libertarian
judges can make it up as they go
philosophy because most of
along, essentially.
the Constitutions framers
were what we would consider today to be libertarians. And, significantly,
the framers of the Fourteenth Amendment, which plays such a large role in
constitutional jurisprudence, were certainly what we would consider to be
libertarians today. So it is largely though not entirely a libertarian document.

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H O O VER DI GEST Summer 201 6

Root: One last question. Do you mind telling me about your tattoo?
Bolick: Well, I have always gotten very personally committed to my cases
over the years. When I took on the cause of tattoo studios and their freespeech rights I vowed that if we won I would get inked. And we did win and,
much to my wifes chagrin, I got inked. The tattoo is a scorpion, which is on
my right index finger. That is my typing finger. Ive typed everything Ive ever
written with one finger. And I thought it would be appropriate now that Im
an official desert resident to have a desert creature on my typing finger. I am
not aware of any other state supreme court justices who are visibly tattooed,
but I hope to start a trend.
Reprinted by permission of Reason (www.reason.com). 2016 Reason
Magazine. All rights reserved.

Available from the Hoover Institution Press is Two-Fer:


Electing a President and a Supreme Court, by Clint
Bolick. To order, call (800) 888-4741 or visit www.
hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 157

I N TERVI EW

The McKinley
Pivot
His rival tried to drive Americans apartbut
William McKinley brought them together.
Seasoned campaigner Karl Rove sees echoes of
the 1896 faceoff in todays presidential contest.

By Peter Robinson

Peter Robinson, Uncommon Knowledge: As president of Karl Rove and


Company, todays guest directed the campaigns of some seventy-five Republican candidates for the House, for the Senate, and for a number of governorships. In 2000 he became the principal architect of the winning presidential
campaign of George W. Bush, and in 2004 the principal architect of George
W. Bushs re-election campaign. Mr. Rove also served in the Bush administration throughout nearly all eight years. Now a columnist for the Wall Street
Journal and a commentator for Fox News, Karl Rove is also an author. His
latest is The Triumph of William McKinley: Why the Election of 1896 Still Matters. Karl, welcome.
Karl Rove: Thanks for having me.
Robinson: Lets start with the candidate himself: William McKinley. Born in
1843, fought for the Union in the Civil War, became a leading lawyer in Canton, Ohio, represented Ohio for three terms in the House of Representatives.
Peter Robinson is the editor of the Hoover Digest, the host of Uncommon
Knowledge, and a research fellow at the Hoover Institution.

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Served from 1892 to 1896 as governor of Ohio, and then in 1896 is elected the
twenty-fifth president of the United States. He is assassinated at the age of
fifty-eight in 1901. Now, if most Americans share my education, youve got a
sense of the founders: Washington, Adams, Jefferson. The next peak is Lincoln, and then theres a big empty space until you get to Theodore Roosevelt
and Woodrow Wilson. Your man lies in that empty space, and you say hes
important.
Rove: Yes. The election of 1896 has been studied by political scientists for
decades. It was one of the five great realigning elections in American history.
There are five points at which American politics is one way before presidential election, and then after that point is something distinctly different.
The election of 1800, with
Thomas Jefferson ending the Federalist era;
1828, with the election of
Andrew Jackson and the
birth of the modern political party; 1860, the election of Abraham Lincoln
and the arrival of the Republicans; 1932, FDR and the New Deal.
And then 1896, where we spend more time talking about the guy who lost
the election, William Jennings Bryan, and the guy who follows McKinley,
Theodore Roosevelt, who plays a minor yet somewhat important role in the
1896 campaign. More important, the 1896 campaign makes the future of
Theodore Roosevelt possible, but only by Roosevelt being a complete weasel:
a self-important, ambitious weasel who takes advantage of the 1896 campaign
to position himself for the job that gives him his future. Namely, the assistant
secretary of the Navy.
Robinson: So lets try to place McKinley himself. A couple of spectrums. On
one end of the spectrum, you have Abraham Lincoln, born in a log cabin, in
what was a very remote part of America, a frontier man. And then on the other
end of the spectrum, you have both of the Roosevelts, born to wealthy families,
born in the most cosmopolitan city, New York, exquisitely educated at private
schools and Harvard. Where in this spectrum does William McKinley fall?
Rove: McKinley lies closer to Lincoln than he does to Roosevelt by background. He is born the son of an iron smelter in northeast Ohio, which is
part of a rapidly growing and rapidly industrializing part of the Midwest.

H O O V ER D IG E ST S u m m e r 2016 159

He is born in what is small-town Ohio and grows up to see it become, in the


aftermath of the Civil War, a great commercial and manufacturing center.
But the amazing thing is, we know a lot about most of our presidents, and we
recognize the name McKinley, but most people do not have any understanding whatsoever what a remarkable human being he is.
He is, like Lincoln, largely self-educated. He spends one semester at
Allegheny College in Meadville, Pennsylvania, but is ill and has to return
home. After the war, he becomes a lawyer the old-fashioned way: he goes
to law school for less than a year, outside of Albany, New York. But, like
Lincoln, he studies for the law by being taken in by a patron, a local judge in
Youngstown, Ohio, named Glidden, who allows him to read for the law in his
office.
McKinley enters the Civil War in April 1861. He shows up with the Poland
Militia at Camp Jackson outside of Columbus, Ohio, for a ninety-day enlistment. Lincoln has called for ninety-day volunteers. But when the young men,
all eighteen and nineteen, show up, theyre told the ninety-day quota has been
fulfilled. You have two options: go home, or enlist for three years or the duration, whichever is longer. And almost to a man, they enlist for three years or
longer. He enters the war as a private; he ends the war at twenty-two as a
major, having received three battlefield commissions for valor. He is recommended for the congressional Medal of Honor, but refuses to be considered,
saying, I was only doing my duty.
He undertakes two suicide missions. One suicide mission he developed
for himself at the Battle of Antietam. The other, which is one of the most
magnificent moments you could imagine, comes in 1864, the Battle of
Kernstown in the Shenandoah Valley. Here, this volunteer has developed
into an astonishingly able young staff officer. On a September morning in
1864, Jubal Earlys Confederates break out of the
It was one of the five great realignforest and begin to collapse
the Union left. And McKining elections in American history.
leys brigade commander, in
charge of five regiments, realizes that the regiment to the extreme right of
the line, the Thirteenth West Virginia, has not received the order to make
an orderly withdrawal before theyre chopped up. So he looks around, sees
McKinley, his most able staff officer, and orders him to ride to the Thirteenth West Virginia. Which means ride in front of the Union line, diagonally across the battlefield, getting ever closer to the Confederates, to get
to the Thirteenth West Virginia, which is in an orchard and sheltered from

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the battle thats emerging around them, and about ready to be cut off and
shot to pieces.
McKinley gets on his horse and begins to ride in front of the Union line,
and all hell breaks loose. Cannon shells are going off, musket fire is everywhere, he is going through a cloud of smoke at the battlefront, and his men
are watching him make this
ride and thinking that he is
He enters the war as a private; he
going to die. At one point, a
ends the war at twenty-two as a
cannon shell goes off right
near him, and McKinleys
major, having received three battletent mate, Russell Hastings, field commissions for valor.
thinks hes dead. But, as
Hastings later wrote, out of the cloud of gray smoke comes this small brown
horse with the erect horseman.
McKinley makes it to the Thirteenth West Virginia just in the nick
of time. The startled commander of the Thirteenth West Virginia says,
Can we at least give them a round? He forms up the Thirteenth West
Virginia, they walk out of the orchard, the rebels are approaching them,
they stop, they take one blast at the rebels, decimating their front ranks,
and then make an orderly retreat. McKinley rides around the back of the
Union forces, arrives back at his brigade commanders tent, and walks
in. Colonel Rutherford B. Hayes, his brigade commander, turns around
and is aghast. He says, My God, I never expected to see you in this life
again.
The Twenty-third Ohio, out of hundreds of Northern regiments, had two
future presidents and one future Supreme Court justice in its ranks.
Robinson: All this by the time he is twenty-one. This man, of whom very
few Americans have the vaguest notionalthough all over the Midwest,
every county courthouse has a statue to William McKinley because of the
assassination.
Rove: He was so popular. Everywhere I go . . . I was in Los Angeles, at the
Nixon library, and a guy comes up to me and says, I wondered why I went to
McKinley Elementary. And in Southern California!
Robinson: One other spectrum. On one hand youve got Richard Nixon,
constantly calculating, ill at ease, a formidable man in all kinds of ways, no
doubt, but ill at ease. And then on the other hand youve got, lets say, FDR
and Ronald Reagan, ebullient, they put you at ease immediately. Where is

H O O V ER D IG E ST S u m m e r 2016 161

William McKinley as a human figure? What would it have been like to be in


his presence?
Rove: He would have been closer to Reagan. He was a little bit more introverted, a lot more restrained and modest. But he was beloved, he was a man
who made friends easily and kept them for a long time. And he listened. And
when he spoke, he was well prepared and knowledgeable on the subject. And
even his adversaries came to respect him enormously.
Robinson: By the way,
Walter Russell Mead, in
Seventy-four-year-old Bernie Sandreviewing this book, praises ers and thirty-six-year-old William
you for taking on the hercuJennings Bryan sound the same.
lean task of explaining the
meaning of the tariff and monetary controversies to twenty-first-century
readers. So, as briefly as you can, make us understand what we need to
understand about the monetary issue in 1896. What difference does it make
whether we had hard money or soft money? What was hard money, what
was soft money?
Rove: Hard money was money backed by gold.
Robinson: Right.
Rove: Soft money was money backed by silver. The difference being that the
way you defined the weight of a silver dollar, it had 52 cents worth of silver
in it. A gold dollar, the way you defined it in law, had $1 worth of gold. So if
you had unlimited coinage of silver, if you had silver from anywhere in the
United States or anywhere in the world, all you had to do was show up at the
mint and they were obligated to pay you a dollar for 52 cents worth of silver,
which immediately would inflate the currency. And then they would coin that
into silver dollars and add them into circulation, which again would inflate
the currency.
Robinson: So its a fight about the money supply.

UNIFIER: Harriet Anderson Stubbs Murphy (18531935) painted this portrait of President William McKinley that hangs in the East Room of the White
House. McKinley was elected president in 1896 and re-elected in 1900; both
times his adversary was William Jennings Bryan. McKinley was assassinated
by an anarchist in 1901, at the age of fifty-eight. [Glasshouse Images]

H O O V ER D IG E S T S u m m e r 2016 163

Rove: Thats right, but theres a deeper battle in it, and its sort of hard for
us to understand today. But in his Cross of Gold speech, William Jennings
Bryan defined this in a way that might seem reasonably familiar to Americans. At the heart of the battle over currency, he said, is this: there are two
ideas of government. The Republicans believe if you just legislate to make the
well-to-do prosperous, then their prosperity will leak through on those below.
Democrats believe if you legislate to make the masses prosperous, their
prosperity will find its way up and through every class. This was the issue of
the 1896 campaign. Were you going to favor economic policies that made the
wealthy prosperous and trickled down to those below it? Or were you favoring those to make the people at the bottom of the pyramid wealthy so their
prosperity would move up?
Robinson: Karl, your subtitle is why the election of 1896 still matters, so
let me add a little parenthesis here. Since the election of Ronald Reagan, at
least, the Republican Party has been free tradethe freer the trade, the better. And along comes Donald Trump and says no, youre hurting the working
man. We need to raise tariffs. Its 1896 all over again. Is Donald Trump reaching back to an honorable Republican tradition?
Rove: Well, hes reaching back to what the Republican Party used to stand
for, but lets be very careful because thats not the
McKinley is a political leader who
lesson. The lesson of 1896
sees that his party is at risk of being
has to be understood in
demographically overrun . . . a vision- this way: the politics of the
ary leader who conducts a campaign American political system is
broken before 1896. We have
that is about bringing us together.
five presidential elections
in a row in which nobody gets 50 percent of the vote. We have two of those
presidential elections in which somebody wins a majority in the Electoral
College, but actually loses the popular vote. We have a third election in which
somebody wins the Electoral College and a plurality of the popular vote, but
by seven thousand votes over his Democrat opponent nationwide. We have
completely divided government. Twenty out of twenty-four years is divided
government. And the animosity in Congress is not merely partisan, its colored deeply by the Civil War. In fact, when the Democrats win control of the
House in 1874 for the first time since 1858, its called the victory of the brigadiers because of all the Confederate generals and officers who get elected to
take back the House of Representatives.

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So its a broken political system. And both parties are right up against each
other, sort of like how weve been over most of the past several decades of
constant turnovers in government and divided government. And along comes
McKinley, modernizes the Republican Party, dramatically changes its coalition, and then governs as he said he would, creating a dominant Republican
majority for most of the next thirty-six years.
And its because McKinley
is a political leader who sees
But Bryan also represented cultural
that his party is at risk of
being demographically over- populism, which is not Bernie Sandrun. What I take away is the ers, its Donald Trump.
activity of a visionary leader
who conducts a campaign that is about bringing us together. You know,
William Jennings Bryan is saying, If youre against me, youre a tool of the
magnates on Wall Street. Youre a pawn of the money power. And McKinley
says, Were all in this together.
Robinson: Bryan deserves a mention or two of his own.
Rove: Yes.
Robinson: To the extent that there is a parallel, how far can we push this . . .
William Jennings Bryan, who seems to come out of nowhere, captures his
partys nomination on the strength of one thrilling speech, becomes, as far as
I can tell, what we would recognize as the first modern populist. William Jennings Bryan runs for president two more times, is defeated all three times,
but theres something going on there. You see it again in Henry Wallaceone
of Franklin Roosevelts vice presidents, he runs for president himself on
the Progressive Party ticket of 1948 and gets wiped out. But he represents
something.
Rove: Yes.
Robinson: And then maybe even George McGovern? My question is: is there
something that we can see in William Jennings Bryan that we also recognize
in Donald Trump and Bernie Sanders?
Rove: Bryan represents two strains that we see in the current election, in my
opinion.
First of all, he is an economic populist. He is Bernie Sanders, only at the
age of thirty-six. Seventy-four-year-old Bernie Sanders and thirty-six-year-old
William Jennings Bryan sound the same. The man at the top is getting rich,

H O O V ER D IG E ST S u m m e r 2016 165

youre getting poor, the system is rigged against you. And in Bryans case,
it was the money power of Lombard Street, the British Wall Street. And the
idle capital holders of Wall Street. Remember, were a developing country in
1896, so think about Brazil or India today. In 1896 weve got foreigners investing in our country.
Robinson: Right.
Rove: But he also represented cultural populism, which is not Bernie Sanders, its Donald Trump. The
America you see in front of
McKinley locks in working-class
us is changing dramatically.
people. Working-class people say,
All the old familiar touchthe Republican Party stands for me. stones are changing because
were becoming a rapidly
And they say it for the next thirtyindustrializing country, no
some years.
longer agrarian in nature.
And we are a rapidly diversifying population. Before 1896, actually before
the Civil War and shortly thereafter, we were a country of immigrants, but
they came from familiar places. Now they start coming from Central Europe
and Southern Europe and Bryan is representing a strain that says, you know
what, that threatens us.
And in his Cross of Gold speech, remember, he says if your great cities
are burned to the ground and you leave our farms alone, the cities will spring
up again. But if our farms are razed, the grass will grow in the streets of
every city. And when he leaves Lincoln, Nebraska, to go accept the Democratic nomination in New York City in early August, he says at the train depot,
I go into the enemys country. Which means hes leaving the rural agrarian
West and South for the urban and industrializing Midwest and East.
Robinson: You close the book with a number of lessons. I quote you: McKinley conducted a campaign based on big issues. While McKinley initially
resisted tackling sound money, and wanted to campaign exclusively on protection, he came to understand that many Americans wanted to hear where
he stood on both. My first reaction to that is this is touching, it is reassuring.
What Karl is saying is that in 1896, democracy worked.
Rove: Yes.
Robinson: He stood for big issues and the country responded. Todays big
issues?

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Rove: One of the big issues is economic insecurity. I dont think its economic inequality; I dont think people begrudge Bill Gates his fortune for
having founded that company. What I do think people are increasingly
insecure about is their place in the economy. Do I have the skills to compete? Is the system rigged against me? Why is it that I dont seem to be
getting ahead when Im working so hard? What about my familys security,
am I going to be able to provide for them, are the social safety nets going
to be there? And then somebody steps forward and says, we must all focus
our energies and efforts to put in place the policies that will allow people
who work hard to get ahead. And that allow our economy to grow at a
faster rate so that prosperity spreads to every corner and every community of America where we have people willing to dream big, take personal
responsibility, and work hard. This, I think, is an important and compelling message, as it was in 1896.
Robinson: And that was essentially McKinleys message.
Rove: Were in it together, he says, and let us not pit capital and labor against
each other. Neither capital nor labor can be prosperous without the other
being prosperous.
Here is one of the campaigns magnificent moments. October 9, 1896. No
Republican presidential candidate has ever met with an organized group of
Confederate veterans. No
Republican president has
met with Confederate vetMcKinley says, Sectionalism was
erans. But McKinley invites
surrendered at Appomattox. Not
two thousand Confederate
the Confederacy, not this or that, but
veterans to come to Canton.
sectionalism, the idea that we were
And they start arriving,
not one together.
forty train-car loads of the
veterans and their spouses.
They get off of the train, theyre met by the Northern veterans group, and
a band and an honor guard. Theyre presented with a beautiful silk banner
to commemorate their day. Theyre each given a pocketknife with a favorite
phrase of McKinleys drawn from Washingtons Farewell Address: No East,
No West, No North, No South, but a Common Country.
Then they form up: Union veterans and Confederate veterans alike in the
courthouse square, led by flags and banners and bands. They march out of
the square and up Market Street toward McKinleys home. The streets are

H O O V ER D IG E ST S u m m e r 2016 167

lined with thousands upon thousands of people, singing patriotic songs, many
of them openly weeping at this vision of blue and gray together.
They arrive in front of McKinleys house. McKinley emerges. And I can
tell, from reading his speeches, some of them are form and others are deeply
personal. This one is deeply personal and short. He says, Sectionalism was
surrendered at Appomattox. Not the Confederacy, not this or that, but sectionalism, the idea that we were not one together. He says if were ever forced
to fight again, and God forbid that we are, we will fight together as brothers
under a common flag. And two thousand veterans stand up, walk across his
front porch, and shake the majors hand. Then the bands play until midnight
in the courthouse square before the veterans are escorted back to the train
to return to Virginia.
This has never happened in American politics before, so you can just
imagine the coverage around the country, how this galvanized the country.
Because heres a man saying were all in this together at the same time that
the populist is saying its us versus them, its us versus the bad guys, theres
nothing but evil on the other side.
Robinson: As you wrote, The bigger, stronger, electoral coalition McKinley built for his party endured for nearly four decades, making the period
between 1896 and 1932 a time of GOP dominance. The Republican Party was
no longer a shrinking and beleaguered political organization composed largely of white, Anglo-Saxon Protestants. Instead it was a diverse coalition of
owners and workers, long-time Americans and new citizens, lifetime Republicans and fresh converts drawn together by common beliefs and allegiances.
Now, that is not just a succinct summary of McKinleys accomplishments.
That is the summary of the Republican Dream at least since 1980. How can
Republicans continue to reach out? Here we are in 2016, and a lot of the GOP
still seems to be in a defensive crouch. Why is this so hard?
Rove: Well, for us it was hard because we faced the war, 9/11, so many
changes. We had that kind of coalition with the 2004 election. Remember, we
are grossly outspent in 2004, we are in the middle of an unpopular war, and
yet Bush gets re-elected by a comfortable margin, gets 44 percent of the Latinos, erases the gender gap. We get the soccer moms to come across. And he
gets the highest percentage of Jewish votes since Ronald Reagan in 1984. We
essentially win re-election by reframing the Republican Party and growing it.
But the war was unpopular.
And consider this years South Carolina primary: Marco Rubio, young and
Cuban-American, standing next to Nikki Haley, the daughter of immigrants

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from India, standing next to Tim Scott, African-American US senator and


son of a single mom. What a picture that was. Thats what the Republican
Party needs to aim for, and thats what McKinley aimed for.
And not only did he run that way, he also governed that way. He carried the
workingmans vote. The labor vote, which was a swing vote in 1896, he carries
it overwhelmingly. He carries the city of New York, he carries the factory
districts of Boston, the stockyards of Chicago. He wins industrial America.
And then, when he becomes president, his economic policies help the country
to return to prosperity after the deepest depression that we have until the
Great Depression. As a result, he locks in working-class people. Workingclass people say, the Republican Party stands for me. And they say it for the
next thirty-some years.
Robinson: Last question. Clare Boothe Luce used to say that history had
time to give even the greatest men just a single sentence. Lincoln freed the
slaves, Churchill saved Britain from Hitler. Whats one sentence that history
will give William McKinley?
Rove: William McKinley changed American politics for the better by modernizing his party and confronting the worst elements of politics to bring the
country together.

H O O V ER D IG E ST S u m m e r 2016 169

I N TERVI EW

Shocks to the
System
Hoover fellow Lee E. Ohanian created a better
economic model by adding a new variable:
exogenous shocks.

By David Andolfatto

David Andolfatto: Why dont you tell us what you are talking about here
in your paper, Neoclassical Models of Aggregate Economies? Whats this
paper about?
Lee E. Ohanian: Its actually a really simple idea. The idea is that economies are
always being hit by various kinds of shocks. And two of the biggest shocks that
we can think about are shocks to technologies and shocks to government policiesfiscal policies, government spending, tax rates, regulatory policies. The
technology shock could be something like the development of the microprocessor or the development of the Internet. It could be something like a change in
the weather, such as the drought in the Western part of the United States.
Economies evolve and respond to these shocks through market processes.
And in doing so, we see movements in how many people are working, how
much people consume, how much firms invest, and how much is produced.

Lee E. Ohanian, a senior fellow at the Hoover Institution, is a professor of economics and director of the Robert Ettinger Family Program in Macroeconomic Research
at the University of California, Los Angeles. David Andolfatto is a vice president
and economist with the research division of the Federal Reserve Bank of St. Louis.
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The idea in this paper is to look at just two factors: changes in technologies,
which have been such a big part of our lives, and changes in government policies. And we examine only those factors that are really long-lived, such as the
Internet or income taxes, which began in 1914. These are large, permanent
changes in government policies and technologies.
How we learn about the actual economy, as you know, is we simulate model
economies. We simulated a variety of model economies in which markets
function very well. Thats what we mean by a neoclassical model.
Then we asked, How did those model economies respond when we look
at changes in technology and changes in government policy that we can
measure using data? And then we asked, To what extent do the movements in the model economy correspond to actual movements in the
data?
Andolfatto: I gather from
the approach you take here
Economies evolve and respond to
that this is a bit in contrast to
these shocks through market prothe traditional business-cycle
cesses.
approach, where at least
in the last twenty or thirty
years, we were more interested in what we call higher-frequency movements
in the data. It seems here what youre trying to do is take the same modeling
framework and see to what extent it can account for broader swings, lower
frequency. Is this a big departure from what has traditionally been done?
Ohanian: It is a departure. As you mentioned, the traditional approach was
to assume there were two pieces to economic data: there was a very smooth
trend, and there was what we call the business cyclemovements that were
very, very short-lived.
But what we show in this paper is that theres a big part in the middle
thats not very short run and thats not super long run. And theres a
lot of movement and data that correspond to what we call these middle
frequencies.
To us, it makes a lot of sense, because when you think, OK, the Internets
invented. Theres a new technology, or, The microprocessors invented,
those innovations are going to take a long time to evolve and disperse
through the economy. We should expect to see things like the development of
the Internet or the development of the microprocessor, the development of
smartphones, to have an impact on the economy that lasts five, ten, fifteen,
or twenty years or even longer.

H O O V ER D IG E ST S u m m e r 2016 171

What we see in the data is that the movements that correspond to those ten-,
fifteen-, twenty-, twenty-five-, thirty-year cycles are very big. In fact, theyre bigger than the movements at the business-cycle frequency. What really surprised
us is that, today, the business-cycle frequency movements are almost all gone.
Andolfatto: Another characteristic or benchmark of your modeling
approach is that you are beginning with the hypothesis that markets work
relatively well on their own. That might strike a lot of people as odd, especially at higher frequencies where we think that the business cycle is often, at
least in part, a manifestation of markets not working so well at times.
Ohanian: A common view toward thinking about business cycles is that
there are changes in monetary policy, and the dollar price of goods and
services doesnt respond immediately to those changes in monetary policy.
The fact that the dollar prices of goods and services dont change immediately perturbs the economy in particular ways. By looking at these fifteen-,
twenty-, twenty-five-year movements, thats plenty of time for dollar prices
of goods and services to change, for the wage rates of workers to change, and
for search behavior of workers to sort itself out.
When you think about the market process in advance, like the United States,
you look at these long-run episodes we used to have: 80 percent of the workforce was in agriculture in the nineteenth century. At that time, we needed
80 percent of our workers in agriculture in order to feed ourselves. Today, its
about one-half of 1 percent. The market processes evolved to move those workers out of agriculture to produce manufactured goods as well as services.
We think that these longer-run movements are exactly what the doctor
ordered for thinking carefully about the usefulness of modeling markets that
function well and when we should not.
Andolfatto: There are many episodesnot just in the United States, but in
other countrieswhere the countries enter into these slowdowns or these
phases or even great depressions or lesser depressions. Its probably a bit difficult to reconcile with the notion of new technologies, though not impossible,
I suppose, if the new technologies are disruptive. But there must be some other hypotheses at work here to account for these episodes. What was responsible for the recent crisis through the lens of your modeling framework?
Ohanian: Lets start with Europe. We look at data from Europe, and again,
we use this particular decomposition in which we separate the data into
these different pieces. Some pieces are what we call very short movements

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associated with the business cycle, and then these longer movements are
fifteen-, twenty-, twenty-five-year movements.
In Europe, what we find is almost all of the movement is due to these
fifteen-, twenty-, twenty-five-, up to fifty-year movements in the data. Theres
hardly any movement whatsoever from what we would call the business
cycle. This is really important, because it is at the business cycle that we
think monetary policy
would be the most imporWe think that these longer-run
tant. Thats a case in which
movements are exactly what the
markets that dont work
perfectly, such as wages
doctor ordered for thinking carefully
or prices that dont adjust
about the usefulness of modeling
instantaneously, are going to markets.
be relevant.
In Europe, you see virtually no business-cycle fluctuations. Its all due to
these long-run movements. Then you combine that statistic with the fact that
many European countriesincluding Spain, France, Germany, Italyhave
had almost no productivity growth in the past thirty-five years, and thats a
remarkable fact, because you think the Internet, microprocessor, all of these
things have transformed our lives.
I think what may be going on there is that Europe has adopted a lot of regulations, a lot of restrictions, that actually, ironically, make markets work less
efficiently. Restrictions on labor and labor mobility and hiring restrictions
and firing restrictions. Venture capital is very difficult to access in Europe.
A lot of regulation protects incumbent businesses at the expense of
entrance. A great example is in France. France banned Amazon from offering free shipping. We have Amazon Prime, we click on the icon and make our
order, we get the product in two days, and theres no shipping charge. You
cant do that in France. Why is that? The local bookstores lobbied the French
government and said, Hey, we cant compete. So France passed a law saying, OK, Amazon, you cant have free shipping.
Economists and policy makers look at Europe and focus on debt crises,
such as the problems that Greece is having, but that didnt come out of
nowhere. I think thats been a long time brewing.
Andolfatto: Your model ascribes absolutely no role to financial-market frictions or debt overhang. Oftentimes, we abstract in our models to get at what
we think are more important forces. But do you think thatin light of the
evidence, say, by Carmen M. Reinhart, who suggests that following major

H O O V ER D IG E ST S u m m e r 2016 173

financial crises, economies stagnate for quite a bit of timethere is an effect


through deleveraging and things like that? Would it be fair to say that your
model is identifying different forces at work that have either nothing or very
little to do with debt deleveraging or financial-market frictions?
Ohanian: The model we have as of now is one in which financial-market
imperfections and debt deleveraging are not playing a role. Youre absolutely
right: it identifies different forces and identifies forces that are moving in
big ways that economists and policy makers havent discussed very much.
One of these issues is productivity growth, which is really what this model is
all about, and it has been slowing down for a long time. Productivity growth
seems related to entrepreneurship activity and startups.
If you think about job creation in the United States in an average yearnot
a recession, but in an average yearif you just mechanically take away the
startups and add up all the jobs created and all the jobs lost, then the US
economy actually loses jobs just from all the incumbents. If you look at gross
job creation, startups and rapidly growing young businesses account for
about 60 percent of job creation. So thats really where the action is in terms
of a growing economy.
But entrepreneurship rates are down 35 percent today relative to where
they were in the 1980s. In the United States, a lot of what was going on in the
financial crisis, I dont think its just like we snapped a finger and suddenly
Lehman Brothers came
down and we had the probIts particularly a puzzle for those
lem with AIG and then all
who look at financial forces as being
heck broke loose. I think that
the underlying economy was
the be-all and end-all. Its an underweakening long before that,
lying economy thats not nearly as
reflecting a significant drop
healthy as one we used to have.
in new business formation.
Thats not to say financial issues were unimportant. But the longer our
economy continues to be below its pre-2007 trend and hasnt made much, if
any, recovery whatsoever to that trend, I think the Great Recession is going
to fade out of view. And the big question becomes Why arent we recovering? Its been seven years now, and productivity growth is 0.9 percent as
opposed to 2.5 percent average.
Andolfatto: Is it a bit of a tough sell for people out there? Your model emphasizes productivity, and I think most people out there would accept that productivity movements influence the longer-term movements of the economy.

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But people must come up to you and ask you, Are you really serious?
Everything that the Fed worries about and that government policy makers
worry about really suggests that they truly believe something is still amiss in
terms of financial markets.
Ohanian: There are really two issues. One is the crisis and the rapid drop in
employment that occurred in the first three or four months of 2009. Other
things are going on, absolutely. But what Ill ask people is to step back and
say, OK, what are by far the most important determinants of long-run living
standards? And people will
say productivity, absolutely,
Europe has adopted a lot of regulano question whatsoever. I
said, Well then, lets work
tions, a lot of restrictions, that actuourselves backwards. How
ally, ironically, make markets work
about at thirty-year levels of less efficiently.
productivity?
Then Ill tell people, Lets take a look at whats happening to informationtechnology productivity growth. Thats been really such an important force
in driving the economy in the past thirty or thirty-five years. You think about
Apple, Google, Microsoft really transforming the world and the economy.
What were seeing is far fewer startups in IT, far fewer successful startups in
IT, successful startups meaning businesses that grow at least 25 percent per
year in terms of employment for at least five years.
Of those that have that rapid growth rate, there are far, far fewer that are
really taking off the way Apple did or Microsoft did or Google did. You look
at that statistic, and thats a grim statistic. I think a lot of people who have
thought this was a financial crisisand even with Reinhart-Rogoffthought
we should be having some recovery by now. Were not seeing recovery.
You look at businesses, and as you know, theyre cash rich. The corporate
sector has enough cash on hand to finance all the investment that they need
to do. So the current economy is a puzzle, I think, from a lot of perspectives.
I think its particularly a puzzle for those who look at financial forces as being
the be-all and end-all. Its an underlying economy thats not nearly as healthy
as one we used to have.
Andolfatto: When will productivity growth turn around? We cant make
those forecasts. We can only remain hopeful that it will, I suppose. And I guess
government policy in your model, strictly speaking, takes quite a laissez-faire
approach. What sort of practical policy implications could you recommendat
the federal level or lower levelsin order to get out of this funk that were in?

H O O V ER D IG E ST S u m m e r 2016 175

Ohanian: We talked about entrepreneurship and startups. Successful


startups are disproportionately done by immigrants. Forty-five percent of
the Fortune 500 was founded by an immigrant or the child of an immigrant.
And we have severe restrictions on immigration, a lot of which go back to the
1980s, many of which are country-specific quotas.
So I think the simple answer is reforming immigration, particularly for
highly skilled workers. We have these people that come here and that study at
Stanford and MIT and Caltech, and they get PhDs in computer science and
electrical engineering. They want to start businesses here, but we make it
hard for them to do that. Congress understands this, and there are bipartisansupported bills in both the Senate and the House aimed at bringing in more
immigrants who want to start businesses. Based on my reading of the data, if
I could think of one policy, it would be that one. And its heartening for me to
see that Congress understands that and theyre trying to move forward on it.
Andolfatto: Very good. But Im going to ask just one question. Is there a role
for government in any dimension in terms of doing good things for building
not just promoting growth by removing restrictions that theyve imposed?
Perhaps infrastructure spending or whatever.
Ohanian: You think about all the resources that we have in this country, and
our infrastructure is crumbling. So massive investment in infrastructure,
based on what civil engineers think about how adequate our bridges and
airports and roads are, I think would be called for.
Government also plays an incredibly important role in trying to make sure
the playing field is level and in trying to make sure that we have competitive
markets where everyone has the chance to compete.
This interview, which has been edited for length, was conducted during
the Fortieth Annual Federal Reserve Bank of St. Louis Conference, where
Lee E. Ohanian was among the presenters.

Available from the Hoover Institution Press is


Government Policies and the Delayed Economic
Recovery, edited by Lee E. Ohanian, John B. Taylor,
and Ian J. Wright. To order, call (800) 888-4741 or visit
www.hooverpress.org.

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VA LUE S

To Gratitude
In a time of sound and fury and presidential
politics, a word on being grateful.

By William Damon

ow many Americans take time to give thanks? As someone who


reads the news, I predict that it might not be a resoundingly
high proportion of the population. Negative forces are casting a
shadow over the good things in life for which we would nor-

mally be thankful. Recent news has been filled with one dreadful report after
another, including the terrorist attacks in Paris and Brussels. On our own
soil, and for other reasons, people are far from content: journalists describe
the American populace as angry, resentful, fearful, sour, hostile, and divided.
Both at home and abroad, people are feeling down.
If there is some desirable balance in life between appreciation and criticismbetween a comfortable perception that the glass is half-full versus a
resentful grumble that the glass is half-emptywe are living through a time
when the scales are tipping in the direction of negativism.
This is unfortunate, not only for our public climate but also for the wellbeing of those who can find no time to give thanks for all they have been
given. A summary of scientific findings by the Templeton Foundation casts
a revealing light on the personal benefits of what Sir John Templeton called
an attitude of gratitude.
Here are a few ways that gratitude contributes to a life of happiness
and fulfillment, according to various studies: grateful people have fewer

William Damon is a senior fellow at the Hoover Institution. He is a professor of education at Stanford University and the director of Stanfords Center on Adolescence.

H O O V ER D IG E ST S u m m e r 2016 177

stress-related illnesses, are more physically fit, and have lower blood pressure. Moreover, they have stronger bonds with the local community andmore
satisfying relationships, and are better liked. Young and older people alike
reap social, intellectual, and health benefits. Grateful youth get into 13
percent fewer fights and are 20 percent more likely to get As in their schoolwork; grateful teens are one-tenth as likely to start smoking. As we age, many
of us gradually realize the importance of giving thanks: for every ten years of
life, gratitude tends to increase 5 percent.
But these documented benefits alone will not wash the bitterness out of
our societal fabric. To lift up an entire society, concerted efforts must be
made to cultivate gratitude as a habitual way of experiencing life. Many
religious practices aim at precisely this goal: the renowned theologian Martin
Marty believed that the most common theme of prayer among the worlds
religions is the expression of thanks. And in the secular world, fostering
gratitude as a route to sustained psychological well-being is a prime target of
scientific innovation.
Leaders in the burgeoning science of positive psychology have developed
techniques for acquiring an attitude of gratitude even during trying times.
Robert Emmons, a pioneer of gratitude research, has tested a gratitude
diary: subjects were told to keep a journal listing five things for which they
felt grateful each week (such as a friends generosity, a trip to a lovely beach,
a beautiful song on the radio, and so on). People who kept such a journal
were more likely than others to feel happy and hopeful and less likely to have
physical problems and weariness.
Martin Seligman, the founder of the positive-psychology approach, found
similar results with a method he calls the gratitude visit. In this exercise,
a person composes a letter to someone who did somethingwhether recognized or notto
improve that persons
We live in a time when the scales are tip- life. When the person
delivers the letter to
ping in the direction of negativism.
the benefactor, the
person explains why he or she feels grateful. Seligman considers such an
act to be an effective promoter of mental well-being and deterrent against
depression.
I would like to suggest a mental exercise. As noted, the mood of our country is contentious. One of the major sources of contention is our immigration
policy, a hotbed of negative feelings on all sides. Wherever the final resolution of that debate may take us, it always begins with one undeniable reality:

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people from all over the world are eager to come to the United States and
become American citizens. All sides of the debate acknowledge this reality.
But how often does anyone pause, in the midst of the political sparring
and acrimony, to express gratitude for the blessings, recognized worldwide,
bestowed by our American
heritage of liberty? This is
what people everywhere
We owe it to those whose sacrifices
crave; and if their undergave us such libertyand also to ourstandable craving poses for
selvesto give thanks for the blessus a problem that we must
ings we share as Americans.
responsibly resolve, we owe
it to those whose sacrifices
gave us such libertyand also to ourselvesto give thanks for the blessings
we share as Americans. In this way, a patriotic sentiment can serve both the
personal good of psychological well-being and the societal good of finding
common ground among competing perspectives. My suggested mental exercise is thus to pause for one moment to reflect on what we cherish about the
American tradition.
The good news for our society is that, in the words of that old 1960s song,
the kidsor at least most of themare all right in this regard. In a study
of civic purpose among a diverse sample of young Americans, we found
numerous expressions of appreciation for the American legacy of liberty and
democracy. In a current study of gratitude in young people, we are looking at
the role of gratitude in their lives, what they are grateful for, how they understand the value of gratitude, and what ways they have learned to express
their thanks.
One might think that in our supposedly materialistic society, young
Americans gratitude would center on material gain, as in, I was grateful for
the new video games my mother bought me. Yet we have found this kind of
hedonistic focus to be relatively rare in our young subjects. Instead, in this
studys ethnically and economically diverse sample, the young people were
far more likely to be grateful for close relationships and the day-to-day necessities of life. Even the young people from very-low-income families expressed
a keen awareness of those who are less advantaged than they are. They
reported experiencing a daily sense of gratitude for a home, a bed, and food.
Some of the youngsters, including those from the less-advantaged groups,
went even further and expressed a sincere gratitude for life itself.
This is not to say that all of todays young are paragons of gratitude: many
still have a lot to learn about the whys, whens, and hows of giving thanks. As

H O O V ER D IG E ST S u m m e r 2016 179

with any life capacity, there is much variation in the understanding of gratitude among young people. We found that some of them invest a lot of time
and attention in their expressions of gratitude, tailoring such expressions
according to the particularities of the situation and the nature of the gift that
one is giving thanks for. But other young people, even among those who are
academically high performers, express a far less mature, almost mechanical
understanding of gratitude as an act of mandatory payback and superficial
manners.
Such young people, and many of us older folks as well, still have much to
learn about how genuine gratitude can deepen relationships, contribute to
the well-being of others, and enhance ones own joy and positive fulfillment in
life.
Hard times test our capacity to remind ourselves what we have to be
thankful for. Young people are not the only ones who can learn more about
the value of gratitude: we are all challenged in new ways all the time to find
the positive in what life may bring us. May we make the best of it.
Reprinted from Defining Ideas (www.hoover.org/publications/definingideas), a Hoover Institution journal. 2015 by the Board of Trustees of
the Leland Stanford Junior University. All rights reserved.

Available from the Hoover Institution Press is


Democracys Dangers and Discontents: The Tyranny
of the Majority from the Greeks to Obama, by Bruce S.
Thornton. To order, call (800) 888-4741 or visit www.
hooverpress.org.

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HISTORY A N D C ULT UR E

Herbert Hoover
Versus the Great
Depression
After the Crash of 1929, Hoover took steps that
were vigorous, creative, and even radicalif, alas,
ultimately unavailing.

By George H. Nash

n March 4, 1929, Herbert Hoover was sitting on top of the


world. As he took his oath of office that day to be president of
the United States, he could look back on a career path that had
curved unbrokenly upward.

Born in Iowa in 1874, and orphaned before he was ten, by 1914 Hoover was

an internationally acclaimed mining engineer living in London. When World


War I broke out that year, he quickly became an international humanitarian
hero by creating an unprecedented relief commission that delivered food for
more than four years to the entire civilian population of German-occupied
Belgium, which was under constant threat of starvation. Belgium was just
the beginning. Between 1914 and the early 1920s Hoover directed, financed,
or assisted a multitude of relief endeavors in Europe without parallel in
the history of mankind. Tens of millions of people owed their lives to his
George H. Nash is a historian, lecturer, and authority on the life of Herbert
Hoover.
H O O V ER D IG E ST S u m m e r 2016 181

exertions. It was later said of him that he saved more lives than any other
person in history.
During the 1920s the great humanitarian ascended still higher on the ladder of public esteem. As secretary of commerce in the cabinets of Presidents
Harding and Coolidge, Hoover became one of the three or four most influential men in the US government.
In certain ways he was a progressive and a reformer. He repudiated the
doctrine of laissez-faire and advocated some governmental regulation of private enterprise. But he also emphatically rejected Old World socialism and
outright governmental direction of business. He called his own philosophy
American individualism.
Hoover was too much of an engineer to content himself merely with praising Americas social system. When the nations economy fell into a severe
recession in 1921, he persuaded Warren Harding to convene a Presidents
Conference on Unemployment, with Hoover as its chairman and driving
force. This highly publicized conference laid the intellectual foundation for
Hoovers presidential response to the Great Depression a decade later. The
conference popularized the idea that the government should not sit still during economic slumps. To the contrary, it should act to mitigate such downturns, especially by countercyclical expenditures on public works. Hoover
scoffed at the classical economic teaching that business-cycle fluctuations
were inevitable. Instead, he
believed that the national
Hoover scoffed at the classical ecoeconomy could be managed
by cooperation and coordinomic teaching that business-cycle
nation between the federal
fluctuations were inevitable.
government and the private
sector. At the heart of his political philosophy was a vision of a vast, informal
partnership between a federal government equipped with scientific data
about economic conditions and a private economy led by enlightened trade
associations.
Hoovers approach has come to be known as associationalism. To him it
was a proven, progressive formula for noncoercive, nonpolitical promotion of
the general welfare.
By 1928 Hoovers reputation was immense. In November he was elected
president in a landslideand without ever having held an elective public
office.
Once inaugurated, Hoover acted quickly to fulfill the publics great expectations. Privately, however, the new president was not as sanguine about the

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future as he appeared to be. For several years he had watched with apprehension as the stock market had soared to spectacular heightsa surge
fueled by massive investor borrowing of money to buy shares. As secretary
of commerce, he had tried in vain behind the scenes to nudge the Federal
Reserve Board into restraining the bull market. In the spring and summer
of 1929 the nervous chief executive again attempted to persuade the Federal
Reserve Board (and the barons of Wall Street as well) to break the speculative fever. His largely covert
actions had little effect.
Hoovers optimistic prophecies of
When the Crash finally
came in October, Hoovers
early 1930 eventually cost him dearly
first response was to assure in public disillusionment.
the nation that the fundamental business of the countrythe production and distribution of
commoditieswas on a sound and prosperous basis. But as the markets
downward spiral continued, he realized that the debacles effects had not
been confined to Wall Street. The national psyche itself had suffered a
shock. If the spreading mood of fear, uncertainty, and hesitation in business were not checked, he said, the economy could plunge into a grievous
depression.
FROZEN CONFIDENCE
Hoover now took steps that changed the course of American history.
Instead of allowing the business downturn to run its course, he intervened
on a scale unmatched by any previous president. Convinced that the countrys difficulties were psychological, he dominated the public stage with
a flourish of activism. He convened a series of conferences at the White
House with business leaders who pledged to maintain wage scales at their
current level, in defiance of economic orthodoxy. A high-wage policy, he and
many others argued, would sustain purchasing power and thus stimulate
future production of goods. Hoover also conferred with labor leaders who
promised not to strike or seek destabilizing wage increases during the
emergency. To counter an expected uptick in unemployment, he promised
that the federal government would augment its public works expenditures
in a big way.
To Hoover these measures were not eccentric nostrums. They reflected
the teachings of the increasingly popular new economics that he and others
had been promulgating since the 1921 unemployment conference. His program of recovery won widespread public approval.

H O O V ER D IG E ST S u m m e r 2016 183

In effect Hoover was practicing a kind of psychotherapy, designed to


restore the nations badly shaken confidence. Confidencethat to him was
the key to renewal of prosperity. By stabilizing the economy through a highwage policy, industrial peace, public works spending, and other actions, he
believed that he could defeat the fear of unemployment and the emotions
that were threatening an economic breakdown.
Both then and forever after, Hoover was proud of the extraordinary agreements he had forgedproud of his break with the fatalism of laissez-faire.
Confidently, deliberately, and self-consciously, he had abandoned the principle of political noninterference with the business cycle.
And having done so, he was quick to proclaim success. On March 7, 1930,
he told a news conference that all the evidences indicate that the worst
effects of the crash upon
employment will have been
It is easy to see why politicians in
passed during the next 60
both parties distrusted Hoover: he
days. Less than two months
later, in an address to the
was simply not one of their kind.
US Chamber of Commerce,
he said: I am convinced we have now passed the worst and with continued
unity of effort we shall rapidly recover. He declared that his great economic
experiment had succeeded to a remarkable degree.
Hoovers optimistic prophecies of early 1930 eventually cost him dearly in
public disillusionment. But at this juncture they did not appear so outlandish. Many other seasoned observersincluding distinguished economists
shared his belief that the worst was (or very soon would be) over, and many
gave him credit for calming the public mood after the Crash. For a time it
appeared that Hoovers policy of cooperative action outside of government
had been vindicated. In the early months of 1930 the stock market recovered
much of the ground it had lost during the previous autumn.
But then (as would happen repeatedly in the next three years), just when
Hoover thought he had restored economic equilibrium, unexpected turbulence arose. In June 1930 Congress enacted and Hoover approved the
highly protectionist Smoot-Hawley Tariff. Just how destructive this measure
proved to be remains a subject of debate. But psychologically its impending
enactment appeared to upset the edifice of confidence that Hoover had been
building. As the congressional struggle over the tariff reached a climax, the
stock market tumbled in what was described as a torrent of liquidation. By
mid-June, when the new tariff took effect, the market had wiped out virtually
all of its gains of the past seven months.

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[Taylor Jonesfor the Hoover Digest]

Then, in the summer of 1930, across much of the Midwest and South, the
worst drought yet recorded in American history ravaged the crops of thirty
states. Millions of acres of planted fields were ruined. Farm income in the
devastated region fell by 25 percent.
No one could blame Hoover for the drought, but as 1930 wore on, a number
of commentators became critical of his performance as president. Time and
again they accused him of timidity and vacillation in his dealings with Congress. Hoover, said the pundit Walter Lippmann, suffered from a peculiar
weakness: he had not yet mastered the political art.
A DOWNWARD SPIRAL
It is easy to see why politicians in both parties distrusted him: he was simply
not one of their kind. His aura of impersonal efficiency, dislike of political
rituals, workaholic seriousness, and reliance on nonpolitical experts set him
apart from what he derided as the beer garden on Capitol Hill. His unusual
blend of progressivism and antistatism pleased neither the left nor the right.
For his part, Hoover believed (as he told an audience shortly after the
Crash) that the most dangerous animal in America is the man with an emotion and a desire to pass a new law. Privately he was more pungent. When in
1930 one of Hoovers granddaughters was born, his first response was: Im
glad she doesnt have to be confirmed by the Senate. In a whimsical mood
one day, he remarked: There ought to be a law allowing the president to
hang two men a year, and
without being required to
give any reason.
Hoover warned that the 1932 elecAs the political headwinds
tion was a contest between two
against him gathered force,
philosophies of government whose
the president gave little sign
outcome would determine the
of reconsidering his polinations course for the next century.
cies. Convinced as ever that
the key to recovery was the
revival of a spirit of confidence, he asked the American Bankers Association
in October 1930 to instill a feeling of assurance in their clients. He appealed
to the bankers to improve their borrowers courage and mental attitude.
In December he advised Congress that the best contribution government
could make to economic recovery was to encourage the voluntary cooperation of the community.
Meanwhile, new manifestations of what Hoover called frozen confidence
were appearing. In the autumn of 1930, a growing number of significant

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American banks began to fail. In 1931 the pace quickened, abetted by a


deepening financial crisis in Europe. In September the turmoil abroad took a
stunning turn when Great Britain was forced to abandon the almost sacrosanct gold standard.
Britains decision triggered a financial tsunami in the United States. Fearful that the US dollar would be the next currency to devalue, many foreign
depositors rushed to withdraw their holdings in the
The pundit Walter Lippmann opined
form of gold from American
that Hoover had not yet mastered
banks. Many domestic
depositors also sought safethe political art.
ty by removing their savings
from banks and hoarding the money at home. Lacking sufficient reserves to
accommodate the stampede, more than five hundred US banks collapsed in
a single month. By the end of December 1931, a total of 2,294 American banks
had failed during that year alone.
Desperate to stem what he called a degenerating vicious cycle, Hoover
reached out to the nations banking elite. Early in October he secretly convened a group of leading New York bankers. He asked them to voluntarily
organize a private banking corporation with capital of $500 million to be
supplied by the banking community itself. The corporation would use this
fund to lend assistance to banks that (in Hoovers words) were under attack
by unreasoning depositors. By rescuing these tottering banks from the
danger of closure, the corporation, he hoped, would revive public confidence
in the banking system. The New York bankers reluctantly acquiesced, but
only after Hoover promised them that if necessity requires he would ask
Congress to create a governmental banking entity patterned after the War
Finance Corporation of World War I.
It soon transpired that the worried bankers had less faith in Hooverian
cooperation than he did. Unwilling to risk their own capital to save their
weaker brethren, and anxious for Uncle Sam to assume the burden, the
corporations organizers procrastinated and loaned out less than $10 million
in the first weeks of its existence.
For Hoover the fateful moment of decision was now at hand. Yielding to
the perceived dictates of necessity, he called upon Congress in December 1931 to enact a program of emergency governmental action to end the
nations growing credit paralysis. He asked Congress to establish a Reconstruction Finance Corporation, with broad power to lend money directly to
beleaguered banks and other commercial institutions. Never before had a

H O O V ER D IG E ST S u m m e r 2016 187

peacetime president proposed to intervene so massively in the workings of


private enterprise. Not bankers, not investors, not captains of industry, but
the government itself would now attempt to lubricate the nations credit
channels and make the wheels of commerce turn again.
In January 1932 Congress voted overwhelmingly to establish the Reconstruction Finance Corporation. During the next five months the RFC authorized more than five thousand loans to more than four thousand banks and
other commercial institutions in financial difficulty.
A CRUSADE AGAINST COLLECTIVISM
Yet even as Hoover embraced government-funded credit expansion and
other intrusions into the market economy, he simultaneously donned the
heavy armor of fiscal conservatism. If confidence in the economy was to be
revived, he announced, the federal government must raise taxes and rigorously balance its budget, which was now running the largest peacetime
deficit in American history. The financial stability of the US governmentas
measured by a balanced budgetwas absolutely essential, he believed, if
the government were to prevent another disastrous run on the dollar and
preserve the all-important gold standard. This, incidentally, was not just
Hoovers thinking in 1932. It was the prevailing economic orthodoxy of the
time. Few Republicansor Democratsdissented. In June 1932 Congress
enactedand Hoover signed into lawthe largest peacetime tax increase up
to that date in American history.
All these measures did not save Hoover from defeat at the polls. Nor
did they lead him to abandon his basic political philosophy. In the autumn
of 1932, as he campaigned unsuccessfully for reelection, he reaffirmed his
voluntaristic faith in
self-government by
the people outside of
Hoover forged a critique of outsized
the Government and
government that has become integral
lashed out at the statist
to modern American conservatism. It is
regimentation that he
one of his most enduring legacies.
sensed would be at
the heart of Franklin
Roosevelts New Deal. In a climactic campaign address Hoover warned that
the election was more than a contest between two men or two parties. It was
a contest between two philosophies of government, and its outcome would
determine the nations course for over a century to come. For the rest of his
life he regarded this as one of his most prophetic utterances.

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In 1933 Hoover left office a political pariah. But this was not the end of the
story. Rising from the ashes of his political immolation, he waged until his
death in 1964 what he called a crusade against collectivism and became
Franklin Roosevelts most formidable critic from the right. During his four
years as president, Hoover in certain ways foreshadowed the New Deal. But
in the larger sweep of the
twentieth century, Hoover
According to liberal scholars, Hoover
as a former president
contributed mightily to
did too little. Yet free market econocontaining the New Deal and mists insist he did too much.
to reinvigorating the political philosophy that he had expounded in the White House. In the process
he forged a critique of ever-aggrandizing statism that has become integral
to modern American conservatism. It was among the most enduring of his
legacies.
DOOMED BY THE FED?
So how shall we judge Hoovers leadership during the Great Depression? It
seems to be a near-consensus among historians that Hoovers presidency
was a failure. According to one narrative, favored by liberal historians and
shaped by Keynesian economics, Hoover fell short because he was too
antistatist, too committed to voluntary cooperation, and too devoted to fiscal
conservatism and the gold standard. In this interpretation, the Great Depression was a crisis of capitalism, and Hoovers failing was that he did too little,
too late.
A competing narrative, favored by free market economists, argues that the
Great Depression was not a crisis of capitalism but a failure of government
whose interventionist policies profoundly exacerbated the nations economic
woes. Among these policy errors: the Smoot-Hawley Tariff, the tax increase
of 1932, and the high-wage policy that Hoover insisted upon in 1929. In this
line of interpretation, Hoovers failing was not that he did too little but that
he did too much.
Both of these schools of scholarship, you will notice, are Hoover-centric.
But there is another perspective on him that historians should consider.
Between 1929 and 1933 the supply of money in the United States contracted
by nearly one-third: a staggering, almost unbelievable decline. Why did
this happen? In their monumental A Monetary History of the United States,
published in 1963, Milton Friedman and Anna Schwartz placed the blame
squarely on the policies, passivity, and ineptitude of the Federal Reserve

H O O V ER D IG E ST S u m m e r 2016 189

Board, the legal guardian of the nations monetary system. It is a complicated


story, but in the judgment of Friedman and Schwartz, it was the Fed that was
mainly responsible for converting a garden-variety recession into a major
catastrophe.
Since 1963 Friedman and Schwartzs indictment of the Fed has won
considerable acceptance among economists. But if Friedman and his fellow
monetarists are substantially correct, what should we now say about Herbert
Hoover? In all of our history, no president has been more conscientious and
hardworking. For three years and more, he strove without stint to induce the
American people to shake off their frozen confidence. Repeatedly he pleaded with banks to resume lending, with depositors to stop hoarding, and for
morale-building action that would arrest the deepening credit freeze. Could
it be that his incessant labors were not so much right or wrong as irrelevant?
It reminds one of the Greek mythological figure Sisyphus, forever condemned to push a heavy boulder up a hill. Every time he nearly reached the
top, the rock would roll back down, and Sisyphus would have to start over.
From 1929 to 1933 Herbert Hoover arguably was our modern Sisyphus.
Every time that he seemed to be on the brink of success in taming the Great
Depression, some new crisis would erupt, while the silent killerthe contraction of the money supplywould grind on. Each time, like Sisyphus, he
would start over, unaware that much of his perpetual motion may have been
doomed to futility by the monetary policies of a government agency beyond
his control.
So I leave you with this food for thought. Perhaps someday historians will
conclude that Hoovers presidency was stymied not so much by his political
limitations, political philosophy, or policies but by something neither he nor
virtually anyone else at the time quite understood: the fatal misjudgments
and errors of the Federal Reserve Board.
Special to the Hoover Digest. This essay is adapted from a lecture delivered at the Miller Center at the University of Virginia.

Available from the Hoover Institution Press is The


Crusade Years, 19331955: Herbert Hoovers Lost
Memoir of the New Deal Era and Its Aftermath, edited
by George H. Nash. To order, call (800) 888-4741 or visit
www.hooverpress.org.

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H O O VER DI GEST Summer 201 6

H OOVE R A R C H I VE S

The Accidental
State
The making of Taiwan.

By Hsiao-ting Lin

oo often we have tended to view the existence of the two political entities across the Taiwan Strait as a logical and most likely
consequence of the Chinese civil war, fought bitterly after
World War II between the Chinese Nationalist Party (KMT)

under Chiang Kai-shek and the Chinese Communist Party (CCP) led by Mao
Zedong. Indeed, by 1949, as the KMT was losing control over the mainland,
its leaders sought to turn Taiwan into a strong territorial base, where they
were safeguarded against possible invasion by the physical barrier of the Taiwan Strait, and were subsequently under the protective shield of the United
States after the outbreak of the Korean War in mid-1950. As the Chinese
Communists lacked naval and air capabilities to invade Taiwan in those early
years, Chiang Kai-shek and his staunch followers were able to retreat to their
island base, where they could nurture hopes of launching a military campaign to recover the Chinese mainland in the decades that followed.
The story, however, is much more nuanced and richer than the above simplistic view would suggest. The making of the separate Taiwan state was not
the result of deliberate forethought and planning by either the United States,
the KMT, or the CCP. It was the outcome of many ad hoc, individualistic
Hsiao-ting Lin is curator of the East Asia Collection and a research fellow at the
Hoover Institution. His latest book is Accidental State: Chiang Kai-shek, the
United States, and the Making of Taiwan (Harvard University Press, 2016).
H O O V ER D IG E ST S u m m e r 2016 191

factors and decisions related to war or alliance maintenance, or even serendipity. Especially significant is the complex and critical role of the US government and various American individuals, as well as US policy, as consistent
determining forces in shaping the accidental island state.
In a broad sense, my new book Accidental State analyzes the overall collapse of the Nationalist regime under Chiang Kai-shek after the end of World
War II in the context of the looming Cold War. In addition to showcasing the
various internal political struggles within the Nationalist camp as its downfall began, the research illuminates how these struggles intersected with the
wider geostrategic concerns of other powers, particularly the United States.
GEOPOLITICAL FERMENT
Located in the western Pacific, just off the Chinese mainlands southeastern coast, the island of Taiwan now comprises most of the land area of the
state known officially as the Republic of China (ROC)also called Nationalist China, Free China, and more recently, the Republic of China on Taiwan.
Communist Chinese leaders in Beijing regard Taiwan not as a sovereign
state but rather an outstanding territory belonging to the Peoples Republic
of China (PRC). In the past several decades, the ROC government in Taipei under the Nationalists
likewise formally espoused
Diplomat George Kerr, responding to
a one-China policy, and until
an infamous massacre, helped shape 1991, claimed sovereignty
over all of China. However,
the idea of American involvement in
its main opponent on the
a more benevolent, liberal Taiwan.
island, the Democratic
Progressive Party (DPP), the ruling party of Taiwan between 2000 and 2008,
and then again from 2016 onward, contended that the island was not a part
of China and should instead be treated as a separate, independent, and fully
sovereign nation-state.
The issue divides the islands population and society. In any case, no one will
deny that Taiwans relationship with mainland China has been, and will continue
to be, of critical importance in any discussion or study of the future of Taiwan.
Until today, the Cairo Conference of 1943 and the resultant joint communiqu by Franklin D. Roosevelt, Chiang Kai-shek, and Winston Churchill has
generally been viewed as an important watershed leading to the eventual
return of Taiwan and the Pescadores from the Japanese to China. Before
China formally declared war with Japan on December 9, 1941, the Nationalist
government was in no legal position to claim back to its fold the territories

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officially ceded to the Japanese by the Qing court. By the time of the Cairo
Conference, with the support of the United States, Chiang secured promises
from his wartime allies that his government could take over the island when
World War II came to an end.
However, behind a seemingly unanimous agreement lay a much more
complicated landscape. Within Nationalist Chinas governing circles, as late
as toward the final stage of World War II, questions concerning how to define
Taiwans future political and administrative status, as well as its relationship with the mainland,
remained pending and
The making of Taiwan was not the
controversial. In the United
result of deliberate forethought and
States, in the months surrounding the summit in
planning by either the United States,
Cairo, sharp debates and
the Nationalists, or the Communists.
divergent policy formulations never ceased to exist within Washingtons planning circles as to how
Taiwan could best serve Americas postwar diplomatic and geostrategic
interests in the Far East while supporting Nationalist Chinas recovery of
that island.
Those wartime internal policy debates over Taiwan within Washingtons
military and diplomatic quarters never quite overturned the ultimate result
that the island should be occupied by Nationalist China in the immediate
aftermath of the Japanese surrender. Nevertheless, some apparently trivial
policy drafts and proposals on the part of the United States before and after
V-J Day turned out to have critical influence on the fate of Taiwan.
One such instance was the sudden withdrawal of American involvement in
the Allied takeover of the Japanese properties on the island, a decision made
shortly after the Japanese surrendered. Without a greater American role in
the Allies overseeing or moderating the takeover operations, the Nationalist
provincial authorities went their own way, allowing local Taiwanese islanders bitter resentment to grow rapidly, leading to the outbreak of the February 1947 bloodshed in Taiwan.
As the overall situation worsened in postwar China during the final years
of the decade, certain US ideas gradually created a new basis for the Truman
administrations shifting stance toward the Taiwan issue. The theory that
Taiwan should be placed under an Allied trusteeship instead of being handed
over to China, a highly theoretical idea forged first by planning-level officials
like George H. Kerr (whose personal papers are held by the Hoover Archives)
during the war years, was one salient example.

H O O V ER D IG E ST S u m m e r 2016 193

After the February 1947 massacre, as more Taiwanese began advocating


the islands autonomy or independence from China, Kerrs unimplemented
theory quietly became one crucial option vis--vis Taiwan for Washingtons top
authorities. And its political repercussions, as well as its impact on the US
Nationalist Chinese relationship, lingered on into the early 1950s and beyond.
The role the Americans played in the February Incident of 1947 also deserves
further scrutiny. Chiang Kai-sheks officials blamed George Kerr, then serving as
the American vice consul in Taipei, for instigating the islanders to rebel against
the Chinese rule, leading to Kerrs disgraceful recall. Yet in an oblique fashion,
Kerrs personal suggestions regarding how Taiwan might be best governed found
their way to top Nationalist leaders. After the tragedy, Chiang appointed a civilian
official to replace the much-hated Taiwanese governor Chen Yi, and more local
Taiwanese were recruited into the new provincial authorities. More significant,
with the reform of the islands commercial and industrial infrastructure after the
massacre, more freedom was allowed for private enterprise to boom in Taiwan.
In hindsight, this marked the beginning of a gradual shift of Taiwans
economic policy, and a salient departure from Chen Yis command-economy
philosophy on the island.
The preliminary reforms undertaken in the aftermath of the February Incident of 1947 were originally intended both to pacify the native Taiwanese and
to fulfill the goal of making the island a role model for the mainland Chinese
provinces. It therefore became a historical accident when those post-traumatic measures inadvertently laid the foundation for the subsequent formation
of a Nationalist island state. Notably, Kerr played a role in injecting into State
Department policy debates in May 1947 the idea of American involvement to
shape the evolution of a more benevolent, liberal political situation in Taiwan.
US policy thereby moved toward creating a certain kind of political-economic
setup on that island, even though very few imagined at this juncture that this
new policy direction would also lead to an unintended state after 1949.
Trusteeship for Taiwan gradually became a popular idea not only among
the pro-independence Taiwanese but also among some of Washingtons
military and political chiefs as a result of the islanders escalating discontent
with Nationalist governance. Worse still for the Chinese Nationalists, as their
civil war with the Communists went from bad to worse, a deeply pessimistic
view of their capabilities led policy designers in Washington to start moving
to wash their hands of the KMT. It even went so far as a willingness by the
end of 1949 to sacrifice Taiwan to the newly inaugurated Peoples Republic of
China as part of the effort to court Chinese Titoism, a reference to Yugoslavias Marshal Josip Broz Tito and his willingness to defy Moscow.

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ON ALERT: A sentry stands guard along the coast of Taiwan in 1954. For
decades, Chiang Kai-shek and his military forces, protected from invasion
by the Taiwan Strait, dreamed of recovering the Chinese mainland. Eventually the island evolved into the final power bastion of the exiled Nationalist
Chinese state. [Newscom]

On the other hand, for those in the Truman administration who did not
wish to see Taiwan fall into Communist hands, more and more voices came
around to the view that Chinas sovereignty over Taiwan remained unestablished, and that the island should be legally acquired by the Chinese government only after the signing of a formal peace treaty with Japan.
THE PROVINCE ASSERTS ITSELF
As the Chinese civil war intensified during the last months of 1947, a prevailing perception among foreign observers, including US diplomats and their
British counterparts, was that a war-burdened China would inevitably return
to a condition of regionalism similar to the early Chinese Republic warlord

H O O V ER D IG E ST S u m m e r 2016 195

era. Toward mid-1948, overall developments in China led American officials,


both civil and military, to agree that a gradual territorial division, coupled
with the emergence of new regional regimes, was the most likely scenario in
trouble-ridden China. It was within this larger strategic conceptual framework of the inevitability of a disintegrated and regionalized China that a new
Taiwan formula began to take shape within the Truman administration.
After Chiang Kai-shek
stepped down as the RepubWhen the Truman administration
lic of Chinas president
reiterated its hands-off policy toward in early 1949, the United
States found it both imperaChina in January 1950, the future of
tive and politically plauthe island state seemed doomed.
sible to search for suitable
candidates to lead Taiwans political and military structure. This American
endeavor to find whoever was capable of handling situations was totally
unacceptable to a retired Chiang Kai-shek, who was still trying to rule
behind the scenes and to search for a strategy for survival.
During the first half of 1949, Chiangs idea was to create a strategic territorial triangle in Southeast China encompassing Taiwan, Zhejiang, and Fujian
provinces. But at this stage, the greatest challenge confronting his political enterprise was not so much from the Chinese Communists as from his
increasingly unbridled (former) Nationalist military subordinates. As Chiang
lost support from the Truman administration, his relationship with key
Nationalist military leaders understandably became much more difficult.
Chen Cheng (whose microfilm collections of rare early Communist Chinese
publications is now stored at the Hoover Archives), Chiang Kai-sheks handpicked Taiwan provincial governor, played a weighty role in determining the
islands future. In mid-1949, Chen found it necessary to court acting president
Li Zongren, Chiangs bitter rival within the KMT, so as to strengthen Taiwans position vis--vis the precarious, soon-to-become-Communist mainland. Chens ostensible defiance of Chiangs wish and his collaboration with Li
Zongren, however temporary, turned out to be another critical turning point
in Taiwans fate.
With Lis consent, Taiwans foreign exchange would henceforth be under
direct control of the Bank of Taiwan. Li allowed the Taiwan provincial
government expediency on using the islands foreign exchange, as well as on
using gold and silver reserves, foreign exchange, tax revenues, and locally
stored state-owned materiel to pay for the central government agencies
and personnel on the island. Chen also secured Lis consent to authorize the

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Bank of Taiwan to collect local tax, thus allowing the provincial authorities to
manage disbursement issues on behalf of the central government. With these
new measures, Taiwans financial and foreign-trade autonomy was increased,
whereas the islands budget deficit was expected to be reduced and inflation
prevented.
Meanwhile, the provincial authorities now had more say in the use of their
local tax revenues, and more significant, they were given the right to handle
all state-owned materiel on the island, thus greatly enhancing Taiwans economic autonomy.
AND THEN CAME WAR
By the time the seat of the crumbling KMT government was moved from
the mainland to Taipei in late 1949, Nationalist Chinas territorial scope had
been reduced to Taiwan, Hainan Island, and a string of offshore islets along
Chinas southeastern littoral. When the Truman administration reiterated its
hands-off policy toward China in January 1950, the future of the island-based
Nationalist Chinese state seemed doomed.
Worse still, the severe challenge Chiang Kai-shek faced was multifaceted.
Internally, the surviving Nationalist authorities on Hainan Island posed a
political embarrassment and added a logistical burden to the trouble-ridden
government in Taipei; and the Hainan Nationalists appeal for American
support generated much diplomatic uneasiness for Chiang. The trouble from
the Hainan Nationalist authorities was coupled with rumors and intrigues
against Chiang. In the early months of 1950, an alleged coup to topple Chiang
was discussed from time to time, and also served as an alternative scenario
in the State Departments
hypothetical planning
The war on the Korean Peninsula
before war broke out in
was undoubtedly the biggest continKorea. Externally, covert
US support for the Hong
gency of all in the accidental forKongbased anti-Chiang
mation of Taiwan.
Third Force movement
and the Tokyo-headquartered Taiwan independence movement was perceived by Taipei with much apprehension, as undermining its already weak
political legitimacy.
As a corollary, to consolidate Nationalist rule in Taiwan and re-establish
Chiangs supreme position, the KMT national-security apparatus began
campaigns of terror to root out Communist networks and sympathizers and
to extend the reach of surveillance and cells down to the grass roots. Those

H O O V ER D IG E ST S u m m e r 2016 197

campaigns were relatively successful in stabilizing a still-weak accidental


state in the island; with them the Chinese Nationalists began the long process
of building political legitimacy among a population that had every reason to
despise the ruling elites.
It was also at this darkest formative moment of Nationalist rule in Taiwan
that an unofficial American policy began to take shape. With the advisory
assistance of the retired former commander of the Seventh Fleet, Admiral
Charles M. Cooke, and his Special Technician Program in Taiwan, Chiang
Kai-shek was able to withstand a critical stage of his political career in the
months surrounding the outbreak of the Korean War.
This individualized US approach to Nationalist China policy led to major
decisions. It culminated in the abandonment of Hainan and Zhoushan Islands
and in arms contracts and procurements crucial to Taiwans security and
defense. The retired admiral, as his personal papers at the Hoover Archives
reveal, also served a vital role in bringing together Chiang and General
Douglas MacArthur in Tokyo. For a period surrounding the outbreak of the
Korean War, American policy toward the Nationalist authorities was underground and privatized. This informal advisory experience helped prolong the
weakened Nationalist regimes survival in Taiwan.
From the spring of 1949 through June 1950, the United States attempted
to offer the Chinese Communists normalization of bilateral relations and
cooperation. This was part of an effort to court Chinese Titoism to contain
the Soviet Union in the Far East. Mao Zedong chose instead to form a close
military alliance with Moscow. Leaders in Beijing then worked with the Soviets and the North Koreans to launch war to take over South Korea.
The war on the Korean Peninsula was undoubtedly the biggest contingency
of all in the accidental formation of the Nationalist state. The subsequent
interposition of the US Seventh Fleet in the Taiwan Strait was the most critical linchpin for Chiang Kai-shek and his cohorts. Their dispirited and decimated regime was now reinvigorated while a Nationalist Chinese state rooted
on the islands of Taiwan and the Pescadores began to take permanent shape.
The Korean War prompted an abrupt about-face by the Truman administration on issues surrounding Taiwan. Indeed, although Chiang Kai-shek
continued to be despised, his island regime was saved.
AN INCREASINGLY SEPARATE IDENTITY
In the process of this state-making in Taiwan, several issues come to the
fore that deserve our careful contemplation. Before the Korean War, Chiang
Kai-shek had hoped for a World War III to bring his dying Nationalist regime

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HINTS OF DEMOCRACY: On October 27, 1946, the central government led


by Chiang Kai-shek (center, holding hat) chose these delegates to represent
Taiwan in the National Assembly. In years to come, Chiang initiated party
reforms and promoted limited democracy in Taiwan to try to deepen the
Kuomintangs social base and strengthen the legitimacy of its rule on the
island. [Republic of China]

back to life. After the outbreak of war in Korea, and with a more secure
island redoubt at hand, launching a military rollback against the Communist
mainland as part of a new world war became less realistic to Chiang. Instead,
as the Kuomintang records housed at Hoover clearly demonstrate, Chiang
began initiating party reforms and promoting limited democracy in Taiwan for the sake of deepening the KMTs social base and strengthening the
legitimacy of its rule on the island. With Taiwan now at the forefront of the
international Cold War, Chiangs idea of a military recovery of the mainland
served as useful political rhetoric, both to attract more US aid and to maintain the Nationalists morale and legitimacy on their maritime domain.
The conventional wisdom argues that after war broke out in Korea,
Chiang Kai-shek strongly favored a military re-invasion of the Chinese
mainland so as to restore his role in China. The Truman and Eisenhower
presidencies, on the contrary, were inclined to adopt containment vis--vis
H O O V ER D IG E S T S u m m er 2016 199

the Chinese Communists. A crosscheck of both Chinese and English declassified documents now shows that as the Korean War entered a stalemate, it
was actually the military and intelligence chiefs in the Pentagon who took
the lead in transforming the Nationalists grandiose but empty military
rollback slogan into detailed courses of action for the purpose of US interests in the Far East.
While Washington urged Taipei to launch a military counteroffensive
against the Communist-controlled territories of Hainan Island and the
Southeast mainland, it was Chiang Kai-shek who now tried to avoid such
an operation so as to keep
his military supremacy
US military and intelligence chiefs
intact within the Nationaltook the lead in transforming the
ist hierarchy, in addition to
Nationalists grandiose but empty
ensuring Taiwans defense
interests. In the eyes of
military rollback slogan into
Chiang, localized and reladetailed courses of action.
tively small-scale raids along
Chinas coast, which maintained the facade of attempts at military recovery
of the mainland, would best suit his interests. Chiangs reluctance to, if not
resistance against, mainland military recovery at the height of the Korean
War might have unwittingly shaped Taiwans military as purely defensive
in nature, thus providing a conceptual basis for Washingtons readiness to
conclude a mutual defense pact with Taipei in 195455.
Revitalized US military aid to the Nationalists in Taiwan no doubt
strengthened Chiang Kai-sheks position in both domestic and international
arenas. Nonetheless, this renewal of aid was coupled with US pressure to
reform Chiangs military and to transform the hitherto inept Nationalist
military command and decision-making structure into more capable ones.
The result of such pressure was a substantial reduction of Chiangs authority over Taiwans military and defense affairs, transforming a perennially
Chiang-centered Nationalist military decision-making process into a virtually US-dominated one. With Taipeis military budget and troop deployment now largely subject to US approval, by mid-1953, when the active
stage of war on the Korean Peninsula ended and Washington no longer
saw military confrontation with the PRC as feasible, a Nationalist military
power projection capability limited to Taiwan and the Pescadores was basically in place.
In the early 1950s, during the nascent period of the Nationalist state, two
treaties further reinforced both the legality and the political reality that

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STILL CHANGING: A crowd gathers to watch election results in Taipei in


January. Tsai Ing-wen, the candidate of the Democratic Progressive Party
(DPP), won the balloting to become the first female president of Taiwan. The
DPP believes Taiwan should be treated as a separate, independent, and fully
sovereign nation-state. [Jose Antonio Lopes AmaralZUMA Press]

the territorial and jurisdictional scope of Nationalist China was to be confined to the islands of Taiwan and the Pescadores. One was the 1952 peace
treaty between Taipei and
Tokyo, and the other was
Taiwan signed two treaties that both
the 1954 mutual defense
pact between Taipei and
solidified its autonomy and implied
Washington. These treaties
that Nationalist rule would not
legitimized the Nationalextend back to the mainland.
ist governance on Taiwan,
elevated the international status of the Nationalist government, and made
Chiangs island redoubts more secure against Communist military threat.
On the other hand, whether the Nationalists liked it or not, the content,
spirit, and scope of application of these two treaties also bore strong implications that would eventually lead to the legalization of an islands-rooted

H O O V ER D IG E S T S u m m e r 2016 201

Nationalist Chinese state. In retrospect, while Chiang Kai-shek endeavored


to legitimize his Taipei-based regime as the sole government representing
the whole of China by entering into more international agreements, ironically, the two important treaties he signed with Japan and the United States
only demystified such a claim.
Chiang, in his personal diary, depicted the realignment between the United
States and the Taiwan-based ROC in 195455 as his greatest achievement
since the end of World War II. To the Americans, the alliance provided a legal
basis for their acquisition and operation of military bases and installations on
Taiwanese soil. It also led to the disposition of US land, air, and sea forces on
the island. Accordingly, the 1954 mutual defense pact bore great significance
in terms of Americas military security buildup in the Cold Wars East Asian
theater.
And yet, for Chiang, re-entering a coalition with the Americans was not
without its costs. He could not have been unaware that one key consequence
of such realignment would be stronger US influence, if not control, over his
future military enterprises against the Chinese mainland, and the existence
of two de facto political entities on both sides of the Taiwan Strait. A politically pragmatic Chiang was also a man with a strong will and determination.
In the years that followed, he did try to challenge, if not break, the framework
created by the 195455 realignment and contemplated resorting to military
means to recover the mainland, first in the late 1950s and again in the early
1960s. Nevertheless, the complicated historical developments at the formative stage of the Nationalist Chinese state on the island of Taiwan had made
such a plan virtually impossible.
TAIWAN TODAY
Within a few years, from the mid-1940s to the mid-1950s, Taiwan was transformed from a Japanese colony to a newly returned province of postwar
China, and then from an island frontier to the center and the final power bastion of the exiled Nationalist Chinese state. The process of making an island
state was intriguing, contingent, inadvertent, and full of political difficulties
and was never intended when the fate of Taiwan and the Pescadores was first
planned in the middle of World War II. It is striking how the United States,
whether high government officials or various private individuals, with their
policy planning and theorizing, actions and inactions, played a crucial role in
the formative years of the making of this state.
In recent years, a school of thought has begun to argue that the United
States should abandon Taiwan in return for a better relationship with

202

H O O VER DI GEST Summer 201 6

mainland China. The DPPs return to power as Taiwans new ruling party
in 2016 deepens worries that Taiwan might once again become a point of
contention in the already bumpy relations between Washington and Beijing.
A thorough investigation of the historical formation of the separate state on
Taiwan and the roles the Americans played in this state formation will help
us see the abandoning Taiwan thesis more clearly.
Special to the Hoover Digest.

Available from the Hoover Institution Press is The


Struggle across the Taiwan Strait: The Divided China
Problem, by Ramon H. Myers and Jialin Zhang. To order,
call (800) 888-4741 or visit www.hooverpress.org.

H O O V ER D IG E ST S u m m e r 2016 203

On the Cover

hips ride at anchor and planes fly overhead in this curiously placid
sketch of British forces sent to Gallipoli, one of the most bitter
battles of the Great War. The 1915 campaign by combined armies
from Australia, New Zealand, and the United Kingdom was meant
to overwhelm Turkish defenses, seize Constantinople, and open a way to
defeat Germany and Austria in the East. Like many well-laid plans, it went
badly astray.
This image of the fleet in the harbor of Moudros, Greece, comes from the
sketchbook of Lieutenant Colonel M. J. W. Pike of the Royal Irish Fusiliers, an
officer and an artist. Pike produced some two dozen drawings while awaiting
action at Chocolate Hill, one of the few bits of Turkish turf the Allies managed to holdat least for a time. Pikes sketchbook is among his memoirs,
housed at the Hoover Institution. The detailed captions he gave his sketches
were often anything but placid, describing the lice, flies, boredom, and shellfire that plagued the bottled-up troops.
The Gallipoli campaign ended with an Allied withdrawal in early 1916, after
many thousands of casualties on both sides. Gallipoli has since become both
a byword for overambitious and underprepared attacks and a symbol of the
hardships soldiers can endure. It was also a defining moment for the Australian and New Zealand (ANZAC) troops, for whom the battle was a crucible of
national identity, and the Turkish military, which defeated the worlds reigning sea power.
The naval images in Pikes sketchbook suggest a contemporary event in
the Aegean, also linked to war. A hundred years later and less than a hundred miles from the beaches of Gallipoli, the Greek island of Lesbos also is
attracting waves of amphibious arrivals. Lesbos, only ten miles off the coast
of Turkey, has borne the brunt of the thousands of migrants who are seeking
to cross the borders of the European Union. Greek authorities have confined
many of the latest arrivals in camps, deporting them as Europe struggles
with the massive human crisis fed by war and economic upheaval in southwest Asia and the Middle East, particularly Syria.
The boats assaulting Lesbos are not naval landing craft as at Gallipoli but
private vessels and dinghies crammed with refugees, some of whom drown
when they try to come ashore. Pope Francis, who visited the Moria refugee

camp on Lesbos in April, said the sea had become a cemetery for the worst
humanitarian disaster since the Second World War.
Those who reach the coast safely add to the vast pile of abandoned life
preservers and deflated boats on the beachand wait for political decisions
to play out.
Charles Lindsey

H O O V ER D IG E ST S u m m e r 2016 205


HOOVER INSTITUTION ON WAR, REVOLUTION AND PEACE

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206

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*Ex officio members of the Board

Distinguished Overseers
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H O O V ER D IG E ST S u m m e r 2016 207

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