Iraq - A Strategic Blunder?

[Dayuhan]

It takes a quite distorted view on what's serious and what not to rate such a distant, largely disarmed state as a serious problem while the own economy is turning to illusions and losing substance.

9/11 distorted lots of views; that's what it was meant to do, and it succeeded. As I've said before, I wasn't in favor of the Iraq operation; it was justified but it wasn't smart. However, assuming that if it hadn't happened the US could, or far more remotely would, have managed some sort of burst of economic enlightenment is beyond far fetched. Certainly the Iraq war ran parallel to a run of bad economic policy, but there's lettle meaningful evidence to suggest a causative link. Economic policy was no better in the relatively peaceful 90s.

I do suspect that if 9/11 hadn't happened, the Bush administration's handlling of the 2000/2001 recession might have been much better, and much trouble down the line might have been prevented. That, however, is pure conjecture.

Again, on both the economic and foreign policy levels the Bush administration was defined by the need to deal with problems that the Clinton administration had declined to manage. These problems were poorly managed in both cases, but there was in either event little opportunity for major reforms in the reactive mode that was imposed by prior neglect.

It was also obvious by basic statistics that the PRC deserved much more attention already in the early 2000's than the whole ME.

China's emergence received plenty of attention, but it's not something that required action on the part of the US or anyone else. Again, assuming that relations with China would have been managed better if the ME had not been an issue is conjecture. What would you have done with respect to China that was not done?

A proper reaction would have reduced the oil addiction to a ME-oil-independent level and a focus on increasing the industrial output instead of outsourcing it (alternatively, reducing consumption to a sustainable level).

And how would you propose to do that? You ascribe to government powers that government does not have.

First the notion of being independent of "ME oil" is a farce. Everyone who depends on oil depends on ME oil, whether or not they actually import any. Oil is globally priced and the removal of any major ME producer imposes the same price penalty on all consumers.

The US is about as likely to become independent of ME oil as Europe is to become independent of Russian gas. For the forseeable future we simply have to accept and manage the reality that our energy supplies are controlled by powers that are unreliable and potentially hostile. I'd actually rather depend on the Saudis than on the Russians, who seem more inclined to manipulate energy supplies for political gain.

Oil dependence was deeply entrenched by the extended glut, and as long as oil remained cheap any action taken by government to reduce dependence was going to be insignificant, short of imposing a massive tax on energy, which no American administration will do as long as democracy is in place. In the last few years we've entered what appears likely to be an extended period of high oil prices, which opens a real opportunity to reduce dependence. The oil-dependent powers of the world may or may not make use of that opportunity.

American manufacturing has been hampered by half a century of a seriously overvalued dollar, which imposed a massive disincentive to any American entrepreneur or corporation entering a line of business that required it to export or to compete with imports. That reality has shaped the US economy to a degree that will require decades to reverse. Again, as long as the dollar was overvalued any policy government adopted to promote manufacturing was equivalent to spitting into a typhoon. That problem has now been alleviated to some extent, though ideally the dollar would fall more. Again, that opens an opportunity, but it's an opportunity that didn't exist for most of the 00s.

Certainly the last decade has seen an abundance of bad decisions in both economic and foreign policy, but claiming a causative relationship between the latter and the former is conjecture, I suspect with a bit of wishful thinking mixed in. An absence of foreign entanglement is no assurance of good economic policy, as we saw in the 90s.

I'm quite sure that historians in 50 years will call the 2000's a lost decade for the whole West (Europe had its parallel follies) and won't find much if any good policy.

I suspect that historians in 50 years will see the 2000s as a desperately needed wake-up call to the West, on a variety of levels. How the West responds to that call is still being defined. Easy to say the response has been unimpressive (not just from the US), but we were very deep in our rut and it's still the early going.