Retro #3 - Lots Of Talk, No Action: The Current Impotency and Lack Of Leverage of American Foreign Policy

Due to massive family obligations in the short term, time will be at a premium for the next week or so. Thus, rather than rush through new posts, I am taking the opportunity to do a "best of" series of past posts. These "retro posts" have been the most popular posts in this blog from the past year or so. All of them have been viewed hundreds of times and seem to have made a connection to our readers vs. other posts and topics. Please enjoy them again or for the first time.

This blog has often talked about the American political class inability to get anything accomplished relative to the major issues facing Americans today. These major issues include the failed war on drugs, failing public schools, the lack of a national energy policy, a non-existent immigration plan and strategy, and the failure to solve the problem of escalating health care costs in this country.

However, this inability apparently is not restricted to the domestic side of political class responsibilities. If you look at our country's foreign policy recently you see very few successes (recent trade agreement with South Korea) and a whole lot of failures:

- There was a recent conference in Geneva that involved Iran and the United States, Russia, China, Britain, France, and Germany [Associated Press - December 7, 2010]. The conference was supposed to find a way to allow Iran to develop a peaceful nuclear energy program while preventing them from developing nuclear weapons. The talks ended with a promise of all countries to get together again in 2011. State Department spokesman P.J. Crowley went so far to say that: "We are encouraged that there will be a follow-on meeting [in 2011].

Sound familiar? It seems this dance has been going on for a long time, with Iran skillfully sitting down for talks with the over eager other six nations and hinting at enough progress to not kill future talks but never agreeing to anything either. This has been going on for years, with no concessions from Iran but serving as their delaying tactic for their continued developed of a nuclear weapon capability. Lots of talk, no action.

- The never ending search for peace between the Palestinians and Israel also has recently been in the news. The United States, for years, has tried to mediate talks between the two factions, with a recent agreement stipulating that Israel would not do any more settlement construction in Jerusalem for 90 days. This agreement was necessary to prevent the Palestinians from walking out of the peace talks. The Obama administration was so desperate for the 90 day window that they agreed to get billions of dollars of weaponry to Israel and made other diplomatic commitments for their moratorium on construction, all for a mere 90 day freeze on construction.

However, shortly afterward, Israel declared that the U.S. was too consumed by the Wikileaks fiasco to talk peace (Associated press - December 7, 2010) and that the U.S. had stopped the peace talk process. The State Department denied that this was the case and the talks were still on. However, it appears that the Israelis are using the weak excuse of Wikileaks to get the military hardware and diplomatic air cover that the U.S. committed to but never wanted to continue the peace talks anyway. Thus, all of the United States' plans to keep both sides happy and talking are likely to fail. Lots of talk, no action.

- Every time that North Korea acts up, the United States goes begging to China to please, please intervene and keep the North Koreans in check. However, China apparently has very little motivation to keep the North Koreans in check according to recent news reports and documents:

• China likes having a buffer between itself and U.S. ally South Korea. If the North government should collapse, then South Korean, and possibly U.S. troops, could be sitting on the Chinese border, something they probably do not want.
• If the North Korean government should collapse, there is a very high probability that millions of starving North Korean citizens would flee to the more prosperous China in search of food and shelter, an event that the Chinese definitely do not want to cope with.
• The North Koreans intermittently act aggressively towards Japan, a military and economic competitor of nearby China. With North Korea as a wild card, it distracts Japan in its affairs and confrontations with China.

As with the Mideast peace talks and hopes and the delaying Iranians nuclear meetings, lots of talk, no action when it comes to North Korea.

What do all of these situations have in common? Namely, the United States no longer has the leverage to make/convince others to do what it wants. Without leverage, other parties will do what the want and is best for them, not what is best for U.S. interests. Especially today, with a fragile economy, the United States has lost the leverage of economic power. China's economy has grown so much and made us so dependent on it that we can do nothing but go to the Chinese and beg for them to do something about North Korea.

The Israelis are living in a prosperous economic environment that is relatively secure. The Palestinian leaders exist and continue in power because of the hatred it sows among its citizens towards Israel. None of the parties involved, Israeli and Palestinians citizens and leaders really want peace as defined by the United States. We have no leverage to make them change their minds from the status quo but we are gullible enough to sign short term and costly agreements that the Israelis abide by or ignore at their will. Again, no leverage to make them do what we want, they have more to lose than to gain.

What leverage do we have with the Iranians? Obviously, the five or six rounds of sanctions that have been imposed on them have had insufficient leverage to make them stand down from their nuclear weapon ambitions. Plus, we are dealing with some very irrational and possibly insane rulers, both in Iran and North Korea. Without leverage to apply to their irrational interests, the United States is relegated to diplomatic beggar again and sits at these meetings with no power or leverage to enact anything effective. As a result, the Iranians play us for fools as they delay and delay as they develop and develop nuclear weaponry.

A wise old business saying goes as follows: "Never be so in love with a business deal that you cannot walk away from the negotiating table." Our political class and politicians have become so in love with these "deals," a nuclear free Iran, a well behaved North Korea, and a lasting a stable Middle East peace accord that they cannot walk away from the table. We continue to sit at the table and talk and talk because we have diplomatically, militarily, and economically no leverage to do anything else, looking diplomatically impotent in every case. Without leverage or the creativity to create leverage, you get played for a fool, which is exactly the position that our politicians have put is in today.

Which should not surprise us. The meager efforts of the political class to domestically improve life for Americans have almost always been a failure (e.g. Cash For Clunkers, TARP, etc.). And usually the root cause of these failures is that the meager and ill-thought out programs from our politicians usually have no leverage. Without leverage, plans usually fail miserably.

But that discussion is worthy of another post in the near future but before then, think about some of these recent failures and try to identify what leverage was inherent in the thought process of the programs. I will bet that you will find that there were none. As a result they failed as miserably as the foreign affairs fiascos above.


Our recent book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

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http://www.flipcongress2010.com/
http://www.reason.com/

The Obama Administration: Leveraging Nothing, Accomplishing Nothing

As I look back over the past two years, it is not easy to identify any significant progress or success stories from the Obama administration. Although it ramrodded Obama Care legislation through the legislative back door of reconciliation, it is highly likely to be unsuccessful. We now know that the numbers on which the whole legislation was based on were bogus (e.g. comparing ten years of revenue to six years of expenses, costing out only parts of the final legislation, not all of it's components, etc.). Already companies and unions are asking for and receiving exemptions from the legislation's requirements and other companies are looking to dump their current employee health insurance plans since under Obama Care, it is cheaper not to offer health insurance to employees and retirees than it is to offer it.

The only other major piece of legislation that has been passed was the initiative to impose more regulations on the financial services industry. But we now know that this legislation is also likely to be a failure for three reasons. First, the legislation avoids dealing with Fannie Mae and Freddie Mac, the primary mortgage drivers in the country, both of which are hemorrhaging red ink to the tune of billions of dollars a  month. Second, consumer car loans were left out of the legislation, probably due to strong lobbying efforts. If you leave out home mortgages and home buying along with car loans, the two largest consumer financial transactions imaginable, you really have not reformed anything., Third, most of the regulations have not been written yet or included in the legislation, that has been left up to the government bureaucrats, to be done down the road. So you really cannot say you have a good piece of legislation if it changes virtually nothing upfront and hopes the bureaucracy gets it right later and you ignore the two biggest components that you wrote the law for in the first place.

That's about it. Everything else this administration has tried has usually failed miserably. They tried a lot of stuff, you would have thought that the probability of getting something right would have happened just out of dumb luck. But alas, none of the following initiatives seemed to work out:

• Cash For Clunkers - gave away taxpayer money to car buyers who probably would have purchased a new car anyway, it just moved up the decisions to purchase when the Clunkers rebate money was available. If you look at the car purchase rate over time, total volume really never increased, it just got redistributed.
• First Time Home Owners Rebate Program - same problem as with Clunkers, first time home buyers may have purchased a home sooner than they originally planned but once the rebate program was over, home sales dropped significantly. Overall demand just changed timing, it did not change volumes.
• Cash For Caulkers, Cash For Appliances - same reason for failure as Clunkers and First Time Home Buyers, these programs just gave away taxpayer money for no reason without fundamentally changing demand.
• Economic Stimulus Program - absolute failure since all the program did was create short term work projects (e.g. fixing a road, fixing a bridge, etc.), it did not fundamentally change demand or grow the economy. Once the stimulus money was gone, the work projects were done and no lasting job creation was made.
• Mortgage Program - an unmitigated failure, according to the government inspector general responsible for the program. We have millions and millions of houses in this country that have gone into foreclosure or have been abandoned by the homeowners and the track record of this program shows that very few homes, as a percentage of the total number of homes in foreclosure, were saved by this program.
• Internationally, we are no closer to peace in the Middle East, Iran is two years closer to having nuclear arms and North Korea is as dangerous as ever and also two years closer to being a nuclear power.
• The War On Drugs continues to be an absolute failure, resulting in an evolving and violent narco state just south of our border.
• Unemployment continues to run very high levels for a very long time and none of the small business tax credits and programs that the political class have come up with have impacted it much at all.

What did all of these failure have in common? The common thread through all of them is that there was no overarching, integrated plan, there was no glue to make these programs "sticky," in other words there was no leverage. A good definition of leverage is as follows:

The ability to strategically influence a system or an environment in a way that multiplies the outcome of one's efforts without a corresponding increase in the consumption of resources, i.e. doing a lot with a little.

Think about it. What was strategic in any of this administration's policies? What multiplied the desired outcome without a corresponding increase in resources?

• Consider Cash For Clunkers. There was no multiplying effect of car sales as a result of the rebate program. It was a straight linear proposition: give away money, sell more cars. Don't give away money, sell even fewer cars since you lost demand to the rebate program without multiplying sales going forward.
• Consider stimulus money to fix a bridge. Provide stimulus money for the work and people are employed. Stimulus money runs out, people go back to being unemployed. No multiplying effect whatsoever if you consider the high official and the higher, unofficial unemployment rates in the country.
• Consider Obama Care. Most health care experts, but not our politicians, know what drives a large percentage of our outsized health care costs in this country: Americans smoke too much, Americans eat too much of the wrong kind of foods, Americans do not exercise enough and America is getting older. What does the legislation focus on? More taxes, more fees, more bureaucracy, more regulations, etc. It has little focus on the leverageable attributes of the situation, get Americans to smoke less, eat better, exercise more, and aggressively attack aging diseases such as cancer and dementia-like diseases. For example, a little bit of effort to reduce smoking in America will multiply savings in all kinds of diseases including lung cancer, heart disease, etc.
• Consider our dealings with Iran and North Korea. Nothing has been done from the State Department that leverage a little effort into a large return. As a result, we continue to pay for a high level of military preparedness while the two countries go about their daily building of nuclear weapon capabilities.

What has this administration done, or any recent administration done, that was a well thought out, strategic, and leverageable plan? There are very few examples, if any. All of their efforts are very singular, standalone that leverage nothing and as a result, they are almost always a bust and almost always very expensive. That is why when you divide the amount of money spent on the economic stimulus projects by the number of jobs the administration says it "created" or "saved," you end up with each job costing over $200,000. You certainly do not have leverage when it costs you significantly more to create or save a job than what that job is likely to pay.

And the administration has recently shown that it has not learned much about leverage despite the past two years of failure:

• In his recent state of the union message,the President hyped the advent of electric cars  and is constantly promoting them as the answer to our energy and green house gas problem. But Charles Lane writing for the Washington Post, as summarized in the February 11, 2011 issue of The Week magazine, pointed out that even if the President attains his goal of a million electric cars on the road by 2015, those million cars would constitute less than one half of one percent of all cars in America. Thus, even if you attain your goal, your likelihood of success in the bigger strategic issues, energy policy and greenhouse gases is still likely to be unaffected and unattained. And the only reason you might attain that million car goal is because you give away taxpayer money in the form of rebates to people that buy an electric car. No rebate money, likely no electric car purchase. Sounds a lot like cash For Clunkers, doesn't it? (note: this does not even take into account that fact pointed out by Mr. Lane that in cold weather, electric cars' batteries lose about 50% of their output, further reducing the limited range of these cars. Not a good, leverageable strategy when your goals could be affected by the weather.)
• Egypt is another example where this administration has no leverage. We have used bribery, money and military equipment, to be "friends" with Mubarak over the decades. That may have given us some limited leverage with this dictator, assuming that we kept paying him. But it gives us no leverage with the protesters now demanding freedom and liberty in Egypt. And we have not paid Mubarak enough or have enough leverage over him to get him to leave office and we have no influence in shaping what the demonstrators want and when the want it. The administration is just floating along with the rest of the world, captive and powerless to what is going on in Tahrir Square because they have not laid the groundwork with the protesters beforehand, groundwork that might have had a multiplying effect now. The administration has no leverage on the street because they have ignored the street or not understood the street in Egypt.

Maybe this is why our problems are so big and our deficit is so big, the thinking of our political class has been so small and our leverage to solve problems has been so small. Lack of leverage is the constant theme across all of our problems, whether you are talking about financial issues, domestic issues, or foreign affairs issues. Our political class does not know how to think strategically, their thinking and approaches are always linear and simplistic.

To get more strategic thinking in Washington,  you need strategic thinkers and that probably involves dumping the current set of politicians in office. "Love My Country, Loathe My government" suggests some steps to do that:

1. Step 39 - implement term limits for all Federal government politicians. If you have been in office for decades and have not come up with any thing leverageable and strategic, it is highly unlikely you will ever do so. Best to step aside, or be forced aside with term limits, to change that Washington mentality.
2. Step 36 - require all Washington politicians to take and pass a course on basic economics, which hopefully will give them some basic thinking skills on leverage and strategy.
3. Other steps - change or implement a number of other steps in the gerrymandering  of Congressional districts, campaign financing rules and laws, and such so that new, better thinking people can get into office and start the leveraging process.

The old "Mission Impossible" TV show understood leverage. A small, trained set of agents every week would strategically solve a major problem against overwhelming odds without an gigantic, expensive, and ineffective government bureaucracy approach. The current TV show, "Leverage" on TNT does the same thing where a small group of con artists, working for the good side, every week exploit weaknesses and leverage points to defeat the supposedly stronger, richer, or meaner bad guys. Hollywood understands leverage, why can't Washington?

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.


Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com
http://realpolichick.blogspot.com
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment