From the Comments: Naval Power and Trade

This is an extremely interesting point, the worth of fighting pirates and guerre de course seems difficult but is completely worth the effort. Strangely, just before reading this post, I finished the book To Rule The Waves by Arthur Herman, which asserts that the rise of large-scale trade went hand in hand with the growth of British naval strength, and points very specifically to the 18th and 19th centuries. On page 402, he asserts that it was only naval protection that enabled British trade to grow considerably during the Napoleonic wars (over 11,000 British merchants were captured by the French from 1793-1815 and far more would have been but for the British blockades and convoy protection). How much can one measure the cost-to-yield of maintaining peaceful trade against such depredation?

Herman also argues that Naval research and technology drove the development of far better seagoing technologies without which large-scale merchant ventures would have had far lower yield (perhaps the most famous example is the Longitude Prize) and the demand for iron and ship production was a major driver of the early Industrial Revolution. While I think that both of these arguments are very vulnerable to crowding out arguments, it seems to me that there were nuanced interconnections between technology, trade, and naval power that each had positive feedback into the others. It seems to me that by examining the very large investment made by the British East India Company in their merchant marine in this very period gives a parallel in which private interests made similar investments in protection of sea trade routes, showing its probable positive return on investment.

I am glad to see that you have recognized that naval production was almost always based on relative strengths of navies. The huge decomissioning trends of the mid-19th century in Britain was exceeded by that of their enemies/rivals (the Dutch had been weak since the late 1600s, the French were exhausted completely, and the Spanish and Portuguese were on a long decline worsened by French occupation). However, there is one major aspect to consider in examining naval strength longitudinally: complete revolution in ship technology. Steam, iron plating, and amazing advances in artillery picked up hugely after 1815, and the British navy in the Crimean War would have been unrecognizable to Nelson. I am not sure how this would affect your analysis, because navies became simultaneously more expensive and more effective, and GDP was exploding fast enough to support such high-tech advances without bankrupting the Brits. I am sure this is not an original problem, but I am interested in seeing how historical economists can control for such changes.

Good luck on this paper, it seems like an extremely useful examination with a lot of interesting complications and a fundamentally important commentary on the balance between maintaining law and allowing market determination of resource distribution.

This is from my fellow Notewriter Kevin on another fellow Notewriter’s (Vincentrecent post about shipping and imperial navies.

From the Comments: The Contribution of American Allies to Pax Americana

Dr Stocker answers my concerns about free-riding and rent seeking with this gem:

Good points Brandon. On the rent seeking, I think you are broadly correct, but I would offer two qualifications. European nations/the EU often foot a lot of the bill/take on associated civilian tasks where America has taken military action, so that the US is not subsidising the defence and security needs of Europe quite as much as it might seem. So for example, in the Yugoslav breakup led to US military operations and a comparatively passive role for Europe, but a lot of the afterwork was taken on by Europe and there is no point in military intervention without work on building civil society to create long term security and stability. Going back a bit further to the first Gulf War/expulsion of Saddam from Kuwait, Germany and Japan did pay a lot towards the cost in return for not participating. Despite [this] they got a lot of abuse in the US Congress from politicians who don’t appear to understand that their non-intervention in the Gulf owed a lot to constitutions and attitudes which the US encouraged/imposed during post-World War II occupation. Recently, though European govts have been cautious in what they say in public about the Ukraine crisis and containing Putin, there is a growth in military spending and co-operation done in fairly quiet ways largely with the aim of deterring Putin from adventurism in the Baltic states. Just one example, Germany has recently taken 100 Leopard II tanks out of retirement and work is underway for the Leopard III. Moving to the Pacific, Japan is enhancing its military and weakening constitutional restrictions on the deployment of the military (imposed by the US in the post-war Constitution) in reaction to Chinese assertiveness.

While I think it is broadly correct that the US has been paying for a military burden which should be born by Europe and Japan, the situation is not as extreme as it often assumed in the US and as far as I can see is moving in a more balanced direction. In general while it is true that the US has a very impressive military machine with some impressive technology and officers, I think some Americans are a bit over confident about this. A lot of Americans, at least amongst those who take an interest in military kit, appear very convinced that the Abrams 2 is the best tank anywhere, I would suggest that in military capacity, for cost, the Leopard II is probably better (it certainly does much better in export markets) and even in absolute terms ignoring cost, the French Leclerc (which is extremely expensive) has a good claim to be the best tank around, and the Korean K2 is another strong but very expensive candidate. The Abrams is expensive, heavy, difficult to transport and difficult to keep in sufficient fuel, though it can certainly do a very good job. A lot of Americans appear to be incapable of thinking of France as anything other than a surrender monkey joke in military terms, which is really very far from the reality, as can be seen by the very strong role that France is now taking in northwest Africa against violent Islamist fundamentalists. The US military may well be able to have the same military capacity for lower cost if it moves away from the Abrams II model of a tank that is expensive to run and transport as well as build.

So broadly a correct point Brandon, but I think the situation is a bit better than is often understood in America and is moving in the right direction as Japan and Europe are getting used to the idea of taking responsibility for dealing with new threats from China, Putinist Russia and the hydra of Islamist fundamentalists.

A very good point, and an even better angle with which to view the world.

My only quibble is that the right direction American allies are moving can easily be changed without a more fundamental shift in institutional arrangements between us. Some sort of federal or confederal arrangement would go a long way toward addressing this issue, and would further deepen the economic and cultural ties between constitutional democracies.

Or am I just looking for problems where there are none, in order for my arguments to gain ground?

Ian Bremmer’s American Foreign Policy Quiz

Ian Bremmer, a political scientist at NYU (and numerous think tanks), has teamed up with Time to put together this quiz on what you think the proper role for the US (“America”) is in the world today. According to Bremmer, a neoconservative, there are three basic points of view with regard to the US’s role in the world: Independent, Indispensable, and Moneyball (you can read his explanation for these three types, as well as his analysis of how major presidential candidates fit into these categories, here).

I ended up being “caught between Independent and Moneyball America,” just like Rand Paul. Leave your scores in the ‘comments’ thread! Bremmer got his PhD in political science from Stanford back in 1994.

The New Caliphate in the Middle East: When Islamists experiment with libertarianism (and why the West should do the same)

Richard Epstein, the legal scholar and libertarian Republican known for his erudite wisdom in the fields of law and economics and tort law, has recently joined in the chorus of Right-wing critics attacking Senator Rand Paul (and President Obama) for arguing that the US government does not have enough information to carry out an attack or launch a military campaign against the Islamic State of Iraq and Syria (ISIS), and that further action on the part of Washington will only make things in the region worse rather than better.

Unfortunately, Epstein’s argument represents the best of what is essentially a quick-tempered fallacy that’s short on details and long on moral posturing. Epstein, for example, provides absolutely no outline for what action the US government should take against ISIS. Should the US bomb targets from afar as it has been doing in Pakistan? Should the US government put combat troops back on the ground in Iraq? Should the US invade Syria and strike ISIS from there? If you read carefully the arguments put forth by proponents of attacking ISIS, you’ll notice that none of them have an outline for what the US government should do about it (even the usually sharp Professor Epstein refrains from providing a coherent outline). Instead, readers are treated to ad hominem attacks that liken Senator Paul to the worst-possible person imaginable: the Big Government-loving Commander-in-Chief of the US Armed Forces, Barack Obama. Oh, the horror!

Epstein’s argument lays a great foundation for any starting point that discusses what a libertarian foreign policy should be. He writes:

Libertarian theory has always permitted the use and threat of force, including deadly force if need be, to defend one’s self, one’s property, and one’s friends. To be sure, no one is obligated to engage in humanitarian rescue of third persons, so that the decision to intervene is one that is necessarily governed by a mixture of moral and prudential principles. In addition, the justified use of force also raises hard questions of timing. In principle, even deadly force can be used in anticipation of an attack by others, lest any delayed response prove fatal. In all cases, it is necessary to balance the risks of moving too early or too late.

Of course, none of this provides any helpful hints for what the US government can or should do going forward to deal with ISIS. Libertarians, like everybody else in the West save for a few disgruntled young Muslims, think that ISIS is morally bad. It does not follow, though, that the use of military force is the best (or even fifth-best) option going forward.

Unfortunately, many libertarians (though not Senator Paul) erroneously fall back on the fallacy that because the US government is unable to coherently attack ISIS (much less define it), Washington should simply adhere to a policy of non-intervention. So what follows is a modest proposal to implement a more libertarian foreign policy toward ISIS.

The interwar Austro-Jewish economist and one of libertarianism’s patron saints, Ludwig von Mises, wrote in his 1927 book Liberalism that:

The right of self-determination in regard to the question of membership in a state thus means: whenever the inhabitants of a particular territory, whether it be a single village, a whole district, or a series of adjacent districts, make it known, by a freely conducted plebiscite, that they no longer wish to remain united to the state to which they belong at the time, but wish either to form an independent state or to attach themselves to some other state, their wishes are to be respected and complied with. This is the only feasible and effective way of preventing revolutions and civil and international wars (109).

This observation – a basic tenet of libertarian political theory – ties in quite well with one stated goal of Islamist political theory, which seeks to partition the Sykes-Picot states of Syria, Jordan, Iraq, and Lebanon into smaller states in order to destroy the influence of Western “imperialists” in the Middle East. Lest detractors start accusing Islamists of being closet libertarians, it is worth noting that Islamists also seek to break all economic ties with the non-Muslim world in favor of an inter-regional protectionist union (to say nothing of Islamism’s views about religion and society).

The words of Mises summarize nicely not only where libertarians and Islamists can agree intellectually, but also points – if ever so subtly – to a new leadership position for a benevolent liberal hegemon like the United States to take up in an increasingly Balkanized world.

Instead of blindly attacking ISIS with no real plan in place, the West should temper the prudence of President Obama and Senator Paul with the libertarian notion of self-determination by recognizing the existence of the Islamic State and swiftly incorporating it into the existing IGOs – such as the United Nations, the World Bank, and the IMF – that the West has built up and maintained since the end of World War 2.

This policy would do much more than strike directly at the legitimacy and power of the authoritarian Assad and Maliki regimes by carving up their territories without their permission; it would also place the burden of governance directly upon the Islamists who have proclaimed an Islamic State.

ISIS has obtained power only because of the vacuum left behind by the Bush administration’s fatally flawed decision to remove regional strongman (and secularist) Saddam Hussein from power. ISIS has therefore had no responsibilities to date – despite its claim to govern territory – save to plunder and murder in the name of religion. Placing the burden of governance directly on the shoulders of ISIS would necessarily alter its foundation of power, and when it becomes apparent that Islamism’s political and economic theories leads directly to despotism and poverty, the benevolent liberal hegemon will be waiting to recognize the independence of regions within the Islamic State that aspire to independence or union with another state.

This policy would also shift the ability to make and enforce international rules and norms back to Washington and would bring a semblance of order to the Middle East by placing a benevolent liberal hegemon into a position of leadership that is capable of recognizing and engaging with the Arab public’s desire for liberty. A liberal hegemon could achieve much of this peacefully and legally.

It is unfortunate that many libertarians – especially in the United States – have adopted the reactionary stance of non-intervention in foreign affairs. Aside from being impossible, non-intervention is also inimical to libertarianism’s social individualism. In the same vein, the calls for military action and the personal attacks against politicians unwilling to act blindly in the realm of foreign affairs does more harm than good as it distracts citizens from focusing on the issue at hand: namely, what is to be done about ISIS. Senator Paul and President Obama have so far made the right decision, but unless Islamism is tackled directly – intellectually – the woes and fears of the West will only continue to mount.

It is time for the West to adopt a more libertarian foreign policy.